Sunil Bharti Mittal vs Cbi

The Instant Proceedings : Factual Narration The CBI registered another RC being RC DAI 2011 A 0024 on 17th November, 2011 with regard to alleged irregularities 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. As already pointed out above, since the matter was being monitored by this Court, progress reports of investigation were filed from time to time in sealed envelopes. On 29th November, 2012, after perusing certain documents presented in a sealed cover, this Court directed the CBI to take action in accordance with the views expressed by it on the issue of prosecution of public servants and the companies in connection with the said case. The precise nature of this order can be seen from the actual language thereof which is reproduced hereunder:

As pointed above, on the basis of the outcome of the aforesaid inquiry, a regular case was registered on 17.11.2011 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'). It was against Mr. Shyamal Ghosh, Mr. J.R. Gupta and the three Cellular Companies, names whereof have already been mentioned above. The main allegation is that additional spectrum beyond 6.2 MHz upto 10 MHz (paired) was approved at an additional revenue share at the rate of 1% only, meaning thereby the said additional revenue should have been at a higher rate. As per the investigation, Cellular Operators Association of India (COAI) had made a request to DoT, in the year 2001, for allocating additional spectrum particularly in Delhi and Mumbai service areas. On this, Technical Committee was constituted which gave its report on 21.11.2001 recommending therein that 6.2 MHz spectrum was sufficient for a subscriber based out of about 9 lacs per operator in service areas like Delhi and Mumbai for another 24-30 months. The Committee also recommended to levy incremental charges for additional spectrum. However, on 31.01.2002, a note was put up by Mr. J.R. Gupta mentioning therein that a consensus had emerged after discussion that additional spectrum to the extent of 1.8 MHz (paired) beyond 6.2 MHz in 1800 MHz band might be released on case to case co-ordination 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 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.

Thus, the allegation, in nutshell, is for grant of additional spectrum by lowering the condition of 9 lacs subscribers to 4/5 lacs subscribers, by only charging additional 1% AGR instead of charging additional 2% AGR which has caused losses to the Government Revenue. It is further the case of the prosecution that this was the result of conspiracy hatched between Mr.Shyamal Ghosh and the then Minister as well as the accused Cellular Operator Companies. The decision was taken in haste on 31st January, 2002 itself inasmuch as note was prepared by Mr. J.R. Gupta on that day which was agreed to by Mr. Shyamal Ghosh and thereafter approved by the Minister on the same day. On that basis, circular was issued on the very next day i.e. on 01.02.2002. As per the charge-sheet, investigation has also revealed that all this was done in haste to help M/s Bharti Cellular Limited which had come out with Initial Public Offer (IPO) that was opened and it was not getting good response from the public as it had remained under-subscribed. The moment such a decision of allocating additional spectrum was taken on 31.01.2002, on the very next day, the issue got over- subscribed.

The Impugned Order The matter was taken up by the Special Judge on 19th March, 2013 for the purposes of issuance of summons to the accused persons in the said charge- sheet (CC No.101/12). 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.

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 understanding the arguments of counsel on either side, with more clarity. The impugned order dated 19th March, 2003 reads as under:

It is on this basis alone that the Special Judge records that "in this fact situation, the acts of companies are to be attributed and imputed to them".

We have already mentioned above that even if the CBI did not implicate the appellants, if there was/is sufficient material on record to proceed against these persons as well, the Special Judge is duly empowered to take cognizance against these persons as 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:

Sine Qua Non for taking cognizance of the offence is the application of mind by the Magistrate and his satisfaction that the allegations, if proved, would constitute an offence. It is, therefore, imperative that on a complaint or on a police report, the Magistrate is bound to consider the question as to whether the same discloses commission of an offence and is required to form such an opinion in this respect. When he does so and decides to issue process, he shall be said to have taken cognizance. At the stage of taking cognizance, the only consideration before the Court remains to consider judiciously whether the material on which the prosecution proposes to prosecute the accused brings out a prima facie case or not.

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.

However, the words "sufficient grounds for proceeding" appearing in the Section are of immense importance. It is these words which amply suggest that an opinion is to be formed only after due application of mind that there is sufficient basis for proceeding against the said accused and formation of such an opinion is to be stated in the order itself. The order is liable to be set aside if no reason is given therein while coming to the conclusion that there is prima facie case against accused, though the order need not contain detailed reasons. A fortiori, the order would be bad in law if the reason given turns out to be ex facie incorrect.

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. In this scenario, having regard to the aforesaid aspects coupled with the legal position explained above, it is difficult to sustain the impugned order dated 19.03.2013 in its present form insofar as it relates to implicating the appellants and summoning them as accused persons. The appeals arising out of SLP (Crl.) No. 2961 of 2013 and SLP (Crl.) No. 3161 of 2013 filed by Mr. Sunil Bharti Mittal and Ravi Ruia respectively are, accordingly, allowed and order summoning these appellants is set aside. The appeals arising out of SLP (Crl.) Nos. 3326-3327 of 2013 filed by Telecom Watchdog are dismissed.

Epilogue While parting, we make it clear that since on an erroneous presumption in law, the Special Magistrate has issued the summons to the appellants, it will always be open to the Special Magistrate to undertake the exercise of going through the material on record and on that basis, if he is satisfied that there is enough incriminating material on record to proceed against the appellants as well, he may pass appropriate orders in this behalf. We also make it clear that even if at this stage, no such prima facie material is found, but during the trial, sufficient incriminating material against these appellants surfaces in the form of evidence, the Special Judge shall be at liberty to exercise his powers under Section 319 of the Code to rope in the appellants by passing appropriate orders in accordance with law at that stage.

.........................................CJI.

JANUARY 09, 2015.

For Appellant(s) Mr. Harish Salve, Sr. Adv.

Mr. Fali S. Nariman, Sr. Adv.

Mr. Amit Desai, Sr. Adv.

Mr. Percival Billimonia, Adv.

Mr. Sidharth Agarwal, Adv.

Mr. Kamal Shankar, Adv.

Mr. Atul N, Adv.

Mr. Manpreet Lamba, Adv.

Mr. Gautam , Adv.

Mr. Utkarsh Saxena, Adv.

Mr. Utkarsh Saxena, Adv.

Leave granted.

The appeals arising out of SLP(Crl.) No. 2961 of 2013 and 3161 of 2013 are allowed. The appeals arising out of SLP(Crl.) Nos. 3326-3327 of 2013 are dismissed.