1.1. Attorney–client communications doctrine

1.1.1. Identify and describe India’s laws, regulations, professional rules and doctrines that protect communications between an attorney and a client from disclosure.

Professional communication between an attorney and a client is accorded protection under the Indian Evidence Act 1872 (the Evidence Act), the Advocates Act 1961 (the Advocates Act) and the Bar Council of India Rules (the BCI Rules). This protection is a rule of evidence (as opposed to other statutory protection) and is subject to certain limitations Sections 126 to 129 of the Evidence Act are a codification of the principles of common law on professional communications between attorneys and clients. Any person who seeks advice from a practising advocate, registered under the Advocates Act, would have the benefit of the attorney-client privilege and his or her communication would be protected. Attorneys cannot, without the express consent of the client:

• disclose any communication made during the course of or for the purpose of his or her employment as such attorney, by or on behalf of his or her client;
• state the contents or condition of any document with which he or she has become acquainted in the course of and for the purpose of his or her professional employment; or
• disclose any advice given by him or her to his or her client in the course and for the purpose of such employment.

There are certain limitations to privilege and the law does not protect the following from disclosure:

• disclosures made with the client’s express consent;
• any such communication made in furtherance of any illegal purpose; or
• any fact observed by any attorney in the course of his or her employment, showing that any crime or fraud has been committed since the commencement of his or her employment.

The fact that the attention of the attorney was or was not directed to such fact by or on behalf of his or her client is not material in this regard. Further, under section 129 of the Evidence Act, no one shall be compelled to disclose to the court any confidential communication that has taken place between him or her and his or her attorney, unless they have offered themselves as a witness, in which case they may be compelled to disclose any communication as may appear to the court necessary to be known to explain any evidence that they have given, but no other. Communications between an attorney and client are privileged even if they contain information from third parties. The prohibition on disclosure of confidential information also extends to any interpreters, clerks or servants of the attorney. While the attorney-client privilege continues even after the employment has ceased, there is no privilege to the communications made before the creation of an attorney-client relationship (Kalikumar Pal v Rajkumar Pal 1931 (58) Cal 1379). The prohibitions on disclosure of attorney-client communications are further bolstered by the provisions of the BCI Rules enacted under the Advocates Act, which govern the conduct of advocates in India. The BCI Rules stipulate certain standards of professional conduct and etiquette for all attorneys. These provide that ‘An advocate shall not, directly or indirectly, commit a breach of the obligations imposed by section 126 of the Evidence Act’, thus reiterating the spirit of attorney-client privilege (Rule 17, Chapter II, Part VI). Further, Rules 7 and 15 of the BCI Rules on An Advocate’s Duty Towards the Client provides as follows: Rule 7: Not disclose the communications between client and himself: An advocate should not by any means, directly or indirectly, disclose the communications made by his client to him. He also shall not disclose the advice given by him in the proceedings. However, he is liable to disclose if it violates section 126 of the Indian Evidence Act 1872. Rule 15: An advocate should not misuse or takes advantage of the confidence reposed in him by his client. A breach of the above Rules would subject an advocate to disciplinary proceedings. Given the above, privileged communication between an attorney and a client are not admissible as evidence. Since the law on privilege is governed by the Evidence Act, one (possibly unintended) consequence is the argument that attorney-client communications are strictly not protected from law enforcement agencies in the course of investigations. That said, any privileged material, if produced, may not be admissible as evidence in court proceedings. 

1.1. Domestic law

1.1.1. Identify India’s money laundering and anti-money laundering (AML) laws and regulations. Describe the main elements of these laws.

The Prevention of Money Laundering Act 2002 (the PML Act), together with the rules issued thereunder and the rules and regulations prescribed by regulators such as the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI), set out the broad framework for the anti-money laundering laws in India. Some of the primary rules and guidelines regulating money laundering activities in India include:

• the Prevention of Money Laundering (Maintenance of Records) Rules 2005, as amended from time to time (the PML Rules), issued under the PML Act;
• the Master Circular on Guidelines on Anti-Money Laundering (AML) Standards/Combating Financing of Terrorism (CFT)/Obligations of Intermediaries under the Prevention of Money Laundering Act 2002 and the rules framed thereunder, issued by SEBI on 15 October 2019 (the SEBI AML Guidelines); and
• the Reserve Bank of India (Know Your Customer (KYC)) Directions 2016, issued by the RBI on 25 February 2016, as updated on 1 April 2021, which is the most up-to-date consolidation of the KYC guidelines and norms for all entities regulated by the RBI (the RBI KYC Master Directions).

The PML Act The PML Act was enacted by the Indian parliament in 2002 and came into force in 2005. It was enacted following the adoption of the Political Declaration and Global Programme of Action by the United National General Assembly in February 1990, which called upon member states to develop money laundering legislations and programmes. The PML Act not only criminalises the offence of money laundering but also puts in place preventive measures. These measures are proposed to be achieved through provisional attachment of ‘proceeds of crime’, which are likely to be concealed, transferred or dealt with in a manner that may obstruct proceedings, and through obligations imposed on banks, financial institutions and intermediaries to maintain records and supply information regarding certain types of transactions. The PML Act provides for the appointment of authorities to administer and enforce the provisions of the PML Act. These authorities are vested with powers, similar to those vested in a civil court, to provisionally attach property involved in money laundering, issue summons and search, seize and arrest with regard to proceeds of crime. Under the PML Act, financial institutions and intermediaries, reference to which includes, inter alia, non-banking financial companies (NBFCs), stockbrokers and payment system operators, are required to maintain records of transactions of a prescribed nature and above certain thresholds. The procedure and manner for providing such information is prescribed by the RBI in consultation with the central government. Although there is limited jurisprudence on the interpretation of provisions of the PML Act, as a general principle of law in India, courts have widely accepted the position that criminal statutes must be construed strictly, and that for a penalty to be imposed under any criminal statute, an offence must have been committed that falls not only within the letter but also within the spirit of the statute (see Glaxo Industries v Presiding Officer, Labour Court, Meerut AIR 1984 SC 505). However, the courts in India have also held that where a plain reading of the statute does not cover the objectives of the legislature in passing the law, the courts must also have due consideration for those objectives while interpreting the provisions of the statute. The above principle is especially important in the context of socio-economic statutes, such as those dealing with corruption or violations of foreign exchange laws. Thus, one may view that the PML Act, if litigated before Indian courts, may also be interpreted and enforced in line with the above principles. The PML Rules The PML Rules have been issued by the central government in consultation with the RBI, setting out the process to be adopted by banks, financial institutions, persons carrying out a designated business or profession (designated persons) and intermediaries (collectively, reporting entities) for identifying and verifying their clients before commencing a business relationship with them. The PML Rules also prescribe exhaustive requirements for reporting entities to establish and verify the identity of any client at the time of operating an account or executing a transaction, including prescribing the documents that the reporting entity should seek from a client and maintain on record. The definitions of the terms ‘financial institutions’, ‘designated persons’ and ‘intermediaries’ are extremely wide under the PML Act. The PML Rules cast obligations on reporting entities to maintain records of certain prescribed transactions, which include all transactions in excess of a certain value, series of interconnected transactions that may cumulatively amount to a prescribed value and suspicious transactions (as defined in the PML Rules), regardless of whether the transactions are effected in cash. The PML Rules stipulate that reporting entities should follow the procedures and manner of maintenance of records prescribed by their respective regulators. In this regard, the RBI has issued the RBI KYC Master Directions for banks and financial institutions, and the SEBI has issued the SEBI AML Guidelines for SEBI-registered intermediaries. The RBI KYC Master Directions The RBI KYC Master Directions were issued by the RBI and are applicable to all entities regulated by RBI (regulated entities), including banking companies and NBFCs. The purpose of the RBI KYC Master Directions is to prevent regulated entities from being used for money laundering or terrorist financing activities. The RBI KYC Master Directions require regulated entities to put in place requirements establishing the identity of customers, categorising customers based on the degree of risk they may pose, undertaking client due diligence (CDD) (including enhanced CDD for high-risk customers and beneficiary accounts) and procedures for dealing with various types of transactions, such as cross-border transactions, and reporting such transactions to the Financial Intelligence Unit (FIU). The SEBI AML Guidelines The SEBI AML Guidelines were issued by the SEBI and are applicable to SEBI-registered intermediaries. The SEBI AML Guidelines require that intermediaries must put in place policies and procedures to combat money laundering, which should include:

• communication of group policies relating to the prevention of money laundering and terrorist financing to all management and relevant staff members that handle account information, securities transactions, the client acceptance policy and CDD measures (including requirements for proper identification);
• maintenance of records;
• cooperation with the relevant law enforcement authorities (including the timely disclosure of information); and
• the role of internal audits or compliance functions to ensure compliance with the policies, procedures and controls relating to the prevention of money laundering and terrorist financing.

