BLOCKCHAIN EVIDENCE & ADMISSIBILITY IN INDIA

This article delves into challenges surrounding electronic evidence in Indian courts, emphasizing adherence to Section 65B of the Indian Evidence Act, 1872, due to the vulnerability of digital evidence to manipulation. The paper highlights the importance of blockchain technology in ensuring authenticity. It endeavours to analyse Indian court judgments on the hearsay rule and electronic evidence, especially in the context of blockchain evidence, and comparing treatment in foreign jurisdictions to enhance Indian law. Legal professionals must be equipped to handle objections based on hearsay and verify blockchain authenticity. The significance of Section 65B(4) in admitting digital evidence is underscored, outlining procedural requirements for validating electronic evidence. The author also discusses various recent judgments, which are indicating a shift towards accepting blockchain evidence without certification, despite some inconsistencies.

The recognition of blockchain technology as proof is still developing in India. The Indian Evidence Act of 1872 treats electronic evidence as hearsay evidence. However, in the recent case of Shahfi Mohammad v. State of Himachal Pradesh, the Court stated that S.65B was only a procedural requirement and not mandatory. A person who is not in possession of the electronic device is not required to produce the certificate. Blockchain technology is distinguished by important functionalities such as 'hash' and 'timestamping'. The Hash function aids in the validation of a file's integrity. If there is any manipulation or difference, the hash will yield an altogether different result, allowing the tampering to be detected. Furthermore, Timestamping gives a chronological record of the transaction's creation, access, and change. Due to these attributes, blockchain is an immutable and incorruptible database of information, making it an exceptionally potent form of evidence.

However, because Blockchain is successful in securing a chain of custody, the necessity for corroboration is eliminated. Because the nature of the technology makes it traceable, maintains data integrity, and is impervious to tampering, it meets the requirements of the best evidence rule. However, electronic evidence as primary evidence was protected by Section 62 of the Act, hence Section 65B method was not acceptable in Anvar P.V vs. P.K. Basheer. However, secondary evidence must follow Section 65B of the Act, and State (NCT of Delhi) vs Navjot Sandhu's view that the assertion that electronic records can be considered supplemental evidence under Sections 63 and 65 was erroneous.

Electronic evidence is admissible in jurisdictions all around the world. Certain countries have made advances in Blockchain as well. However, as of 2021, there are no particular rules or judgements in India that address the admission of blockchain evidence in courts.

Blockchain technology is renowned for its unparalleled security and reliability. In essence, a Blockchain network functions by ensuring that any data reaching a node, which represents one of its members, remains unaltered. This data is then verified by all other nodes within the chain, effectively closing the Blockchain loop and confirming the authenticity of the information. This meticulous verification process guarantees that the data received by a node is precisely as it was sent, as corroborated by all nodes. The real-world applications of Blockchain technology are incredibly diverse. One such application focuses on employing Blockchain to validate the existence and content of a file, akin to creating an evidence record or making a notarial deposit.

With a solid understanding of this basic concept, Blockchain technology has the capacity to authenticate intellectual property rights, protect confidential business information, or offer evidence of ownership in diverse circumstances. Within this particular context, the role of Blockchain entails the verification of a file's existence through the utilisation of a procedure that mixes file hashing with a specifically chosen Blockchain network. As a result, the proprietor has the ability to provide evidence of the presence of a particular file, including its exact timestamp of creation, thereby confirming their ownership and authorship.

For example, in cases where the file encompasses a trade secret or an intellectual property right, such as a source code, algorithm, or creative work, the utilisation of Blockchain technology can provide validation for the owner's assertion.

Are these Blockchain-based proofs admissible in a court of law?

Initially, there should be no inherent procedural barriers to prevent the acceptance of a document verified by Blockchain as evidence. Despite the relatively recent emergence of this technology, there is already a legal precedent that unequivocally supports its utilization as a tool for presenting evidence.

Before delving into the examination of legal rulings, statutes, and precedents, it is important to note that there is no discernible indication thus far that Blockchain-based evidence submissions are being categorically rejected by the judicial system.

The United States Stance:

Blockchain technology, in its ever-evolving dynamism, is increasingly proving its adaptability and value across an expansive spectrum of industries. Its applications, once primarily tied to the realm of cryptocurrency for creating secure digital ledgers, have expanded significantly. Notable instances of blockchain adoption include its utilisation by retail giant Walmart for supply chain oversight, aiming to bolster food safety. Healthcare institutions have utilised technology to guarantee the authenticity and reliability of medical records.  Blockchain-based "smart contracts" are being utilised in various transactions within the commercial real estate industry, and are also being implemented by oil and gas companies to manage worldwide energy trading operations. The versatility of blockchain's applications has been substantiated by Deloitte's 2018 global survey, revealing that 95% of blockchain-savvy executives have invested in this technology, with 69% expressing expectations of digital ledgers supplanting conventional financial and inventory tracking systems.

Amid the burgeoning implementation of blockchain across industries, the question centres on how this technology is accommodated in legal proceedings, particularly concerning its admissibility as electronic evidence.

