SINGHALS | FUNDAMENTAL OF “. INFORMATION _ TECHNOLOGY + [For LL.B. Students of various Universities of india; CivitJuaicta! Services acc NET Aspirants] (Based on New Syllabus) by Manav Malhotra 5 LLB. (CLG, Faculty of Law, DUP ‘ LA, (Pol. Sc.) (IGNOU) BA. «Prog,} (University of Delhi) SINGHAL LAW PUBLICATIONSFirst Edition 22018 Reprint + 2019-2026 © All rights reserved with Author ‘ E 295/~ Published by: ‘Singhal Law Publications Law Book Sellers & Publishers ‘A-2/457, Bhagat Colony, SantNagar, Dethi-110084 Mobile: 9810486750,9910188323 Visit at: www-dinkerlawbooks com, Sole Distributors: Mis Ussiverea! Rook Traders 80, Gokhale Market, Opp. Tis Haxari Coun, Delhi-1Gos4 Ph. 011-2397 1966, 23061288, 23001487 The publication is being sold on the condition and understanding that the information. comments, and views it centains are merely for guidance and reference anid mest 201 be taken as having the authority of. or being binding in any way on, the author, editors, publishers. and sellers, who do not owe any responsibiity wheasoever for any loss. damage, or distress to any person, whether or not a purchaser of this publication, on account of eny action taken or not taken on the basis of this publication. Despite ali the care zaken, errors or omissions may have crept inadvertently into this publication. For authoritative text information, please contact the department concerned or refer to the text-books. The answer given in this book are suggestive and may differ with interpretation. The publishers shat! he obliged if any such error or omission is brought to their notice for possible correction in a future edition. In the ease of binding defect, misprint, missing pages, etc. the publishers’ liability is timited to replacement of the defective copy within one month of its purchase by a copy of the same edition or reprint. All disputes are subject to the jurisdiction of competent courts in Delhi. Printed at: Balaji Primer, Gokulpur, Dethi-94 Dedication - My dedication of this book is divided into foltowing fold. ‘My Mom (EVG Counsellor in Gavernment of NCT af Dethi, Directorate of Education) : My Dad My lifeline my brother Akash AMM- Blessing for Life Ay Friends - Mr. Sanjeev Jain— Additional District & Sessions Judge Member Secretary, Delhi State Legal Services Authority Ms. Geetanjali Goel~ Additional District & Sessions Judge, Special Secretary. Delhi State Legal Services Authority Mr. Naveen Gupta~ Additional Secretary, Deltsi State Lega! Services Authority ‘Mrs, Rana Parween Siddiqui -- Ex-Chairman, Bar Council of Indic: Dr. Harteen Kaur — Assistant Professor, Campus Law Centre, Faculty of Lest. University of Delhi Ms. Urmila Khosa - Superintendent, Delhi State Legal Services Authority Kuibir Kaur - Director, Praud investigation & Dispute Services, Ernst a: Young, India Deepika Jamwal, Mohan K. Gajulapalte, Vineeta Jaitley, Karishma Bhatia - Ernst and Young, India| PREFACE TO THE FIRST EDITION } Advent of computers, followed by intemet has revolutionized the human existence and their conduct in the society. Tiie information can be accused, stored, retrieved and distributed speedily and easily. The traditionat paper documents are now being replaced by their electronic equivatents. The commercial transactions and individual functioning are more and more driven by the digital techaology. This transaction has put forth need for a law to facilitate and govern activities in the information society and has thus ted to the passing of the information Technology Act, 2000 (IF Act). ‘The primary focus of this book will be on Information Technology Law. addition thore will be an insight into the applicability of other laws in the tal environment. The lcaming outcome of the course will be understanding ‘the provisions of Information Technology laws provided to facilitate electronic commerce—electronic signatures, data protection, cyber security; penalties & offences under the IT Act, dispute resolution, and other contemporary issues. 1 Lam grateful to the Singhal Law Publications for producing this material. Every effort has been made to meet the excellence quality of information and making easy understanding of the concepts, Manav Malhatra Email: Manavmalhotracle@yahoo.com ©CONTENTS Chapters Page Ne. t . FART A : THE INFORMATION TECHNOLOGY 4CT, 2000 QT ACT) - A, Introduction smn erimeseenessessesomntesersereice 1 2. Legal Recognition and Authentication of Electronic 5 Records 3. Civil Liabilities 4. Criminal Liabilities 5. Internet Service Providers LiaDIiY -nensnncene 6. Cyber Security PART B > APPLICABILITY OF OTHER LAWS OF E-COMMERCE 7. E-Conteacts. 8. Trade Marks end Domain Names ... 9. Jurisdiction in Cyberspace. Bibliography 0.0. (id| PREFACE TO THE FIRST EDITION t ‘Advent of computers, followed by internet has revolutionized the human | > existence and their conduet in the society. The information can be accused, stored, retrieved and distiduted specdily and casily. The traditional paper documents are now being replaced by thei electronic equivalents. The commercial transactions.and individual functioning are more and more driven by the digital technology. This transaction has put forth need for a law w facilitate and govern activities in the information society and has thus led to the passing of the information Technology Aci, 2000 (TT Act). “Tike primary focus of this book will be on Information Technotogy Law. In addition there will be an insight into the applicability of other laws in the digital environment, The learning outcome of the course will be understanding tiie provisions of Information Technology laws provided to facilitate electronic commerce—electronic signatures, data protection, cyber security; penalties & offences under the IT Act, dispute resolution, and other contemporary issues. Jam grateful to the Singhal Law Publications for producing this materiai. Every effort has been made to meet the excellence quality of information and making easy understnding of tne concepts. Manav Malhotra Taw Conte, DU Manavmalhotracle@yahoo.com Emai oCONTENTS 5 . Chapters 2 Page No. PART A : THE INFORMATION TECHNOLOGY ACT, 2600 aT Act) - - 2. Legal Recognition and Authentication of Electronic RECOTES eeyerersenreemerticemntenninseneenitttnnnsesetemtsenins 26 3. Civil Liabilities ......... 4. Criminal Liabilities .... 1, Introduction ....... 1 eesernecteseestnemnserntasanneetsee 56 nevrssemmnneeicmenstnnee 94 200 5. Internet Service Providers Liabi 6. Cyber Security eeernnnennneereinnee E36” PART B : APPLICABILITY GY OTHER LAWS ON E-COMMERCE Te WContracts reese 8. Trade Marks and Domain Names 9. Jurisdiction in Cyberspace. Bibliography urn (wii)TABLE OF CASES 2 Amit Dilip Patwardhan y. Rud Indis Chains Pit Ltde Anoushke Shankar's Cas: Anvar PV, v. P.K, Basheer & Ors. ‘Aqua Minerals Ltd. v. Mr. Pramod Borse & Aut. Aveek Sarkar v. State of West Bengal (SC)... Avishek Goenka v. Union of India & Ant. Aynish Bajaj v. State ... Babu Ram Verma v. State of Uttar Pradesh Banyan Tree Holding (P) Ltd. v. A. Murali Krishna Reddy & Ant... ee - Bhavesh Jayanati Lakhani v. State of Maharashtra... Bigtree Entestaisment Pvt. Ltd. v. Saturday Suniay Medie i Bobby Ast International & Ors. v. Om Pal Singh Hoon ... sone 168 Bragg v. Linden pee 286 Cable News Network,P, v. GoSMS.com Ine. ... 23S Central Inland Water Transport Corp. Ltd. v. Brojo Nath .. 306 Chairman Rao v. State of Madhya Pradesh a Comb v. PayPai ........... . Cybersell, Ine. v. Cyberseil, Inc, Dharambir Khattar v. U1 Diebold Systems Pvt. Ltd. v. The Commissioner of Commercial Taxes 14 Dow Jones & Co. Inc. v. Gutnic .. Equustek Solutions ine. v. Jack Ferro Alloys Corpn. Lid. v. A-P. State Blectricity Board and Aar Food Corporation of India v. Laxmi Cattle Feed Industries Google India Pvt. Lid. v. M/s Visaka Industries Ltd & Ors. nof India @)e Googie Spain SL, Google Inc. v. Agencia Espanola dis Protection de ‘Datos, Mario Costeja Gonzalez, independent News Service Pvt Ltd v. India Brosdoast Live Li and Ors. Karak Singh v. State of UP LIC India v. Consumor Education & Riisearch Cenier Lily White v. R Munuswam: — Magbool Fida Husain v. Raj Kumar Pandey ... Mohd Sajeed K. v. State of Kerala ... My Space Inc. v. Super Cassettes Industries Led. Dethi National Association of Software v. Ajay Sood and Ors. Oil and Natural Gas Commission v. Utpal Kumar Easy and Ors, ‘On-Line Technologies v. Perkin Elmer Corp. . PR. Transport Ag yey v. Union of India Pagnan SPA v. Feed Products Ltd. Parkr Knotiv. soil International . Patel Roadways Ltd., Bombay v. Prasad Trading Co. 383 People’s Union for Civil Liberties (PUCL) v. Union of India... 