TMI Blog2015 (9) TMI 1339X X X X Extracts X X X X X X X X Extracts X X X X ..... report of such facts; and (c) upon information received from any person other than a police officer, or upon his own knowledge, that such offence has been committed. This Section which is the starting section of Chapter XIV is subject to the provisions of the said Chapter. The expression “taking cognizance” has not been defined in the Code. However, when the Magistrate applies his mind for proceeding under Sections 200-203 of the Code, he is said to have taken cognizance of an offence. This legal position is explained by this Court in S.K. Sinha, Chief Enforcement Officer v. Videocon International Ltd & Ors. [2008 (1) TMI 618 - SUPREME COURT OF INDIA] Taking Cognizance” does not involve any formal action of any kind. It occurs as soon as a Magistrate applies his mind to the suspected commission of an offence. - Cognizance of an offence and prosecution of an offender are two different things. Section 190 of the Code empowered taking cognizance of an offence and not to deal with offenders. Therefore, cognizance can be taken even if offender is not known or named when the complaint is filed or FIR registered. Their names may transpire during investigation or afterwards. Perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jan, Adv., Mr. Balendu Shekhar, Adv., Mr. B.V. Balram Das, Adv., Ms. Meenakshi Grover, Adv., Mr. Rohit Bhat, Adv. and Mr.D.S. Mehara, Adv. A.K. SIKRI, J. Leave granted. Introduction: 2. 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 case was registered against unknown officers of the Department of Telecommunications (DOT) as well as unknown private persons and companies. 3. While the investigation into the said case was still on, a writ petition was filed by an NGO known as Center for Public Interest Litigation (CPIL) before the High Court of Delhi seeking directions for a Court monitored investigation. Apprehension of the petitioner was that without such a monitorin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia Ors. (2012) 3 SCC 1. The Court allowed the appeal as well as the writ petition, holding that spectrum licences were illegally granted to the beneficiaries at the cost of the nation. The Court accordingly cancelled the licences granted to the private respondents on or after 10.01.2008 and issued certain directions for grant of fresh licences and allocation of spectrum in 2G Band. It was also specifically clarified that the observations in the said judgment would not, in any manner, affect the pending investigation by the CBI, Directorate of Enforcement and other agencies or cause prejudice to those who are facing prosecution in the cases registered by the CBI or who may face prosecution on the basis of charge-sheet(s) which may be filed by the CBI in future. The Court also made it clear that the Special Judge, CBI would decide the matter uninfluenced by the judgment dated February 02, 2012. Thereafter, order dated 11.04.2011 was passed in that very appeal, making its intention manifest that this Court would be monitoring the investigation by CBI in larger public interest. Special Court was set up for trial of the 2G case and a Senior Advocate was nominated as the Special Publ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereunder: At the commencement of hearing in connection with CBI Case No. RC DAI 2011 A 0024, Shri K.K. Venugopal, learned senior counsel appearing for the Central Bureau of Investigation placed before the Court a sealed envelope, which was opened in the Court. We have perused the papers contained in the sealed envelope and are of the view that the CBI shall take action in accordance with the views expressed by the Director, CBI on the issue of prosecution of public servants and the companies in connection with the said case. The report produced by Shri Venugopal shall be put in sealed cover and handed over to the counsel instructing Shri Venugopal. The needful has been done. List the case on 05.12.2012. To be taken up at 3.30 P.M. 7. On completion of the investigation, charge-sheet was filed by the CBI in the Court of Shri O.P. Saini, the learned Special Judge, on 21st December, 2012. 8. Before proceeding further, it would be prudent to mention in brief the case set up by the CBI in the charge-sheet to have the flavour of the prosecution case. Though we are not much concerned about the merits of the allegations in these proceedings, a brief account thereof w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed on case to case coordination basis to the Operators by charging additional 1% of revenue after customer base of 4-5 lacs was reached. On this note, Mr. Shyamal Ghosh agreed to the reduced subscriber base from 9 lacs to 4/5 lacs for allocation of additional spectrum and recommended to allocate additional spectrum beyond 6.2 MHz upto 10 MHz by charging only additional 1% of AGR. This note was approved by the then Minister of Communications and Information Technology on the same day i.e. 31.01.2002 itself. It resulted in issuance and circulation of General Order on 01.02.2002 to all Cellular Mobile Telecom Service (CMTS) Operators. 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 ₹ 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. 