Discussing Blockchain's Operational Mechanics authors and legal scholars aptly describe blockchain as a "distributed, shared, encrypted database that serves as an irreversible and incorruptible repository of information." What distinguishes blockchain is its "irreversible and incorruptible" nature. Once a piece of data is incorporated into a blockchain ledger, it becomes immutable. Alteration is precluded, and the only permissible action is the addition of new blocks, each meticulously time-stamped and sequentially appended. This meticulous process ensures the preservation of data integrity and provides a transparent and unassailable historical record of the entire ledger.

Moreover, blockchain operates as a decentralised network, in stark contrast to conventional databases. It depends on decentralised networks consisting of numerous nodes, like as computers or servers, spread throughout the world. Each node maintains a synchronised copy of the ledger, ensuring real-time updates through a sophisticated synchronising algorithm. This distribution of data to every node function as a robust safeguard against data loss or corruption.

Navigating The Hearsay Challenge

Despite blockchain's virtual invulnerability to tampering and corruption, the admissibility of blockchain receipts can be challenged in court, primarily on the grounds of hearsay. Hearsay, characterised as an "out-of-court statement offered to prove the truth of the matter asserted," is often disallowed due to the difficulty it presents in assessing the credibility of a witness under oath, compounded by the lack of opportunities for cross-examination.

Courts have confronted hearsay objections pertaining to computer-generated data, leading to nuanced decisions. Notably, in the case of United States v. Lizarraga-Tirado, where the defendant's location was a point of contention, the admissibility of a Google Earth screenshot and a computer-generated "thumbtack" was contested. The former was readily deemed non-hearsay, as it consisted of an image without a direct assertion. However, the latter, generated automatically by Google's computers, posed a more intricate challenge. Ultimately, the court ruled in favour of its admissibility, reasoning that the assertion was made by a machine, not a human, rendering it non-hearsay.

BLOCKCHAIN’S INFLUENCE ON DISPUTE RESOLUITON MECHANISMS:

In the vast realm of blockchain, where discussions have primarily revolved around its immense commercial implications, its transformative impact on legal systems has often been left unexplored. However, dismissing its significance in the legal arena would be an oversight. Recent developments in the world of law indicate that blockchain is beginning to redefine the landscape of dispute resolution mechanisms, offering a multitude of innovative possibilities. Let's delve deeper into these compelling developments:

Blockchain as a Dispute Resolution Platform:

On a global scale, China's Internet Courts have witnessed remarkable success, having settled over three million litigation cases in 2019 through their blockchain-based platforms. Internationally, while there is cautious scepticism about the digital transformation of dispute resolution, the progress is unmistakable. Initiatives like Kleros, alongside research groups exploring the integration of blockchain into traditional dispute resolution methods, signify that we are in the early stages of a profound digital transformation.

Blockchain for Enhanced Data Security:    

   Blockchain's applications extend to the realm of evidence management, offering streamlined custody and enhanced data security. The United Kingdom's Ministry of Justice has embarked on an ambitious blockchain pilot program aimed at establishing an impervious chain of custody for digital evidence management. Drawing inspiration from Estonia, renowned as the world's foremost.

The role of blockchain in evidentiary matters can be categorized into two primary dimensions:

 1. Transaction Verification: Blockchain serves as a robust mechanism for substantiating the occurrence of transactions within its ecosystem. Each transaction undergoes rigorous scrutiny, validation, registration, and meticulous time-stamping within the blockchain's ledger through cryptographic hashing. When admitted in a legal context, blockchain receipts provide irrefutable evidence regarding the transaction's chronology, location, and nature.

 2. Authentication of External Information: Embracing blockchain as a tamper-proof and chronologically secure database for external information offers significant advantages in the realm of evidence reconstitution. For example, transferring a design into a blockchain platform  inherently serves as compelling evidence of its existence at a precise moment in time. This evidential aspect assumes paramount importance when adjudicating ownership and intellectual property matters.

Furthermore, proponents of blockchain technology argue that it presents an innovative solution to the enduring challenge of verifying the source, integrity, and authenticity of digital data, particularly concerning original documents. By conducting a comparative analysis of the cryptographic hash of the original external document and its blockchain-stored counterpart, experts can definitively confirm their congruence.

While the technical community widely acknowledges the immutability and reliability of blockchain technology, it remains imperative for lawmakers and the judiciary to fully embrace its potential. This adoption would enable substantive and procedural legal frameworks to efficiently leverage the benefits offered by this transformative technology, potentially rendering conventional notarial processes obsolete. Importantly, it should be noted that the value and utility of blockchain technology are not contingent on its formal recognition or active use in court proceedings.

Procedural Requirements under Section 65B(4) of the Indian Evidence Act

Traditionally, only direct oral evidence is admissible, with documents requiring special treatment. While primary evidence (the original document) is preferred, Section 63 permits secondary evidence—like certified copies or oral testimony by witnesses—when the original is unavailable. Section 65 outlines when such secondary evidence is admissible.

