2015 (9) TMI 1339 - SC - Indian Laws

Magistrate can summon accused not named in charge-sheet under Section 190 CrPC if police report has sufficient material

The SC held that a Magistrate under Section 190 CrPC may take cognizance of an offence and summon persons as accused even if they were not named in the ... Alter ego and attribution of mens rea to a corporation - vicarious liability in criminal law - taking cognizance of an offence under Section 190 CrPC - prima facie material / sufficient incriminating material to issue process - requirement of recording satisfaction and reasons when issuing process under Section 204 CrPC - powers to summon additional persons and Section 319 CrPCTaking cognizance of an offence under Section 190 CrPC - prima facie material / sufficient incriminating material to issue process - requirement of recording satisfaction and reasons when issuing process under Section 204 CrPC - Validity of the Special Judge's order summoning persons not named in the charge-sheet where summoning was based on the judge's characterization rather than on recorded satisfaction of sufficient incriminating material against those persons. - HELD THAT: - The Court held that while a trial court may take cognizance and summon persons not named in the charge-sheet if the material on record discloses a prima facie case against them, the magistrate must apply his mind and record satisfaction that the documents/statements disclose sufficient incriminating material against those persons. In the impugned order the Special Judge's satisfaction, expressed in paras 2-3, related to the four persons named in the charge-sheet; the subsequent paras (notably para 4) proceeded to summon three additional individuals merely by describing them as being in control of the companies and as the companies' 'alter ego', without recording specific reasons or reference to incriminating material against those individuals. An order issuing process must state the basis of the opinion that there are sufficient grounds for proceeding; an order is vitiated if no such exercise of mind is shown or if the reason given is ex facie incorrect. Consequently the part of the summoning order that implicated the appellants is unsustainable in law. [Paras 32, 40, 41, 44, 48]Order summoning the appellants is set aside for want of recorded satisfaction and valid reasons; the Special Judge may, upon proper examination of the material, pass fresh orders if satisfied of prima facie incriminating material.Alter ego and attribution of mens rea to a corporation - vicarious liability in criminal law - powers to summon additional persons and Section 319 CrPC - Permissible scope and directional application of the doctrine of attribution / 'alter ego' in corporate criminal liability. - HELD THAT: - The Court analysed authoritative authorities (including Iridium and Standard Chartered Bank) to explain that the doctrine of attribution imputes the criminal intent of the human agents who constitute the directing mind and will to the corporate body; this doctrine traditionally operates to attribute individual mens rea to the company, not to transfer the company's culpability to individuals as a matter of routine. Criminal vicarious liability cannot be presumed; absent a statutory deeming provision or specific material showing active participation and mens rea of the individual, acts of a company are not automatically to be imputed to its directors/officers. The Special Judge applied the principle in reverse-attributing the company's acts to individual directors merely because of their positions-an approach inconsistent with settled law. That said, if during trial material surfaces, the court retains power under Section 319 CrPC to bring additional persons into proceedings. [Paras 35, 36, 37, 38, 39]The Special Judge misapplied the doctrine of 'alter ego'; imputation of corporate acts to directors/persons in charge requires specific material or statutory backing and cannot be automatic.Final Conclusion: Appeals by Sunil Bharti Mittal and Ravi Ruia are allowed and the Special Judge's order summoning them is set aside; interlocutory challenge by Telecom Watchdog dismissed. The Special Judge is free to reconsider the materials and, if satisfied after proper application of mind that sufficient incriminating material exists, to pass fresh orders; alternatively, the court may, at trial, act under Section 319 CrPC if incriminating evidence against the individuals emerges. Issues Involved:1. Alleged irregularities in the grant of Unified Access Services Licenses (UASL) and additional spectrum.2. Court-monitored investigation by the Central Bureau of Investigation (CBI).3. Criminal liability of corporate entities and their directors.4. Summoning of individuals not named in the charge-sheet.5. Application of the principle of 'alter ego' in criminal liability.6. Vicarious liability in criminal law.Detailed Analysis:1. Alleged Irregularities in the Grant of UASL and Additional Spectrum:The case revolves around the alleged irregularities in the grant of UASL during the tenure of the then Minister of Telecommunications in 2008, leading to substantial losses to the public exchequer. The CBI registered a case (RC DAI 2009 A 0045) on October 21, 2009, popularly known as the '2G Spectrum Scam Case.' The investigation was extended to cover the period from 2001 to 2007, including the grant of additional spectrum in 2002 during the tenure of late Shri Pramod Mahajan as Minister of Communications.2. Court-Monitored Investigation by the CBI:The Supreme Court directed the CBI to conduct a thorough investigation into the irregularities highlighted in the reports of the Central Vigilance Commission and the Comptroller and Auditor General. The investigation was to focus on the loss caused to the public exchequer and the corresponding gain to the licensees/service providers. The Court also set up a Special Court for the trial of the 2G case and appointed a Senior Advocate as the Special Public Prosecutor.3. Criminal Liability of Corporate Entities and Their Directors:The CBI charge-sheeted Mr. Shyamal Ghosh, the then Secretary (Telecom), and three Cellular Companies: M/s Bharti Cellular Limited, M/s Hutchison Max Telecom (P) Limited, and M/s Sterling Cellular Limited. The main allegation was that additional spectrum beyond 6.2 MHz up to 10 MHz was approved at an additional revenue share of 1% only, causing a cumulative loss of Rs. 846.44 crores to the Government Exchequer. The Special Judge, while taking cognizance of the case, also issued summons to Mr. Sunil Bharti Mittal, Mr. Asim Ghosh, and Mr. Ravi Ruia, who were not named in the charge-sheet but were deemed to be in control of the respective companies.4. Summoning of Individuals Not Named in the Charge-Sheet:The appellants, Mr. Sunil Bharti Mittal and Mr. Ravi Ruia, challenged the order summoning them as accused persons. The Supreme Court noted that while the trial court has the power to summon individuals not named in the charge-sheet if sufficient material is found, the Special Judge in this case did not record his satisfaction based on material evidence. Instead, the summoning was based on the incorrect legal principle of 'alter ego.'5. Application of the Principle of 'Alter Ego' in Criminal Liability:The principle of 'alter ego' was applied in reverse by the Special Judge, attributing the acts of the company to the individuals controlling it. The Supreme Court clarified that while the criminal intent of the 'alter ego' of the company can be imputed to the company, the reverse is not true unless there is specific statutory provision or sufficient evidence of the individual's active role coupled with criminal intent.6. Vicarious Liability in Criminal Law:The Supreme Court reiterated that there is no vicarious liability in criminal law unless specifically provided by statute. The Court cited several judgments to emphasize that an individual can only be made vicariously liable if there is a statutory provision to that effect or if there is sufficient evidence of the individual's direct involvement in the criminal act.Conclusion:The Supreme Court set aside the order summoning Mr. Sunil Bharti Mittal and Mr. Ravi Ruia, noting that the Special Judge did not apply the correct legal principles and did not record his satisfaction based on material evidence. The Court allowed the Special Judge to re-examine the material on record and, if sufficient incriminating material is found, to pass appropriate orders. The Court also clarified that if sufficient evidence surfaces during the trial, the Special Judge can exercise his powers under Section 319 of the Code of Criminal Procedure to summon the appellants.