1.2. In-house and outside counsel

1.2.1. Describe any relevant differences in India between the status of private practitioners and in-house counsel, in terms of protections for attorney-client communications.

The concept of attorney-client privilege concerning the position of an in-house counsel is not free from doubt. This question has been the subject matter of judicial interpretation. This is because in-house counsel are not considered ‘advocates’ under the Advocates Act; however, the position regarding attorney-client privilege is not necessarily impacted by the same. Section 2(a) of the Advocates Act defines an advocate as an individual whose name is entered in any roll under the Advocates Act, and section 29 of the Advocates Act states that only an advocate is entitled to practise the profession of law in India (which includes appearing and/or practising in the courts, and practice of law outside the court by giving legal advice, drafting or drawing legal documents or advising clients on non-contentious matters). Rule 49 of the BCI Rules states that an advocate shall not be a full-time salaried employee of any person, government, firm, corporation or concern, as long as he or she continues to practise and shall, on taking up any such employment, disclose the fact to the Bar Council on whose roll his or her name appears, and shall thereupon cease to practise as an advocate so long as he or she continues in such employment. However, an exception is made in such cases of law officers of the central government, any state government or of any public corporation or of body constituted by statute despite being a full-time salaried employee, if such law officer is required to act or plead in court on behalf of others. It is therefore often argued that an in-house lawyer (ie, one who draws a salary) cannot practise as an advocate until such time that he or she is in full-time employment (Sushma Suri v Government of National Capital Territory of Delhi (1999) 1 SCC 330). The Supreme Court of India clarified this question of law in Satish Kumar Sharma v Bar Council of Himachal Pradesh (2001) 2 SCC 365. On whether a salaried employee can be an ‘advocate’ under the Advocates Act, the court held: The test, therefore, is not whether such person is engaged on terms of salary or by payment of remuneration, but whether he is engaged to act or plead on its behalf in a court of law as an advocate. In that event the terms of engagement will not matter at all . . . If the terms of engagement are such that he does not have to act or plead, but does other kinds of work, then he becomes a mere employee of the Government or the body corporate. Therefore, the Bar Council of India has understood the expression advocate as one who is actually practising before courts which expression would include even those who are law officers appointed as such by the Government or body corporate. However, the distinction between lawyers who are engaged to act or plead as advocates and lawyers who are employees does not materially alter the position of law in respect of attorney-client privilege. This has been clarified by the Bombay High Court in the cases of Municipal Corporation of Greater Bombay v Vijay Metal Works and Larsen & Toubro Ltd v Prime Displays (P) Ltd. In Municipal Corporation of Greater Bombay v Vijay Metal Works, AIR 1982 Bom 6, the Bombay High Court, while considering whether privilege would extend to communications between an in-house counsel and the client, has held that a paid or salaried employee who advises his or her employer, on all questions of law and relating to litigation, must get the same protection of the law and therefore any such communication made in confidence by his or her employer to him or her to seek legal advice or vice versa should get the protection of sections 126 and 129 of the Evidence Act. The Court further distinguished that such protection may not extend to the work undertaken by an in-house legal counsel for his or her employer that is in another capacity (such as work of an executive nature). Communications exchanged in any other capacity (not legal) would not be subject to legal professional privilege under sections 126 to 129 of the Evidence Act. In Larsen & Toubro Ltd v Prime Displays (P) Ltd [2003] 114 Comp Cas 141 (Bom), the Bombay High Court observed that: It is, thus, clear that, even according to the applicant, in order that an advice given by an internal legal department of the applicant becomes entitled to protection, under section 129, that advice must be given by a person who is qualified, to give legal advice. This observation appears to indicate that where the in-house counsel would, save for his or her employment with the concerned litigant, be otherwise qualified to give legal advice, then privilege under sections 126 and 129 of the Evidence Act would attach itself to the advice given by that in-house counsel. The Court in Larsen & Toubro, however, did not make any finding on this issue, owing to a lack of pleadings on the issue. In Larsen & Toubro, the Court also permitted a claim of privilege in the case of certain documents, which included communications between the company and in-house counsel, but solely on the ground that the same had been created in anticipation of litigation (which the court held to be otherwise covered by attorney-client privilege).

1.2. Investigatory powers

1.2.1. Describe any specific powers to identify proceeds of crime or to require an explanation as to the source of funds.

The Directorate of Enforcement has been given wide powers under the PML Act to conduct search and seizure when it believes that a person has committed any act constituting money laundering, or is in possession of proceeds of crime, records or property relating to money laundering. When any property or record is attached or seized, an application or complaint must be filed before the Adjudicating Authority, which has been constituted to exercise jurisdiction, powers and authority conferred by or under the PML Act. Typically, a criminal court or a special court set up for this purpose is appointed and vested with the powers of the Adjudicating Authority under the PML Act. The Adjudicating Authority has been given powers under section 8 of the PML Act to serve a notice, if it has reason to believe that any person has committed an offence of money laundering or is in possession of proceeds of crime, calling upon the person to indicate the sources of his or her income, earnings or assets out of which or by which means he or she acquired the property that has been seized, attached or frozen and the evidence on which the person relies, as well as to show cause as to why those properties should not be declared to be properties involved in money laundering and confiscated by the central government. An Adjudicating Authority has, for the purposes of the PML Act, been vested with the same powers as that of a civil court under the Code of Civil Procedure 1908, including, inter alia, in relation to discovery and inspection, compelling the production of records, receiving evidence on affidavits, enforcing the attendance of any person, etc.

1.3. Work-product doctrine

1.3.1. Identify and describe India’s laws, regulations, professional rules and doctrines that provide protection from disclosure of tangible material created in anticipation of litigation.

All work-products created (tangible or intangible) and communication exchanged between a client and attorney in anticipation of litigation will be privileged communication). This includes communication to:

• obtain advice for the litigation;
• obtain or collect evidence to be used in the litigation; and
• obtain information that will lead to such evidence, drafts of notices, pleadings and so forth exchanged between the attorney and the client.

Information called for by the client and provided by an employee or a third-party agent, on the request of, and for submission to, the attorney may also be protected (Woolley v North London Railway (1868–1869) LR 4 CP 602). In D Veerasekaran v State of TN (1992 CriLJ 2168 (Mad), an unsigned and undated letter allegedly written by an advocate, advising his client (who was charged with terror offences) was cited as evidence of the advocate having abetted the terror charges. The court observed that even if the said letter was written by the advocate to a client, it would be treated as a professional communication and could not be used against the advocate. However, communication between the employees of the client in the ordinary course of business, which may have utility for anticipated litigation, is not protected. Accordingly, there is no protection accorded to the following:

• for statements made by an employee regarding the subject matter of certain suit proceedings that were not to be submitted to their attorney (The Central India Spinning Weaving and Manufacturing Co Ltd v G I P Railway Co, AIR 1927 Bom 367); and
• letters written by one employee to another regarding information that could potentially become useful to their attorney (Bipro Doss Dey v Secretary of State for India in Council (1885) ILR 11 Cal 655).

