Final Draft:-

“Sunil Bharti Mittal v. Central Bureau of Investigation

2015 Cri LJ 1130 (SC)”

Submitted by:

Name: Aditi Banerjee

Roll No.: 2225

Year of Study: 4th Semester, 2nd Year

Course: B.B.A. LL.B. (Hons.)

Submitted to:

Dr. Meeta Mohini

(Faculty of Law of Evidence)

Chanakya National Law University, Patna.

[1]
 ACKNOWLEDGEMENT

Writing a project is one of the most difficult academic challenges I have ever faced. Though
this project has been presented by me but there are many people who remained in veil, who
gave their support and helped me to complete this project.

First of all, I am very grateful to my subject teacher Dr. Meeta Mohini without the kind
support and help of whom the completion of the project would have been a herculean task for
me. She took out time from her busy schedule to help me to complete this project and
suggested me from where and how to collect data.

I acknowledge my family and friends who gave their valuable and meticulous advice which
was very useful and could not be ignored in writing the project. I want to convey most sincere
thanks to my faculties for helping me throughout the project.

Thereafter, I would also like to express my gratitude towards our seniors who played a vital
role in the compilation of this research work. I would also like to express my gratitude
towards the library staff of my college which assisted me in acquiring the sources necessary
for the compilation of my project.

Last, but not the least, I would like to thank the Almighty for obvious reasons.

Aditi Banerjee

[2]
 DECLARATION

I hereby declare that the work reported in the B.B.A. LL.B. (Hons.) Project Report entitled
“Sunil Bharti Mittal v. Central Bureau of Investigation, 2015 Cri LJ 1130 (SC)” submitted at
Chanakya National Law University, Patna is an authentic record of my work carried out
under the supervision of Dr. Meeta Mohini. I have not submitted this work elsewhere for any
other degree or diploma. I am fully responsible for the contents of my Project Report.

[3]
 Contents

ACKNOWLEDGEMENT ..................................................................................................... 2

DECLARATION .................................................................................................................. 3

RESEARCH METHODOLOGY .......................................................................................... 5

AIMS AND OBJECTIVES ............................................................................................... 5

HYPOTHESIS .................................................................................................................. 5

SCOPE AND LIMITATION ............................................................................................. 5

METHOD OF RESEARCH............................................................................................... 5

SOURCES OF DATA ....................................................................................................... 5

RESEARCH QUESTIONS ............................................................................................... 5

METHOD OF DATA COLLECTION ............................................................................... 6

Chapter 1: Facts of the Case .................................................................................................. 7

Chapter 2: Issues Outlined..................................................................................................... 9

Chapter 3: Arguments ......................................................................................................... 10

3.1. Arguments advanced on behalf of the Appellants ...................................................... 10

3.2. Arguments advanced on behalf of the Respondents ................................................... 11

Chapter 4: Relevant Provisions of Indian Evidence Act, 1872 ............................................. 13

4.1. Section 3: Circumstantial Evidence ........................................................................... 13

4.2. Section 8: Motive, preparation and conduct of the summoned directors. ................... 14

4.3. Section 9: Inference that the Appellants were Alter Ego of the Companies ................ 16

4.4. Section 10: Criminal Conspiracy between the Appellants and the Accused Persons
mentioned in the Charge-Sheet ........................................................................................ 16

Chapter 5: Highlights of the Judgement ............................................................................... 18

Chapter 6: Concluding Remarks .......................................................................................... 21

BIBLIOGRAPHY ............................................................................................................... 23

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 RESEARCH METHODOLOGY

AIMS AND OBJECTIVES

1. To analyse the judgement of Sunil Bharti Mittal v. Central Bureau of Investigation,
2015 Cri LJ 1130 (SC).
2. To study the relevant provisions of the Indian Evidence Act, 1872, related to the
judgement.

