INDIA Law and Practice Contributed by: Vijayendra Pratap Singh, Asif Ahmed, Bhanu Jindal and Khushi Mittal, AZB & Partners
person who was directly in charge of and responsible for the affairs of a company at the time of the contra - vention may be held personally liable for environmen - tal offences. There are sector-specific rules such as the Hazardous Waste (Management and Transboundary Movement) Rules, 2016, Biomedical Waste Management Rules, 2016, Plastic Waste Management Rules, 2016, and E-Waste Management Rules, 2022. The Water (Prevention and Control of Pollution) Act, 1974, and the Air (Prevention and Control of Pollu - tion) Act, 1981, contain prohibitions and restrictions on water and air pollutant discharge, prescribing penalties, including fines and imprisonment for wilful contraventions. These environmental obligations have been linked to the broader principles of sustainable development and the public trust doctrine, emphasis - ing company accountability for pollution and sustain - able operations. Notably, Section 166 of the Companies Act imposes a statutory duty on directors to protect the environment. Failure to comply with the duties set out in Section 166 (2), including the duty to safeguard the environ - ment, may attract a fine of up to INR500,000. While explicit laws mandating supply chain compli - ance for social issues like modern slavery are not codified, SEBI, under its Business Responsibility and Sustainability Reporting mandate, requires transpar - ency on social metrics, including environmental risks, labour practices, and materials sourced from suppli - ers. 3.15 Artificial Intelligence and Automation Misuse SEBI has introduced new guidelines to regulate algo - rithmic trading – ie, any type of automated rule-based trading. This includes high-frequency trading (HFT) which is used to ensure a high daily portfolio turnover and high order-to-trade ratio. Any facility/strategy for algorithmic trading must be approved by the stock exchange, and only application programming inter - faces (APIs) provided by brokers can be used. SEBI has banned all open APIs. All algorithmic strategy
providers are mandated to be empanelled with stock exchanges. As detailed in 3.4 Insider Dealing, Market Abuse and Criminal Banking Law , SEBI prohibits the use or employment of any manipulative/deceptive device/ artifice to defraud in connection with the issue, pur - chase, or sale of any securities listed or proposed to be listed. This could include use of algorithmic trading if it leads to “manipulative, fraudulent, and an unfair trade practice” in the securities market. Any person who contravenes or attempts to contravene or abets the contravention of such acts can be punished with imprisonment for up to ten years, a fine of up to INR250 million, or both. 3.16 Crypto-Assets and Digital Currency Crimes There is no legislation in India that specifically deals with crypto-assets. While the government of India introduced the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, to prohibit private crypto-assets and create a framework for a digital cur - rency issued by the RBI, this has not materialised into substantive legislation. Under criminal law, crypto-assets have not been expressly classified as either securities or commodi - ties. Indian courts have also not yet ruled on whether crypto-assets qualify as “movable property” under the BNS. However, law enforcement agencies have in practice treated crypto-assets as movable property, initiating investigations for property-related offences such as theft under the BNS. Crypto-assets have not been recognised as digital currencies by the RBI. However, the RBI has, through its circular dated 31 May 2021, advised its regulated entities to continue to carry out customer due dili - gence processes for transactions in VDAs, in line with regulations governing standards for know-your-cus - tomer (KYC), anti-money laundering, and the combat - ing of the financing of terrorism obligations under the PMLA. In March 2023, the government of India formally brought cryptocurrency and VDAs under the regula - tory ambit of the PMLA. VDASPs are included within
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