Judgement Briefs

Criminal Procedure Code

Sunil Bharti Mittal v. CBI

(2015) 4 SCC 609

Citation
(2015) 4 SCC 609
Court
Supreme Court of India
Date
9 January 2015
Bench
H.L. Dattu CJ, A.K. Sikri and Arun Mishra JJ.

Facts

  • The case arose from allocation of additional telecommunications spectrum.
  • The CBI filed a charge-sheet against certain companies and identified officials.
  • Sunil Bharti Mittal and another senior corporate officer were not specifically charge-sheeted as accused in their personal capacities.
  • The Special Judge nevertheless summoned them.
  • The Judge reasoned substantially that:
  • they were chairpersons or controlling minds of their companies;
  • the companies could not have acted without their knowledge;
  • and the “alter ego” doctrine justified personal prosecution.
  • The summoned officers challenged the order.

Issue

  • Whether a corporate officer may be summoned merely because of their senior position.
  • How the alter-ego doctrine operates in criminal law.
  • What material is required before issuing process against a director or chairperson.

Rule

  • A company is a separate legal person and may be prosecuted for criminal offences.
  • The acts and mental state of controlling officers may, in appropriate circumstances, be attributed to the company.
  • The reverse is not automatic.
  • Criminal liability of the company cannot invariably be attributed to every director or senior officer.
  • An individual may be prosecuted where:
  • the statute expressly creates vicarious liability; or
  • material shows personal participation, direction, consent or criminal intent.
  • Summoning requires:
  • specific allegations;
  • supporting material;
  • and a reasoned prima facie conclusion.
  • Corporate rank alone does not establish mens rea.

Application

  • The Special Judge used the alter-ego principle in the wrong direction.
  • The doctrine ordinarily enables the court to treat the mind of a controlling individual as the mind of the company.
  • It does not mean that every offence attributed to a company automatically becomes the personal offence of its chairperson.
  • The CBI material had to show that Sunil Mittal:
  • participated in the alleged agreement;
  • directed the relevant act;
  • knew the unlawful object;
  • or intentionally facilitated it.
  • The summoning order did not identify sufficient specific evidence of that kind.
  • The Court accepted that a person’s designation does not make prosecution impossible.
  • A chairperson may be liable where evidence establishes actual involvement.
  • But courts cannot infer personal criminality solely from:
  • organisational authority;
  • control of the company;
  • or benefit received by the corporate entity.
  • Criminal law ordinarily requires personal act and intent.
  • The Special Judge could summon additional accused where the record justified it.
  • The defect lay not in exercising that power, but in the unsupported reasoning used.

Conclusion

  • The Supreme Court set aside the summonses.
  • It held that senior corporate officers cannot be prosecuted merely because they control or represent the company.
  • Specific material showing an active role and criminal intent, or an express statutory vicarious-liability provision, is required. ( )