237,277 PR Transport Agency v. Union of Indie... eee 36M Ry. Shephard se we 158 &.K. Daimia v. Delhi Administration 131 RM. Malkaai v. State of Maharashtra Ranjit Udeshi v. State of Maharashtra. Rannoch, Inc v. Rannoch Corp. Ratan Tata v. Union of India .. Rediff Communication v. Cyberbooth... Religious Tchnology Centre v. Netcom Online Communication Services - eo Remia v. Sub-Inspector of Police, Tanur, Reno v. ACLU ‘S. Khushboo v. Kanniammal. S, Rangarajan v. P. Jagjivan & Ors. Sanjay Kumar v. State of Haryana P&H High Court .... Santosh Kumar Singh ¥. State... Satyam Infoway Ltd--. Sifynet Solutions (P) Led, Schenck v. United States Seven Day Adventists v. M.A. Unerikutty and Am Sh. Chander Kalasi v. State Bank of India. Sh. Sanjay Govind Dhande v. Branch Manager, ICICI Bank ‘Shankarlat Narayandas Mundad v. The New Mofussil Co. Lid. Shreya Singhal v. Union of India. SMC Pneumatics Pvt. Ltd. v. Jogesh Kwatra....... Soma Mc iL Intern. v. Standard Chartred Bank... Sreckanth (. Nair v. Developer of Web-Site ..... State (NCT of Dethi) v. Navjot Sandhu @ Afsan Guru. State of A.P. v. Prabhakar Sampath State of Bihar v. Shailabala Devi State of Maharashtra v. Bharat Shanti Lal Shah __ State of Tamil Nadu v. Suhas Kutti ‘Super Casseties Industries Ltd. v. Myspace Inc. & Ang. .... er) SWIL Ltd. v. State of Delhi Syed Asifuddin and Ord. v. The State of Andhra Pradesh & Anr. Tamil Nadu v. Suhas Katti.. ‘The Google v. AEPD and Mario Cosjeta... ‘The State (Cyber Cell) v. Yogisha@ Yogesh Pandurang Prabhu .......... 189 ‘The Superiatendent, Central Prison, Fatehgarh v. Ram Manchar Titan Industries v. Prashant Koorapti & Ors.eID ‘Trimex Intemational FZE Ltd. v. Vedanta Aluminium Led... United States v. American Library Association Vaibhev Jain v. Vice-Chancetlor Devi Ahilya Vinod Kaushik & Anr. y. Madhvika Joshi & Or Vyakti Vikas Kendra, india Public Charitable Trust Thr. Trustee ‘Mahesh Gupta & Ors. v. Jitender Bagga & Aur. . World Wrestling Entertainment, Inc. v. M/s Reshma Collection Yahoo Ine v. Akash Arora Yahoo! Ine. v. Akash’ Arora & Anr, Zippo Mfg. Co. v. Zippo Dot Com. Ine. .. PART A : TRE INFORMATION TECHNOLOGY ACT, 2000 @ ACT) - Chapter 1- _ INTRODUCTION Se Information techngloyy is the application of computers and telecommunications equipment to store, retrieve, transmit and manipulate data. This term is synonymously used for computers and computer networks, but it also includes hardware, software, electronics, semiconductors, internet and other computer services. The term—information technology in the modern sense was first coined by Leavitt and Whisler in an article published in the Harvard Busines: Review in 1958. They commented—the new techeology does not yet have a singic established name. We shail cait it information technology. ‘The basic concept of information technology can be traced to World War 2, alliance of military and industry in development of electronics, computers and information theory. After the 1940's, the military remained the major source of funding for research and development in IT and also for expansion of automation to replace manpower with machine oower. IT the application of computers and telecommunications equipment to store, retrieve, transmit and manipulate data, often in the context ofa business or other enterprise. The term is commonly used as a synonym for computers and computer networks, but italso encompasses other information distribution technologies such as tlevision and telephones. IT is considered a subset af information and communications technology (ICT). Several industries are associated with information technology. including computer hardware, softwate, electronics, semiconductors, internet, telecom equipment, e- commerce and computer services. All database management systems consist of a number of components that together allow the data they store to be accessed simultaneously by many users while maintaining its integrity. A characteristic of all databases is that uy2 Fundamentals of Information Technology the structure of the data they contain is defined and stored separsteiy from the data iGelf, in a database schema. ‘The offences which take place on or using ths medium of Intemet are known as cybercrime. These inclade a plethora of legal activities. The term ‘cybercrime’ is an umbrella term under which many illegal activities may be grouped together. Because of the ationymous nature of Intemet, there are many disturbing activities occurring in the cyberspace which may enable the perpetrators to indulge in various types of criminal activities which are called as cyter crimes. The weapon with which cybercrimes are committed is technology and therefore, the perpetrators of these crimes are mostly ‘technically skitled persons who have a thorough understanding of the Intemet and computer applications. Some of the newly emerged cybercrimes are cyber- stalking, cyber-terrorism, e-mail spoofing, ¢-mail bombing, cyber- Pornography, eyber-defamation etc. Some conventional crimes may also be ‘cybercrimes if they are committed through the medium of Intemet. For e.g. theft, fraud, cheating, mischief, misrepresentation, intimidation etc. which areall punishable under the IPC, 1860. Thus, cybercrime means any unlawful act wherein the computer is either a too! or a target or both. / The Theoretical aspects include + Types of computing devices * Computer components * Input and output devices + Memory and Storage + ‘Types of software + Networks * Intemet and e-roail * File Management + Legal, ethical and security issues related to information technology + Use of computers in society * Impact of computers on society * Health and ergonomic issues associated with the use of computers ‘The practical aspects inciude > Word Processor + Spreadsheet + Database Introduction + Presentations + Browsers + Programming — Hither Java or Delphi Prearabie te the Act An Act to provid tegal recognition for transactions carried out by micas of cicotronic data interchange arid other means of electronic communicstic: commonly referred to as “electronic commerce”, which involve the use O° alternatives to paper-based methods of communication and storage cf information, to facilitate electronic filing of documents with the Government agencies and further to amend the indian Penal Code, the Indian Evidence Act, 1872, the Banker's Books Evidence Act, 1891 and the Reserv Bank of India Act, 1934 and for matters connected therewith or incidectai thereto. WHEREAS the Gencral Assembly of the United Nations by resviution 4/ RES/51/162 dated the 30th January, 1997 has adopted the Model Law om Electronic Commerce adopted by the United Nations Commission op. International Trade Law; AND WHEREAS the said resolution recommends inter alia that all States give favourable consideration to the said Model Law when they enact or revise their laws, in view of the need for uniformity of the law applicable tc alternatives to paper based methods ef communication and storage of information: AND WHEREAS it is considered necessary fo give effect to the said resolution and to promote efficient delivery of Government services by means of reliable electronic records; 1, Short title, extent, commencement and application (1) This Act may be called the Information Technology Act, 2000. (2} it shall extend to the whole of India and, save as otherwise provided in this Act, it applies alse to any offence or contravention thereunder commitied outside India by any person. (3) It shall come into force on such datel as the Central Government may, by notification, appoint and different dates may be appointed for different provisions of this Act and any reference in any such provision te ‘the commencement of this Act shall be construed as a reference io the commencement of that provision. 2[(4) Nothing in this Act shail apply 10 documents or transactions specified in the First Schedule: Provided that the Central Government may, by notification in the Official Gazette, amend the First Schedule by way of addition or deletion of entries thereto, (5) Every notification issued under sub-section (4) shall be laid before each House of Parliament] (Cyberspace is “the notional environment in which communication over computer networks occurs.” The word became popular in the 1990s when the4 Fundamentals of Information Technology usage of the intemet, vetworking, and digital communication were all yrowing dramatically and the term “cyberspace” was able to represent the many new ideas and phenomena that were emerging, As a social experiance, individuals can interact, exchange ideas, share information, provide sociai support, conduct business, direot actions, create artistic media, play games, engage in political discussion, and s0 on, using this global network. They are sometimes referred to us cybernauls. ‘The term cyberspace has become a conventional means to describe anything associated with the Internet and the divurse Internet culture. Cybérspace is a borderless environment. It has no territorial based boundaries. ‘The Internet aridress has no relation to the physical location of Computers and individials cessing them thug render georraphical borders of nations meaningless. t.. ceographica) boundaries of nations and the electronic frontiers do not fizve any eo-relationship. E-commerce commerce ins: and ameng organiz. nohude als th transact or individual bs ‘ecommerce const. analysis of produc: Finally. they pay the the terms and condi variety of activities sus sappy vial - saws we management systems and “i: cetion systerns. E-commerce means transier of ownership or rights to use goods or services; it consists