10. Thus, the allegation, in nutshell, is for grant of additional spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ie , 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. 13. Two of the aforesaid three persons are before us in these appeals. Feeling aggrieved, they have challenged the order insofar as it proceeds to implicate them as accused persons in the said charge-sheet. 14. Before proceeding to record the submissions of the learned counsel for the appellants as well as the counsel opposite, it becomes necessary to take note of the brief order dated 19th March, 2013, as this order was read and re-read time and again by each counsel with an attempt to give their own interpretation to the same. Therefore, we deem it apposite to reproduce the said order in its entirety as it would facilitate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enior 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, which has filed the appeal arising out of SLP (Crl.) Nos.3326-3327/2013 challenging another order of the even date namely 19th March, 2013 passed by the Special Judge whereby protest application filed by this appellant has been dismissed. 17. Leading the attack from the front, Mr. Harish Salve opened his submission by arguing that the impugned order was in two parts. Paras 1 to 3 pertain to the charge-sheet which was filed by the CBI naming four accused persons namely, Mr. Shyamal Ghosh and the three Cellular Companies. This fact is noted in para 2. He pointed out that in respect of these four accused persons named in the charge-sheet, after going through the copy of the FIR, charge-sheet, statement of witnesses and documents on record, the learned Judge was satisfied that there was enough incrimi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following manner: 27. A bare perusal of the complaint shows that the gravamen of the allegation is that a fabricated document containing the offending endorsement was tendered in evidence before the Arbitral Tribunal on behalf of MSEB by Accused 6, who was in charge of Shirpur Section. It is evident from the aforeextracted paragraphs of the complaint that other accused have been named in the complaint because, according to the complainant, MSEB, Accused 1 was acting under their control and management. It bears repetition that the only averment made against Appellant 2 is that Appellant 1 i.e. MSEB was acting under the control and management of Appellant 2 along with other three accused. There is no denying the fact that Appellant 2 happened to be the Chairman of MSEB at the relevant time but it is a settled proposition of law that one cannot draw a presumption that a Chairman of a company is responsible for all acts committed by or on behalf of the company. In the entire body of the complaint there is no allegation that Appellant 2 had personally participated in the arbitration proceedings or was monitoring them in his capacity as the Chairman of MSEB and it was at his ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e deemed to be liable for the offences under Section 138. Thus, the statutory intendment is absolutely plain. As is perceptible, the provision makes the functionaries and the companies to be liable and that is by deeming fiction. A deeming fiction has its own signification. 19. 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. However, reasons given in the impugned order, according to the learned senior counsel, are totally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid note allegedly to benefit the companies; and the manner in which it was approved by the Minister. This affidavit also 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. Therefore, even if in the chargesheet, names of these appellants were not included, the Special Judge was within his powers to look into the matter in its entirety as the charge-sheet along with documents spanning over 25000 pages was submitted to him. 23. Mr. Venugopal joined issue on the interpretation given by the appellants to the impugned order. According to him, the order could not be bifurcated i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 204 of the Code. Once the Magistrate takes cognizance of the offence he may proceed to try the offender (except where the case is transferred under Section 191) or commit him for trial under Section 209 of the Code if the offence is triable exclusively by a Court of Session. As pointed out earlier cognizance is taken of the offence and not the offender. This Court in Raghubans Dubey v. State of Bihar (1967) 2 SCR 423stated that once cognizance of an offence is taken it becomes the Court s duty to find out who the offenders really are and if the Court finds that apart from the persons sent up by the police some other persons are involved, it is its duty to proceed against those persons by summoning them because the summoning of the additional accused is part of the proceeding initiated by its taking cognizance of an offence . Even after the present Code came into force, the legal position has not undergone a change; on the contrary the ratio of Dubey case was affirmed in Hareram Satpathy v. Tikaram Agarwala . (1978) 4 SCC 58 Thus far there is no difficulty. 