The Indian government has proposed new legislation on evidence, criminal procedures, and the criminal code, replacing existing laws, some of which date back a century. If these proposed laws are passed as-is, it would mean significant changes to how investigations are conducted in India, including the ensuing disclosure obligations and criminal liabilities.
The proposed laws aim to strengthen the admissibility of electronic records in courts by providing clear guidelines and formats for their presentation. For example, under the proposed laws, if a copy of an electronic record is produced as evidence in court, it will also be required to provide certain technical details in a prescribed format, such as the “hash value” of the original record. While these formats are not provided in the existing statute of evidence, any such technical details are currently being provided merely as a matter of practice.
As a result, the procedural documentation in forensic investigations will become more relevant to provide the court with all adequate details, as required, to establish the admissibility of relevant electronic records procured during the investigation.
Further, companies operating in India often face the question of whether findings related to bribery or potential bribery discovered during an investigation need to be reported to a state agency such as the police. The current criminal procedure code under Section 39 has been interpreted by the Indian Supreme Court and various high courts in some instances, resulting in divergent views both in favor of reporting and non-reporting.
However, the proposed laws have now removed the scope for anomalous interpretation, making it clear that no such reporting would be required in bribery and corruption cases. Nonetheless, this does not mean that a criminal complaint to the police cannot still be made.
Interestingly, the proposed laws now make it mandatory to report all instances of “criminal breach of trust” to the police, including any dishonest misuse of entrusted money by employees. It is often noted that investigations resulting in positive findings regarding bribes, etc., have potential cases for “criminal breach of trust” by employees as they are more often than not found to use the money entrusted to them to pay bribes.
In all such cases linked to criminal breach of trust by employees, reporting is made compulsory by the proposed laws. However, in such cases, the underlying bribery scheme will likely automatically be reported while informing the police about the criminal breach of trust by employees, despite not having a statutory requirement to do so. Currently, only instances of criminal breach of trust by public servants, bankers, merchants, etc., and not employees, are reportable.
There are several white-collar offenses, such as cheating and falsification of accounts, where not much change is proposed. However, the proposed laws are relevant because standalone economic offenses such as criminal breach of trust, forgery, running Ponzi schemes, money laundering, etc., clubbed with certain conditions, have been classified as “organized crime” with harsher punishments. The punishments include imprisonment for up to the remainder of a person’s natural life and fines of up to INR 1 million ($12,000).
From an investigation perspective, it would be prudent to explore the elements of “organized crime” from a factual standpoint, especially in investigations concerning financial improprieties. This would allow for the appropriate assessment of legal liabilities attached to the conduct at a later stage now that there is a new offense.
While this is just a glimpse of the proposed changes, it is important to note that the proposed laws are still subject to suggestions from various stakeholders, including the standing committee of the Indian Parliament, and may evolve. The finality of all the changes will only be confirmed when these proposals are passed as legislation.
Kunal Gupta is a partner at Trilegal and advises on cross-border investigations in India. Sahil Bansal is a Senior Associate at Trilegal.
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