1.4. Recent case law

1.4.1. Identify and summarise recent landmark decisions involving attorney-client communications and work-product.

In Vijay Metal Works, the Bombay High Court held that a salaried employee who advises his or her employer on legal questions would be afforded the same privileges and protections under sections 126 and 129 of the Evidence Act as afforded to practising advocates. In Larsen & Toubro, a petition was filed for winding up filed by the respondents against the petitioner company. The Bombay High Court in this regard held that section 126 of the Evidence Act protect the documents prepared by the client in anticipation of litigation either for seeking legal advice or for using them in that litigation. If an associate or advocate works for another advocate and his clients, he or she owes an obligation not only to maintain the confidentiality between the client and his or her advocate but also not to surreptitiously take away what is the final product of the effort put in to which he or she may also be a party. The protection under section 126 of the Evidence Act would apply to an advocate and his clients and any misuse of the same could make him or her liable if it is founded on confidential drafts being taken away by the associate or advocate and being misutilised. (Diljeet Titus & Ors V Alfred A Adebare & Ors 130 (2006) DLT 330). The Right to Information Act 2005 (the RTI Act) enables Indian citizens to access information held by public authorities. This has raised interesting questions about attorney-client privilege as grounds for refusing to disclose professedly public information in the hands of public authorities. In Mukesh Agarwal v Public Information Officer, Reserve Bank of India [2012] CIC 11210, the Central Information Commission (CIC) held that while there may be a fiduciary relationship in respect of communication from the client to his or her attorney, there is no fiduciary relationship in respect of communication from the attorney to the client when the client is a public body with public responsibility under the RTI Act. Section 8.1(e) of the RTI Act excludes disclosure of information available to a person in his or her fiduciary relationship unless the competent authority is satisfied that the larger public interest warrants the disclosure of such information. The CIC, in this case, held that there was a larger public interest warranting disclosure and accordingly ruled in favour of the citizen seeking information. The same principle was applied by the CIC in 2015, in Alok Srivastava v CPIO, English & Foreign Language University, where the court held that the client (being a public university with an aforementioned public responsibility) was directed to disclose material information as there was a public interest that outweighed the protected interest. These CIC cases show that traditional attorney-client privilege does not apply to governmental entities if the exception provided in section 8.1(e) of the RTI Act applies. In The Superintendent, High Court v The Registrar, Tamil Nadu Information Commission and M Sivaraj, 2010 (5) CTC 238, it was held that even though the office of the public prosecutor is a public authority, the RTI Act only requires the public prosecutor to furnish such information, which is available to him or her and capable of being furnished, subject to section 8(1)(e) of the RTI Act. Here, the public prosecutor, bound by attorney-client privilege to not disclose information provided to it by the state of Tamil Nadu, directed a citizen seeking information to approach the state of Tamil Nadu directly. The Madras High Court, which was approached in this connection, held that: Instead of asking the [Public Prosecutor], who holds such information in the capacity of counsel, the petitioner is very well entitled to approach the client, ie, the State of Tamil Nadu directly for getting such information. In Cecilia Fernandes v State represented by the Director General of Police Goa and Anr, Criminal Miscellaneous Application No. 9 of 2005, the Bombay High Court held that the right to consult a legal practitioner under article 22(1) of the Constitution of India could only be exercised meaningfully in confidence. Thus, a police officer, while entitled to stay within a certain distance of an accused, cannot insist on being within hearing distance to prevent an accused from instructing his or her lawyer in confidence.

 client. The client may release the attorney from his or her obligation to maintain secrecy; however, in the absence of express consent, the attorney must maintain secrecy. If the attorney fails in his or her duty and discloses confidential information, that information may be held inadmissible (Bakaulla Mollah v Debiruddi Mollah (1911–1912) 16 CWN 742 (Cal)).

2.4. Underlying facts in the communication

2.4.1. To what extent are the facts communicated between an attorney and a client protected, as opposed to the attorney-client communication itself?

The facts between an attorney and a client are privileged as far as they are exchanged after the attorney’s engagement and subject to the exceptions set out above (eg, facts not concerning fraud or for any illegal purpose, etc).

2.5. Agents

2.5.1. In what circumstances do communications with agents of the attorney or agents of the client fall within the scope of the protections for attorney-client communications?

Section 126 of the Evidence Act includes communications made to the attorney ‘on behalf of’ the client within the scope of the protection. This will arguably extend protection to communications made by the agent of the client to the attorney on the client’s behalf concerning legal advice or in anticipation of legal proceedings, subject to the limitations and exceptions contained above. Section 127 of the Evidence Act extends protection under section 126 to all interpreters and clerks or servants of the attorney.

2.6. Corporations claiming protection

2.6.1. Can a corporation avail itself of the protections for attorney-client communications? Who controls the protections on behalf of the corporation?

Yes, the protection granted to ‘client’, is not restricted to individuals and covers corporations as well. Communication between a corporation (through its agents) and external attorney concerning legal advice or in anticipation of litigation is considered to be privileged communication under sections 126 to 129 of the Evidence Act, subject to the limitations and exceptions contained above. Under Indian law, the board of directors of a corporation are understood to be in control of the corporation. In the case of protection of attorney-client communications, the board of directors may be understood to be in control. The board of directors can delegate this role to one or more of their authorised representatives.

2.7. Communications between employees and outside counsel

2.7.1. Do the protections for attorney-client communications extend to communications between employees and outside counsel?

See ‘Agents’ – section 126 of the Evidence Act includes communications made to the attorney ‘on behalf of’ the client within the scope of the protection, subject to the limitations and exceptions contained above.

2.8. Communications between employees and in-house counsel

2.8.1. Do the protections for attorney-client communications extend to communications between employees and in-house counsel?

Yes, the protection for attorney-client communications will extend to communications concerning legal advice or in anticipation of litigation between employees (as agents of the corporation) and in-house counsel. Such protection is not absolute and subject to the limitations and exceptions contained above. However, this protection may not extend to the work undertaken by an in-house legal counsel for his or her employer that is undertaken in another capacity (eg, work of an executive nature). Communications exchanged in any other capacity (not legal) would not be subject to legal professional privilege under sections 126 to 129 of the Evidence Act (Vijay Metal Works).

2.9. Communications between company counsel and ex-employees

2.9.1. To what degree do the protections for attorney-client communications extend to communications between counsel for the company and former employees?

The ceasing of employment of the employees does not take away privilege that was created when the employment of the employee was subsisting.

3.1. Elements

3.1.1. Describe the elements necessary to confer protection over work-product.

Indian law follows the English position concerning work-product. The work-product must be prepared by counsel or at the request of counsel in anticipation of litigation to confer protection.

3.10. Client access to attorney files

3.10.1. May clients demand their attorney’s files relating to their representation? Does that waive the protections for work-product?

Yes, clients may demand their attorney’s files relating to their representation. The mere demand for files will not amount to waiver, as it does not amount to express consent on the part of the clients, to release the attorney from the duty of privilege.

3.11. Accidental disclosure of work-product

3.11.1. Does accidental disclosure of work-product protected materials waive the protection?

See ‘Accidental Disclosure’.

3.12. Exceptions

3.12.1. Describe India’s main exceptions to the protections for work-product.

See ‘Exclusions’.

3.13. Litigation proceedings overriding the protections

3.13.1. Can the protections for work-product be overcome by any criminal or civil proceedings where waiver has not otherwise occurred?

See ‘Litigation proceedings overriding the protections’.

3.14. Recognition of foreign protection

3.14.1. In what circumstances are foreign protections for work-product recognised in India?

See ‘Recognition of foreign protection’.

3.2. Exclusions

3.2.1. Describe any settings in which the protections for work-product are not recognised.

See ‘Work-product doctrine’ and ‘Exclusions’.

3.3. Who holds the protection

3.3.1. Who holds the protections for work-product?

See ‘Who holds the protection’.