3. Dharam Pal v. State of Haryana (2014) 3 SCC 306 40. In that view of the matter, we have no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all foreign citizens, whereas, Appellant 5 is a foreign company incorporated in Dubai. Appellant 1, we are told, was Chairman and Director of Samsung, South Korea. It is contended that he has had nothing to do with Samsung, Dubai. We are informed that he lives in South Korea. Appellant 2, we are informed, was a former Vice-Chairman and CEO of Samsung, South Korea. He also has had nothing to do with Samsung, Dubai. He too lives in South Korea. xx xx xx 54. The fourth contention advanced at the hands of the learned counsel for the appellants was aimed at demonstrating; firstly, that the charges, as have been depicted in the summoning order, were not made out; secondly, that the appellants herein were functionaries of a company, and therefore, per se could not be made vicariously liable for offences emerging out of actions allegedly taken in furtherance of the discharge of their responsibilities towards the company; and thirdly, that none of the appellants had any concern whatsoever (even as functionaries of the company concerned), with the allegations levelled by the complainant. xx xx xx 57. In paras 24 to 30, this Court in Iridium India Telecom Ltd. case (2011) 1 SCC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence before summoning the appellants. xx xx xx 28. The High Court committed a manifest error in disposing of the petition filed by the appellants under Section 482 of the Code without even adverting to the basic facts which were placed before it for its consideration. 29. It is true that the Court in exercise of its jurisdiction under Section 482 of the Code of Criminal Procedure cannot go into the truth or otherwise of the allegations and appreciate the evidence if any available on record. Normally, the High Court would not intervene in the criminal proceedings at the preliminary stage/when the investigation/enquiry is pending. 30. Interference by the High Court in exercise of its jurisdiction under Section 482 of the Code of Criminal Procedure can only be where a clear case for such interference is made out. Frequent and uncalled for interference even at the preliminary stage by the High Court may result in causing obstruction in the progress of the inquiry in a criminal case which may not be in the public interest. But at the same time the High Court cannot refuse to exercise its jurisdiction if the interest of justice so required where the allegations made in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecorded before the VIIth Additional Chief Judicial Magistrate, Ghaziabad under Section 200 of the Code of Criminal Procedure. 72. These allegations made by JCE Consultancy, are supported by documents furnished to the summoning court. The aforesaid factual position has also been endorsed by Sky Impex Ltd. before this Court. According to the learned counsel for the respondents, the culpability of the appellants before this Court, in a series of similar actions, clearly emerges even from documents placed on record of the instant case by Sky Impex Ltd. As such, it is submitted, that the respondents have per se repudiated all the submissions advanced on behalf of the appellant, obviously subject to the evidence which rival parties will be at liberty to adduce before the trial court. xx xx xx 74. It would not be appropriate for us to delve into the culpability of the appellants at the present juncture on the basis of the factual position projected by the rival parties before us. The culpability (if at all) would emerge only after evidence is adduced by the rival parties before the trial court. The only conclusion that needs to be drawn at the present juncture is that even on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d counsel for the appellants tried to trivialize the matter by stating that what was decided was only a policy decision of the Government to allocate additional spectrum by charging 1% additional AGR i.e. from 4% to 5%; benefit thereof was extended to all Cellular Operating Companies including Pubic Sector Companies like MTNL and BSNL etc. and, therefore, there cannot be a criminal intent behind it. Mr. Salve as well as Mr. Nariman took pains in showing various portions of the counter affidavit filed by the CBI to show that the appellant was left out and not made accused after due deliberations and argued that it was not a case of erroneous omission by CBI. It was also argued at length that the allegations were in the domain of the policy decision taken by the Government to charge 4% of AGR whereas it was realised much later in the year 2010 when the TRAI has passed orders that it should have been 5% AGR. According to them, it was merely a bona fide policy decision which could not be subject matter of criminal proceedings, in the absence of intent of criminality therein. More so, when benefit of the said decision was not confined to the appellant's company, namely M/s Bharti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, including statement of witnesses, he is satisfied that there is sufficient incriminating