E-mail to be a valid evidence under new company law

NEW DELHI: The new company law which is being drafted by the government is likely to recognise e-mails as a valid piece of evidence. With corporates relying on e-mails for bulk of their communication, the ministry of corporate affairs is planning to recognise electronic communication by corporates as evidence during company law prosecutions.

Regulatory changes in this regard would clear the air on the evidentiary value of electronic communication including emails . With the present law on the subject yet to gain clarity, it is felt that the move would tighten the noose around companies, who often bank upon regulatory loopholes to save themselves.

Officials say that the new company law, expected to be placed in Parliament soon, would provide for necessary changes to this effect. The changes are likely to provide prosecuting agencies a strong hand in their crackdown on matters of infringement of company law provisions.

Under the present law, there is no specific recognition of e-mails as evidence. Officials point out that this lack of clarity has often been exploited by companies facing prosecution . The officials also point out that the basic ground work towards the move is almost ready with the inception of the ministry's egovernance project. The project named MCA-21 has enabled computerisation of documents and records filed by companies .

The new company law has laid substantial importance to both means to check corporate frauds as well as ways to crack them. The government feels that companies should not be let off due to lack of evidence .

It is also learnt that the government at various levels is trying to harmonise related legislation's like Information Technology Act and Evidence Act on the subject, so as to avoid regulatory overlaps.

Even as the company law awaits amendments to this effect, the Competition Commission of India (CCI) feels corporate e-mails could be crucial evidence in cartel investigations . The CCI recommends enterprises to maintain a check on electronic correspondence of its marketing personnel and distributing agents to ensure that they do not engage themselves in anti-competitive activities .