3.4. Types of work-product

3.4.1. Is greater protection given to certain types of work-product?

No, different levels of protection are not granted to work-product depending on their nature. If the elements necessary to confer protection over work-product are satisfied, the work-product will be protected.

3.5. In-house counsel work-product

3.5.1. Is work-product created by, or at the direction of, in-house counsel protected?

Yes, work-product created by or at the direction of in-house counsel in anticipation of litigation will be protected. However, such protection may not extend to the work undertaken by an in-house legal counsel for his or her employer that is in another capacity (eg, work of an executive nature).

3.6. Work-product of agents

3.6.1. In what circumstances do materials created by others, at the direction of an attorney or at the direction of a client, fall within the scope of the protections for work-product?

See ‘Agents’.

3.7. Third parties overcoming the protection

3.7.1. Can a third party overcome the protections for work-product? How?

No, protection for work-product can only be overcome when the client waives privilege; a third party cannot overcome the protections.

3.8. Who may waive work-product protection

3.8.1. Who may waive the protections for work-product?

See ‘Who may waive protection’.

3.9. Actions constituting waiver

3.9.1. What actions constitute waiver of the protections for work-product?

See ‘Actions constituting waiver’.

4.1. Who determines what is protected

4.1.1. Who determines whether attorney-client communications or work-product are protected from disclosure?

Whether communications or work-products are protected under attorney-client privilege is a determination made by the courts in India. In civil proceedings, under the Code of Civil Procedure, when an opposite party makes an application for discovery, a party can resist production on the grounds of attorney-client privilege. The civil court is entitled to decide whether the documents or communications in question are privileged or not. If a court issues a summons in a criminal proceeding under section 91 of the Code of Criminal Procedure, then attorney-client privilege over documents or communications cannot prevent a court from examining the same. It cannot be argued that the section 91 order is illegal simply because it overrides the privilege conferred under section 126 of the Indian Evidence Act 1872 (the Evidence Act). The power to issue a notice under section 91 is not limited by section 126. The court in the appropriate cases can make an order under section 91 that would override the provisions of section 126 of the Evidence Act. The issuance of summons is a discretion exercised by the court and the possibility of the court not to make an order that violates the privilege conferred under section 126, in the exercise of its discretion, cannot be ruled out.

4.2. Common interest

4.2.1. Can attorney-client communications or work-product be shared among clients with a common interest who are represented by separate attorneys, without waiving the protections? How may the protections be preserved or waived?

Section 126 of the Evidence Act does not contemplate sharing of attorney-client communications or work-product among persons with a common interest without waiving protections. As per the language of section 126, a client may waive privilege entirely or not at all.

4.3. Limited waiver

4.3.1. Can attorney-client communications or work-product be disclosed to government authorities without waiving the protections? How?

Sections 126 to 129 of the Evidence Act do not contemplate limited waiver. As per the language of section 126, a client may waive privilege entirely or not at all. However, where the disclosure is forced by a government authority (eg, as a part of documents seized), such disclosure may be attempted to be made without waiving protections.

4.4. Other privileges or protections

4.4.1. Are there other recognised privileges or protections in India that permit attorneys and clients to maintain the confidentiality of communications or work-product?

Other than what is provided in sections 126 to 129 of the Evidence Act and Rule 17, Chapter II, Part VI of Bar Council of India Rules, there are no formal recognised privileges or protections. Attorneys and clients may in their contract enter into arrangements to maintain the confidentiality of communications or work-product. This will be capable of protection under (Indian) contract law.

11.1. Key developments of the past year

11.1.1. Are there any other current developments or emerging trends that should be noted?

The warehousing sector has seen a sharp increase owing to the expanding delivery network of e-commerce companies in India, many of them concentrated in tier-two cities across the country. Press Note 3 of 17 April 2020 now requires all countries sharing land borders with India or beneficial owners of investors who share land borders with India, proposing to acquire a shareholding or invest in India, will require government approval.

11.2. Coronavirus

11.2.1. What emergency legislation, relief programmes and other initiatives specific to your practice area has your state implemented to address the pandemic? Have any existing government programmes, laws or regulations been amended to address these concerns? What best practices are advisable for clients?

On 28 May 2020, the Ministry of Housing and Urban Affairs issued advice to various states, union territories and other central government ministries concerning the validity and time-limit extension of all approvals, no-objection certificates and subsequent compliances for the real-estate sector. According to the advisory, the states and the concerned agencies have been advised to:

1. consider the situation as a force majeure;
2. extend the validity automatically, of various kinds of approvals by urban local bodies and urban development authorities or other state agencies including the commencement and completion certificates, the payment schedule of charges, including developmental charges and no-objection certificates from various agencies by nine months; and
3. automatically extend timelines for subsequent compliances by the building proponents, as per the precondition of the permission give, for nine months.

The advisory, as outlined in point (2) and (3) above, may be considered for all those projects whose validity has expired on or after 25 March 2020. The advisory further provides that the states may issue necessary directives to municipal corporations, urban development authorities and urban local bodies enabling various approvals, payment of charges and compliances by building proponents be rescheduled without an individual application from the building proponent. Given the above advisory, the real-estate regulatory authorities of several states have extended the registration of the real-estate project including completion timelines from six to nine months. The state of Maharashtra has reduced the amount of the stamp duty by 2 per cent on immovable-property conveyance instruments from 1 September 2020 to 31 December 2020, and by 1.5 per cent from 1 January 2021 to 31 March 2020. The Reserve Bank of India announced a resolution framework for covid-19 related stress on 6 August 2020, addressing borrower defaults under the stress caused by the pandemic – without necessitating a change of ownership and without an asset-classification downgrade, it modified the existing framework. The framework for covid-19 stress covers the resolution of both personal loan accounts and corporate loan accounts. The framework applies to commercial banks, primary cooperative banks, state cooperative banks, district-level cooperative banks, all India term financial institutions and all non-banking financial companies, including housing finance companies. Only those borrower accounts that were classified as standard, but not in default for more than 30 days with any lending institution as on 1 March 2020 and having stress because of covid-19, are eligible for resolution under this framework. On 24 September 2020, the Ministry of Corporate Affairs (MCA) extended the moratorium against the filing of applications for the commencement of corporate insolvency resolution processes against corporate debtors for any defaults arising after 25 March 2020 by a further three months to 25 December 2020. The moratorium, which came into effect in June, was originally announced for a period of six months (ie, from 25 March 2020 to 25 September 2020. The MCA is authorised to further extend the moratorium until 25 March 2021. 

5.1. Key developments of the past year

5.1.1. Are there any developments, emerging trends or hot topics in foreign investment review regulation in India? Are there any current proposed changes in the law or policy that will have an impact on foreign investment and national interest review?

As a step towards the liberlisation of foreign investment in India and towards giving an impetus to defence production, the central government, in Press Note 4 dated 17 September 2020, increased the foreign direct investment cap to 74 per cent from 49 per cent through the automatic route in the defence sector. The covid-19 pandemic has adversely affected most major economies, including the Indian economy. In light of the lockdowns and market disruptions caused by covid-19, the valuations of several Indian companies have witnessed a significant decline. To combat any opportunistic takeovers or acquisitions of Indian companies, the Ministry of Commerce, on 17 April 2020, issued Press Note 3 (2020 Series) to amend the extant foreign direct investment policy; and the related amendments to the Foreign Exchange Management (Non-debt Instruments) Rules 2019 were notified in the notification dated 22 April 2020 in exercise of the powers conferred by clauses (aa) and (ab) of subsection (2) of section 46  of  the  Foreign  Exchange  Management  Act  1999, which amended the Foreign Exchange Management (Non-debt Instruments) Rules 2019 (Revised NDI Rules). Based on the Revised NDI Rules, any investing entity that belongs to or is incorporated in or that is beneficially owned by a citizen of or a person situated in a country sharing a land border with India (concerned investor) must obtain the Indian government’s approval prior to making any investment. Over the course of the past several years, the rules relating to foreign direct investment in India were progressively liberalised; however, investors from only two of India’s neighbouring countries – Pakistan and Bangladesh – have been subject to stricter investment rules (requiring all investments to be approved by the government). Investors from China were not subject to such strict scrutiny other than in sensitive sectors such as telecom, defence and railway infrastructure. With the amendment to the Foreign Exchange Management (Non-debt Instruments) Rules the following transactions will require prior government approval (even if the sector is an automatic route sector): any acquisition of a stake in an Indian entity by a concerned investor; or any transaction that will result in a concerned investor becoming a beneficial owner of an Indian entity. Prior government approval must also be obtained for any transfers of existing foreign investment, which would result in the concerned investor securing beneficial ownership of an Indian company. Further, to facilitate seamless investments in India during the pandemic, the Finance Ministry announced a slew of measures across several domains, including, inter alia, income tax filing, corporate affairs, the Insolvency and Bankruptcy Code 2016, the banking sector, and credit schemes to micro, small and medium-sized enterprises. For instance:

