Supreme Court stays Delhi High Court order allowing GST authorities to search lawyer's office

The Supreme Court on Monday stayed a Delhi High Court judgment which held that law enforcement agencies can search an advocate's office if there is prima facie material indicating the lawyer's personal involvement in an offence [Puneet Batra v. Union of India].

A Bench of Justices Dipankar Datta and Sheel Nagu issued notice on the plea filed by Advocate Puneet Batra and stayed the operational directions of the High Court regarding the search and data cloning.

During the hearing, the Bench expressed serious concern over how investigating authorities could unilaterally determine which seized materials are protected by attorney-client privilege.  

"You collect evidence, no problem. But how will you segregate the confidential/privileged material?" the Court asked.  

Additional Solicitor General (ASG) SV Raju, appearing for the GST authorities, submitted that the department could redact and segregate the confidential material during investigation. 

However, the Bench firmly rejected this approach.

"How will you decide that? You can’t decide that."

ASG Raju argued that the department was not required to disclose its reasons to believe to the petitioner at this stage.

Taking note of the submissions, the Court issued notice specifically on the question of the legality of the search and stayed the High Court's directions permitting the cloning and examination of the seized computer data.

The Bench clarified that it was not passing any orders regarding coercive action, noting that the petitioner may respond to the department's summons and appear before the officer concerned on Wednesday.  

"Issue notice. We are only on the question of legality of search. So far as the directions are concerned that it will be cloned etc, we’ll stay that. Coercive action we will not say anything. Petitioner may respond to the summons and appear before the officer concerned on Wednesday," the Court ordered.

The matter reached the top court after the High Court dismissed Batra's challenge against a search conducted by the Anti-Evasion Branch of the Central Goods and Services Tax (CGST) Department at his office cabin, during which his computer processing unit (CPU) and other documents were seized.  

The GST Department claimed it was investigating a gaming company, Martkarma Technology Pvt Ltd (MTPL), and alleged that Batra was not merely representing the firm as a legal adviser, but was actively involved in running its business operations.  

Batra contended that the search targeted materials protected by attorney-client privilege and that the department had no legal grounds to search an advocate's office without concrete evidence proving personal involvement in illegalities beyond legal representation.  

In its ruling, the High Court had observed that advocate-client privilege cannot act as an absolute bar against an investigation into the conduct of an advocate himself where prima facie material exists. It further held that privilege does not automatically cover every document or file in a lawyer's office.  

Placing those findings on hold, the Supreme Court has now stayed the High Court judgment and sought a response from the Union government and GST authorities.

Batra was represented by Senior Advocates Balbir Singh and N Hariharan.