A privilege divided: Indian Supreme Court bolsters protections for external counsel but excludes in-house lawyers

In India, legal privilege is codified under sections 132–134 of the Indian evidence law called the Bharatiya Sakshya Adhiniyam 2023[2] (BSA). The recent Supreme Court judgment strongly reaffirms the sanctity of this privilege, describing it as fundamental not only to the rule of law, but also to constitutional guarantees, especially the right against self-incrimination under Article 20(3) and the right to effective legal representation under Article 22 of the Constitution of India. The Court has reiterated that a lawyer must always remain a form of safe harbour for their clients.

Reinforcing the bedrock of justice

The case originated from a disturbing occurrence wherein a lawyer was summoned by the police under section 179 of the Indian criminal procedure code, called the Bharatiya Nagarik Suraksha Sanhita 2023 (BNSS),[3] simply for representing a person who had been accused of an offence in a criminal matter. The Supreme Court recognised that such actions pose a grave threat to the administration of justice, as they interfere with the ability of lawyers to ‘conscientiously and fearlessly discharge their professional duties’.

At the heart of the judgment is a robust affirmation of section 132 of the BSA, which codifies the lawyer–client privilege. This protection is mirrored in section 134 of the BSA, which prevents a client from being compelled to disclose confidential communications with their legal advisor. The Court reiterated that this privilege belongs to the client and places an absolute obligation of confidentiality upon the lawyer regarding any communication made in the course of their professional engagement. This protection is fundamental, ensuring that a client can communicate freely and frankly with their lawyer, which is indispensable for effective legal representation and a fair justice system.

The Court also clarified the well-defined exceptions to this rule, noting that the privilege does not protect communications made in furtherance of an illegal purpose or facts observed by a lawyer that show that a crime or fraud has been committed since the commencement of their service.

New curbs on state overreach

The most significant and immediate impact of this judgment is the creation of a clear procedural shield for practicing lawyers. Answering the primary question referred to it with an ‘emphatic “NO”’, the Court declared that an investigating agency cannot summon a lawyer appearing in a case to elicit details about that case. To prevent the misuse of power, the Court has laid down the following binding directions:

• explicit justification: all summons issued to a lawyer must fall under the specific exceptions carved out in the proviso to section 132 of the BSA. The summons must explicitly state the facts and reasons for invoking the exception;
• senior officer approval: such a summons can only be issued after obtaining the consent and written satisfaction of a senior police officer, not below the rank of superintendent of the police; and
• the right to a judicial review: all summons issued to a lawyer can be subject to an immediate judicial review, which can be sought by the lawyer or the client under the inherent powers of the High Court, enshrined in section 528 of the BNSS.

These directions effectively transform the privilege from a mere evidentiary rule into a judicially enforceable right, ensuring that the ‘power to summon is not the power to interfere with the privileged communications between a lawyer and client, as long as the Constitutional Courts sit’.

The production of documents and digital devices

The Court observed that the privilege under section 132 of the BSA does not protect pre-existing documents or digital devices owned by the client that are in the possession of the lawyer from being produced if ordered by a court or police officer under section 94[4] of the BNSS. However, the Court mandated that:

• such items must be produced before the relevant jurisdictional court, not the investigating officer directly;
• the court will decide on any objections to production and admissibility after hearing the evidence of the lawyer and the client; and
• digital devices may only be examined in the presence of the lawyer and their client, with the assistance of a technology expert of their choice, in order to protect the confidentiality of other clients’ data. 

The unprivileged insider: in-house counsel left outside the citadel

While the judgment is a landmark victory for practicing lawyers, it erects a rigid wall that excludes in-house counsel from the protection offered by section 132 of the BSA. The Court’s reasoning is rooted in the definition of an ‘advocate’ under the Advocates Act 1961 and the Bar Council of India Rules, which prohibits full-time salaried employees from practicing law.

The Court held that in-house counsel, by virtue of their employment relationship, lack the requisite independence from their employer. Endorsing the reasoning of the Court of Justice of the European Union in Akzo Nobel Limited v European Commission,[5] the Supreme Court stated: ‘It follows, both from the in-house lawyer's economic dependence and close ties with its employer, that he does not enjoy a level of independence comparable to that of an external lawyer’.

The Court reasoned that an in-house lawyer is less able to manage conflicts between their professional obligations and the commercial strategies of their employer. Consequently, communications between in-house counsel and their employer are not covered by the privilege set out in section 132 of the BSA. The Court did note that protection pursuant to section 134 of the BSA may be available, but, critically, this applies only to confidential communication with an external legal advisor, not to internal communications with in-house counsel.

The chilling impact on internal investigations

This clear exclusion from legal privilege protections of in-house counsel has profound and troubling implications for corporate governance and internal investigations in India. In an era of heightened regulatory scrutiny, companies rely heavily on their in-house legal teams to conduct sensitive internal inquiries into potential wrongdoing, such as bribery, fraud and data breaches. These investigations are crucial for a company to understand its legal exposure, take corrective action and cooperate with the relevant authorities.

The lack of privilege means that the entire product of an internal investigation led by in-house counsel, including interview notes, investigation reports and legal assessments, is potentially discoverable by regulators or opposing parties to the litigation. This creates a chilling effect, such as:

• hesitancy to investigate: companies may be reluctant to conduct thorough internal reviews for fear of creating a documented roadmap for prosecutors;
• a lack of candour: employees may be less willing to speak openly with in-house counsel if they know their communications are not protected, which may hinder the fact-finding process; and
• increased costs and inefficiency: to secure privilege, companies will now be compelled to engage external counsel to lead investigations from the outset. This significantly increases costs and may sideline the in-house team, which often possesses deeper institutional knowledge.

This ruling places Indian corporations at a distinct disadvantage compared to their counterparts in jurisdictions like the US and the UK, where the privilege for in-house counsel is well-established.

Conclusion

The Supreme Court’s judgment is a laudable and necessary defence of the independence of the bar and the fundamental rights of clients. It provides clear, practical and enforceable safeguards against executive overreach. However, by drawing a bright line that excludes in-house counsel, the Court has inadvertently created a significant challenge for corporate India. While the judgment fortifies the privilege granted to external lawyers, it leaves in-house counsel and their employers navigating a far more uncertain and perilous legal landscape. The question that now looms large is whether this judicial delineation will prompt legislative action to address the unique and vital role of in-house counsel in modern corporate governance.