2002 (3) TMI 875 - HC - Companies Law

Summary

Issues Involved:
1. Whether the documents prepared by the applicant in anticipation of litigation are privileged.
2. Whether the respondents can use the documents obtained unlawfully.
3. Whether the advice given by the internal legal department of the applicant is privileged under Section 129 of the Evidence Act.

Detailed Analysis:

1. Privilege of Documents Prepared in Anticipation of Litigation:
The applicant contended that 21 documents prepared in anticipation of litigation and for seeking legal advice are privileged. The respondents did not dispute that the documents were prepared in anticipation of litigation but argued that the dominant purpose was not for legal advice or litigation. The court relied on the principle established in the case of Southwark and Vauxhall Water Company v. Quick [1878] 3 QBD 315, which states that documents prepared for the purpose of being communicated to a solicitor for legal advice or litigation are privileged. The court found that the dominant purpose of the documents was indeed for legal advice and litigation, thus granting them privilege under Sections 126 and 129 of the Evidence Act.

2. Use of Documents Obtained Unlawfully:
The respondents argued that even if the documents are privileged, they can use secondary evidence of these documents. They relied on the judgment in Calcraft v. Guest [1898] 1 QB 759. However, the court noted that the validity of Calcraft has been doubted and emphasized the principle from Lord Ashburton v. Pape [1913] 2 Ch. D. 469, which allows a person entitled to privilege to seek an injunction to prevent the use of such documents before they are used in evidence. The court held that the applicant is entitled to an order restraining the respondents from using the privileged documents in evidence.

3. Privilege of Advice Given by Internal Legal Department:
There was a debate on whether advice given by the internal legal department of the applicant is privileged under Section 129 of the Evidence Act. The court noted that the applicant did not provide details about the qualifications of the internal legal advisors. Since it was not established that the internal legal advisors were qualified to give legal advice, the court did not decide on this issue. However, the court found that the documents are privileged under Sections 126 and 129 of the Evidence Act because they were prepared in anticipation of litigation for seeking legal advice or for use in litigation.

Conclusion:
The court granted the company applications in terms of prayers (a) and (b), restraining the respondents from using the privileged documents in evidence. The applications were disposed of accordingly.