HYPOTHESIS
The researcher is of the view that the appellants cannot be held to be the “alter ego” of their
respective companies, as there is no statutory provision to hold them vicariously liable for the
crimes committed by the companies and there is no satisfactory evidence on record to
proceed against them.

SCOPE AND LIMITATION

 The resources on which the researcher resorts for data and information collection is
limited.
 There is time restraint which bounds the researcher.
 And, this research is limited to a particular area.

METHOD OF RESEARCH
 The methodology adopted for this research work is traditional i.e., doctrinal and non-
doctrinal.

SOURCES OF DATA
 The researcher focuses on obtaining information from both the available sources; they
are (1) primary sources of data, (2) secondary sources of data.
 Primary sources of data include first-hand information available like journals, district
plan goals, etc. and secondary sources include magazines, journals, etc.

RESEARCH QUESTIONS
The study seeks for the answer of following research question.

 Could the principle of “Alter Ego” be applied in the present case?

 Are there enough incriminating evidence to proceed against the appellants?

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 METHOD OF DATA COLLECTION

 For the purpose of research work, the researcher has adopted doctrinal research
method. In Doctrinal Research Method, the researcher has collected information
through library study, books and through surfing the web.

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 Chapter 1: Facts of the Case

In the year 2008, during the tenure of the then Minister of Telecommunications, Unified
Access Services Licenses ("UASL") were granted. After sometime, an information was
disclosed to the Central Bureau of Investigation (CBI) alleging various forms of irregularities
committed in connection with the grant of the said UASL which resulted in huge losses to the
public exchequer. On the basis of such source information, the CBI registered a case bearing
RC DAI 2009 A 0045 on 21st October, 2009. It is now widely known as "2G Spectrum Scam
Case".

The CBI registered another RC being RC DAI 2011 A 0024 on 17th November, 2011 for the
offences punishable under Sections 120-B IPC r/w 13 (2) and 13 (1)(d) of the Prevention of
Corruption Act, 1988 (for short, 'PC Act') in grant of additional spectrum in the year 2002
during the tenure of late Shri Pramod Mahajan as Minister of Communications. In this RC,
apart from Shri Pramod Mahajan, others who were named were Mr. Shyamal Ghosh, the then
Secretary (Telecom), Mr. J.R. Gupta, the then Deputy Director General (VAS) and three
Cellular Companies viz. M/s Bharti Cellular Limited, M/s Hutchison Max Telecom (P)
Limited and M/s Sterling Cellular Limited. After registering the said RC, the CBI started
investigation into the allegations contained therein. The matter was being monitored by the
Supreme Court of India.

On completion of the investigation, charge-sheet was filed by the CBI in the Court of Shri
O.P. Saini, the learned Special Judge, CBI, on 21st December, 2012. As per the allegations in
the FIR, the accused public servants entered into a criminal conspiracy with the accused
beneficiary companies in taking the aforesaid decision which caused undue cumulative
pecuniary advantage of Rs.846.44 crores to the beneficiary companies and corresponding loss
to the Government Exchequer, by charging an additional 1% AGR only for allotting
additional spectrum from 6.2 MHz upto 10 MHz (paired) instead of charging 2% AGR, as
per the existing norms. In the charge-sheet, CBI named Mr. Shyamal Ghosh and the aforesaid
three companies namely M/s Bharti Cellular Limited, M/s Hutchison Max Telecom (P)
Limited and M/s Sterling Cellular Limited as the accused persons in respect of offences
under Section 13(2) read with 13(1)(d) of the PC Act and allied offences.

