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Andy Spalding
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Jessica Tillipman
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Bill Steinman
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Richard L. Cassin
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Elizabeth K. Spahn
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Cody Worthington
Contributing Editor

Julie DiMauro
Contributing Editor

Thomas Fox
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Marc Alain Bohn
Contributing Editor

Bill Waite
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Shruti J. Shah
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Russell A. Stamets
Contributing Editor

Richard Bistrong
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Eric Carlson
Contributing Editor

Practice Alert: Legal issues in corporate investigations in times of lockdown

India is currently in a 21-day national lockdown, which has impaired the ability of compliance professionals in carrying out investigations. While we are all trying to balance work and life practicing social distancing, whistleblower hotlines have been buzzing.

Due to the uncertainty about the duration of this crisis, companies here are conducting internal investigations relying on technology and electronic documents. This new reality is leading to issues that need to be tested on legal principles, some of which may involve the application of laws not intended for these situations, but that could still be applicable.

We identify below some of those investigation-related issues and the legal position on them:

Interviews

Because of social distancing, interviews during internal investigations are being conducted remotely with tools such as Zoom and Skype. Under Indian law, there is no requirement for the interviews to be conducted in person. Legally, it is important to demonstrate that in an internal investigation, the interviewee was afforded an opportunity to defend after being presented with the findings usually in the form of a charge-sheet, and as long as it is demonstrated, the medium of the interview may not matter.

During online interviews, counsel often struggle with the issue of legal admissibility of interview recordings under Indian law. On the issue of admissibility, the Supreme Court of India in the case of Shri N. Sri Rama Reddy Etc v. Shri V. V. Giri (1971 SCR (1) 399) has held that audio recordings are admissible as evidence in the Indian courts as primary evidence where the device which recorded the conversation first-hand is produced before the court. It is therefore, important for the investigators to preserve the recording devices under a duly executed chain of custody.

Under Indian law (Section 65B of the Indian Evidence Act, 1872), electronic evidence may also be produced as secondary evidence before Indian courts where the device which recorded the conversation first-hand cannot be produced. In that case, a certificate is required to be produced before Indian courts under Section 65B(4) of the Evidence Act by a person who is custody of the device from which the electronic document is generated.

On the issue of consent before recording an interview, absence of consent may be illegal because of potential invasion into the right to privacy. However, the absence of consent will not make the recordings inadmissible because of non-application of the doctrine of “fruits of poisonous tree” in India. While supporting the same view, the Supreme Court of India has also held that obtaining evidence illegally by using recordings is admissible in law although such method may not be the procedure established by law.

Data Collection

Remote working can present challenges for data collection, particularly collection of devices such as laptops for forensic imaging. One such issue is on the execution of chain of custody. As chain of custody is required to be signed at the time of handing over of data (by both provider and recipient of data), it is practically impossible to obtain physical signatures of custodians on the chain of custody. If chain of custody is not maintained properly, it may be construed as mishandling of electronic evidence by Indian courts. However, Section 3 of the Information Technology Act, 2000 provides that an electronic record may be authenticated by affixing digital signature. Therefore, it is prudent that an electronic chain of custody should be prepared wherein custodians could affix their digital signature at the time of handing over of data in order to strengthen the case of its admissibility in Indian courts. Moreover, the Evidence Act provides no bar on the submission of electronic chain of custody to Indian courts and it may be admitted by courts here as a secondary evidence.

Concerns Faced by the Companies Post Investigation

As a result of the Covid -19 outbreak, the government of India has issued orders under Section 144 of the Code of Criminal Procedure, 1973 (Section 144 Orders) that prohibit gatherings at public places and also require shutting down of offices etc. As a result, an employee who is subject of an internal investigation may not necessarily have access to documents relevant to a potential defense. Therefore, in a situation where a company issues an electronic show-cause notice to its employee pursuant to the findings of an internal investigation, the employee may cite his or her inability to access documents as being an impediment in his or her ability to defend.

Further, while those Section 144 Orders remain in effect, a company that issues to an employee an electronic show cause notice may be at risk of being charged under the offense of “abetment,”as it could be argued that the company has somehow abetted (or encouraged) the employee to seek such information by violating a Section 144 Order. As a practical matter, therefore, other options, such as placing the employee under suspension, should also be evaluated as a potentially better course to follow.

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