of buying or selling of products or services over clectronies system such as the intemet and other computer network. In other words, sale ‘and procurement of supplies and sctvices using information technology, which is not only confined to computers but also includes everything done slectronicatly such as digitally enabled commercial transactions between and aniong the organization and individuals, and use of internet and websites to do business, According to OECD (Organization for Economic Co-operation and Development) Economic Outlook, “E-Commerce” means “doing business over the intemet, selling goods and services which are delivered oftline as well as products which can be “digitized” and delivered online, such as computer software. ‘insity enabled commerciat transactions between individually. Digitally enabled transactions technology, meaning, for the most part, alue (8.8, money) seross omganiravions um for products ot services. In the age of ‘merous options and offers, doa comparative © best suitable products as per their needs. ordering or on delivery, which depends on ont service providers, lis domain covers a fund transfer, electronic data interchange, Fn, veut Introduction 5 Though there exists no sianderd definition for the term e-commerce, it is generally used in the sense of denoting a method of conducting, business through electronic means rather than through conventional physical means. Such electronic means include ‘click & buy’ methods using computers as well as ‘m-commerce’ which make usc of various mobile devices or smart phones. This term takes into account not just the eet of purchasing goods and’ or availing services through an ontine piatform but also all other acti which are associated with any transastion such as: + Delivery, + Payment facilitation, + Supply chain and-service management. E-commerce has defied the wraditiona! structure of businesses trading with consumers bringing lo the fore various business models which has empowered ‘consumers. Some of the common business models which are facilitated by e-commerce ate as follows: B2B: E-commerce hus enabled various businesses to build new relationships with other businesses for efficiently managing several of their business functions, B28 « ree cous comprise of various modets, whic may include distribution services, procurement services, digitalonline market place like services eve, IndiaMART.com is one such B2B online market piace which provides a platform for businesses to find other competitive suppliers Oa the other hand Ariba provides procurement services by providing access to digital electronic merket ces in the physical medium have beaun providine their goods’ services on the internet a5 well intemet users where @ near virtaal shop is created with images of products sold. This not only provides cost benefits to the sefiers as brick and mortar type of investments are consicicnsbly reduced, but the seller § aiso able to provide benefits to the consumers in terms of discounts and free additions Guch as free delivery} RIC: Direct dealings between businesses and consumers fave always existed; however with the emergence of e-commerce such transactions have gained firther momentum. In a traditional B2C model, the distribution channet ‘ypically starts with manufacturer and goes through & distributor/wholesaler fo retailer, who interacis with the end customer. However, in an online modet one finds the manufacturer or the intermediary directly trading with the consumer in a web based commerce with the reduced costs of having an6 Pundamentals of information Technology intermediary. For instance, Flipkart, one the most successful e-commerce portals provides a platform for consumers to purchase a wide variety of goods such as, electronic goods, apparels, books and music CDs. in fact the growth of this model is evident from the surge in the number of e-commerce players adopting this model in recent times — fashion and you. Jabong to name a few. Farther, apart from businesses providing intermediary services such as that of Flipkart a lot of online platforms tic up with payment gateway facilitators who provide a platform for the processing of payments. ‘Though at the outset, the prospect of conducting business through ¢- commerce may seem uncomplicated and economical, there are a variety of legal factors that ari e-commerce business must seriously consider and keep in mind before commencing and white cactying out its activities, The portance of dealing with these complex fegal issues have already been highlighted starting from the court rating in the year 2001 in the “Napster. comcase wherein the United States Ninth Circuit Court of Appeals held that music file sharing system known as “Napster” committed repeated infringements of copyright law as millions of users uptoaded and downloaded copyright protected sound recordings. Closer home, the Delhi High Coust held in the *Myspace’ order that social networking sites such as Myspace may be heid jiable for copyright infringemens caused due te infringing material posted on sui if the intermediaries had control aver the material posted, had the opportunity to exercise due diligence in preventing infringement and derived profits out of such infringing activities. Further, privacy and data Protection issues have assumed great significance with the indian Goverment notifying specific rules for data protection. (C2C: Traditionally consumers have had dealings with other consumers, but only few of those activities were in a commercial sense. E-commerce has made it possible to bring together strangers sé providing a platform for thens to trade on, For example, portals such as eBay and quikr enable consumers to transact with other. consumers. STEPS IN E-COMMERCE The business over internet involves steps which are as follows: 1. Electronic presentation of goods and services, where a consumer can so through the catalogue of a website and avai various search options ‘available, 2. Online order taking and bill presentations, where the terms and conditions of a transaction and payment are specified, Introduction 7 3. Awtomated customer account enqul electronic transactions. 4, Online payment and transaction handling, the website doing the online transaction either does the payment verification on its own or ties up with a third party for doing the same. Consponents of E-Commerce 1. Shopping Cart: It helps the customer to browse through the product list and place an order. Further, it enables the shopper to maintain the product list, and stores the customer's selected products. 2. Payment Gateway: Payment gateways work by providing the secure, integrat link betveon a website (web server) and the bank. When credit card details ace submitted on a website the payniemt yatewsy receives these detaits and sends them to the bank for verification, The bank then replies with the responsc: usually either accepted or declined. The peyrzent gateway then sends ~ this response back to the web server where the appropriate message is displayed fo the user—for example “Your payment has been successfvi”. 43. Security Server: The payments are generally made with the helpof a number of security mechanisms. Databases used in the transactions over the internet or through electronic means are protected with protoccls enabied firewalls, and ae authenticated by digital signacures. Secwity server provides, a certifying authority (CA) function to encrypt and dverypt data. 4, Current Challenges The technological development has given rise to a cyber warld constinning, cyber space. Cyber space is witnessing considerable advancement with te rapid increase in the information technology, It is always hard to determine or prodict something in the accurate manner. ‘There is a possibility to consolidate the technological advancements in the past. The internet users are increasing tremendously every year and at the same time there is also rise in the number of peopie using mobiles snd smart phones. i, Emerging Trends & Challenges in Cyber Law Cyber law is likely to experience various emerging wends with the increased usage of digital technology. “ The various emerging trends include: A. Challenges in Mobile Laws B, Legat Issues of Cyber Security y a website deating in & fatare in an.8 Fundamentals of Information Technology ©, Cloud Computing & Law D. Social Media & Legal Problems E, Spam Laws Challenges in Mobile Laws Today, there are tots of ctivities in the mobile ecosystem. The increasing competition has introduced new models of mobile phones, personal digital assistors (pda), tabletsand other communication devices ih the global market The intensive use of m 21. -.yives has widened the mobile ecosystem and the content generated is likely to pose new challenges for cyber legal Jurisprudence across the world. There are no dedicated |. ; dealing with the use of these new communication devices anc slatforms in a number of jucisdictions across the world as the sie ve devices for input and output activities is increasing day by © With the increas 20) os, there is an increasing necessity to meet the