eDiscovery – the new frontier for evidence in India

eDiscovery ‘Discovery’ is a fact-finding process in litigation which occurs after a lawsuit is filed, to encourage exchange of information between both parties involved and help uncover the truth. Prior to the digital age, non-testimonial evidence primarily comprised paper documents, photographs and other physical evidence. With the prolific use of computers across industries, accepting digital evidence became inevitable in the judicial process, as communication and records on such channels could no longer be dismissed. This impetus drove change within Indian law to enable courts to accept digital evidence.

Amendments made to the Information Technology (IT) Act 2000, Indian Evidence Act 1872, Indian Penal Code 1860, Banker’s Book Evidence Act 1891 and The Companies Act, 2013, provide legislative framework for transactions, reporting, and recording in electronic format. This new admissible digital format now includes electronically stored information (ESI), and is therefore termed ‘eDiscovery’. These amendments are not only progressive and in sync with India’s go-green initiatives; they also provide a boost on improving India’s global perception on ease of doing business in the country.

Categories of electronic evidence

An observation brought about during the Dharambir vs. Central Bureau of Investigation (CBI) (148 (2008) DLT 289) case, categorized ESI into two types of records. The Delhi High court arrived at a conclusion that when Section 65-B of the Indian Evidence Act 1872 discusses an electronic record produced by a computer, it would also include a hard disk in which information was. It was therefore, distinguished as there being two levels of an electronic record:  (1) the hard disks (which used once itself becomes an electronic record in relation to the information), (2) the active accessible information recorded in the hard disk in the form of a text file, or sound file or a video file etc.

Factors causing apprehension

While the digital format is gaining incredible traction (according to research firm, International Data Corporation (IDC), by the end of 2017, two-thirds of Chief Executive Officers of the G2000 will have digital transformation at the centre of their corporate strategy), there are certain hurdles which are yet to be overcome and are likely to increase litigation costs in the interim. A couple of key challenges include,

  • Ascertaining the authenticity, relevance, and veracity of digital evidence prior to it being included in acceptable evidence: Every type of evidence is subject to vulnerabilities (such as being destroyed, altered, or damaged); ESI faces similar challenges. While tampering of evidence could be either intentional or due to negligence, it become necessary to exert caution and ensure expert handling of such information to avoid any hurdles.
  • Rising IT costs due to the mandate to preserve and produce evidence that is discoverable in pending or anticipated litigation: Considering the niche expertise and authorization required to manage such files, the costs associated with appropriately maintaining such documentation are relatively high. The technology and mechanisms may evolve over a period of time as the process scales to become more mainstream and hence this challenge would be overcome.
  • Increasing storage requirements: ESI is more voluminous than paper discovery as it is possible to store or produce such data in a variety of formats. Data collections now easily run into the gigabytes or terabytes. According to Lexis Nexis, a gigabyte can hold up to 677,693 pages of plain text documentation or 64,782 pages of Microsoft Word Files, while a terabyte can hold up to 75 million pages. Backup disks alone can hold up to 500 billion pages of plain text. Many e-mails are sent to multiple recipients, who forward it to other recipients. Additionally, on average – employees send and receive about 50 e-mail messages per day, which can be more than 1,200,000 messages a year for an organization of 100 employees. The producing party can be required to share all combinations of communications during the discovery process.

The different strokes of eDiscovery

The format of digital evidence is gaining significant traction within India, with courts playing an instrumental role in driving adoption. As a result, the following trends are beginning to emanate:

  • Revaluation of organizational data policies: Corporations may tend to have a rather lackadaisical approach toward data governance policies. The inclusion of digital evidence in judicial proceedings is prompting change as it will become inherently difficult to contribute appropriately to the eDiscovery process without effective polices to collect, retain and back-up data. Moreover, historic data needs to be effectively captured to be presented in an acceptable format, either in litigation or during regulatory inquiries.

Another facet which contributes to this challenge is the rampant tech influx of bring-your-own-device (BYOD) and cloud has increased the risk associated with organizational data. With regulators frequently demanding present and historic data for investigating numerous forms of fraud and violation; sanctions and penalties for non-compliance are likely to grow. Hence it is gradually becoming imperative for corporations to wake up and implement sound data preservation and retention policies.

  • Regulators’ reproach: Taking cue from the past year, 2016 is expected to witness a significant increase in inquiries initiated by enforcement agencies such as Economic Offences Wing of CBI (EOW) and Serious Fraud Investigation Office (SFIO). Any such inquiry, without effective documented measures, could present the legal and compliance teams with copious work. A proactive approach here would be the most useful technique to meet regulatory requirements.
  • Rise in cross border litigations: Multi-jurisdictional obligations require a thorough understanding of ‘the law of the land’ in each jurisdiction, coupled with ancillary information about acceptable discovery processes. Data privacy laws that are present in other regions could potentially trigger cost escalations.

Going by the current wave of adoption of the eDiscovery methodology in India, there is yet significant ground to cover to reach a definitive paradigm of success in this area. To draw a parallel with the US; they reached this stage of awareness and inclusion of electronic data as evidence about a decade ago. The learning that emerged is that scores of hardships had to be overcome due to the rigidly litigious environment and high scrutiny that the US economy thrives on. Legal departments in India need to take cue from their journey on this front and put in a lot of work to drive awareness about handling such inquiries which demand electronic records and reports. While complete avoidance of these challenges is not realistic, many could be diminished or controlled with proactive measures, customized solutions, and most importantly awareness.

Follow @EY_India and track #EYForensic for regular updates


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