• No additional fees were charged for late filing during a moratorium period from 1 April 2020 to 30 September 2020 in respect of any document etc, that was required to be filed with the Ministry of Corporate Affairs (MCA) registry, irrespective of its due date. This step contributed towards the reduction of compliance burden and enabled previous non-compliant companies and limited liability partnerships to make a fresh start.
• The MCA, in a circular dated 24 March 2020, relaxed the regulations for companies conducting their annual general meeting (for the financial year ending 31 December 2019) (AGM) until 30 September 2020. Further, in a general order dated 8 September 2020, the MCA extended the timeline for conducting AGMs from 30 September 2020 to 31 December 2020.
• The Reserve Bank of India, in a notification dated 27 March 2020, permitted all commercial banks (including regional rural banks, small finance banks and local area banks), cooperative banks, All India Financial Institutions, and non-banking financial companies (including housing finance companies and microfinance institutions) to allow a moratorium of three months on payments of equated monthly installments and installments in respect of all term loans outstanding as on 1 March 2020, which was further extended by another three months (until 31 August 2020).
• The Supreme Court, in its order dated 23 March 2020 in WP (Civil) No. 3/2020 took suo motu cognisance of the difficulty faced by the litigants in approaching various courts and tribunals owing to the national lockdown and thereby extended the limitation period in all proceedings, irrespective of the limitation prescribed under the general law or special laws whether condonable, with effect from 15 March 2020 until further orders are passed by the Supreme Court.

In the wake of strict lockdowns in India owing to covid-19, to ensure regulatory continuity and progress new and pending cases, the Competition Commission of India (CCI) in a welcome move in 2020, issued a press release clarifying the procedure for the electronic filing of notification forms as well as online video consultations. Be it Form I/Form II combinations, green channel notifications or, even, combinations with remedies, it has been business as usual for the CCI’s combination division, which has conducted its review as seamlessly as possible with limited staff and work-from-home facilities. Additionally, in a welcome development, the CCI acknowledged the need for businesses to ‘join-hands’ to address the technical and economic challenges caused by covid-19 such as: disruptions in supply chains; the rationalisation of product ranges; the halting of pipeline products; and future supply concerns. In this regard, the CCI issued an advisory to businesses recognising the need of businesses (including those dealing in critical healthcare and essential commodities) to coordinate certain activities (including the formation of efficiency enhancing joint ventures). However, the advisory clarified that these activities shall be limited to: sharing data on stock levels; timings of operation; sharing of distribution networks and infrastructure; and transport logistics, research and development, production, etc. However, the CCI emphasised in the advisory that in its assessment of such coordinated activity, it will review factors such as accrual of benefits to consumers, improvement in production or the distribution and provision of goods and services, and economic development. This caveat clarifies that the CCI will only consider coordinated activity that is necessary and proportionate to address concerns arising from covid-19. The advisory further cautions that businesses taking advantage of covid-19 to contravene the provisions of the Competition Act 2002 will not be able to claim protection from the sanctions. On 27 March 2020, the CCI issued guidance (the Revised Notes) for parties to file a Form I and clarified the scope of information to be provided to the CCI while notifying a combination in Form I. The Revised Notes were essentially issued to incorporate the amendments introduced to Form I by CCI by way of gazette notification dated 13 August 2019. The Revised Notes: provide relaxation in mapping overlaps between the parties; provide relaxation in providing market facing information; and clarify the scope of ‘complementary’ products and services. It also requires an enhanced level of disclosure: from the acquirer with respect to its group activities; and on the details of the transaction, including the rights being acquired. The Revised Notes clarify: that market shares are to be provided for three years (as opposed to the earlier requirement of one year), only when the combined market shares of the parties for any plausible alternative relevant market exceeds 10 per cent; and the scope of complementary products and services. While mapping horizontal and vertical overlaps, parties are now required to consider entities in which they hold: a direct or indirect shareholding of 10 per cent or more; a right or an ability to exercise any right (including any advantage of commercial nature) that is not available to any ordinary shareholder; or a right or an ability to nominate a director or observer in another enterprise. Further, the CCI has also recently proposed to do away with the requirement for transacting parties to disclose (in Form I) and justify non-compete covenants as part of the combination. If this proposal is successful, then parties would be expected to conduct a self-assessment of non-compete covenants while making a notification in Form I. Moreover, the CCI will continue to have the power to conclude on the effects of these non-compete covenants through the provisions pertaining to anticompetitive agreements under the Competition Act 2002 (the Competition Act). While the CCI sought public comments on its recommendation, it is yet to implement this amendment. 

5.1. International and national regulation

5.1.1. Are there any emerging trends, international regulatory schemes, national government or regulatory changes, or other hot topics in real estate regulation in India? (eg, transition to a new alternative benchmark rate upon cessation of LIBOR as benchmark rate?)

The Supreme Court of India has upheld an amendment to the Insolvency and Bankruptcy Code 2016 whereby home buyers have been included in the definition of financial creditors. Home buyers being not less than 100 under the same real estate project or being not less than 10 per cent of the total numbers of home buyers in a real state project, whichever is lesser, can file an insolvency application for initiating the insolvency resolution process against a developer should the developer fail to keep the commitment made by the developer to the home buyers.

5.1. Proposals and developments

5.1.1. Are there any other current developments or trends that should be noted?

With the increasing sophistication of offences and the pressure on investigating agencies to find evidence, investigating agencies are also testing the boundaries of attorney-client privilege (and, in some instances, successfully so). As per media reports, a law firm was recently asked by investigating agencies to hand over documents on a fraud allegedly perpetrated by an individual who had left India, since the documents available with the law firm were not covered by attorney-client privilege. Similarly, in connection with the investigation into a failure of a large conglomerate with financial and other businesses, with the consent of the new management, investigating agencies sought details of past advice provided by multiple law firms to the past management.

