Courts Must Exercise Caution While Granting Pre-Arrest Bail In Cyber Economic Crimes, Interrogation Is Needed To Gather Info: Karnataka HC

The Karnataka High Court has recently said that courts must exercise caution when granting anticipatory bail, especially in cyber economic crimes underscoring that custodial interrogation is needed in such technical cases to collect useful information. 

 Justice Mohammad Nawaz made the observation while dismissing a petition filed by Prabhat Sharma and Akash Patil seeking anticipatory bail. The two are accused of data theft including proprietary software and designs for high-altitude drones developed by a private company which are used by Indian defence forces for border security.

The bench said, “Courts must exercise caution when granting anticipatory bail, specially in cyber economic crimes. Custodial interrogation is necessary, due to the technical nature of the crime and to reveal the full extent of data theft and its concealment methods. The petitioner's actions show their ability and willingness to destroy and tamper with evidence. Granting anticipatory bail could jeopardize investigation and may frustrate the investigating agency in interrogating the accused and collecting useful information and may weaken the ability of law enforcement agencies to combat sophisticated cyber crimes.”

The petitioners are charged under Section 66(B), 66(C) of Information Technology Act, 2000 and under Section 318(2) (3) (4) of BNS, 2023. In his complaint, Sameer Joshi, CEO of NewSpace Research and Technologies Pvt. Ltd, alleged that accused were former employees of complainant's company conspired to steal sensitive information for the benefit of their current employer, Lenviz Technologies Pvt. Ltd.

Accused No.1, purportedly orchestrated the theft of confidential data, including source codes, CAD designs, copyrighted information, project files and other proprietary information. It is alleged that accused No.1 utilized this stolen data to place a competing bid on behalf of Lenviz for the Meher Baba Swarm Drone Competition-II, thus causing irreparable loss and damage to the complainant's company.

Following the resignation of accused Nos. 2 and 3, an IT audit of their laptops revealed the existence of a separate Autodesk Fusion workspace labeled “Lenviz Tech”. It is alleged that accused Nos.2 and 3 illegally hacked, copied, and shared highly sensitive information including source codes and original designs, with Lenviz.

The petitioner approached the court after the trial court rejected their application. It was contended that FIR lacks specific allegations against the petitioners and that investigation was conducted without any prima facie evidence of the offence.

Moreover, the Sessions Court erroneously held that petitioners were accused of destabilizing the national defense data for illegal purposes and engaging in data theft, which was deemed a menace that needed to be nipped in the bud.

The prosecution opposed the plea submitting that Investigation reveals that stolen proprietary data and digital records may have been stored in cloud based environments placing them beyond the immediate reach of law enforcement authorities. Custodial interrogation of the petitioners is imperative to decrypt and access such digital evidence, thereby ascertaining the full extent of the conspiracy and identifying its beneficiaries.

Further, considering the gravity of the offence, if anticipatory bail is granted to the petitioners, at this stage, it would irreparably hamper the ongoing investigation and they may tamper with the witnesses or abscond, as they lack permanent residence in Bengaluru.

Similarly, the complainant argued that the offence committed by these petitioners involves systematic and premeditated corporate espionage affecting economic and national security interests. The petitioners still have access to stolen confidential data and given their financial resources and business connections, there is a high flight risk and possibility of tampering with electronic evidence that is yet to be fully recovered and analyzed. The investigation would require custodial interrogation.

Findings

The bench noted that it is well settled that, while considering a bail application, court should refrain from evaluating or undertaking detailed assessment of evidence, as the same is not a relevant consideration at the threshold stage. The Court may examine prima facie issues, including any reasonable grounds whether the accused committed an offence.

Then it said “The complainant – NRT is said to be specialized in the development of Aerospace and defence research. Government agencies such as the Indian Army, Air Force, Navy, BEL, Hindustan Aeronautics and DRDO are said to be its clients, which emphasizes the highly sensitive nature of its business. The operations are said to be governed by stringent confidentiality and security protocols, hence, play a critical role in national security. Therefore, any unauthorized divulgence can have serious repercussions.”

Following which it held “It cannot be said that there is no prima facie case against the petitioners. Granting pre-arrest bail can significantly hamper the investigation, particularly in collecting useful information and uncovering concealed materials.”

It added “Preliminary findings would establish that the petitioners continued to access, retain and use proprietary information even after their resignation and demonstrates a deliberate attempt to misappropriate data for unlawful benefits, constituting a prima facie case.”

Accordingly it dismissed the petition.

Appearance: Advocate Sundara Raman M V for Petitioners.

ASPP Asma Kouser RESPONDENT

Advocate Angad Kamath, Sloka B, Suyog Sathya for Complainant.

Citation No: 2025 LiveLaw (Kar) 117

Case Title: Prabhat Sharma And State of Karnataka

Case No: CRIMINAL PETITION NO. 695 OF 2025 C/W CRIMINAL PETITION NO. 698 OF 2025.

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