legal chalter. erg th the use of mobile devices and ensure mobile protection 2 soyal bus ay The other emergin sicnd is the need for enacting appropriate legal frameworks oo ..ing and enhancing cyber security. The cyber securi Xl the attacks on networks are increasing rampantly leading t0 bre impact on the nation. vyber security which is likely to have serious Howe ce fy tu usveiop appropriate legal regi: “0 2 yotection and preservation of cyber security, but also to instill 2 cuiture of cyber security amongst the net users. ‘The renewed focus and emphasis is to set forth effective mandatory provisions which would hejp the protection, preservation and promotion of cyber security in use of computers, allied resources and communication devices. C. Cloud Computing and Law ‘With the growth in internet technology, the world is moving towards cloud computing. The cloud computing brings new challenges to the law makers, Introduction 9 The distinct challenges may include data security, data privacy, jurisdiction and ther tegal issues, The pressure oa the cyber legislators end stakeholders ‘would be to provide appropriate legal framework that could benefit the industry und enable effective remedies in the event af gloud computing incidents, B. Social Media & Legal Problems “ ‘The social media is beginning to have social and legal impact in the recent imes raising significant legal issucs and challenges. A latest study indicates the social networking sites responsible for various problaims. Since the lax enforcement agencies, intelligence agencies target the social media sites: they are the preferred repository of all data. The inappropriate use of social media is giving rise to crimes tike oybe: harassments, cyber stalking, identity theft etc. The privacy in social media i going fo be undermined (o a great extent despite the efforts by relevant stake hotders. ‘The challenge to the cyber legislators would be to effectively regulate the misuse of social media and provide remedies to the victims of social media Social Medis Litiyations are also Tikely to increase couveming the association or nexus with the output of social media. ‘The litigations regarding defamation, matrimonial actions are popularly increasing and with the data, information resident on social media networking, there is em emerging trend of various other litigations in the coming y FE. Spam Laws There is considturstte erseah of eam Ft st countries have already become hot spots for generating spam, As the nuit Of internet and mobife users increase the spammers make use of innovative methods to taxget the digital users, It is therefore necessary to have effective legistative provisions to deal with tie menace of spam. Purpose and Object of the Act India is one of the few countries other than U.S.A, Singapore and Malaysia that have information Technology Act to promote E-Commerce und electronic ‘ransactions. Indian Parliament has already passed the legislation known as Information Technology Act 2000 drafted by the Miristry of Communications and information Technology. The Act is based on the “United Nations Commission on International Trade Law” (UNCITRAL) model Law on Electronic Commerce.10 Fundamentals of Information Technology “The passing of the Information Tecimnology Act by the Indian Pastiament and the consequent amendments to the Indian Evidence Act, etc. has now paved way for the legal recognition of transactions carried out by means of “electronic cominerce.” Electronic commerce can now be cfivied out by persdns to whom a “Digital Certificate” is issued. Any person to whom such coniffetes Issued can now authenticate an electronic record by affixing his digital signature to the document. Xt is important for us to know as to what the Act provides. The job of drafting legislation for law related to E-commerce and Intemet becomes difficult in view of some of the peculiar features of the cyber world. Some of the peculiar features of the cyber world are:— (a) No physical boundaries. (b) No writing. (c) No handwritten signature, seals, thumb impression. (d) Lack of Security, high risk factor. (e) Taxes, rules, regulations, between Countries not clearly defined. (f) Fast changing technology. (@) fgnorance of Common tan about technology. (h) No single authority over Internet who can decide. The objectives of the Act ar + Thete is « peed for bringing in suitable amendments in the existing laws in ou. country to facilitaie e-commerce. Itis, therefore, proposed to provide for legal recognition of electronic records and digital signatures. This will enable the conclusion of contracts and the creation of rights and obligations through the efectronie medium. It is also proposed to provide for e regulatory regime to supervise the Certifying Authorities issuing Digital Centificates. To prevent the possible misuse arising out of transactions and other dealings concluded over the electronic medium, itis also proposed to create civil and criminal liabilities for contravention of the provisions of the proposed legislation. + With a view to facilitate Electronic Governance, it is proposed to provide for the use and acceptance of electronic records and digital signatures in the Government offices and its agencies. This will make ‘the citizens” interaction with: the Governmenial offices hassle free. + Itis also proposed to make consequential amendments in the Indian Penal Code and the Indian Evidence Act, 1872 to provide for necessary changes in the various provisions, which deal with offences relatingto documents, and paper based transactions. Itis also proposed to amend the Reserve Baik cf India Act, 1934 to facilitate electronic fund transfers between the financial institutions and banks and the introduction u Bankers’ Books Evidence Act, 1991 to give legal sanctity for books of account maintained in the electronic form by the banks. Highlights of the Information Technology Act 2000 Salient Electronic Contracts will be legally valid. LEGAL recognition of Digital signatures. Digital signature to be effected by use of asymmetric crypto system and hash function. Security procedure for Electronic records and Digital signature. Appointment of Certifying Authorities (CAs) and Controtier of Cehifying Authorities including recognition of foreign Certifying ~ Authorities. Controller to Act as repository of alt Digital Certificates, Certifying Authorities to get ficense to issue Digital Certificates, Various types of computer crimes defined and stringent penalties provided under the Act. Appointment of Adjudicating Officer for holding inquiries under the Act. Establishment of Cyber Appellate Tribunal under the Act. Appeal from order of Adjudicating Officer te Cyber Appellate Tribunal and not (0 any Civil Court. Appeat from order of Cyber Appellate Tribunai to High Court. Actto apply for offences or contraventions committed outside India Network Service providers not to be lisbie in certain cases, Power of Police Officers and other Officers to enter into any public place and search and arrest without warrant. Constitution of Cyber Regulations Advisory Committee who will advice the Central Government and Controller, Amendments in Indian Penal Code, Indian Evidence Act, Banker's Books Evidence Act and Reserve Bank of India Act Features of LT. Act ‘The salient features of the LT. Act are as foliows: Digital signature has been replaced with clectronic signature to make it a more technology neutral act. It elaborates on offences, penalties, and breaches. 1 outlines the Justice Dispensation Systems for cyber-crimes.2 Fundamentals of Information Technology Tt dofines in a new section that cyber. caf is any faactitzy from where the access to the internet is offered by any person in the ordinary course of business to the members of the pubic. It provides for the constitutionyof the Cyber Regulaions Advisory Committee. . itis based on The Indian Penal Céde, 1260, The indian Evidence Act, 1872, The Bankers” Books Evidence Act, 1891, The Reserve Bank of India Act, 1934, ete. oe It adds a provision to Section 81, which states that the provisions of the Act shall have overriding effect. The provision states that nothing contairied in the Act shalll restrict aiy person from exercising any right conferred under the Copyright Act, 1957. . ‘The-object of The Information Technology Act,2000 as defined therein is as under “to provide legal recognition for transactions carried out by means of electronic data interchange and other means of electronic communication, commonly referrer! to as “electronic methods of communication and storage of information, to facilitate electronic filing of documents with the Government agencies and further to amend the Indian Penal Code, the indian Evidence Aci, 1872, the Banker’s Book Evidence Act, 1891 and the Reserve Bank of India Act, 1934 and tor matters connected therewith or incidental thereto.” Towards that end, the said Act thereafter stipulates oumerous provisions. The said Act aims to provide for the tegal framework so That loyal connie te aneamted te ett tant cota activities curried out by electronic means. The