Sunil Bharti Mittal v. Central Bureau of Investigation

Name of the Case	Sunil Bharti Mittal v. Central Bureau of Investigation
Court	Supreme Court
Citation	AIR 2015 SC 923; (2015) 4 SCC 609
Year of the Case	2015
Appellant	Sunil Bharti Mittal
Respondent	Central Bureau of Investigation
Bench/Judges	Chief Justice, H.L. Dattu Justice, Madan B. Lokur Justice, A.K. Sikri
Acts involved	Prevention of Corruption Act, 1988. Indian Penal Code, 1860.
Important Sections	s. 13(1)(d), s. 13(2), s. 4(1) and s. (3) of Prevention of Corruption Act, 1988; s. 120B and s. 420 of Indian Penal Code, 1860.

Abstract

This case was filed opposed to unfamiliar private companies, persons from those private companies, and officials from the Department of Telecommunication, Ministry of Telecommunication. In 2008, Unified Access Services Licenses were permitted during the then Minister of Telecommunications. Later, certain functions of illegal activities were found done with the help of Unified Access Services Licenses which cause massive losses in the National treasury and it was reported to CBI. An old civil appeal petition by Center for Public Interest Litigation an NGO with direct writ petition under article 32 of Indian Constitution to the Supreme Court through another petitioner named Dr.Subramanian Swamy was made together for concurrent hearing since both the petitions were filed for a fair monitoring of investigation. This appeal case of 2015 by the Apex Court set aside the order of the trial court dated 19^thof March 2013 and granted the appellant not liable for the illegal means of obtaining license for the company. Since the satisfied material of facts where the Special Judge issued for summon contained insufficient information of evidence and not detailed and there is no specific vicarious liability of the directors followed by written statute for the acts done in the company by way of a legal fiction.

Introduction

Sunil Bharti Mittal v. Central Bureau of Investigation was known as and aroused from the prominent case of 2G Spectrum Scam Case with two more petitions. This civil appeal was filed by the petitioner Sunil Bharti Mittal one of the directors of private company who was made liable for illegal activities done in the name of company. In 2008, Unified Access Services Licenses were permitted during the then Minister of Telecommunications. Later, certain functions of illegal activities were found done with the help of Unified Access Services Licenses which cause massive losses in the National treasury and it was reported to CBI – Central Bureau of Investigation.

After stating that the obtained Uniform Access Services License were accessed and used purely illegal and the directors as well as the private companies were made liable and for summon. To challenge the decision of the High Court of Delhi the directors of those companies were granted with civil appeal through special leave petition under article 136 of the Constitution of India, 1950.

Background

On 21^st October of 2009, the CBI filed a case, RC DAI 2009 A 0045 opposed to the directors of the private companies based on the factual report presented with them. In one hand the investigation of filed case was in the process and on the other hand another writ petition was registered in the High Court of Delhi by an NGO named Centre for Public Interest Litigation. The NGO pleaded the High Court for a well-monitored righteous investigation the need for this petition is to make the investigation more secure to lead in a fair manner. But this petition was dismissed by the High Court of Delhi. Further a special leave petition was plead by the Centre for Public Interest Litigation and the same was granted with the civil appeal. Concurrently another writ petition under article 32 of the Indian Constitution was directly filed in by Dr. Subramanian Swamy pleaded same relaxation that of the NGO ^[1].

These two civil appeal and direct petition was combined as Centre for Public Interest Litigation & Ors. v. Union of India & Ors. ^[2] in the Supreme Court and it was held that permit of license was obtained illegally means at the cost of the nation. Correspondingly the permit of license vested with the private companies were cancelled on or after 10^th of January 2008 and the Court instructed to grant with new fresh licenses to those private companies. The Court also directed to allocate the new spectrum of 2g band and prescribed clearly that observations in the said judgment would not affect the remaining investigation by the CBI, which may cause prejudice to those who may face prosecution on the basis of charge-sheet(s) filed by the CBI in future.

At that time, the High Court of Delhi stated in the 2G spectrum scam case that,

(i) (the CBI shall carry on their investigation on different issues emphasized in the report of Central Vigilance Commission that passed to director of CBI vide letter dated 12^th of October 2009 and report of the Controller and Authority General, who have prima facie found illegal activities in the grant of licenses to Hundred and twenty-two applicants. In that most of them were considered as in-eligible. This flagrant violation of terms and conditions of license leads to immense drop to the national treasury up to several thousand cores. The CBI should inquiry how the licenses were permitted to many ineligible applicants and inquiry reasons for why the Telecom Regulatory Authority of India and the Department of Telecommunication did not take any legal action against those licensees)^[3]

(ii) the CBI shall, if it has already not registered in FIR (First Information Report) the context of the alleged illegal activities committed through the permit of license from 2001 to 2006-2007, can file a case and conduct thorough investigation with particular significance regarding the loss caused to the National treasury and equivalent profit to the service providers and also regarding the complication of granting the use of dual/alternate technology by some service providers even before the decision was made notified to public through press release dated on 19^th of October 2007.^[4]

And also finally the High Court of Delhi in the 2g spectrum scam case, it was held that the directors of companies liable and for summon by the Special Judge under s. 4(1) of the Prevention of Corruption Act, 1988 for their illegal activities. The Special Judge took cognizance of those offences under s. 120B and s. 420 of Indian Penal Code, 1860 since a Magistrate is incapable of taking cognizance under s. 3(1) of the Prevention of Corruption Act of offences mentioned in s. 13(1) (d) and s. 13(2) done through obtaining license by illegal means which cause immense loss in National Treasury. Sunil Bharti Mittal one of the directors of the company aggrieved with the decision of summoning him made by the Court. He was granted with civil appeal based on Special Leave Petition under article 136 of Indian Constitution. Thus, the appeal of Sunil Bharti Mittal and with two other petitions was combined for parallel hearing in the Supreme Court.