5.1. Key developments of the past year

5.1.1. Please highlight any recent significant events or trends related to your national anti-corruption laws.

The key recent developments that related to Indian anti-corruption laws are as follows:

• A criminal reforms committee has been constituted in an attempt to amend the Indian Penal Code. A set of questionnaires have been issued by this committee to gauge public opinion on various offences. One of these issues includes private bribery, which may be criminalised by way of amendment.
• recent amendments to the Prevention of Money Laundering Act (PMLA), which expand the definition of proceeds of crime, remove the requirement to file a first information report for a scheduled offence as a prerequisite for the Enforcement Directorate to initiate proceedings under the PMLA and declare all offences under the PMLA as cognisable and non-bailable;
• the former chairman of United Spirits Limited being declared as India’s first Fugitive Economic Offender under the Fugitive Economic Offenders Act 2018;
• recent forensic investigation activity in relation to the affairs of the Amrapali directors, Moser Baer India Limited and Infosys Limited, based on alleged fraud and mismanagement in the affairs of the relevant entities;
• the Securities and Exchange Board (SEBI)’s initiative to reward whistle-blowers for cases involving companies whose securities are listed on stock exchanges in India;
• initiation of proceedings before the Supreme Court, which will ultimately decide the retroactive applicability of the PMLA to cases of fraud under section 447 of the 2013 Act that occurred prior to April 2018;
• the ED’s prosecution against P Chidambram, HDIL and its promoters and Moser Baer India Limited and Ratul Puri, for allegations of money-laundering;
• the prosecution by the Ministry of Corporate Affairs against the directors, management and the statutory auditors of Infrastructure Leasing and Financial Services. The auditors are presently being investigated by the National Financial Reporting Authority, with bans having been met out to the individuals directly involved in the audit;
• proceedings before the Supreme Court of India in relation to the ban imposed by the SEBI against Pricewaterhouse Coopers for its alleged involvement in the fraud committed by the management of Satyam Computer Services Limited; and
• proceedings initiated by the Serious Fraud Investigation Office (against the lenders and the promoters of Bhushan Steel alleging that the senior officials of 13 banks were involved in the bank fraud committed by the promoters against the relevant banks.

5.1. Update and trends

5.1.1. What are the principal challenges to developing cybersecurity regulations? How can companies help shape a favourable regulatory environment? How do you anticipate cybersecurity laws and policies will change over the next year in India?

Various factors have contributed to delayed formulation of cybersecurity regulations in India, including: (i) the rapid advancement of technology that continues to outpace regulatory response; (ii) intermittent and ineffective reporting of incidents; (iii) the private sector’s inability to accurately assess criticality of available information and likely harm that may be caused in the event of an incident; (iv) lack of cross-functional expertise on the nature of cyber security incidents that may be experienced by varied sectors; and (v) government and private sector hesitation to mandate minimum standards for all categories of businesses, in view of the time and expense involved. In the last year, however, there has been a renewed focus on adoption of robust cybersecurity practice in India, both from the government and the private sector. Due to the covid-19 pandemic and the large-scale remote work and new technology adoption resulting from it, the private sector has been quite vigilant in adapting its processing, updating its budgets and responding to cyber threats in a timely and nuanced manner. Several organisations, such as the Data Security Council of India (DSCI), have proactively issued advisories and assisted other private sector organisations to seamlessly transition to safer digital processes. We expect these initiatives to guide the government in terms of level of cyber security preparedness expected from organisations, how the private sector has responded to cyber security threats, renewed focus on revision of policies and diversified skill-set of response stakeholders, and testing efficacy of protective technologies and strategies. Timely and descriptive cyber security reporting by the private sector will bring in more collaboration and clarity on better practices. The varied experiences of regulated businesses regarding cyber incidents will help guide policy, as it is likely that sensitive sectors such as healthcare and social security will require a higher standard of compliance, in view of the nature of their operations and risk assessment. We expect some regulatory developments proposed by the government to further energise compliance. The National Cyber Security Strategy 2020 is a long-awaited policy initiative of the government, and it is hoped that better security standards and priority allocation will be the norm after it is notified. The Guidelines on Regulation of Payment Aggregators and Payment Gateways require payment aggregators to implement security standards, and best practices which will benefit the financial technology sector in India.

5.2. Coronavirus

5.2.1. What emergency legislation, relief programmes and other initiatives specific to your practice area has been implemented to address the pandemic? Have any existing government programmes, laws or regulations been amended to address these concerns? What best practices are advisable for clients?

On 28 May 2020, the Government of India, Ministry of Housing and Urban Affairs, issued an advisory to various states, union territories and other ministries of central government with respect to the extension of validity and time limit of all approvals, No Objection Certificates (NOCs) and subsequent compliances for the real estate sector. As per the said advisory, the states and the concerned agencies have been advised to:

• consider the situation as a force majeure;
• extend the validity, automatically, of various kinds of approvals by Urban Local Bodies, Urban Development Authorities and other state agencies, including commencement and completion certificates, payment schedule of charges including developmental charges, NOCs from various agencies by nine months; and
• extend the timelines for subsequent compliances by the building proponents as per the precondition of the permission given, automatically, for a period of nine months.

It has been clarified in the advisory that the advisory as set forth in the second and third points may be considered for all those projects whose validity has expired on or after 25 March 2020. The advisory further provides that the states may issue necessary directives to Municipal Corporations, Urban Development Authorities and Urban Local Bodies so that various approvals, payment of charges and compliances by building proponents may be rescheduled without any requirement of an individual application from the building proponent. In view of the above advisory, the Real Estate Regulatory Authorities of various states have extended the registration of real estate projects as well as completion timelines by a period ranging from six months to nine months. The state of Maharashtra has reduced the amount of stamp duty by 2 per cent on the instruments of conveyance of the immovable property for a period starting from 1 September 2020 to 31 December 2020, and by 1.5 per cent for the period starting from 1 January 2021 to 31 March 2020. The Reserve Bank of India announced a resolution framework for covid-19 related stress on 6 August 2020 to address borrower defaults pursuant to the stress caused by the pandemic – without necessitating a change of ownership and without asset classification downgrade, modifying the existing framework. The framework for covid-19 stress covers resolution of both personal loan accounts and corporate loan accounts. The framework is applicable to commercial banks, primary cooperative banks, state cooperative banks, district level cooperative banks, all Indian term financial institutions and all non-bank financial companies, including housing finance companies. Only those borrower accounts that were classified as standard, but not in default for more than 30 days with any lending institution on 1 March 2020 and having stress on account of covid-19 are eligible for resolution under this framework. 

5.2. Coronavirus

5.2.1. What emergency legislation, relief programmes and other initiatives specific to your practice area has your state implemented to address the pandemic? Have any existing government programmes, laws or regulations been amended to address these concerns? What best practices are advisable for clients?

The central government and the state governments, during the covid-19 pandemic, issued orders under the National Disaster Management Act 2005 and the Epidemic Diseases Act 1897. The Epidemic Diseases Ordinance 2020 was promulgated on 22 April 2020 to empower the state governments to take special measures and prescribe regulations during the outbreak of an epidemic disease. These legislation were the primary sources of the government imposing the lockdown and rules surrounding it.

At the Union level, a relaxation on tax return filings was announced through the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance 2020. There was a further relaxation on the tax deducted at source announced at the annual budget. The Central Board of Direct Taxes relaxed the reporting of information as well.

The Reserve Bank of India (RBI) started by imposing a three-month moratorium on loans, which was extended to 31 August 2020. However, there is still some uncertainty as the issue is sub-judice with the Supreme Court and the RBI has not issued fresh guidelines on the moratorium. However, the moratorium imposed against insolvency proceedings was extended up to 25 December 2020. Orders in this matter were reserved on 17 December 2020 and are still awaited.

Timelines for compliances have been extended by the Ministry of Corporate Affairs. These relaxations include conducting the annual general meeting of a company through video conferencing, and the date for the meeting had been extended to 31 December 2020. On the capital markets front, SEBI has extended the timeline for compliances on depository participants as well as trading members. This also includes measures to ease compliance such as permitting digital signature certificates for authentication of filings.

For good order, it is recommended that clients seek advice on the updated compliance requirements under various regulators. There have been continuous changes introduced by the government to address various issues caused by the pandemic. There has been a further review of some of these changes by the judiciary and the state governments.

A repository of resources tracking the changes introduced by the government to tackle the pandemic can be found here: https://www.azbpartners.com/covid-19/

5.2. Coronavirus

5.2.1. What emergency legislation, relief programmes and other initiatives specific to your practice area has your state implemented to address the pandemic? Have any existing government programmes, laws or regulations been amended to address these concerns? What best practices are advisable for clients?