said Act further states that unless otherwise agreed, an acceptance of contract may be expressed by electronic means of communication and the seme shall have legal validity and enforceability. The said Act purports to facititate electronic intercourse in trade and commerce, eliminate barriers and obstacles coming ii the way of electconic commerce resulting from the glorious tincertainties relating to writing and signature requirements over the Internet. The Act also aims to fulfil its objects of promoting and developing the legal and busine: infrastructure necessary to implement electronic commerce, Chapter-H of the said Act specifically stipuistes that any subscriber ‘may authenticate an electronic record by affixing his di Introduction the use of a public hey of F can verity ths electronic record. Then I'T-Act provides for both eivil liability and eriminal penalty for a number of specificaily proscribed activities involving use of a compuser— many of which impinge on privacy directly or indirectly. These wi examined in detail in the following sub-sections, Inirusions into computers and mobile devices may be by, + accessing, downioading/copying/extraction of data or extracts any data, introduction of computer contaminant; or computer virus, + causing damage cither to the computer resource of data residing on it + disruption, + denial of access, + facilitating access by an unauthorized person, charging the services availed of by person to the account of another person, + dostmetion or diminishing of value of information, « stealing, concealing, des intention. ying of altering source cous with an ‘The Act provides for the civil remedy of “damages by way « compensation” for dumnages caused by any of these actions. In addition, 2 who “dishonastly” and “fraudulently” does any of these specified ats is to be punished with imprisosiment for a term of up to three years or With = fine which snay extend to five lakh rupees, or with both, DEFINITIONS Section 2(1) (¥) “information” includes {data, message, text,} images, sound, voice, codes, computer programmes, software and data-bases or micro film or computer generated micro fiche Section 20) () “computer” means any electronic, magnetic, optical or other high-speed data processing device or system which performs iogical, arithmetic, and memory functions by manipulations of electronic, magnetic or optical impulses, and includes al! input, output, processing, storage, computer sozt- ware, or communication facilities which are connected or related to the computer in 2 computer system or computer network,14 Fundamentals of Information Technology Section 263) G) “computer network” means the inter-connectioa of one of more computers oF computer systems or communication device through—(D the use of satellite, microwave, terrestrial line, wire, wireless or other communication media; and Gi) terminals or complex consisting of two or more inter-connected computers or communication device whether or not the inter-connection is continuously mnaintainieds] Section 28K) “computer resource” means compiiter, computer system, computer net- work, deta, computer data-base or sofiware; Section 2(1)(0) “computer system “means a device or collection of devices, including -nput and output support devices and excluding calculators which are not programmable and capable of being used in conjunction with external files, which contain computer programmes, electronic instructions, input data, and, Jutput clata, that performs logic, arithmetic, data storage and retrieval, communication control and other functions; CASE LAW Diebold Systems Pvt. Ltd. v. The Commissioner of Commercial Taxes., [2006] 144 STC 59 (Kar) (Section 2 of Information Technology Act, 2000) Facts: The appellant company was engiged in the manufacture and supply >»f Automated Teller Machines (ATM's for short). In view of the configuration und for the purpose for which if is put to use, the appellat company was of he view that the sale of ATM's was cligibie to single point levy of tax under section 5(3)(a) of the Kamataka Sales Tax Act, 1957 (hereinafter for the ‘ake of brevity referred to as “Act, 1957°). The appellant company had filed wn application before the Advance Ruling Authority seeking clarification on he rate of tax applicable under the Act on sale of Automated Teller Machines. ‘The basic submission that was madc was, ATM is a combination of a Computer and it rans on a processor and the purpose for which it is put 10 use, s to dispense with cash and therefore, had requested the Authority to classify’ ATM's as goods falling under Entry 20 of Part ‘C" of the Second Schedule to he Act and not Electronic goods falling under Entry 4 of Part ‘E’ of Second Schedule to the Act. Introduction 1S Tae Advance Ruling Authority (Majority View) efter referring to the dictionary meaning of the word “Automated Teller Machines” and the product, iterature produced by the appetlant company, by their order dated 1.10.200% have clarified that ATM’s can be classified under the caption “computer terminals” and therefore, A'TM's would fall uncier Enry 20 (ii) (b) of Part ‘C of Second Schedule to the Act.and the basic tax applicable is four percent. ‘The Chairman of the Advance Ruling Authority has dissented from the majority view and has opined, that the goods in question would fit into the description of clectronic goods, parts-and accessories thereof and therefore, falls undey Entry 4 of Part “E” of the Second Schedule to the KST Act and the basic rate of tax applicable is 12%. ‘The Commissioner of Commercial Taxes, however, was of the view the? the Authority for Advance Ruling, has erroneously classified ATM’s as “computer terminals” chargeable at 4%, instead of classifying it as electronic g00ds liable to tax at 12% and thereby has caused prejudice to the interest of the revenue. The Commissioner of Commercial Taxes, teking such a view, had initiated suo-motu revisional proceedings by issuing 2 show cause notice: inter alia, directing the appellant company to show cause, why the order passed by the Authority for Advance Ruling dated !.10.2002 should not be set aside and the *goods" in question should not be treated as “electronic goods" liable to tax at 12%. ‘The Commissioner of Commercial Taxes, after considering the reply flee by the appellant company, has confirmed the proposal made by him in the, show cause notice. Hence present appeal by the appellant company. Held: The relevant question of faw was: “Is ATM a computer and whether it would fall under Entry 200) ‘C of Second Schedule to the Act?” In order te resolve the controversy between the parties to the tis, we necc! to know what is ATM and how it works? ATMis the acronym for Automated Teller Machine. This Machine has «: data terminal with two input and four output devices, The ATM connects te: and communicates with a host processor that is analogous to an Internet Service: provider. Then as a way of supporting the Machine to the Lest processor. dia: up or leased lines are used. With the dial up, the Machine would dial into the: host processor, using a standard telephone line and modem. With the leased fine, the Machine is connected through the host processor through what s called a four-wire, point to point, dedicated telephone line. The ATM docs of Far16 Fundamentals of Information Technology not have many parts, There ise card reader, which is what captures a person's account information that is stored on the magnetic strip located on the back of the ATMi/debit card. This information is actually used by the host processor in routing the transaction to the appropriate bank. Then it has a ‘Key pad’, which is used by the cardholder to tell the machine what type of transaction is needed. Ithas an ‘electric eye” that is used for cash dispensing mechanism. In addition to the eye, the ATM has a ‘sensor” thut is capable of evaluating the thickness oF each of the bills being, dfspensed. ‘The world's fiest ATM was installed in Enfield Town ia the London Borough Enfield, London, on June 27, 1967 by Barclay’s Bank. This iastance ofthe invention is credited to John Shophered-Birron, although George Simjian registered patents in New York, JSA, in the 1930°s and Don Wetzel and two other Enginecrs from Docutet registered a patent on June 4, 1973 ATM’s are found at banks, grocery stores, shopping racks, convenience stores and some times on the side of the road. They are used by the bank's customers to make cash withdrawal and check their account balarices at any time without the need of human teller. Many ATM’s also allow people 10 deposit cash or cheques, transfer money between their bank or even buy postage stamps. ATMs ars known by a wide variety of names. Some of which are more commis certain countries than others. Examples inchide Automated ‘Teller Machine. Automated Banking Machine, Bank Box. Cash Box, Cash Dispenser, Cash Point, Role in the Wall, Mac Machine Mini Bank, MAC Machine, Robotic Teller, Tele Banco, Ugly Teller, ctc. ‘The book on Computers, concepts and applications for users by Robert C. Nikenson has explained the configuration