In a closely watched ruling, the Supreme Court on Wednesday clarified that in-house legal advisors working as salaried employees cannot claim the same attorney-client privilege as practising advocates. The decision, delivered in Suo Motu Writ Petition (Criminal) No. 2 of 2025, has stirred meaningful discussion within corporate legal circles, especially where companies rely on internal counsel to handle compliance, litigation strategy, and board-level governance issues.
Background
The dispute revolved around how the Bharatiya Sakshya Adhiniyam, 2023 (BSA) treats confidentiality between lawyers and clients. Traditionally, Indian law has protected private communications between a client and their advocate. However, the law also contains a separate provision for “legal advisors” - a category that includes in-house counsel employed directly by corporations.
To simplify:
- Section 132 protects communications with advocates (practising lawyers with independent standing).
- Section 134 covers legal advisors (in-house counsel), granting more limited protection.
Corporate lawyers had argued that since most in-house counsel are fully qualified and enrolled with Bar Councils, they should receive full confidentiality protections under Section 132, not the narrower shield under Section 134.
Court’s Observations
The bench drew a sharp line between a lawyer who practices independently and one who works as an employee within a corporation. “The bench observed, ‘A salaried legal employee does not function with the independence required under the Advocates Act to claim full professional privilege.’”
According to the Court, the employment relationship changes the nature of the professional bond. A practising advocate, the bench noted, has ethical duties to court and client that override business interests, while an employed counsel is structurally linked to corporate hierarchy and performance evaluation.
Interestingly, the Court leaned on the European Court of Justice ruling in Akzo Nobel, where privilege was denied to in-house counsel on grounds of lack of independence. This reference raised eyebrows in the courtroom because India’s legal system is traditionally aligned with the common law approach - and in most common law countries like the US, UK, Australia, and Singapore, communications of in-house counsel are considered privileged so long as the lawyer is giving legal (not business) advice.
Still, the judges held that the source of salary and corporate reporting relationships “cannot be separated from the question of confidentiality.”
Decision
The Court ultimately ruled that:
- In-house counsel cannot claim privilege under Section 132 of the BSA;
- Their communications are protected only under Section 134, which provides narrower confidentiality;
- Their status remains legal advisors, not practising advocates in the privilege context.
The ruling closes one debate but opens another - how corporations will reshape internal legal oversight going forward.
The judgment concluded with the Court declining to extend full attorney-client privilege to in-house counsel.
Case Title: Supreme Court Clarifies Privilege for In-House Counsel under Bharatiya Sakshya Adhiniyam, 2023
Case Name: Suo Motu Writ Petition (Criminal) No. 2 of 2025
Court: Supreme Court of India
