HDFC Bank Must Follow Sound E-Discovery And Cyber Forensics Procedure To Avoid Legal Liability

Many of the readers of this Blog may be aware that ICICI, HDFC and Axis Banks have been accused of indulging in Money Laundering and Benami Transactions. While Finance Ministry and Reserve Bank of India (RBI) are Investigating Money Laundering Accusations against ICICI, HDFC and Axis Banks yet these Banks may also be conducting their own Private Investigations.

It has been reported by media reports that the HDFC Bank has hired services of private players for Forensics and Legal Audit of its affairs. At Perry4Law and Perry4Law’s Techno Legal Base (PTLB) we strongly believe that although this may be good intended yet it may bring “Unforeseen Legal Challenges”.

As the allegations against these Banks are serious and Criminal in nature, there is numerous Data of Evidence that must be “Kept Intact” by these Banks. If these Data, including Digital and Electronic Data, Changes, Access or Manipulated, it may “Draw an Adverse Inference” by the Investigating Authorities and Courts against these Banks. It may also amount to “Destruction of Evidence” by these Banks hence further Offence(s).

Although HDFC has declared that this Forensics and Legal Audit Process has been initiated without prejudice to the authentication of the video recordings or electronic data yet this is stand is difficult to prove in a Court of Law.

Actually it is the fault of the Investigating Agencies and Indian Government that have failed to take appropriate and immediate action in this regard. If the Investigation Agencies had acted “Expeditiously”, Crucial Digital Evidence would have already been placed “On Hold”.

It is also high time to spread Awareness about and ensure necessary Techno Legal Skills Development for Cyber Law of India, Digital Evidencing, E-Discovery Procedure in India and Cyber Forensics Application to various Civil and Criminal cases in India. Till now this Awareness is missing and Investigation Authorities and Courts are not insisting upon holding the Crucial Digital Evidence.

 A Public Interest Litigation (PIL) has been pending before the Supreme Court of India to ask Indian Government to prescribe Regulations and Guidelines for Effective Investigation of Cyber Crimes in India. This is also a good opportunity for the Supreme Court and Indian Government to take care of Paper Evidence Scanning and E-Discovery Legal Issues in India and Optical Character Recognition (OCR) Legal Issues India.  

We would come up with further report on this issue very soon.

Paper Evidence Scanning And E-Discovery Legal Issues In India

India is in the process of providing of electronic delivery of services to Indian citizens. Further, there is also a shift in electronic financial transactions in India whether it pertains to Internet banking or mobile banking. Additional challenges would also arise due to this digital revolution in India.

E-discovery services in India have become essential due to growing dependence upon electronic services in India. Further, white collor crimes, financial frauds, IT and cyber frauds, forensics accounting and auditing and risk management have further increased the scope of e-discovery services in India.

E-discovery legal jurisprudence in India is still evolving. At Perry4Law and Perry4Law’s Techno Legal Base (PTLB) we have provided certain techno legal aspects of e-discovery laws and regulation in India. These include optical character recognition (OCR) legal issues India, e-discovery for social media in India, data rooms, legal compliances and merger and acquisitions in India, virtual data rooms and legal compliances in India, e-discovery for cloud computing in India, electronic discovery (e-discovery) challenges in India, etc.

In e-discovery and OCR procedure, the role of a technology lawyers and ICT law firm is very important. No organisation or individual engaged in the e-discovery or ODR process can afford to engage in a limitless exercise. We at Perry4Law and PTLB believe that any e-discovery and OCR exercise must be primarily guided by relevancy, proper chain of custody and admissibility criteria in all circumstances. This is more so when litigation is an option.

In e-discovery and OCR procedure, data is identified as potentially relevant by lawyers/law firm and placed on legal hold. Evidence is then extracted and analysed using legally acceptable cyber forensic procedures. This includes the stages of identification, preservation, collection, processing, review and production.

These issue must be properly managed as per the techno legal requirements existing in India otherwise the adduced information, documents and evidence may not be relevant and admissible in the court of law.

Optical Character Recognition (OCR) Legal Issues India

Optical character recognition (OCR) is one of the most important stages of e-discovery or cyber forensics process. OCR is the process where images of handwritten, typewritten or printed text are converted into machine-encoded text using the mechanical or electronic conversion.

The main purpose of OCR is to digitise printed texts so that they can be electronically searched, stored more compactly, displayed on-line through virtual data rooms, and used in machine processes such as machine translation, text-to-speech and text mining. OCR is also very important for presenting and defending claims and obligations in civil and criminal proceedings.

OCR, e-discovery and cyber forensics are sometimes combined while investigating financial frauds and crimes, serious frauds, forensics audit, white collor crimes, corporate frauds, fraud risk analysis, IT and cyber frauds, etc.