and its uses in the day-to-day affairs by banks, stores sto. Accarding to the leame} Author. an ATM is not & computer by itseli. iz 18 connected to a computer that performs the tasks requested by the person using the ATM. The computer is connected electronically to many ATM's that may be located some distance from the computer. Ta so far as its use is concerned, the leamed Author says that when you use an ATM, you are using a computer. When you insert your card and press keys on the ATM, you are entering input into the computer. The computer Process the input to perform the banking transactions you requested and you receive output in the form for a paper suzumary and cesh. The computer is a multiple user computer, because different people use it through many ATMs at one time. When you use an ATM, you are using the computer to keep with your personal banking needs. “Introduction 17 in modem A'TMs customer's authenticate themselves by using a plastic card with a magnetic stripe, which encodes the customer’s account number, and by entering a aumberic passcode called a PEN (Personai identification Number) number, which in some cases, may be hanged using , machine. Most ATM's are counseted to authorisation of a transaction by the cetd user er authorizing Institution via communications network, - Now we necd to notice what is a “computer terminal”, since the majority view of the Advance Ruling Authority is that ATM is a “computer te and therefore, it would fall under Entry 20 Gi}(b) of Part *C’ of & Schedule to the Act. In Columbia Bneyclonedia, Sixth 8 described as under: “A device tit cnables 4 computer to receive or deliver data. Computer terminals vary greatly Gepending on the format of the data they handle For example, a simply carly terminai comprises a typewriter keyboard for input and a typewri ing element for alpha-numeric output. A more recent variation includes the Key board for input and a felevision sereen to display the output. The sereen ean be Cathade-ray tube or 2 gas plastna panel, the later involving an fonized Gas (sendwiched between glass layers) that glows to fon dots which in tum, connect to form lines. Such displays can present a variety of output, ranging from simple alpha aumeric (© compiex graphic images used as design tools by Architects and Engineers. Portable terminals frequentiy wse liquid crystal dispiays bocause of their low power requirements. The terminals of pen-based computers use a stylus (o input hand writing on the screen, Touch sensitive tcrminats accept input made by touch sensitive pene! us iront ofa menu dispiayed on the screen. Other familiar types of terminals inclusle siore checkout systems that deliver detailed ptinted receipts and use later scanners to read the bar codes on packages and automatic teller machines ir: banks.” ‘Thereafter, the present Court deliberated upon principles of interpretation of fiscal laws as laid down by the Supreme Court in its various judgments, ‘The questios to be detenmined was “Whether an ATM fs 6 “oorapurec” as contended by the appellant company or a “computer terminal” as classified by the Advance Ruling Authority (Majority view) or is it “electronic goods” 25 classified by the Commissioner of Commercial Taxes, while revising the order passed by the Advance Ruling Authority?” ion, computer terminals are on ee1s Fundamentals of information Technotogy ‘The information Technology Act, 2000, is an Act to provide iexal recognition for transastions carried out by means of electronic data interchange and other means of electronic communication, commonly referred 10 as “electronic commerce”, which involve the use of allematives to paper-based methods of communication and storage of information to facilitate electronic filing of docurhents with the Government Agencies, etc. In the dictiona:y cleuse of the Act, the meaning of the word “computer” is defined lomean any electronic, magnetic, optical or otter high speed data processing device or system which performs logical, arithmetic and memory functions by mmanipulations of electronic, magriétic or optical impulses and includes ail input, output, processing, storage, computer software, or communication facilities which are connected or related to the computer in a computer system, or computer network. The “computer network” means ihe interconnection of one or more-computers through the: use of satellite, microwave, terresttial jine, or other communication media and terminals or a complex consisting of two or more interconnected computers whether or not the interconnection is continuously maintained. The purpose and object of Information Technology Act, is to recognine ‘the transactions carried out by means of electronic data interchange and oth=r means of electronic communication. To suit the purpose and object of the Act, the Parliament has defined the expression “computer” by giving a very wide meaning, but at the same time, by using the expression “mean immediately after the words “computers”, the Legislature intends to make it clear that the definition is exhaustive and no other meaning can be assigned to the expression than what is included in the definition. . Held, the enlarged definition of “computers” in the Information Technology Act cannot be made use of interpreting an Entry under fiscal legislation. Heid finally, an Automatic Teller Machine is an eiccironic device, which allows a bank’s customer to make cash withdrawals, and check theiz account balances at any time without the nced of human teller, probably that most willely used means of “electronic fards transfer”. From the literature and the books oa computers produced, it was held that ATM is not 2 computer ty itself and it is. connected to a computer that performs the tasks requested by the person using ATM's. The computer is connected electronically to many -ATM’s that may be located from some distance from the computer. In commoi parlance, it is understood as electronic device and therefore, the revisonal ‘authority was justified ia holding that ATM’s are electronic goods and the levy’of tax and the sale of ATM’s requires to be made under Enliy 4 of Part “B* of Second Schedule to the Act. Introduction - 19 Syed Asifuddin And Ors. v. The Siste of Andhra Pradesh & Asn. “2006 (2) ALD Cri 96, 2005 Cri LI 4314 (29.07.2005) Facts: A written complaint was made by M/s. Reliance Infocomm Lid. Siyderabad, the second respondent in the present cose. In the compiain, was alleged that certain vested clements of the trade of mobile telephone services began to woo the subscribers of Reliance India Mobile (RIM) ! various other schemes promoted by other similar service providers, waich ‘would have the impact on the image as well as the reveriues of the second respondent. Reliance Infocomm under Dhirubhai Ambani Pioneer Offer launched telephone services named as ‘Reliance India Mobile’ witha view to make communication affordable to the masses. The same was later modified and the scheme fitled ‘POBF, which is the most affordable in the market today. Under the said scheme, the subscriber gets a digitel handset worth ®s. 10,500/- as well as service bungie for three years with an initial paymens of Rs. 3,350/-and monthly outflow of meager Rs, 600/- gets one year warranty and insurance for three years. The handset given to ihe subscriber is third ganeration digital handset with a host of features which are of first of its kind coupled with attractive tariff options. In view of this, the market response in twin cities has been phenomenal. This has an ins: the business of other service providers for the reason that those sevice providers attempted unethicc! und illegal practices for weaning away <>: subscribers of the second respondent On above complaint, crime was registered. investigation reveated that all the handsets of Reliance India Mobile aze being migrated to TATA Indicom network at the behest of TATA Indica: staff members and that same is illegal as there is an agreement between the ‘manufacturers of the Reliance handsets and Reliance india Mobile Limiied ‘There was an agreement existing Detween the Samsung manufacturers 2rd LG manufacturers with Reliance Infocomm regarding their exclusive modais Samsung N19! and LG-2030. These model handsets were to be exclusively used by Reliance Indi Mobile Limited only. In contravention of the above contract, the TATA Indicom staff niembers, accused persens, were tampering with pre-programmed CDM-A digital, handsets belonging to Reliance Infocomm and activating with their network with ali dubious means whici: is an offence under Section 65, 1.7. Act. Secondly, the customer was not barred from exiting from the Reliance network as such and to quit from that network hhe had to fulfil the obligations laid dowa in the terms and conditions of the Reliance company. Till the lock in period of 3 years is over, the handset supplied to the customer by Reliance Infocomm was a joint property of the20 Fundamentals of Information Technology: company and any kitd of transaction on the part of the subscriber without fulfilling the obligations Iaid down in the terms and conditions wes a clear case of Breuch of Trust since the customer had not settied the accounts with the company. 