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The learned Special Judge passed orders dated 19th March, 2013 recording his satisfaction to
the effect that there was enough incriminating material on record to proceed against the
accused persons. At the same time, the learned Special Judge also found that Mr.Sunil Bharti
Mittal was Chairman-cum-Managing Director of Bharti Cellular Limited, Mr. Asim Ghosh
was Managing Director of Hutchison Max Telecom (P) Limited and Mr. Ravi Ruia was a
Director in Sterling Cellular Limited, who used to chair the meetings of its Board. According
to him, in that capacity, these persons, prima facie, could be treated as controlling the affairs
of the respective companies and represent the directing mind and will of each company. They
were, thus, "alter ego" of their respective companies and the acts of the companies could be
attributed and imputed to them. On this premise, the Special Judge felt that there was enough
material on record to proceed against these three persons as well. Thus, while taking
cognizance of the case, he decided to issue summons not only to the four accused named in
the charge-sheet but the aforesaid three persons as well.

Two of the aforesaid three persons are the appellants in the present case before the Hon’ble
Supreme Court of India. The present case was decided by Justice A.K. Sikri on 9th January,
2015, in which he allowed the appeal and set aside the summon order of the Special Court.

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 Chapter 2: Issues Outlined

The fulcrum of the issue before the Hon’ble Supreme Court was the validity of that part of
the impugned order vide which the two appellants who were not named in the charge-sheet,
have been summoned by the Special Judge. Therefore, the issue in the present case is whether
there was sufficient evidence to proceed against the accused persons?

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 Chapter 3: Arguments Advanced from Each Side

Harish Salve and Fali Nariman, learned senior counsel, argued the case on behalf of the
appellant Sunil Bharti Mittal in an attempt to take him out of the clutches of the impugned
order. Mr.K.V. Viswanathan, learned senior counsel, led the attack to the said order on behalf
of the appellant Ravi Ruia. Their onslaught was tried to be blunted by Mr. K.K. Venugopal,
learned senior counsel appearing for the CBI. Challenge of the appellants was also sought to
be thwarted by Mr. Prashant Bhushan, learned counsel appearing for CPIL, and Mr. Sunil
Malhotra, counsel who argued on behalf of Telecom Watchdog.

3.1. Arguments Advanced on Behalf of the Appellants

In the second part of the order, the Special Judge found that the three persons (including the
two appellants) were, prima facie, controlling the affairs of the said three companies and,
therefore, they represented the directing mind and will of each company. On that basis, these
three persons were treated as "alter ego" of their respective companies and in the opinion of
the learned Special Judge, the acts of the companies were "to be attributed and imputed to
them". That was the reason given by the Special Judge finding enough material to proceed
against them also which resulted in issuing of summons against these three persons including
the appellant. The neat submission of Mr. Salve was that the aforesaid reason given by the
learned Special Judge was clearly erroneous in law.

He submitted that it has never been a case where for the act of the company, an individual is
made accused, unless there is a categorical provision in the statute making such a person
vicariously liable or there is enough material to attribute the alleged acts of criminality to the
said person. For his aforesaid submissions, he placed heavy reliance upon the decision of this
Court in Iridium India Telecom Ltd. v. Motorola Inc.1 He further submitted that merely on
the basis of the appellant's status in the company, it could not be presumed that it is the
appellant who became a party to the alleged conspiracy, as was held in Maharashtra State
Electricity Distribution Co. Ltd. v. Datar Switchgear Ltd. 2 Mr. Salve also referred to the

1
Iridium India Telecom v. Motorola Inc, (2011) 1 SCC 74.
2
Maharshtra State Electricity Co. v. Datar Switchgear Ltd., (2010) 10 SCC 476.

[10]
following observations in S.K. Alagh v. State of U.P.3 Reliance was also placed on the
decision in the case of Aneeta Hada v. Godfather Travels & Tours (P) Ltd. 4

In addition to the above, another submission of Mr. Salve was that in the present case, role of
the appellant was specifically looked into and investigated by the CBI and an opinion was
formed that there was no material to implicate him. Since the appellant was consciously
omitted from the array of the accused persons after thorough discussions and deliberations by
the investigating agency at the appropriate level, and it was specifically so stated in the
charge-sheet itself, in a situation like this even if the learned Judge wanted to differ from the
investigating agency and decided to take cognizance against the appellant, he should have
given valid reasons for proceeding against the appellant which could include his opinion that
there was sufficient material against the appellant to be proceeded against.

