In a major relief to Bharti Cellular Ltd CMD Sunil Bharti Mittal and Essar Group promoter Ravi Ruia, the Supreme Court today set aside the lower court order summoning them as accused in a corruption case related to allocation of additional spectrum during NDA rule in 2002.
Finding fault with the summoning order, a three judge bench headed by Chief Justice H L Dattu said the principle of 'alter ego' has wrongly been applied by the special CBI judge in seeking presence of Mittal and Ruia as accused.
"It is stated...That 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," the bench, also comprising justices Madan B Lokur and A K Sikri, said.
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Essar Group in a statement said setting aside trial court order summoning its Vice Chairman Ravi Ruia will "assuage concerns of corporate leaders regarding misuse of judicial processes".
"The judgement will assuage concerns among corporate leaders regarding misuse of judicial process. It will help re-instill confidence among investors and corporates, especially at a time when India is looking to attract fresh investments and increase growth," it said in a statement.
The trial court had said that Mittal and Ruia, who were not named as accused in the charge sheet, used to chair board meetings and "were/are prima facie in control of affairs of the respective companies" and "they are/were 'alter-ego' of their respective companies" and hence, criminal acts of firms can be imputed to them also.
Discussing in detail the issue of 'alter ego', Justice Sikri, who wrote the verdict for the bench, said, "It is abundantly clear that the principle which is laid down is to the effect that the criminal intent of the 'alter ego' of the company, that is the personal group of persons that guide the business of the company, would be imputed to the company/corporation.
"The legal proposition that is laid down in the aforesaid judgment is 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 as they are 'alter ego' of the company".