4 Further, as the competition between the CDMA service providers blown ‘out of proportions, the TATA Indicom had hatched a conspiracy to hijack the customers of Reliance Tnfecomm by all fraudulent means and as a part of their conspiracy tricd to woo the customers of Reliance Infocomm with different tariff packsees and trying to trap gullible customers and succeded in their atterapt to attract their customers and so far as many as 63 customers, belonging to Reliance Infocomm so far migfated to FATA Indicom by illegal means. ‘The petitioners were employees of Tata Tele Services Limited (TTSL) which provided basic telephone services including Wireless in Local Loop QWLL) services on non-exclusive basis in the service area including State of Andbra Pradesh under the name of Tata Indicom. Petitioners were alleged to have committed offences punishable under Sections 420, 409 and 1208 of IPC, Section 65 of IT Act and Section 63 of Copyright Act. ‘The petitioners, presently, sought quashing of F. 1. R. registered under Sections 409, 420 and 1208 of IPC, Section 65 of the El Act and Section 63 of the Copyright Act, 1957 Held: Charge under sections 409, 420 and 120B of IPC ‘The submission of the petitioners that even if the aliegations in F. 1. R., are taken to be true, an offence under Sections 409, 429 and 120B of IPC, ‘was not made out had force. Admittedly, a subscriber of second respondent was given a mobile phone instrument and connection with an understanding, that the subscriber had exclusive right to use the phone. ifthe accused allegedly induced the subscriber of the second tespondent to opt for the services provided by TTSL, an offence under Section 409 of iPC., could not be said to have been made out. Section 405 of IPC, defines ‘criminal breach of trust. The offence of criminal breach of trust requires entrustment with property and dishonest use or disposal of the property by the person to whom the property 4s entrusted. Both these things were absent. There was no allegation that the property in respect of which the second respondent has right was entrusted to ‘TTST. or its employees who are the petitioners herein. Similarly, an offence of cheating as defined under Section 415 of IPC.. is, not at all made out because a subscriber of second respondent was never induced to deliver the property to TTSL nor there was dishonest or fraudulent Introduction ~ 21 inducement by the petitioners of the second respondent of its subscribers to deliver the property. indoed the delivery of the property as such is not present in the ease. In so far as offence of Section 120B of IPC, is concemed, the same is made in relation to alleged offence under Sections 409, 420 and 1208 of IPC., and therefore the petitioners cannot be prosecuted for offences under Sections 409, 420 and 120B of IPC. lasofar as these alleged offences were concemed, ifany criminal trial was conducted, the same would have resulted in miscarriage of justice for a5 held by the Supreme Coutt in State of West Bengal v. Swapan Kumar, and State of Haryana v. Bhajan Lal, that when the '.LR., does not disclose commission of cognizable offence, the police have no power to investigate such offence. In such 2 case, this Court would be justified’ in quashing investigation on the basis of information faid with the police. Charge under section 65 of If Act ~ ‘What is ‘computer’, ‘computer source code’ and ‘computer network’? According io the definition of ‘computer’ under cl. () of section 2(1) of TT Act, it means any electronic, magnetic, optical or other high speed data processing device or system which performs logical, arithmetic and memory functions by manipulations of electronic, magnetic or optical impulses, and includes all input, output, processing, storage, computer software or ‘communication facilities which are connected or related to the computer in. a ‘computer system or computer network. ‘According to the definition of ‘Computer system” as defined in clase (1) of Section 2(1) of 1.7. Act, it means a device or collection of devices, including input and Output support devices which are programmable, capable of being used in conjunction with extemal files which contain computer programmes, electronic instructions, data storage and retrieval and communication control. ‘The 1.7. Act aiso defines ‘computer network in clause (j) of Section 2(4) of the Act, which reads as unde; @ computer network’ means the interconnection of one or more ‘computer through- @ the use of satellite, microwave, terrestrial line or other communication media; and Gi) terminals or a compiex consisting of two or more interconnected computers whether or not the interconnection is continuously maintained22. - = Fundamentals of Information Technolozy A compitter has to be appropriately instructed so as to make it work a5. Per iis specifications. The instructions issued to the computer consists of a Series of Os and is in different permutations and combinations. This machine [2nenage can bo in different form in different manner, which is ealled computer: {anguage- The communicator as well asthe computer understand “a langueye and mutually responid with each other. When specified or particular instructions axe wiven, having regard.to the capacity of the computer it performs certain Specified functions. The instructions or programme given to computer in ¢ nguage known to the computer are not seen by'the users of the computer’ Goasnmers of computer funetions. Known as source eode in computer parlance, the programme written in whatever computer language by the person who assembled the programme are not seen by the users. A source code is thus 2 - Programme as written by the programmer. Every computer functions as a ‘separate programme and thus a separate source code. Compote: ov « code oF scutes code, or just source or code may be Gslined as a series of statements written in some human readable computer programming language constituting several text files but the source code may be printed in a book or recorded on a tape without a file system, and this object code but on source code and then converted again. (Diane Rowland and abeth Macdonald : Information Technology Law; Canandish Publishing Limited; (1997). p. (7] Thus, source code is always: closely guarded by the computer companies, which develop different function specific computer programmes capable of hendling various types of functions depending on the need. The law as we presently see is developing in the direction of recognizing a copyright in the source code developed by a Programmer. If source code is copied, it would certainly violate copyright of developer. With this brief background in relation to computer source code, the technologteal aspects ofa cell phone and haw it works was to be concioered, ‘That was necessary to understand the ‘controversy involved in the present Antraduction 23 The problem of waditional telephone system i.e. the cedio telephone communication, was solved by communication technology by dividing a large area like a city into smalt cells and any two persons connected 10 a.cell system - at 2 time receive 800 frequencies and crores of people can simultancously communicate with each other at the same time. ° ‘That used. the reason why the term ‘coli mobile phone or ceil phone? is In the cell technology, a person using a phone in one cal of the division * will be plugged to the central transmitter, which wilt receive the signals and then divert the signals to the other phone to which the sarge are intended When the person moves from one cell te other cell in the same city, the system i.e, Mobile Felephoue Switching Office (MTSO} automatically transfers signals from tower to tower when the teiephone user moves from one division, to another. Another advantage in a cell phone compared with radio phone is that when the radio phone is used, one person can talk at a time as both the persons cay communicate simultaneously and also receive sound signals simultaneously. All ceil phone service providers like Tata Indicom and Reliance india Mobile have special codes dedicated to them and these are intended to identify the phone, the phone’s owner and the service provider. To understand how the cel! phone works, we need to know certain terms in cell phone parlance. System Identification Code (STD) is a unique $-digit number that is assigned #0 each carrier by the ficensor. Electronic Serial Number (ESN) ig @ unique 32-bit number programmed into the phone when i is manufactured by the instrument manufacturer. Mobile Identification Number (MIN) is a i0-digit number derived from ceti phone number giver to 2 subseriber, When the celi Phone is switched on, it listens for 2 S#D on the control channel, which is a special frequency used by the phone and base station to tail to one another ebout things like call set-up and channel changing. If the phone cannot find ny conirol channels to listen to, the ceil phone displays “no service” message as it is out of range. When cell phone