Justice Unplugged: Laws should keep pace with changes in business practices, say experts

N.L.Rajah, Advocate, Madras High Court, Deepika Murali, Advocate, Madras High Court, R.Kesavamoorthy, Professor, VIT, Aaratrika Bhaumik, Senior Sub Editor The Hindu at the corporate Law and Business Ethics at the Justice Unplugged in Chennai on Saturday (March 22, 2025).
| Photo Credit: Srinath M.

Laws should keep pace with changes in business practices and emerging laws like the Digital Personal Data Protection Act are going to throw up a lot of challenges, primarily between balancing privacy and processing data for private good, said experts during ‘Justice Unplugged: Shaping the Future of Law’, a law conclave organised by the VIT School of Law, VIT Chennai, in association with The Hindu, in Chennai on Saturday.

In a panel discussion titled ‘Corporation Law & Business Ethics – Navigating Legal Complexities’ moderated by Aaratrika Bhaumik, Senior Sub Editor, The Hindu; N.L. Rajah, Senior Advocate, Madras High Court, while speaking about challenges in the existing regulatory regime, said the top 100 economic entities in the world are not governments, but corporates which have budgets bigger than the Tamil Nadu government. Elaborating on the technological advancements and their potential impact on businesses, he said, that in this world of constantly evolving business standards and practices, the challenge of law to keep up with the pace of change of business strategies is a real one.

Deepika Murali, Advocate, Madras High Court, spoke about the Whistle Blowers Protection Act and the changes it needed for the hour. She said India had passed a Whistle Blowers Act, but it has been dormant for more than a decade now. She also spoke about the need for audit mechanisms and a better system in place.

Referring to Sanjay Dutt vs State of Haryana case, she said the Supreme Court elaborated on how much a director of a company can be held vicariously liable when they have not been directly involved in an act which the company is accused of doing. “…You cannot make a director blindly a party or an accused. There has to be some cause and effect. A director may be an agent of the company but that doesn’t mean they can be added to each and every litigation,” she said.

R. Kesavamoorthy, Professor of Law, VIT School of Law, VIT Chennai, said in the post-colonial era, all the colonial laws were actually made into Indian laws, especially when it comes to commercial and corporate laws. “Because of that, we have lost the entire history of India in terms of its trade and commerce and mercantile laws that we had earlier”. He also pointed out that many of the SEBI regulations actually come from the western countries to satisfy the needs of cross-border commercial trade and commerce.

Mr. Rajah said there are six main directors’ responsibilities. They are financial reporting and disclosure, board processes, related party transactions, compliance with labour and employment laws, environmental regulations and compliance, and taxation compliance. These could be managed by putting in place better corporate governance, which will ensure that there might not be exposure to any liability.

Responding to a question on differentiating between criminalising deliberate misconduct and mere lapses in oversight when it comes to liability of directors, Ms. Murali said the practical example would be the Insolvency and Bankruptcy Code which has been amended several times and a lot of rules and regulations are attached to the parent Act.

For instance, there will be actually no causal relationship at all to the instance of fraud that had happened to a particular director, who might have been a director at that point in time. But even then the director would be arrayed as a respondent in these proceedings. Time and again, the law has been pretty clear that you will have to establish a relationship to show that this director was liable, she said.

Speaking about the compliance requirements that companies are supposed to follow under the new draft rules of the Union government on Digital Personal Data Protection Rules, Mr. Rajah urged students to keep constantly tracking new laws and rules to be introduced. “It is going to have a huge impact on how corporates store their data….There are two rights which are sought to be balanced in this legislation. One is the right to privacy of the citizens and the other is a right to benefit from certain data.”

He also observed that in India, legislation as a norm is very easy to achieve. But ‘act’ as a verb is very difficult to achieve. The Data Protection Act is an emerging law which is going to throw up a lot of challenges, primarily between balancing privacy and processing data for private good.

Mr. Kesavamoorthy observed that data and fiduciaries are non-measurable. We are going to go to the court and use these particular terms. Drafting legislations have changed over the period of time and now more of an adjective and non-measurable terms have been used, where the judiciary has to throw a light on it. There is no other choice available other than fighting in the court and to get clarity.