Digital Assets in Divorce Settlements in India; Article By Arya K

I. Introduction

With the exponential growth of technology and the digital economy, the concept of “property” in matrimonial law is undergoing a significant transformation. No longer confined to tangible assets such as land, buildings, and movable property, the scope of divisible matrimonial assets now extends to encompass digital assets—a category that includes cryptocurrencies, digital wallets, intellectual property rights, online businesses, and other forms of digital holdings. As marital breakdowns become increasingly complex in the digital age, the equitable distribution of such assets during divorce proceedings in India has emerged as a pressing legal issue.

The Indian legal framework, while gradually evolving, lacks codified provisions specifically addressing the division of digital assets upon dissolution of marriage. Consequently, courts are required to interpret existing matrimonial and property laws to accommodate these novel forms of property. This article examines the nature of digital assets, their classification under Indian law, and the legal principles currently applied in their adjudication during divorce proceedings.

II. What Are Digital Assets?

The term digital assets refers to any item of value that exists in digital form and has ownership rights associated with it. These assets may be financial, intellectual, or proprietary in nature. Common categories include:

1. Cryptocurrencies – Such as Bitcoin, Ethereum, and other blockchain-based currencies.
2. Digital Wallets – Wallets holding fiat or cryptocurrency balances.
3. Online Business Assets – Websites, e-commerce platforms, affiliate accounts, or digital goodwill.
4. Social Media Accounts & Influencer Revenues – Including monetized content or digital branding rights.
5. Intellectual Property – Copyrights, patents, trademarks related to digital content or software.
6. Non-Fungible Tokens (NFTs) – Digitally unique assets on blockchain platforms.

These assets are often non-tangible, decentralized, and difficult to trace or value, making their identification, valuation, and division a significant challenge in matrimonial disputes.

III. Laws Governing Digital Asset Settlement in India

1. Absence of Specific Statutory Recognition

At present, Indian matrimonial laws—such as the Hindu Marriage Act, 1955, the Special Marriage Act, 1954, and others—do not explicitly define or include digital assets within the ambit of “matrimonial property.” Indian divorce jurisprudence does not operate on a community property model but instead relies on judicial discretion under principles of equity, fairness, and maintenance rights.

2. Recognition Under General Property Law

Digital assets may fall under the definition of “property” under general law principles (e.g., Transfer of Property Act, 1882, and Indian Contract Act, 1872). Therefore, in the absence of a statutory framework, courts have relied on:

• Evidence of ownership and acquisition during the subsistence of the marriage.
• Contribution of the non-owning spouse, financial or otherwise, to the asset.
• Valuation reports and digital forensic audits to establish market value and asset trail.

3. Judicial Interpretation and Equitable Division

Although there is sparse Indian case law specifically dealing with digital assets in matrimonial litigation, courts have applied equitable principles while adjudicating disputes involving business interests and intellectual property. These can be analogously extended to digital assets. Where an asset was acquired during the marriage and used for the mutual benefit of the spouses, courts may consider it matrimonial property subject to division.

Further, under Section 27 of the Hindu Marriage Act, the court has the power to pass orders regarding property presented at or about the time of marriage, which may extend to certain digital gifts or holdings.

4. Disclosure and Enforcement Challenges

The decentralised and pseudonymous nature of digital assets like cryptocurrencies poses significant challenges for enforcement. Courts may order financial disclosures and forensic analysis, but lack of regulation and global jurisdictional constraints hinder effective recovery or division.

To address this, reliance is often placed on:

• Affidavit of assets and liabilities mandated during divorce proceedings.
• Section 91 and 92 of the CrPC for summoning digital evidence or bank records.
• Expert witnesses and digital forensics to establish hidden or undervalued digital

IV. Mechanism for Settling Digital Assets in Divorce Proceedings in India

The resolution of digital assets in matrimonial disputes presents novel legal and procedural challenges, primarily due to their intangible nature, cross-border accessibility, and rapid fluctuation in value. Given the absence of dedicated matrimonial legislation governing digital asset division in India, courts are guided by general principles of property law, equity, and the procedural framework provided under civil and criminal law, including the recently enacted Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS).