3.2. Arguments Advanced on Behalf of the Respondents

Mr. K. K. Venugopal, learned senior counsel appearing for the CBI, referred to the various
portions of the charge-sheet where allegations against the accused persons are stated and
outcome of the investigation revealed. He argued that once the companies are charged with
mens rea offences, they require guilty mind as these are not strict liability offences. However,
the companies would act through their Directors/Officers only and the mens rea/guilty mind
would be of those persons who are controlling the affairs of the companies.

He referred to the counter affidavit filed by the CBI, which mentions that there is evidence on
record to show that the appellant Mr. Sunil Mittal had met late Shri Pramod Mahajan during
2001-2002 for getting allocated additional spectrum beyond 6.2 MHz for tele-service area of
his company. There was also evidence of meetings between the appellant and Mr. Shyamal
Ghosh for the same purpose during the same period which would constitute the
circumstantial evidence to implicate these persons. The thrust of his submission, thus, is that
it is the "human agency" in the accused companies who was responsible as it was a mens rea
offence and such an agency/person has to be the top person, going by the circumstantial
evidence.

Respondent counsel referred to Para 3 of the order wherein the Special Judge has observed
that he had perused the FIR, charge-sheet, statement of witnesses and documents on record
3
S.K. Alagh v. State of U.P., (2008) 5 SCC 662.
4
Aneeta Hada v. Godfather Travels, (2012) 5 SCC 661.

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was relatable to the three individuals, including the two appellants as well. He even submitted
that in the absence of individual accused persons, who were in charge of the affairs of the
three accused companies, it may become difficult to proceed against the accused companies
alone as it was a mens rea offence. The counsel heavily relied on M.C. Mehta (Taj Corridor
scam) v. Union of India,5 Kishun Singh v. State of Bihar,6 Dharam Pal v. State of Haryana,7
and Lee Kun Hee, President, Samsung Corpn., South Korea v. State of Uttar Pradesh. 8

Respondent counsel concluded his submission by reiterating that when it was a case of
circumstantial evidence which appeared on record in abundance, the trial court was right in
summoning the appellants and in fact, judgment in Keshav Mahindra v. State of M.P. 9 fully
supported the impugned order. Mr. Prashant Bhushan, appearing for intervenor, highlighted
the role of the appellant Mr. Sunil Bharti Mittal from the records and particularly the extract
of file noting which inter alia contained the views of the Superintendent of Police. He, thus,
submitted that this constituted sufficient material to proceed against him and since it was only
a summoning order, the appellants were free to seek discharge before the trial court.

5
M.C. Mehta v. Union of India, (2007) 1 SCC 110.
6
Kishun Singh v. State of Bihar, (1993) 2 SCC 16.
7
Dharam Pal v. State of Haryana, (2014) 3 SCC 306.
8
Lee Kun Hee v. State of U.P., (2012) 3 SCC 132.
9
Keshub Mahindra v. State of M.P., (1996) 6 SCC 129.

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 Chapter 4: Relevant Provisions of Indian Evidence Act, 1872

4.1. Section 3: Circumstantial Evidence

The word “evidence” in Section 3 only signifies the instruments by means of which relevant
facts are brought before the court.10 The instruments adopted for this purpose are witnesses
and documents.11 Circumstantial Evidence is one of the classes of Evidence, which relates to
a series of other facts than the fact in issue, but by experience have been found so associated
with the fact in issue in relation of cause and effect that it leads to a satisfactory conclusion.
The circumstantial evidence is always direct and primary, i.e. the facts from which the
existence of the facts in issue to be inferred must be proved by direct evidence.12