The DSCI (which is an industry body set up by the National Association of Software and Service Companies, established for data protection in India, for the purposes of establishing standards and practices for cyberspace to make it safe and secure) issued a paper titled ‘Business Resiliency and Security during COVID-19’, which outlines how security organisations have handled the unprecedented challenges brought about by the pandemic and is a summation of best practices that may be adopted by organisations, going forward. The DSCI has also issued various advisories on the best practices for cyber security to be implemented by IT administrators and employees working from home, privacy implications arising from remote work and cybersecurity protocols to be adopted by hospitals and law enforcement agencies. Further, an advisory has also been issued by the Computer Emergency Response Team (CERT-In) to combat the covid-19 related phishing campaigns by malicious actors against individuals and businesses. Further, to combat cyber security issues, certain regulators such as the Department of Telecommunication have been issuing, inter alia, various security-related circulars to update stakeholders, such as: ‘Best Practices – Cyber Security‘, which provides protocols to be followed by organisations; and ‘Unsafe Practices to be Avoided at Workplace for Cyber Security‘, which describes unsafe workplace practices that should be avoided, such as using common passwords, leaving devices unlocked, ignoring operating systems and software updates, downloading files without scanning, etc. It is recommended for all organisations to, in a timely manner, appoint a chief information security officer, formulate policies and allocate stakeholder responsibility, and review the available advisories (especially in their particular sector). It is also advisable for organisations to adapt their cyber security preparedness in light of the degree of harm that can be caused to their business and stored information, in the event of an incident. The Reserve Bank of India (RBI), in its ‘Financial Stability Report’ issued in July 2020, recognised the banking industry as a ‘target of choice’ for cyberattacks. In the post-covid-19 lockdown, the number of cyberthreat incidents has considerably surged, in view of which the RBI has taken several measures to ensure the adoption of other practices and procedures. As per the ‘Financial Stability Report’ issued in July 2020, one such example is the advisory issued by the RBI on 13 March 2020 to the regulated entities to ensure that access to systems was secure and critical services to customers were operating without disruption. From then onwards the RBI, in close coordination with the CERT-In, has issued over 10 advisories to supervised entities on various cyberthreats and best practices to be adopted. In addition, a series of video conferences were conducted regarding cybersecurity preparedness and broad cyber/IT threats in order to sensitise supervised entities. Further, owing to the increase in the number of digital transactions on account of the covid-19 crisis and associated threats, the government is in the process of setting up a system to secure the financial sector of the country from cyberattacks, and is establishing a specialised agency, CERT-Fin, for this purpose.

5.2. Coronavirus

5.2.1. What emergency legislation, relief programmes and other initiatives specific to your practice area has your state implemented to address the pandemic? Have any existing government programmes, laws or regulations been amended to address these concerns? What best practices are advisable for clients?

The covid-19 pandemic has adversely affected most major economies, including Indian economy. In light of the lockdowns and market disruptions caused by covid-19, the valuations of several Indian companies have witnessed a significant decline. To combat any opportunistic takeovers or acquisitions of Indian companies, the Ministry of Commerce, on 17 April 2020, issued Press Note 3 (2020 Series) to amend the extant foreign direct investment policy; and the related amendments to the Foreign Exchange Management (Non-debt Instruments) Rules 2019 were notified in the notification dated 22 April 2020 in exercise of the powers conferred by clauses (aa) and (ab) of subsection (2) of section 46  of  the  Foreign  Exchange  Management  Act  1999, which amended the Foreign Exchange Management (Non-debt Instruments) Rules 2019 (Revised NDI Rules). Based on the Revised NDI Rules, any investing entity that belongs to or is incorporated in or that is beneficially owned by a citizen of or a person situated in a country sharing a land border with India (concerned investor) must obtain the Indian government’s approval prior to making any investment. Further, to facilitate seamless investments in India during the pandemic, the Finance Ministry announced a slew of measures across several domains, including, inter alia, income tax filing, corporate affairs, the Insolvency and Bankruptcy Code 2016, the banking sector, and credit schemes to micro, small and medium-sized enterprises. For instance:

• No additional fees were charged for late filing during a moratorium period from 1 April 2020 to 30 September 2020 in respect of any document etc, that was required to be filed with the Ministry of Corporate Affairs (MCA) registry, irrespective of its due date. This step contributed towards the reduction of compliance burden and enabled previous non-compliant companies and limited liability partnerships to make a fresh start.
• The MCA, in a circular dated 24 March 2020, relaxed the regulations for companies conducting their annual general meeting (for the financial year ending 31 December 2019) (AGM) until 30 September 2020. Further, in a general order dated 8 September 2020, the MCA extended the timeline for conducting AGMs from 30 September 2020 to 31 December 2020.
• The Reserve Bank of India, in a notification dated 27 March 2020, permitted all commercial banks (including regional rural banks, small finance banks and local area banks), cooperative banks, All India Financial Institutions, and non-banking financial companies (including housing finance companies and microfinance institutions) to allow a moratorium of three months on payments of equated monthly installments and installments in respect of all term loans outstanding as on 1 March 2020, which was further extended by another three months (until 31 August 2020).
• The Supreme Court, in its order dated 23 March 2020 in WP (Civil) No. 3/2020 took suo motu cognisance of the difficulty faced by the litigants in approaching various courts and tribunals owing to the national lockdown and thereby extended the limitation period in all proceedings, irrespective of the limitation prescribed under the general law or special laws whether condonable, with effect from 15 March 2020 until further orders are passed by the Supreme Court.

In the wake of strict lockdowns in India owing to covid-19, to ensure regulatory continuity and progress new and pending cases, the Competition Commission of India (CCI) in a welcome move in 2020, issued a press release clarifying the procedure for the electronic filing of notification forms as well as online video consultations. Be it Form I/Form II combinations, green channel notifications or, even, combinations with remedies, it has been business as usual for the CCI’s combination division, which has conducted its review as seamlessly as possible with limited staff and work-from-home facilities. Additionally, in a welcome development, the CCI acknowledged the need for businesses to ‘join-hands’ to address the technical and economic challenges caused by covid-19 such as: disruptions in supply chains; the rationalisation of product ranges; the halting of pipeline products; and future supply concerns. In this regard, the CCI issued an advisory to businesses recognising the need of businesses (including those dealing in critical healthcare and essential commodities) to coordinate certain activities (including the formation of efficiency enhancing joint ventures). However, the advisory clarified that these activities shall be limited to: sharing data on stock levels; timings of operation; sharing of distribution networks and infrastructure; and transport logistics, research and development, production, etc. However, the CCI emphasised in the advisory that in its assessment of such coordinated activity, it will review factors such as accrual of benefits to consumers, improvement in production or the distribution and provision of goods and services, and economic development. This caveat clarifies that the CCI will only consider coordinated activity that is necessary and proportionate to address concerns arising from covid-19. The advisory further cautions that businesses taking advantage of covid-19 to contravene the provisions of the Competition Act 2002 will not be able to claim protection from the sanctions. On 27 March 2020, the CCI issued guidance (the Revised Notes) for parties to file a Form I and clarified the scope of information to be provided to the CCI while notifying a combination in Form I. The Revised Notes were essentially issued to incorporate the amendments introduced to Form I by CCI by way of gazette notification dated 13 August 2019. The Revised Notes: provide relaxation in mapping overlaps between the parties; provide relaxation in providing market facing information; and clarify the scope of ‘complementary’ products and services. It also requires an enhanced level of disclosure: from the acquirer with respect to its group activities; and on the details of the transaction, including the rights being acquired. The Revised Notes clarify: that market shares are to be provided for three years (as opposed to the earlier requirement of one year), only when the combined market shares of the parties for any plausible alternative relevant market exceeds 10 per cent; and the scope of complementary products and services. While mapping horizontal and vertical overlaps, parties are now required to consider entities in which they hold: a direct or indirect shareholding of 10 per cent or more; a right or an ability to exercise any right (including any advantage of commercial nature) that is not available to any ordinary shareholder; or a right or an ability to nominate a director or observer in another enterprise. Further, the CCI has also recently proposed to do away with the requirement for transacting parties to disclose (in Form I) and justify non-compete covenants as part of the combination. If this proposal is successful, then parties would be expected to conduct a self-assessment of non-compete covenants while making a notification in Form I. Moreover, the CCI will continue to have the power to conclude on the effects of these non-compete covenants through the provisions pertaining to anticompetitive agreements under the Competition Act. While the CCI sought public comments on its recommendation, it is yet to implement this amendment. 

