India: Tapping Of Phone Lines Or Recording Calls Without Consent Is A Violation Of Right To Privacy Enshrined In Article 21 Of The Constitution Of India

Case Details: Sanjay Pandey vs Directorate of Enforcement BAIL APPLN. 2409/2022 & CRL.M.(BAIL) 957/2022

Court: The High Court of Delhi ("DHC"/"the Court")

Observation: Tapping of phone lines or recording calls without consent is a breach of privacy, Article 21 of the Constitution demands that phone calls be not recorded.

Judgment date: December 08, 2022

Act/Law: Indian Penal Code, 1860, Information Technology Act, 2000, The Indian Telegraph Act, 1885, Indian Wireless Telegraphy Act, 1933, Prevention of Corruption Act, 1988 and Prevention of Money Laundering Act, 2002

Facts:

• ISEC Services Private Limited ("ISEC") is primarily involved in the business of cyber security consulting, which includes conducting audits, preparing policy design and evaluation of cyber security systems and processes. In the year 2009, the National Stock Exchange ("NSE") entered into a contract with ISEC. ISEC's mandate under this contract was to analyse data and to check for cyber vulnerabilities within the NSE. As per the agreed arrangement between NSE and ISEC, NSE would provide ISEC with a hard drive (on a weekly basis) which contained the pre-recorded call data that ISEC was to analyse. ISEC would conclude its analysis and submit its weekly report to the NSE. ISEC would identify and isolate suspicious calls on the issue of data and information security and cyber and process vulnerability. Until 2012, such call-recording took place via a system installed by one M/s Comtel. Subsequently, from the year 2012 onwards, such call-recording was done using a set-up installed by one NEXSUS Techno Solutions Pvt. Ltd.

• A complaint was made to the Central Bureau of Investigation ("CBI") wherein it was alleged that ISEC in conspiracy with other accused illegally intercepted Mahanagar Telephone Nigam Limited ("MTNL") lines at NSE between 2009 to 2017 and recorded calls by various NSE officials. Thereafter, FIR/RC No. RC 2212022E0030 dated 07.07.2022 was registered on the allegations levelled by CBI under Sections 120-B read with 409 and 420 of the Indian Penal Code, 1860 ("IPC"), Sections 69B, 72, 72A of the Information Technology Act, 2000 ("IT Act"), Sections 20, 21, 24 & 26 of the Indian Telegraph Act, 1885 ("Telegraph Act"), Sections 3 & 6 of the Indian Wireless Telegraphy Act, 1933 and Section 13(2) r/w Section 13(1)(d) of the Prevention of Corruption Act, 1988 ("PC Act") at PS – EO-III, CBI, Delhi. Based on the above referred FIR, an ECIR/DLZO-I/28/2022 under the Prevention of Money Laundering Act, 2002 ("PMLA") was registered by the Enforcement Directorate ("ED"), and thereafter one Mr. Sanjay Pandey was arrested by ED, who allegedly played an active role in ISEC throughout the period 2009 to 2017.

• Mr. Sanjay Pandey applied for bail from the DHC. The ED stated that Mr. Pandey tried to project that he was merely having an advisory and guidance role in the company, however, as the factual position as evidenced by the documents available on record and statements of various persons tendered under Section 50 of PMLA, 2002 belied his claims. It was further alleged by the investigating agency that the telephone monitoring was carried out by ISEC without taking permission of the competent authority as required under Section 5 of the Telegraph Act and it was without the knowledge and consent of NSE employees.

• However, as per ISEC, NSE had been monitoring calls from the landlines installed in its premises since 1997. As per the proposal, NSE was to be provided a hard drive containing pre-recorded call data of its employees and ISEC was required to listen to the data provided by NSE on a weekly basis and submit a report to NSE officials upon analysis thereof. The work required ISEC to flag pre-recorded calls as "suspicious" based on their content and to determine whether there were any system or process vulnerabilities. The Enforcement Directorate alleged that the revenue of Rs. 4.54 crores generated by ISEC for providing such services constituted the "proceeds of crime‟ and therefore alleged commission of the offence of money laundering punishable under Section 4 of the PMLA.

• During the bail proceedings the DHC observed that:

• With respect to the bail proceedings the Court further held that as far as offences under the IPC are concerned, the ingredients of the alleged offences were not made out because the entire prosecution was silent on the identity of the victim who has suffered a wrongful loss. There was nobody named in the prosecution complaint who had been deceived or cheated. Nobody had been named to whom a wrongful loss had been caused or as to what is the wrongful loss. Except for a bald averment that various customers have been cheated, the complaint was totally silent on the name of the customers, the way and manner that they have been cheated.

• The Court further held that there were allegations that the "customers‟ were cheated as they shared "information‟ only under an assumption that the same would not be recorded. However, the ED had failed to show the nature of such information which was shared or misused, or intended to be misused, to cause any wrongful loss or wrongful gain, or to show the presence of criminal intent. Moreover, no "customers‟ had filed any complaints or been made witnesses in the complaint.

• That the act of tapping and recording phone calls without consent of the concerned person can be penalised under various sections of the Telegraph Act and Indian Wireless Telegraphy Act but the offences under the said statutes are not scheduled offences. On the other hand, invocation of Sec. 72 of the IT Act is only limited to breach of confidentiality and privacy, which offence was not made out.

• That as far as the offences under sec. 13(2) read with 13(1)(d) PC Act were concerned, which are PMLA Scheduled Offences, the same cannot be invoked since there was no allegation in the prosecution case of giving or receiving a bribe or illegal gratification. NSE is a private entity, thus no offences under section 13 of the PC Act, can be said to have been committed over the course of ISEC's contractual dealings with it.

• The DHC held that it was of the view that in the present case, no scheduled offence was prima facie made out, concomitantly there cannot be proceeds of crime having been generated as there was no criminal activity relating to a scheduled offence. This position was in consonance with the dicta of "Vijay Madanlal Chaudhary & Ors. vs. Union of India & Ors. 2022 SCC OnLine SC 929" and keeping in mind the abovementioned facts DHC granted bail to Mr. Sanjay Pandey.

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