A case which rests squarely on circumstantial evidence the inference of guilt can be justified
only when all the incriminating facts and circumstances are found to be incompatible with the
innocence of the accused or guilt of any other person. 13 The burden of proof is always on the
party who asserts the existence of any fact which infers legal accountability. 14 In the case of
Sharad Birdichand Sarda v. State of Maharashtra,15 the apex court described five golden
principles of the proof of a case based on circumstantial evidence, as laid down in the case of
Hanumant v. State of M.P.16 These rules are:

1. The circumstances from which the conclusion of guilt is to be drawn should be fully
established.
2. The facts so established should be consistent only with the hypothesis of guilt of the
accused, that is to say, they should not be explainable on any other hypothesis except
that the accused is guilty.
3. The circumstances should be of conclusive nature and tendency.
4. They should exclude every possible hypothesis except the one to be proved.
5. There must be a chain of event so complete as not to leave any reasonable ground for
the conclusion consistent with the innocence of the accused and must show that in all
human probability that act must have been done by the accused.

10
Batuk Law, The Law of Evidence, 33 (23rd ed., 2020).
11
The Indian Evidence Act, 1872, Act No. 1 of 1872, § 3.
12
Batuk Law, The Law of Evidence, 63 (23rd ed., 2020).
13
Batuk Law, The Law of Evidence, 64 (23rd ed., 2020).
14
Alfred Wills, Circumstantial Evidence, 287 (6th ed., 1912).
15
Sharad Birdichand Sarda v. State of Maharashtra, AIR 1984 SC 1682.
16
Hanumant v. State of M.P, AIR 1952 SC 343.

[13]
In the present case, the thrust of respondent’s submission was that it is the "human agency" in
the accused companies who was responsible as it was a mens rea offence and such an agency
has to be the top person, going by the circumstantial evidence. The respondent counsel
referred to the evidence of meeting between the appellants and other accused persons
mentioned in the charge-sheet. Respondents tried to project that it was a conspiracy of major
level to benefit the accused companies.

In case of circumstantial evidence, the onus lies upon the prosecution to prove the complete
chain of events which shall undoubtedly point towards the guilt of the accused. 17 However, in
the present case, circumstances (conspiracy) from which the conclusion of guilt is to be
drawn wasn’t established. Also, the respondents failed to establish complete chain of events
that leads to the guilt of the appellants, as appellants were not mentioned as accused persons
in CBI’s reports and the Special Judge in the impugned order did not state that after
examining the relevant documents and statements, he was satisfied that there was sufficient
incriminating material on record to proceed against the appellants.

4.2. Section 8: Motive, Preparation and Conduct of the Summoned Directors.

4.2.1. Motive

Any fact is relevant which shows or constitutes a motive or preparation for any fact in issue
or relevant fact.18 A motive is that which moves a man to do a particular act.19 Existence of a
motive for committing a crime is not an absolute requirement of law but it is always a
relevant factor.20 In case of circumstantial evidence, motive assumes importance.21 If the
motive is made reasonably doubtful, it is enormously in favour of the prisoner.22 In case of
circumstantial evidence, if after giving due consideration to the want of proof of motive, the
court is satisfied that the circumstances proved give one conclusion only that the accused is
guilty, he may convict the accused.23

In the present case, CBI named three companies namely M/s Bharti Cellular Limited, M/s
Hutchison Max Telecom (P) Limited and M/s Sterling Cellular Limited as the accused

17
Sahadevan v. State of T.N., AIR 2012 SC 2435.
18
The Indian Evidence Act, 1872, Act No. 1 of 1872, § 8.
19
Batuk Law, The Law of Evidence, 116 (23rd ed., 2020).
20
Batuk Law, The Law of Evidence, 118 (23rd ed., 2020).
21
Subodhnath v. State of Tripura, AIR 2013 SC 3726.
22
Batuk Law, The Law of Evidence, 118 (23rd ed., 2020).
23
Rajendra Kumar v. State of Punjab, AIR 1966 SC 1322.