1. Identification and Disclosure

The primary step in the resolution process is the disclosure of digital assets by both parties. Courts may direct parties to submit:

• Affidavit of Assets and Liabilities, as per the Supreme Court Guidelines in Rajnesh v. Neha (2020), encompassing all tangible and intangible assets including cryptocurrency, NFTs, digital wallets, domain names, and intellectual property.
• Forensic Discovery and Technical Evidence: In cases of suspected non-disclosure or concealment, courts may permit digital forensic audits or appoint technical experts under Order XXVI Rule 9 of the Civil Procedure Code, 1908 for inspection and valuation.
• Requisition of Information: Under Section 94 of the BNSS, courts may summon digital records, financial documents, or third-party data from cryptocurrency exchanges, fintech platforms, or financial institutions for evidentiary purposes. This replaces the former Section 91 of the CrPC.

2. Valuation of Digital Assets

Valuation of digital assets must reflect their real-time market worth and potential future income. Courts may adopt the following approaches:

• Appointment of Independent Valuers: Through expert evidence under Section 45 of the Indian Evidence Act, 1872, courts may admit reports from certified asset valuers, blockchain experts, or chartered accountants.
• Market-Based Evidence: Parties may present exchange values, transaction histories, and blockchain records to establish contemporaneous value.

Given the volatility of certain digital assets (e.g., cryptocurrencies), courts may allow time-bound valuations or consider average indexed values across a specified period.

3. Determination of Ownership and Contribution

Determining whether a digital asset is a marital asset subject to division depends on:

• Source of Acquisition: Whether the asset was acquired before, during, or after the marriage, and whether it was funded from joint marital resources.
• Direct and Indirect Contributions: Courts may recognize non-monetary contributions such as technical support, promotion, or operational involvement by a spouse, especially in the case of digital ventures, online content creation, or web-based intellectual property.

Ownership rights may also be scrutinized under Section 14 of the Hindu Marriage Act, 1955, and other applicable personal laws, based on whether the asset forms part of stridhan, dowry, or joint property.

4. Division and Compensation

Depending on the nature of the digital asset and judicial discretion, courts may order:

• In-Specie Division: Where divisible (e.g., splitting cryptocurrency across wallets).
• Transfer of Title or Access: For digital content, intellectual property, or business accounts.
• Monetary Compensation: If division is impractical or if one party retains exclusive possession post-divorce.

Courts may also exercise interim jurisdiction under Order XXXIX CPC to preserve digital assets pendente lite, by issuing temporary injunctions against alienation or transfer.

5. Enforcement and International Implications

Given the transnational nature of digital assets, enforcement of court orders may require:

• Cooperation with Digital Platforms: Including exchanges or hosting services based outside India.
• Application of Mutual Legal Assistance Treaties (MLATs): In cases involving cross-border servers or wallets.
• Utilisation of Section 94 of the BNSS: For issuing search and seizure directions relating to digital devices or online platforms, replacing the earlier procedure under CrPC Section 91.

Furthermore, courts may direct parties to disclose private keys, recovery phrases, and access credentials under contempt proceedings if they fail to comply with judicial orders.

V. Conclusion

The treatment of digital assets in divorce settlements in India remains an evolving area of matrimonial jurisprudence. In the absence of dedicated statutory provisions, courts are compelled to rely on general principles of equity, disclosure norms, and existing property law doctrines to adjudicate such disputes. As digital assets continue to proliferate in personal and professional spheres, there is an urgent need for legislative intervention to recognize and regulate their role in matrimonial property settlements.

A codified framework, incorporating digital asset disclosure, valuation guidelines, and enforcement mechanisms, is essential to ensure fair and equitable distribution. Until such reform is achieved, litigants and legal practitioners must navigate this domain with heightened diligence, technological awareness, and strategic use of existing legal remedies. While the relevance of digital assets in Indian divorce proceedings may appear limited at present, it is a legal issue of the future, gradually moving to the forefront. As more individuals invest in digital instruments and build businesses in cyberspace, disputes surrounding such assets during marital dissolution are inevitable. In this context, the Indian legal system must evolve to ensure that emerging forms of wealth are appropriately recognized and equitably divided.