Order issuing summons to Sunil Mittal and others in 2G Scam case by Special Judge, CBI, set aside

Supreme Court: Making a significant development in the 2G Spectrum scam case, while deciding the validity of the order  of 19.03.2013 passed by the Special Judge, CBI vide which the appellants who were not named in the charge sheet by CBI had been summoned by him, the 3 Judge Bench of H.L. Dattu, C.J., M.B. Lokur and A.K. Sikri, JJ, held that the impugned order is unsustainable in its present form as it implicates the appellants to be summoned as accused persons on basis of an erroneous presumption of law by way of reverse application of principle of ‘alter ego’.

The present case arises from the notorious 2G spectrum scam involving telecom bigwigs and ministers alike whereby a Special Court was setup trying the persons involved in the scam. The Special Judge in his findings observed that the appellants who are the chairpersons and managing directors of their respective companies therefore in this capacity they are the ‘alter egos’ of their companies hence acts of the companies could be attributed to them, and thus taking cognizance of the case the appellants were issued summons. Noted counsel Harish Salve and Fali Nariman, on behalf of the appellants argued that the Special Judge has erroneously applied the principle of ‘alter ego.’ Also the appellants were not made an accused by the CBI. The counsel for the CBI, K.K. Venugopal contended that once a company is charged with a mens rea offence, the guilty mind would be of those persons who are at the helm of the affairs in the company. Further, noted counsel Prashant Bhushan put forth the argument that the appellants’ role in the scam is clearly made out from the records and file notings, constituting enough material to be proceeded against him.

Upon perusing the background facts and arguments, the Court deemed it fit to look into the principle of ‘alter ego’ which means that 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 company as well. The Court stated that in the present case, the principle has been applied in reverse which runs contrary to the principle of vicarious liability therefore incorrect in law. Thus, the Court set aside the order summoning the appellants; however the Court also stated that in course of trial if sufficient incriminating evidence surfaces against the appellants then the Special Judge is at liberty to exercise his powers under Section 319 of CrPC. Sunil Bharti Mittal v. Central Bureau of Investigation, 2015 SCC OnLine SC 18, decided on 09.01.2015