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persons for criminal conspiracy, which caused undue cumulative pecuniary advantage of
Rs.846.44 crores to the beneficiary companies and corresponding loss to the Government
Exchequer. Mr.Sunil Bharti Mittal was Chairman-cum-Managing Director of Bharti Cellular
Limited, Mr. Asim Ghosh was Managing Director of Hutchison Max Telecom (P) Limited
and Mr. Ravi Ruia was a Director in Sterling Cellular Limited, who used to chair the
meetings of its Board. According to the learned Special Judge, in that capacity, these persons,
prima facie, could be treated as controlling the affairs of the respective companies and
represent the directing mind and will of each company. Therefore, owing to their positions in
the company, it could be said that the appellants had motive to hatch the criminal conspiracy
for the benefit of their respective companies.

4.2.2. Preparation

Evidence tending to show that the accused made preparation to commit a crime is always
admissible.24 Preparation only evidences a design or plan to do a certain thing as planned.25
In the present case, respondent counsels have submitted the evidence of the presence of
appellants in the meetings with the accused persons, which allegedly led to the criminal
conspiracy. Therefore, appellants can be considered to make preparations. However, the
appellants cannot be held to be the alter egos of their respective companies and they cannot
be held liable in their individual capacities.

4.2.3. Conduct

The conduct of an accused is relevant under S. 8 of the Indian Evidence Act, 1872. 26 In the
present case, as per the allegations in the FIR, the accused public servants entered into a
criminal conspiracy with the accused beneficiary companies in taking the aforesaid decision
which caused undue cumulative pecuniary advantage of Rs.846.44 crores to the beneficiary
companies and corresponding loss to the Government Exchequer, by charging an additional
1% AGR only for allotting additional spectrum from 6.2 MHz upto 10 MHz (paired) instead
of charging 2% AGR, as per the existing norms. Although the respondent counsels submitted
that the appellants were part of the meeting where criminal conspiracy was hatched, they
were representing the accused companies. The Supreme Court also observed that the
submissions related to criminal conspiracy were beyond the scope of the appeal in hand.
24
Batuk Law, The Law of Evidence, 122 (23rd ed., 2020).
25
Batuk Law, The Law of Evidence, 122 (23rd ed., 2020).
26
The Indian Evidence Act, 1872, Act No. 1 of 1872, § 8.

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 4.3. Section 9: Inference that the Appellants were Alter Ego of the Companies

As per S. 9 of the Indian Evidence Act, facts necessary to explain or introduce a fact in issue
or relevant fact, or which support or rebut an inference suggested by a fact in issue or relevant
fact, or which establish the identity of anything or person whose identity is relevant, or fix the
time or place at which any fact in issue or relevant fact happened, or which show the relation
of parties by whom any such fact was transacted, are relevant in so far as they are necessary
for that purpose.27 Certain evidences either support or contradict the inference suggested by
the facts in issue or relevant facts and for that they are relevant. Facts showing relationship of
parties by whom such facts was transacted are relevant.28

In the present case, the learned Special Judge, by the fact that the appellants were directors of
their respective companies, inferred that the appellants were "alter ego" of their respective
companies and the acts of the companies could be attributed and imputed to them. However,
the learned Special Judge has wrongfully applied the principle of alter ego, and no statutory
provision states that directors can be held vicariously liable for the acts of the company. Also,
the Special Judge has not stated in the order that he was satisfied that there was enough
evidence to proceed against the appellants. Therefore, it cannot be inferred that the appellants
were alter ego of their respective companies, as there wasn’t enough evidence regarding the
same.

4.4. Section 10: Criminal Conspiracy between the Appellants and the Accused Persons
mentioned in the Charge-Sheet

Section 10 renders that anything written or said or done by any one of the conspirators in
reference to their common intentions as relevant fact not only against each conspirator but
proving the conspiracy itself.29 Further the said fact can be used for showing that a particular
person was party to the conspiracy.30

In the present case, although the respondent counsels have submitted that the appellants were
part of the criminal conspiracy, the CBI in its reports has not accused the appellants for
hatching the criminal conspiracy. Appellant counsel appearing on behalf of appellant Ravi

27
The Indian Evidence Act, 1872, Act No. 1 of 1872, § 8.
28
Batuk Law, The Law of Evidence, 148 (23rd ed., 2020).
29
The Indian Evidence Act, 1872, Act No. 1 of 1872, § 10.
30
Batuk Law, The Law of Evidence, 149 (23rd ed., 2020).