However, there are certain techno legal issues that must be taken care of while engaging in the OCR activities. If these techno legal issues are not followed properly, the end OCR product may not be admissible in a court of law or other investigation.

Further, only relevant material must be converted into legally admissible electronic records, including OCR. A proper chain of custody must be maintained at all stages of converting printed and other text documents into digital documents and OCR.

There is no sense in converting the entire paper based document s in to electronic format as not all electronic versions would be relevant to the case or investigation. Even lesser electronic records and OCR would be held admissible in a court of law.

According to Perry4Law and Perry4Law’s Techno Legal Base (PTLB) the most important attribute while engaging in the OCR exercise meant for litigation purposes is to first ascertain the relevant documents and then convert them into digital format keeping in mind the admissibility criteria while following proper chain of custody. 

If you are interested in our techno legal services, you may contact us in this regard. See our techno legal services, cyber forensics services, US, UK and EU laws compliances, etc in this regard.

Electronic Discovery (E-Discovery) Challenges In India

Electronic discovery (e-discovery) in India is a novel field. With the active use of information and communication technology (ICT) in India, the requirements and demand for e-discovery services in India would increase.

However, e-discovery in India is also facing many challenges that India must tackle effectively to use e-discovery services in India. For instance, e-discovery for cloud computing in India, e-discovery for social media in India, e-discovery challenges for virtual data rooms and legal compliances in India, e-discovery and due diligence mechanisms, etc require special attention of Indian government and various e-discovery professionals and stakeholders.

E-discovery may also be useful for meeting the requirements of laws like Health Insurance Portability and Accountability Act of 1996 (HIPAA) of United States. Although India does not have a dedicated law like HIPPA and presently HIPPA compliances in India are not followed yet in future we cannot rule out this possibility.

Similarly, we have no dedicated data protection laws in India, data privacy laws in India and privacy rights and laws in India.  Of course, we have general laws and some of the provisions of these laws can be applied to data security, data protection and privacy protection in India. However, that is a temporary solution and in the long run we need dedicated privacy rights, privacy laws and data protection laws in India.

Recently the Supreme Court of India issued an interim order that reserved the legal practice in its widest possible manner to Indian advocates alone. This practically means that this restriction equally applies to e-discovery services in India. Thus, only Indian law firms/lawyers and Indian e-discovery LPO/KPOs of India can provide e-discovery services in India. Similarly, legal e-discovery services in India cannot be provided by any person or firm unless it consists of Indian advocates alone.

It is obvious that e-discovery challenges in India are going to be tough and all e-discovery stakeholders must be well equipped to deal with the same. Perry4Law and Perry4Law Techno Legal Base (PTLB) wish all the best to all e-discovery stakeholders in India and abroad.

E-Discovery For Cloud Computing In India

Cloud computing is increasingly seen as a viable business opportunity in India. However, there are many problems associated with cloud computing in India as well. For example we have no dedicated legal framework for cloud computing in India. In fact, cloud computing in India is legally risky.

The importance of legal framework for cloud computing and its regulation in India is also evidence if we analyse the recently proposed national telecom policy 2012 of India. The Telecom Regulatory Authority of India (TRAI) has also recommended a good legal framework for cloud computing in India. TRAI has approved many techno legal suggestions of Perry4Law in this regard, including the one pertaining to cloud computing.

The legal sector is also related to cloud computing in another manner. Cloud computing often involves regulatory issues pertaining to litigations and court cases. This is more so where electronic discovery (e-discovery) pertaining to cloud computing is involved. For instance, e-discovery for social media would be frequently undertaken in future, including in India. Similarly, virtual data rooms for legal compliances in India and elsewhere would be frequently used in future. These virtual data rooms may be based upon cloud computing technology.

Similarly, data rooms, legal compliances and merger and acquisitions are also closely related. In future, due diligence for mergers and acquisitions in India and world wide would be done in a cloud environment. This would have cost benefits and efficiency advantages.

However, electronic discovery (e-discovery) in India is still maturing. Individuals and organisations are still getting familiar with concepts like cyber law, cyber forensics, e-discovery, digital evidencing, etc. Further, Perry4Law and Perry4Law Techno Legal Base (PTLB) are providing the exclusive techno legal electronic discovery (e-discovery) services In India.

Perry4Law and PTLB suggest that both e-discovery and cloud computing need to have strong and effective legal frameworks. Te sooner it is done the better it would be for the e-discovery and cloud computing industry of India.

Virtual Data Rooms And Legal Compliances In India

Data rooms are essential for maintaining relevant and up to date information by various organisations. Companies have been using data rooms for legal compliances and mergers and acquisitions in India and abroad. However, time has come to shift to the contemporary practices and standards in this regard so that companies can successfully complete various legal due diligences and compliances in India.

