Case BriefsSupreme Court

Supreme Court: Appointments of Chief Vigilance Commissioner and the Vigilance Commissioner, which were assailed by the petitioner Common Cause and others, were upheld by the Bench in a Judgment delivered by Arun Mishra, J. speaking for himself and M.M. Shantanagoudar, J.

Prashant Bhushan, learned counsel for the petitioner, lead a scathing charge against the appointment of current CVC K.V. Chowdary and VC T.M. Bhasin as he submitted that they could not be termed as persons of ‘impeccable integrity’. As many as thirteen points were raised while assailing the appointment of CVC besides questioning VC’s appointment. The grounds on which CVC’s appointment was assailed included, inter alia, the allegations of quid pro quo between CVC and former CBI Director Ranjit Sinha; involvement in the infamous ‘stock guru scam’; failure to make headway in 2G scam investigation; failure of investigation into foreign accounts in HSBC Bank, Geneva; inaction in Radia tape investigations, etc. As far as the challenge to appointment of VC is concerned, the allegations were, inter alia, that he was indicted in a detailed inquiry by CVC for forging and tempering with the appraisal report of the General Manager, Indian Bank, in pursuance to which criminal prosecution was suggested against him and there was a finding of moral turpitude against him. On the other hand, K.K. Venugopal, learned Attorney General for India, took the Court in extensive details with respect to the appointment procedure while repelling the challenges put forth by the petitioner. He further contended that the appointments were made unanimously by a High Powered Committee and were unassailable.

Supreme Court made a point-wise consideration of all the challenges. The Court observed that most of the challenges were mere aspersions and were unsubstantiated allegations. Investigations and enquiries were conducted in almost all the cases raised by the petitioner and neither the CVC nor the VC were found on the wrong side of the law in any report; in fact, they were cleared of all the allegations. It was observed that the Government is not accountable to the courts for the choices made but the Government is accountable in respect of the legality of its decisions. However, in the instant case, the Court after observing that nowadays we are in a scenario where such complaints cannot be taken on face value, reached the conclusion that the decisions of appointments of CVC and VC were taken after following due procedure by the High Powered Committee; no illegality could be found in the decision made; and hence  there were no grounds to quash the appointments. [Common Cause v. Union of India, 2018 SCC OnLine SC 644, decided on 02-07-2018]

Supreme Court

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 Investigation2015 SCC OnLine SC 18, decided on 09.01.2015