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Ruia even submitted that Mr. Ruia was not even called for interrogation by CBI as there was
no material against him.

[17]
 Chapter 5: Highlights of the Judgement

The Hon’ble Supreme Court had set aside the order summoning the appellants. The apex
court observed the following in its judgement:

1. The Supreme Court observed that at that juncture itself, the submissions related to the
alleged criminal conspiracy was beyond the scope of the appeals in hand, as insofar as
four persons who were made accused of criminal conspiracy in the charge-sheet by
the CBI was concerned, they were concededly not before the apex court as their
summoning order were not challenged.
2. In the first instance, the apex court made it clear that there is no denying the legal
position that even when a person is not named in the charge sheet as an accused
person, the trial court has adequate powers to summon such a non-named person as
well, if the trial court finds that the charge sheet and the documents/material placed
along with the charge-sheet disclose sufficient prima facie material to proceed against
such a person as well. However, in the present case, SC observed that the question
was not as to whether there was sufficient material against the appellants filed in the
trial court to proceed against them. Whether such a material was there or not was not
reflected from the impugned order as that aspect was not even gone into. The learned
Special Judge did not state in the order that after examining the relevant documents,
including statement of witnesses, he was satisfied that there was sufficient
incriminating material on record to proceed against the appellants as well.
3. The reason for summoning these persons and proceeding against them, prima facie,
are:
a) These persons were/are in the control of affairs of the respective companies.
b) Because of their controlling position, they represent the directing mind and
will of each company.
c) State of mind of these persons is the state of mind of the companies. Thus,
they are described as "alter ego" of their respective companies.
It is on this basis alone that the Special Judge recorded that "in this fact situation, the
acts of companies are to be attributed and imputed to them". As per the principle of
“alter ego”, if the person or group of persons who control the affairs of the company
commit an offence with a criminal intent, their criminality can be imputed to the

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 company as well as they are "alter ego" of the company.31 In the present case,
however, this principle is applied in an exactly reverse scenario. Here, company was
the accused person and the learned Special Magistrate had observed in the impugned
order that since the appellants represent the directing mind and will of each company,
their state of mind was the state of mind of the company and, therefore, on this
premise, acts of the company was attributed and imputed to the appellants. The SC
observed that it was difficult to accept it as the correct principle of law by stating, “As
demonstrated hereinafter, this proposition would run contrary to the principle of
vicarious liability detailing the circumstances under which a direction of a company
can be held liable.”32
4. If such a company commits an offence involving mens rea, it would normally be the
intent and action of that individual who would act on behalf of the company. It would
be more so, when the criminal act is that of conspiracy. However, at the same time, it
is the cardinal principle of criminal jurisprudence that there is no vicarious liability
unless the statute specifically provides so. Thus, an individual who has perpetrated the
commission of an offence on behalf of a company can be made accused, along with
the company, if there is sufficient evidence of his active role coupled with criminal
intent. Second situation in which he can be implicated is in those cases where the
statutory regime itself attracts the doctrine of vicarious liability, by specifically
incorporating such a provision. The Penal Code, 186033 save and except in some
matters does not contemplate any vicarious liability on the part of a person. The
Managing Director or the Directors of the Company, thus, cannot be said to have
committed an offence only because they are holders of offices. The Managing
Director and the Directors of the Company should not have been summoned only
because some allegations were made against the Company.
5. Person who has not joined as accused in the charge-sheet can be summoned at the
stage of taking cognizance under Section 190 of CrPC. 34 It is also trite that even if a
person is not named as an accused by the police in the final report submitted, the
Court would be justified in taking cognizance of the offence and to summon the
accused if it feels that the evidence and material collected during investigation
justifies prosecution of the accused. Thus, the Magistrate is empowered to issue

