In a relief to Sunil Bharti Mittal of Airtel and Ravikant Ruia of the Essar Group, the Supreme Court Friday quashed the order by the 2G special court summoning them to appear before it to face trial for alleged conspiracy in allocation of excess spectrum in 2002.A bench of Chief Justice H.L. Dattu, Justice Madan B. Lokur and Justice A.K. Sikri said the legal principles of vicarious liability have been wrongly applied by the trial court."In the present case, while issuing summons against the appellants, the special magistrate has taken shelter under a so-called legal principle, which has turned out to be incorrect in law. He has not recorded his satisfaction by mentioning the role played by the appellants which would bring them within criminal net," said Justice Sikri speaking for the bench.
The court said that "an inpidual 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" but where the company is the offender, vicarious liability of the directors cannot be imputed automatically, in the absence of any statutory provision to this effect"."In the present case, however, this principle is applied in an exactly reverse scenario. Here, company 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 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," the apex court held.However it clarified that "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," the court said keeping it open the trial court to proceed against Mital and Ruia even at a later stage.The special Central Bureau of Investigation court hearing the 2G case March 19, 2013, while summoning Mittal and Ruia, said that they were, prima facie, controlling the affairs of their companies and the directing mind and will of each company and treated them as an "alter ego" of their respective companies and the acts of the companies are "to be attributed and imputed to them".
The CBI had Nov 17, 2011, registered a case in connection with alleged irregularities in the allocation of additional spectrum in which the then communication minister Pramod Mahajan, telecom secretary Shyamal Ghosh, then deputy director general (VAS) J.R.Gupta, and three companies - Bharti Cellular, Hutchison Max Telecom, and Sterling Cellular - were named. The charge sheet in the case was filed on Dec 21, 2012.