Court affirms maintainability of complaint against director, emphasizes company's exclusive ownership of corporate data.
The Karnataka High Court, presided over by Justice M. Nagaprasanna, has upheld the maintainability of a complaint alleging data theft against Mr. Aashay Harlalka, a director and shareholder of Plutus Research Private Limited. The court dismissed the petition challenging the registration of a crime under the Bharatiya Nyaya Sanhita, 2023, and the Information Technology Act, 2000, emphasizing the exclusive ownership of corporate assets, including digital data, by the company itself.
The case arose from allegations that Mr. Harlalka, despite being a founding director and shareholder, engaged in unauthorized access, copying, and deletion of the company's proprietary digital assets. The complaint, filed by co-director Saurabh Bhola, detailed instances of Mr. Harlalka altering trading model parameters and deleting system logs, causing significant financial loss to the company.
The court's decision underscored the legal principle that shareholders and directors do not possess proprietary interests in company assets, which belong exclusively to the corporate entity. Justice Nagaprasanna rejected the argument that Mr. Harlalka's position entitled him to ownership of the data, likening it to a parent being accused of kidnapping their own child.
Citing precedents, the court reiterated that a company's assets, including intangible digital assets, are distinct from the personal assets of its shareholders and directors. The ruling aligns with the Constitution Bench's decision in Bacha F. Guzdar v. Commissioner Of Income-Tax, affirming that shareholders acquire rights to company profits but not to its assets.
The court further highlighted the necessity of a thorough investigation into the allegations, despite the civil nature of some disputes. The judgment referenced Supreme Court rulings emphasizing the importance of allowing investigations to proceed to ascertain specific offences and gather material evidence, particularly in complex cyber crime cases.
In conclusion, the Karnataka High Court's decision reinforces the distinct legal personality of companies and the exclusive ownership of their assets, paving the way for continued investigation into the alleged cyber crimes.
Bottom Line:
Complaint alleging data theft against a company director/shareholder - Maintainability in law affirmed. Corporate assets, including digital data, belong solely to the company; shareholders/directors cannot claim proprietary rights over such assets. Investigation into cyber crime involving unauthorized data access, copying, and deletion must proceed despite civil nature of certain disputes.
Statutory provision(s): Bharatiya Nyaya Sanhita, 2023 Sections 316 and 318(4), Information Technology Act, 2000 Sections 65 and 66, Criminal Procedure Code, 1973 Section 482.
Mr. Aashay Harlalka v. State of Karnataka, (Karnataka) : Law Finder Doc id # 2874274
