Supreme Court’s refusal to grant attorney-client privilege to in-house counsel in India: A critique

The Supreme Court’s recent decision in Suo Motu Writ Petition (Criminal) No 2 of 2025 marks a defining moment in India’s legal discourse. For the first time, the Court has explicitly acknowledged the role of in-house counsel and General Counsel, while clarifying the contours of attorney–client privilege under the Bharatiya Sakshya Adhiniyam, 2023 (BSA).

The judgment deserves appreciation for bringing long-awaited clarity on professional privilege. It distinguishes between Section 132 - which protects communications with advocates - and Section 134, which safeguards legal advisors. The Court observed that while in-house counsel are qualified advocates, they are not “practising advocates” within the meaning of the Advocates Act, 1961. Hence, they cannot invoke privilege under Section 132; their protection arises only under Section 134, which affords limited confidentiality.

However, the judgment overlooks an important interpretative element -that in-house counsel, though salaried, are indeed legal advisors to their employer. The omission to harmonise Sections 132 and 134 creates an internal anomaly: by denying them the status of “advocates” for privilege while not fully embracing them as “legal advisors,” the judgment leaves a conceptual vacuum around the professional identity of corporate counsel.

The Court’s suggestion that the salaried nature of an in-house counsel diminishes their independence or confidentiality is another anomaly. Remuneration and professional objectivity are not causally linked - a point well-settled across jurisdictions. Independence is rooted in professional ethics and duty to law, not in the source of compensation. Equating employment with compromised confidentiality risks undermining the institutional legal functions essential to corporate governance.

The Court’s reliance on the European Court of Justice’s decision in Akzo Nobel Chemicals Ltd v. European Commission - a civil-law precedent that denies privilege to in-house counsel for want of independence - reflects a jurisprudential borrowing that sits uneasily within India’s common-law tradition.

In contrast, common law jurisdictions recognise the privilege of in-house lawyers acting in a legal capacity. The US Supreme Court in Upjohn Co v. United States, the UK Court of Appeal in Three Rivers District Council v. Bank of England, the High Court of Australia in Waterford v. Commonwealth (1987) 163 CLR 54, and Singapore’s Court of Appeal in Skandinaviska Enskilda Banken AB v. Asia Pacific Breweries (Singapore) have all upheld privilege for in-house counsel providing legal advice, regardless of employment status.

A purposive reading of the BSA reveals two complementary protections: Section 132 shields the client from compelled disclosure, while Section 134 protects the legal advisor providing the advice. The Court’s interpretation, however, risks diluting this twin-pillar framework by conflating professional status with employment form. Today, in-house lawyers are not mere employees; they are key custodians of governance, ethics, ESG and digital compliance. To reflect this evolution, privilege must be linked to functional independence rather than the nature of employment. Global jurisprudence increasingly recognises that in-house counsel, when acting as legal professionals, deserve the same confidentiality as external lawyers. To align privilege with this reality, the test must evolve from “who pays the lawyer” to “in what capacity the lawyer acts.” Functional independence, not financial structure, should be the measure of privilege.

Despite these anomalies, the judgment is a progressive beginning. It has for the first time brought the in-house legal community into the constitutional conversation on privilege. As jurisprudence matures and legislation adapts, India’s privilege law will inevitably evolve towards parity with global standards - recognising that confidentiality, independence and professional integrity transcend employment labels.

This ruling should thus be viewed not as an endpoint, but as the first step toward a modern, globally harmonised understanding of attorney–client privilege. One that fully values the institutional role of in-house counsel in upholding justice within corporate India.

Dr Sanjeev Gemawat is the Managing Director and Group General Counsel at Essar Group.