31
Sunil Bharti Mittal v. CBI, (2015) 4 SCC 609, at ¶ 40.
32
Sunil Bharti Mittal v. CBI, (2015) 4 SCC 609, at ¶ 41.
33
The Indian Penal Code, 1860, Act No. 45 of 1860.
34
The Code of Criminal Procedure, 1973, Act No. 2 of 1974, § 190.

[19]
 process against some other person, who has not been charge-sheeted, but there has to
be sufficient material in the police report showing his involvement. However, there
has to be a proper satisfaction in this behalf which should be duly recorded by the
Special Judge on the basis of material on record. No such exercise is done.

Therefore, in the lights of the above observations, the appeals were allowed.

[20]
 Chapter 6: Concluding Remarks

The present case, related to the 2G Spectrum Scam, is a case of Corporate Criminal Liability,
in which the learned Special Judge had applied the principle of “Alter Ego” in reverse to
proceed against the appellants, who were the directors of the accused companies. The
Hon’ble Supreme Court observed that the learned Special Judge was empowered to proceed
against the appellants, whose names were not mentioned in the CBI’s charge-sheet, if either
there is any statutory provision to hold the appellants vicariously liable for the acts of the
accused companies, or when there is enough evidence to proceed against them.

Both the criteria, under which appellants could be held vicariously liable, did not meet. The
Indian Penal Code, 1860 does not provide for vicarious liability of directors when their
company is accused of a crime. And, the learned Special Judge, in the instant case, did not
state that there was enough satisfactory evidence to proceed against the appellants. The
inference drawn by him by reversely applying the principle of “alter ego” is also not
acceptable in law.

The respondent counsels heavily relied on circumstantial evidence that the appellants were
part of the conspiracy and were the guilty minds of the companies, but they failed to establish
complete chain of events that leads to the guilt of the appellants. While looking into the
motive, preparation and conduct of the appellants while considering circumstantial evidence,
it can be proved that the appellants had motive to hatch the criminal conspiracy for the
benefit of their respective companies. But, they cannot be proved to be preparing or
conducting the crime in their individual capacities. Also, there were not enough materials
against them in the CBI’s reports and they were not mentioned by the CBI in its charge-sheet
as “accused persons”.

Also, it cannot be inferred, from the fact that the appellants were managing the affairs of the
accused companies, that they were the alter ego of the companies. The appellants cannot be
vicariously held liable for the crimes of the company even when they were managing the
affairs of the companies, as there was no satisfactory evidence against them. Further, Section
10 of the Evidence Act will not apply, as the CBI in its reports did not accuse the appellants
for hatching the criminal conspiracy, and the criminal conspiracy was not related to the main
issue in hand.

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Therefore, owing to the fact that no incriminating evidence against the appellants was found
by the learned Special Judge that satisfied him, the Supreme Court found no merit in the
second half of the order that had summoned the appellants for proceeding against them. The
inference drawn from reversely applying the principle of “alter ego” cannot be sustained to be
reasonable incriminating evidence to proceed against the appellants. Therefore, the researcher
concludes that the Hon’ble Supreme Court was justified in allowing the appeal and setting
aside the summon order of the Special Court.

[22]
 BIBLIOGRAPHY

 The Indian Evidence Act, 1872

 The Code of Criminal Procedure, 1973
 The Indian Penal Code, 1860
 Batuk Lal, The Law of Evidence, Central Law Agency, 23rd Edition, 2020
 Alfred Wills, Circumstantial Evidence, Butterworth & Co., 6th Edition, 1912
 SCC Online, https://www.scconline.com/Members/Search.aspx.
 Indian Kanoon, https://indiankanoon.org/.

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