material on record to proceed against the appellants as well. On reading of the impugned order which is already extracted verbatim, it is very clear that in para 2 of the order, the learned Special Judge discusses the submissions of the Public Prosecutor in respect of the persons who are made accused in the charge-sheet. Insofar as chargesheet is concerned, it has named Mr. Shyamal Ghosh, who was the public servant and other three accused persons are the corporate entities. Submission of the learned Public Prosecutor is recorded in this para that there is enough incriminating material on record against them and they be proceeded against, as per law. Immediately thereafter in para 3, the learned Special Judge records his satisfaction on the perusal of the records namely FIR, charge-sheet, statement of witnesses and documents and states that he is satisfied that there is enough incriminating material on record to proceed against the accused persons . Para 3 is clearly relatable to para 2. Here, the accused persons referred to are those four persons whose names are mentioned in para 2. Obvi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s rea to prove the guilt. But as we are not concerned with this question in these proceedings, we do not express any opinion on that issue. 34. In Iridium India (supra), the aforesaid question fell directly for consideration, namely, whether a company could be prosecuted for an offence which requires mens rea and discussed this aspect at length, taking note of the law that prevails in America and England on this issue. For our benefit, we will reproduce paras 59, 60, 61, 62, 63 and 64 herein: 59. The courts in England have emphatically rejected the notion that a body corporate could not commit a criminal offence which was an outcome of an act of will needing a particular state of mind. The aforesaid notion has been rejected by adopting the doctrine of attribution and imputation. In other words, the criminal intent of the alter ego of the company/body corporate i.e. the person or group of persons that guide the business of the company, would be imputed to the corporation. 60. It may be appropriate at this stage to notice the observations made by MacNaghten, J. in Director of Public Prosecutions v. Kent and Sussex Contractors Ltd. 1972 AC 153: (AC p. 156): ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability for criminal offences, Lord Reid made the following statement of law: (AC p. 170 E-G) I must start by considering the nature of the personality which by a fiction the law attributes to a corporation. A living person has a mind which can have knowledge or intention or be negligent and he has hands to carry out his intentions. A corporation has none of these: it must act through living persons, though not always one or the same person. Then the person who acts is not speaking or acting for the company. He is acting as the company and his mind which directs his acts is the mind of the company. There is no question of the company being vicariously liable. He is not acting as a servant, representative, agent or delegate. He is an embodiment of the company or, one could say, he hears and speaks through the persona of the company, within his appropriate sphere, and his mind is the mind of the company. If it is a guilty mind then that guilt is the guilt of the company. It must be a question of law whether, once the facts have been ascertained, a person in doing particular things is to be regarded as the company or merely as the company s servant or agent. In that case any li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany is the accused person and the learned Special Magistrate has observed in the impugned order that since the appellants represent the directing mind and will of each company, their state of mind is the state of mind of the company and, therefore, on this premise, acts of the company is attributed and imputed to the appellants. It is difficult to accept it as the correct principle of law. 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. (iii) Circumstances when Director/Person in charge of the affairs of the company can also be prosecuted, when the company is an accused person: 37. No doubt, a corporate entity is an artificial person which acts through its officers, directors, managing director, chairman etc. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t disappears. The only ground on the basis of which the High Court has convicted him is that as he was the Chairman of the Managing Committee, he must be held to be vicariously liable for any order given or misappropriation committed by the other accused. The High Court, however, has not referred to the concept of vicarious liability but the findings of the High Court seem to indicate that this was the central idea in the mind of the High Court for convicting the appellant. In a criminal case of such a serious nature mens rea cannot be excluded and once the charge of conspiracy failed the onus lay on the prosecution to prove affirmatively that the appellant was directly and personally connected with acts or omissions pertaining to Items 2, 3 and 4. It is conceded by Mr Phadke that no such direct evidence is forthcoming and he tried to argue that as the appellant was Chairman of the Sangh and used to sign papers and approve various tenders, even as a matter of routine he should have acted with care and caution and his negligence would be a positive proof of his intention to commit the offence. We are however unable to agree with this somewhat broad statement of the law. In the absen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within its ambit. In the instant case, the said law which prevails in the field i.e. the Customs Act, 1962 the appellants have been thereinunder wholly discharged and the GCS granted immunity from prosecution. 