Issues

The appellants summoned were not mentioned in the charge-sheet and lack of sufficient information in the evidence material enclosed by the CBI?
Since there are no statutory provisions regarding vicarious liability of the directors on what basis of evidence the Court alleged them?

Facts with Related Cases

Further the CBI reported the then Telecom Secretary and the three companies as well as their directors scilicet, Hachison Max Telecom (P) Ltd, Bharti Cellular Ltd, and Sterling Cellular Ltd as accused persons regarding offences committed under s. 13(1)(d) and s. 13(2) of the Prevention of Corruption Act, 1988 with other associated offences. In 19^th of March 2013, the Special Judge of this 2g spectrum scam noticed and gratified with sufficient denounced report enclosed by the CBI. This leads to prosecute the accused persons by summoning all the three companies^[5].

Simultaneously, the Special Judge also summoned the directors of same companies. It was stated by the Special Judge that the position of capacity of acting company director is mainly considered as the officials who controls the affairs of the company. The Special Judge also noticed that these directors are ‘alter ego’ i.e. they represent as another or alternative person of company. By this means the functions of the companies could be attributed and imputed to them. The appellant Shri Sunil Bharti Mittal and Shri Ravi Ruia were aggrieved with the decision by the Special Judge they appealed in the Apex Court to reverse or cancel the summoning orders.

In this case of Sunil Bharti Mittal v. Central Bureau of Investigation, it was proposed by the appellant that he was found immaterial to incrimination from the CBI investigation. Since the appellant, Sunil Bharti Mittal’s name as well as Ravi Ruia’s name was not reported in the charge-sheet which disclosed before the court. It is to be noted the Supreme Court has power to summon in case of any alleged activities proved even at any stages of the hearing thereafter if found with respect to s. 319 of the Criminal Procedure Code. The CBI proposed that there was proof of held meetings between the then Telecom Secretary with the appellant for same purpose at same period that might be indicated as a crucial evidence to incriminate the appellants ^[6].

And the CBI also highlighted the judgment of the High Court where the crucial evidence found for reasonable and acceptable with respect the rulings of Keshav Mahindra v. State of MP ^[7] It was also cleared that the company can be prosecuted for any illegal activities done and can be penalized with imprisonment since a company is an artificial person it cannot be imprisoned but the can be penalized through fines ^[]. The Supreme Court also looked another rulings of the Apex Court in the case of Kishan Singh v. State of Bihar (1993-2 SCC 16)^[8], it was held as the Sessions Court has authority to take cognizance of the offences and can summon those persons noticed in column 2 of the police report only when complicity of the obtained proof in the case favors or relates or likely denotes the persons for such offence they can be summoned even without any recorded evidence.

The Apex Court cleared that the Special Judge in the Para 3 read with Para 4 the appellants are incriminated on the basis of satisfaction of enough implicated material and it is not a state where the accused is decided on the names mentioned in the charge-sheet. And the causes for summoning the appellants relayed since they were vested with controlling authority regarding controlling affairs and they were the ‘alter ego’ (represented as another face for company) such that the mind and will of company are represented by them.

The Supreme Court viewed the rulings of Iridium India Telecom v. Motorola [(2011) 1 SCC 74]^[9] where it was stated that the principle of attribution, is to the effect that the criminal intent of the ‘Alter-ego’ of the company refers to the associated persons that guide the business of the company, would be ascribed to the company/corporation. It was held that if the person or group of persons who control the affairs of the company and committed an offence with a mens rea and their action of criminal intent can be imputed to the company also since they are ‘Alter-ego’ of the company ^[10].

Judgment

As in the case of Iridium India Telecom, the principle of attribution refers the illegal activities of the members of the company will also imputed to the company though it is an artificial person denoting ‘Alter-ego’. Here in the case of Sunil Bharti Mittal this principle of attribution is looked in the inverse position thus illegal activities committed in name of companies will also imputed the members of the company via ‘Alter-ego’. The Apex Court finds very hard to foist the application of principle of vicarious liability since it must not be contradictory to the legal principle. And there must be specific vicarious liability of the directors of the acts of the company by way of a legal fiction. Since there was no cleared vicarious liability mentioned in criminal law and it is necessary that the act of an offence arising out of vicarious liability by way of legal fiction should be stated in the Statute.

The Court also finds the Special Judge’s satisfaction of materials enclosed by CBI was not detailed and considered to be lack of sufficient information. Thus noticing all the circumstances, the Supreme Court set aside the order by Special Judge dated 19^th of March 2013 and held favorable to the appellant Sunil Bharti Mittal, since there was insufficient material of evidence to make the appellant penalize.