Significance of Section 65B(4):Section 65B(4) sets procedural rules for admitting electronic evidence, requiring a certificate to prove authenticity. However, the certificate is not always mandatory—particularly if the party presenting the evidence does not control the device from which it originated. The provision helps treat electronic records as equivalent to documents, often eliminating the need for additional verification.

Judicial Discretion and Justice:Courts can waive the certificate requirement in the interest of justice. The obligation applies only to those with control over the device. Courts assess each case individually to ensure fairness, especially when the party lacks access to the device.

Judicial Interpretation:In Ram Singh v. Col. Ram Singh, the Supreme Court supported using modern technology in evidence if accuracy is assured. However, it stressed careful assessment depending on case facts.

In Anvar P.K. v. P.K. Basheer, the Court made certificate compliance under Section 65B(4) mandatory, overruling Navjot Sandhu. But in Shafhi Mohammad v. State of Himachal Pradesh, the Court clarified that Section 65B is procedural, not mandatory, especially for those without access to the device.

CHALLENGES TO BLOCKCHAIN EVIDENCE IN INDIA:

One significant challenge arises from the fact that most lawmakers, legal professionals, and courts are still unfamiliar with the inner workings of blockchain. The absence of comprehension frequently results in scepticism, if not complete unwillingness, about the acceptability of blockchain evidence. The core concern is the belief that the immutability of blockchain data is not always guaranteed. The verification of data on a blockchain network relies on the consensus reached by the majority of network nodes.   If a hacker assault were to compromise or originate from a majority (51%) of these nodes, it has the potential to jeopardise the integrity of the information stored in the blockchain.. Additionally, studies have shown that the probative value of a blockchain platform is influenced by the cost associated with thwarting such an attack. As a result, legal professionals and judges must first develop a comprehensive understanding of how blockchain functions and its potential limitations to establish trust in the platform storing the data. Without this understanding, the admissibility of blockchain evidence remains uncertain.

Despite the obligatory character of the provisions within section 65B of the Indian Evidence Act, there has been a noticeable inconsistency in their application. Notably, the certificate of authenticity, which is mandated for electronic records in legal proceedings, has not consistently been furnished along with such records. This irregularity has been exemplified in several legal cases, including the State (NCT of Delhi) v. Navjot Sandhu case, in which the Supreme Court ruled that electronic records, such as printouts and compact discs (CDs), could be admitted as prima facie evidence even without authentication. The case revolved around the admissibility of mobile telephone call records, with the accused contending that these records were inadmissible due to the prosecution's failure to produce the requisite certificate as specified in section 65B(4) of the Evidence Act, and non-compliance with the procedure outlined in section 65B.

Within this framework, the Supreme Court determined that the testimony of a knowledgeable witness who was proficient in the operation of the computer system during the relevant time period, along with an understanding of how the call data were obtained, was sufficient to prove the genuineness of the records. Consequently, the printouts and CDs were accepted as evidence without undergoing comparison to the original electronic data or receiving certification at the time of submission.  The practise of ignoring the specific procedure outlined for the acceptance of electronic records as evidence continued in later cases, such as Ratan Tata v. Union of India. In this case, a CD containing intercepted telephone calls was presented in the Supreme Court without following the procedure specified in Section 65B of the Evidence Act.

Regrettably, the lower judiciary in India often lacks technological proficiency and fails to fully grasp the authenticity concerns or implement safeguards when admitting electronic evidence, with only a few exceptions. The decisions of the Supreme Court in the cases mentioned above have inadvertently set a precedent for the lower judiciary to overlook the specific procedural requirements for electronic evidence.

It is imperative to recognize that the legislature instituted this distinct procedure precisely because printed copies of electronic records are susceptible to manipulation and misuse. In this context, the courts in India have, on numerous occasions, disregarded the provisions of section 65B(4), By doing so, one fails to acknowledge the fundamental characteristics of electronic evidence and leaves digital evidence vulnerable to the possibility of tampering. This issue, as discussed by Mason, remains largely unaddressed by Indian courts.

Consequently, for an extended period, unless the credibility of the digital evidence itself was questioned, courts seldom raised concerns about its authenticity or demanded the involvement of forensic experts to ascertain its accuracy. Courtroom electronic recordings were frequently assumed to be accurate without passing necessary verification processes.

The evolution of blockchain technology in legal evidence marks a transformative shift, challenging traditional standards and introducing prospects for a more secure and efficient future. With its immutable structure and advanced cryptography, blockchain offers the potential to usher in a new era of transparency and trust within legal institutions.

Blockchain’s ability to create tamper-proof, time-stamped records could redefine evidence verification, enhancing processes from digital courts to data security and chain of custody protocols. The Supreme Court’s decision in Shafhi Mohammad v. State of Himachal Pradesh, which held that individuals without control over the electronic device are not required to furnish a Section 65B(4) certificate, reflects a legal system increasingly receptive to blockchain-based evidence—though gaps in clarity and consistency remain.