5.2. Coronavirus

5.2.1. What emergency legislation, relief programmes and other initiatives specific to your practice area has your state implemented to address the pandemic? Have any existing government programmes, laws or regulations been amended to address these concerns? What best practices are advisable for clients?

Besides waiving various procedural compliances under certain laws, the Indian regulators have, inter alia, allowed companies to hold meetings through video conferences, to use digital signatures and to contribute towards awareness programmes and research related to covid-19 as part of their corporate social responsibility obligations. Further, the government rolled out various relief packages to address the ill-effects of lockdown on the economy and those affected. The government has also undertaken various measures to improve the ease of doing business in India. Clients would need to evaluate these in light of their specific circumstances.   * The authors would like to acknowledge Abhay Raj Singh Bundela, an associate at AZB & Partners, for his assistance with this chapter.

6.1. Recent developments

6.1.1. Are there in India any emerging trends or hot topics regarding antitrust regulation and enforcement in the pharmaceutical sector?

In October 2020, the Competition Commission of India (CCI) launched a market study to assess the competitive landscape in the pharmaceutical sector. The CCI indicated that the objective of the study is to assess antitrust concerns in the drug supply chain. The CCI has indicated that the study would primarily focus on the distribution segment of the pharmaceutical market, with a view to understanding:

• discounts and margin policies at the wholesale and retail levels of the distribution system;
• the role of trade associations in relation to various aspects of the distribution business;
• regulatory rationalisation of trade margins and its impact on price and competition; and
• the impact of e-commerce on price and competition.

The study also aims to investigate the proliferation of branded generic drugs in India and how this may affect competition, and to assess potential hurdles relating to the entry of biosimilar drugs in India. The market study is being conducted in consultation with relevant stakeholders, including pharmaceutical companies, stockists, chemists, sector experts, trade associations, doctors and regulators. 

6.1. Enforcement and compliance

6.1.1. Describe any national trends in criminal money laundering schemes and enforcement efforts. Describe any national trends in AML enforcement and regulation. Describe current best practices in the compliance arena for companies and financial institutions.

In the wake of economic offenders such as Nirav Modi and Vijay Mallya, who have fled the country since their fraud came to light, the Fugitive Economic Offenders Act 2018 (the Economic Offenders Act) was enacted with effect from 21 April 2018. The legislation gives the Indian government the power to attach all the assets (and not just the assets acquired from the proceeds of crime) of an individual against whom an arrest warrant has been issued for committing a prescribed offence where the value exceeds 1 billion rupees. The government has also stated that it will establish an international cooperative mechanism to attach the foreign assets of such declared fugitives. Absconding liquor baron Vijay Mallya became the first person to be declared a ‘fugitive economic offender’ under the Economic Offenders Act. The Directorate of Enforcement (ED) initiated proceedings against Mallya in 2016, alleging that he had used his business ventures to siphon huge amounts of money out of India. He had fled from India and moved to the United Kingdom. The High Court of Justice, according to publicly available information, dismissed his appeal against the Westminster Magistrates’ Court’s extradition order on 20 April 2020. Further, he has also lost leave to appeal against the High Court’s decision before the Supreme Court of the United Kingdom. Certain securities held by Mallya that had been attached by the ED have been sold to recover approximately 10 billion rupees. In February 2018, the ED registered a money laundering case against billionaire diamond dealer Nirav Modi for alleged fraud approximating 13 billion rupees. Modi fled the country and moved to the United Kingdom, despite a series of criminal summons issued to him by Indian courts. He was arrested in London, and the ED is working with the Crown Prosecution Service of the United Kingdom to extradite him back to India. According to publicly available information, a Special Court declared Modi as a fugitive economic offender in December 2019 on an application filed by the ED. By an order dated 25 September 2018, the Reserve Bank of India (RBI) imposed a monetary penalty of 50 million rupees on Federal Bank for non-compliance with the RBI directions in relation to, inter alia, certain know your customer and AML norms as well as for failure to pay compensation for delays in the resolution of ATM-related customer complaints. With the objective of reviewing anti-bribery and anti-corruption laws in India, certain amendments to the Prevention of Corruption Act 1988 (PCA) were introduced with effect from 26 July 2018. Under the erstwhile PCA, only the demand side of corruption (ie, the solicitation and acceptance of a bribe) was a criminal offence, and there was no provision to directly criminalise the supply side of corruption or the offering of a bribe to obtain an undue advantage, which has now been included as an offence. Further, the PCA now also specifically prescribes the consequences of an offence thereunder when committed by a company. By virtue of the same set of amendments, the new offences under the PCA have been listed as ‘scheduled offences’ under the Prevention of Money Laundering Act 2002. The RBI, on 18 December 2020, amended the Reserve Bank of India (Know Your Customer (KYC)) Directions 2016. These amendments make it, inter alia, mandatory for the regulated entities to upload KYC records pertaining to accounts of legal entities whose accounts are opened after 1 April 2021 onto the Central KYC Records Registry (CKYCR), pursuant to Rule 9 (1A) of the PML Rules. Even the KYC data of accounts of individual customers and legal entities opened prior to the above-mentioned date have to be incrementally uploaded on the CKYCR.

6.2. Coronavirus

6.2.1. What emergency legislation, relief programmes and other initiatives specific to your practice area has your state implemented to address the pandemic? Have any existing government programmes, laws or regulations been amended to address these concerns? What best practices are advisable for clients?

Indian regulatory authorities have waived various procedural compliances under certain laws and extended certain compliance timelines. Other measures taken include contribution towards awareness programmes and research related to covid-19 being permitted as part of corporate social responsibility obligations of companies. Further, the government rolled out various relief packages to address the ill effects of lockdown on the economy and those affected. The government has also undertaken various measures to improve the ease of doing business in India. Clients would need to evaluate these in light of their specific circumstances.   * The authors would like to acknowledge Abhay Raj Singh Bundela, an associate at AZB & Partners, for his assistance with this chapter.

7.1. Recent developments

7.1.1. Are there any emerging trends, notable rulings or hot topics related to cryptoassets or blockchain in India?

The Supreme Court ruling of March 2020, setting aside the Reserve Bank of India (RBI) Circular, has been notable in bringing about a positive attitude to crypto trading in the Indian markets. Unlike resistance to cryptoassets, blockchain has recently gained much traction. The government report that forms the basis for the proposed legislation banning cryptocurrency acknowledges that blockchain will play a major role in the new digital age and explicitly excludes this technology from the purview of the ban. Private entities and government institutions have aggressively pushed for innovation using this technology. Noteworthy developments include the Andhra-Pradesh government developing and using blockchain in banking and finance as well as exploring the use of smart contracts. The defence minister has also declared that blockchain has ‘Revolutionised the existing paradigm of warfighting,’ and that the ministry is seeking to employ this technology to better safeguard the security of the critical infrastructure. In its white papers, the RBI has consistently highlighted the various uses of blockchain and encouraged its deployment in the financial services market. Given the vote of confidence, the Indian market is keenly following the policy initiatives that the government may potentially release in the coming years.

7.2. Coronavirus

7.2.1. What emergency legislation, relief programmes and other initiatives specific to your practice area has been implemented to address the pandemic? Have any existing government programmes, laws or regulations been amended to address these concerns? What best practices are advisable for clients?

The Indian government has issued various guidelines concerning financial aid, health measures, etc, to address concerns arising from the covid-19 pandemic. Given the lack of clarity in regulating cryptocurrency and cryptocurrency businesses, no specific measures or initiatives have been taken in this area.