For instance, virtual data rooms (VDRs) can be used to store documentary and legal information pertaining to various organisations and companies. If these companies and stakeholders use virtual data room (VDRs) for their legal and due diligence compliances, it can greatly benefit them in managing their legal aspects.

A VDR is essentially a hosted website with limited and controlled accessibility to authorised personnel only. VDR uses secure log in credentials, as supplied by the vendor/authority, which can be modified or disabled at any time by the vendor/authority in appropriate situations. Such log in credentials can be used by the bidders and their advisers to gain access to relevant documents and information.

Establishment of VDRs is considered as a viable and cost effective alternative to traditional data rooms. Electronic legal due diligence relies heavily upon virtual data rooms instead of traditional data rooms. In fact, corruption and technology related legal due diligence may use VDRs in future.

The merger and acquisition trends in India 2011 have shown a decline in merger and acquisition transactions in India except for few areas. Banking related mergers and acquisitions in India are on the cards in the year 2012. The virtual data rooms (VDRs) can be used for the future merger and acquisitions, legal due diligence requirements, loan syndication, private equity and venture capital transactions, etc.

This due diligence process has traditionally used a physical data room to accomplish the disclosure of documents. For reasons of cost, efficiency and security, virtual data rooms have widely replaced the more traditional physical data room.

A VDR is quick to set up. Scanned data and existing electronic files can be mixed, information can be added or eliminated at any time (the changes could be logged if required) and any or all information can be restricted to any or all registered viewers at any time.

There are many disadvantages of a physical data room like time consuming, narrow bandwidth, expensive, cost of travel, paper intensive, etc. On the other hand, VDRs has many advantages like improvement in the number of bidders, increased speed of transactions owing to improved accessibility, enhanced merger and acquisition, takeovers and property deals compared with purely face-to-face and hardcopy document transactions, etc. So time has come to start using VDRs for legal compliances and legal due diligence in India.

Data Rooms, Legal Compliances and Merger And Acquisitions In India

Data rooms are maintained by companies and organisations to manage and make available companies related information and documents so that they can be analysed and inspected by authorised persons and companies.

Data rooms are used for different types of transactions and multiple stakeholders these days. Vendors use data rooms in the case of a property, merger and acquisition, legal due diligence, share sale, etc. Similarly, authorities engaged in public private partnerships (PPPs) prefer to disclose a large amount of confidential data to proposed bidders during the due diligence process.

The traditional data room that is used in this regard is located at a secured physical location to which limited and authorised access is granted to selective people only. It is generally located at the vendor’s offices or at their lawyers or at some other secured place, which the bidders and their advisers will visit in order to inspect and report on the various documents and other data made available.

Often only one bidder at a time will be allowed to enter and if new documents, or new versions of documents are required these will have to be brought in by courier as hardcopy. Teams involved in large due diligence processes comprise of number of experts in different fields and so the overall cost of keeping such groups on call near to the data room is often extremely high.

Establishment of virtual data rooms (VDRs) is considered as a viable and cost effective alternative to traditional data rooms. Electronic legal due diligence relies heavily upon virtual data rooms instead of traditional data rooms. In fact, corruption and technology related legal due diligence may use VDRs in future.

A VDR is essentially a hosted website with limited and controlled accessibility to authorised personnel only. VDR uses secure log in credentials, as supplied by the vendor/authority, which can be modified or disabled at any time by the vendor/authority in appropriate situations. Such log in credentials can be used by the bidders and their advisers to gain access to relevant documents and information.

Obviously, the documents and information is sensitive and confidential and technological safeguards and restrictions should be applied to the viewers' ability to release this to third parties by forwarding, copying or printing. Technological solutions like digital rights management is one example of such technological safeguards. Cyber law and cyber security due diligence must also be undertaken by various stakeholders.

The cyber law trends in India 2012 by Perry4Law and Perry4Law Techno Legal Base (PTLB) have clearly projected that cyber law due diligence in India would going to increase. In fact cyber law due diligence for Indian companies has become so important that it must be made a part of their policies and corporate strategies.

Similarly, e-discovery in India is also going to increase the demands for data rooms and virtual data rooms in India. E-discovery services in India are still evolving but e-discovery for social media in India is one area that has tremendous potential in India and world wide.

Data rooms and virtual data rooms also facilitates mergers and acquisition and legal due diligence exercises. The merger and acquisition trends in India 2011 have shown a decline in merger and acquisition transactions in India except for few areas. However, banking related mergers and acquisitions in India is going to increase and e-legal due diligence in India may be involved in such mergers and acquisitions in India.

Virtual data rooms can also used for legal, accounting, investment banking and private equity companies performing mergers and acquisitions, fundraising, insolvency, corporate restructuring, and joint ventures. India may soon realise the benefits of virtual data rooms for merger and acquisition and other purposes.