4. Maksud Saiyed v. State of Gujarat (2008) 5 SCC 668 13. Where a jurisdiction is exercised on a complaint petition filed in terms of Section 156(3) or Section 200 of the Code of Criminal Procedure, the Magistrate is required to apply his mind. The Penal Code does not contain any provision for attaching vicarious liability on the part of the Managing Director or the Directors of the Company when the accused is the Company. The learned Magistrate failed to pose unto himself the correct question viz. as to whether the complaint petition, even if given face value and taken to be correct in its entirety, would lead to the conclusion that the respondents herein were personally liable for any offence. The Bank is a body corporate. Vicarious liability of the Managing Director and Director would arise provided any provision exists in that behalf in the statute. Statutes indisputably must contain provision fixing such vicarious liabilities. Even for the said purpose, it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Director or the Directors of the Company, thus, cannot be said to have committed an offence only because they are holders of offices. The learned Additional Chief Metropolitan Magistrate, therefore, in our opinion, was not correct in issuing summons without taking into consideration this aspect of the matter. The Managing Director and the Directors of the Company should not have been summoned only because some allegations were made against the Company. 18. In Pepsi Foods Ltd. v. Special Judicial Magistrate (1998) 5 SCC 749 this Court held as under: (SCC p. 760, para 28) 28. Summoning of an accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a matter of course. It is not that the complainant has to bring only two witnesses to support his allegations in the complaint to have the criminal law set into motion. The order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. He has to examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof and would that be sufficient for the complainant to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well. Under Section 190 of the Code, any Magistrate of first class (and in those cases where Magistrate of the second class is specially empowered to do so) may take cognizance of any offence under the following three eventualities: (a) upon receiving a complaint of facts which constitute such offence; (b) upon a police report of such facts; and (c) upon information received from any person other than a police officer, or upon his own knowledge, that such offence has been committed. 42. This Section which is the starting section of Chapter XIV is subject to the provisions of the said Chapter. The expression taking cognizance has not been defined in the Code. However, when the Magistrate applies his mind for proceeding under Sections 200-203 of the Code, he is said to have taken cognizance of an offence. This legal position is explained by this Court in S.K. Sinha, Chief Enforcement Officer v. Videocon International Ltd Ors. (2008) 2 SCC 492 in the following words: 19. The expression cognizance has not been defined in the Code. But the word (cognizance) is of indefinite import. It has no esoteric or mystic significance in criminal law. It merely means ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent material in the police report showing his involvement. In that case, the Magistrate is empowered to ignore the conclusion arrived at by the investigating officer and apply his mind independently on the facts emerging from the investigation and take cognizance of the case. At the same time, it is not permissible at this stage to consider any material other than that collected by the investigating officer. 45. On the other hand, Section 204 of the Code deals with the issue of process, if in the opinion of the Magistrate taking cognizance of an offence, there is sufficient ground for proceeding. This Section relates to commencement of a criminal proceeding. If the Magistrate taking cognizance of a case (it may be the Magistrate receiving the complaint or to whom it has been transferred under Section 192), upon a consideration of the materials before him (i.e., the complaint, examination of the complainant and his witnesses if present, or report of inquiry, if any), thinks that there is a prima facie case for proceeding in respect of an offence, he shall issue process against the accused. 46. A wide discretion has been given as to grant or refusal of process and it must be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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