reccives SID, i compares it to the SID Programmed into the phone and if these code numbers match, ceil knows that it is communicating with its home system. Along with the SID, the phone also trarsmits registration request and MTSO which keeps track of the phone's Jocation in u database, knows which cell phone you are using and gives a ring. ‘The essential functions in the use of cel! phone, which are performed by the MTSO, is the centra! antenna/centrai transmitter and other transmitters in other areas well coordinated with the celf phone functions in a fraction of a24 Fundamentals of Information Technology second. AH this is made possible only by ¢ computer. which simultaneously receives, analyses and distributes data by way of sending and receiving radio/ electrical signals... So as to match with the system of the cell phone provider, every celi phone contains a circuit board, which is the brain of the phone. It isa combination of several computer chips programmed te convert analog.to digital and digital to analog conversion and translation of the outgoing audio signals aad incoming signals. This is a micro processor similar to the one generally used in the compact disk of a DeskTop computer. Without the circuit board, cell phone instrument cannot function. Therefore, it is not possible to accept the submission that a cel! phone is not a computer. Bven by the very definition of the computer and computer network as defined in IT Act, a cell phone is a computer which is programmed to do among others the function of receiving digital audio signals, convert it into analog audio signal and also send analog audio signals in a digital form extemally by wireless technology. ‘The main allegation against the petitioners is that the MIN of Reliance phone is irreversibly integrated with ESN and the petitioners hacked ESN so as to wean away RIM customers to TATA Indicom service. The question is whether the manipulation of this electronic 32-bit number (ESN) programmed into Samsung Ni91 and LG-2030 cetl phone instrument exclusively franchised to second respondent amounts to altering source code used by these computer cell phone instruments. In the background facts, a question would 30 arise whether such alteration amounts to becking with computer system? Tthe query answered in the affirmative, itis always open to the police to alter the F. 1. R, or it is always open to the criminal Court to frame a charge specifically with regard to with computer system, which is an offence under jon 66 of the IT Act. Sections 65 and 66 of the IT Act were quoted and deliberated upon. Section 65 of the IT Act provides for the offence of “Tampering with computer source documents’ and section 66 provides for ‘Hacking with Computer System’. Held, going by the definition of ‘computer source code” in section 65 of IT Act, BSN of Samsung Ni91 model cell phone handsst or ESN of LG-2030 model cell phone handset exclusively used by the second respondent as well a5 SID of second respondent come within the definition of computer source code. Every cell phone operator is. required to obtain SID from the licensor ie, Government of India, Further, ESN is a permanent part of the phone whereas MIN and SID are programmed into phone when one purchases a service plan and have the phone activity. When a customer of second respondent opts for its services, the MIN and SID are programmed into the Introduction 25 handset. If some one manipulates and alters ESN, as per the case of second respondent, SamstingyL handsets ‘hich are exclusively uscd by them become usable by other service providers like TATA Indicom. Therefare, prima facic, when the ESN is altered, the offence under Section 65 of 1.7. Act is attracted because every service provider like second respondent has to maintain its own SED code and also gives a customer specific number 1 each instrument used io avail the services provided. The submission that as there is no law which requires a computer source code to be maintained, an offence cannot be made oui, is devoid of any merit. The disjunctive word “or” is used by the Legislature between the phrases “when the computer source code is required to be kept’ and the other phrase “maintained by law for the time being in force” and, therefore, both the situations are different. Going by the allegations in the complaint, it becomes clear that the second respondent is in fact ‘maintaining the computer source code. If thére was allegation against any person inchicling the petitioners, certainly an offence under Section 65 of LT. Act was made out. Therefore, the crime registered against the petitioners could not be quashed with regard to Section 65 of the 1.T. Act, Charge under section 63 of Copyright Act, 1957 Definitions of ‘Compiiter’, “Computer Programme” and *! jterary Work? and of Copyright’ under the Copyright Act were quoted and deliberated upon. Held, reading Section 20), [ffe) and Sections 15 and 14 together, it ‘becomes clear that « computer programe is by very definition original literary work and, therefore, the law protects such copyright. Under Section 53 of the Copyright Act, any infringement of the copyright in e computer prograrome! source code is punishable. Therefore, prima facie, ifa person alters computer programme of another person or another computer compa be infringement of the copyright. Again the entire i regard is subject to the evidence that may be led by the complainant at the time of teial ‘The well settled principle is that unless and until jnvestigetion oy the Police into a complaint is shown to be illegal or would reselt in miscarriage of justice, ordinarily the criminal investigation canmot be quashed. Held finally, crime insofar as it is under Sections 409, 420 and 120-B of Indian Penal Code, 1860 was quashed and insofar as the crimes under Section 65 of the IT Act and Section 63 of the Copyright Act, 1957, the petitions were dismissed. The C.1.D. Police was directed to complete investigation and file a final report before the Metropolitan Magistrate competent to take cognizance of the case within a period of three months from the dato of receipt of this order.- : Chapter 2 LEGAL RECOGNITION AND AUTHENTICATION OF ELECTRONIC RECORDS ‘ONCITRAL MODEL LAW ON ELECTRONIC COMMERCE AND E-SIGNATURES (1996 and 2001) ‘d Nations Commission on International Trade Law UNCITRAL is the core legal body of the United Nations system in the: field of international trade law. A legei body with universal meribership Tercamzing in commercial taw reform worldwide for over 40 years ENCITRAL’s business is the modernization and harmonisation of ruiec co international business. “Trade means faster growth, higher living standards, and new apportunities (brough commerce. In order to increase these opportunitios worldwide, UNCITRAL is formulating modem, fais, and harmon-zed rules on comune transactions, These include: Ceaventions, model laws and rules which are aeceptable worldwide; * [gal and legislative guides and recommendations of great practical * Updated information on case law and enactments of uniform commercial law; * Technical assistance in taw reform projects; * Regional and national seminars on uniforns commercial law, UNCITRAL Model Law on Electronic Commerce (1996) In preparing and adopting the UNCITRAL Model Law on Electronic Commerce (hereinafter telerred to 2s “the Model Law”), the United Natere Pe) Legal Recognition and Authentication of Electronic Records a Commission on Intemational Tradé Law (UNCITRAL} wes nindful star Modei aw would be a more effective tool for States modernizing their legislation if background and explanatory informstion wortd be provided t0 exceutive dmanches of Governments and legislators to assist them in using the Model Law. The Corsmission was also aware of the likelihood that the Mode! Law would be used in a number of States with limited familiarity with the type of conumunication techniques considered in tite Model Law. This Gui much of which is drawn from the travaux préparatoires of the Model Law, is aiso intended to be helpful to users of electronic means of cofamunication 2s weil es to scholars in that area. In the preparation of the Model Law, it was assumed that the draft Model Law would be accompanied by such a guide. For example, it was decided in respect of a number of issues not ta settle them in the drafi Model Law but to address them in the Guids se as to provide guidance to States enacting the draft Model Law. The information presensed in this Cruide is intended to explain why the provisions i the Model Law have been iticluded as essential basic features of jovice designed to-achieve the objectives of the Model Law. Such information might assis! States also in considering which, if any. of the provisions cf the Model te ‘might have to be varied to take into account porticular national cireasastanices Purpose The Mode! Law on Electronic Commerce (MLEC) purports to enable and facitiate commerce conducted using electronic means by providing national legislators with a set of intemationally acceptable rules zimed 2 removing legal obstacles and increasing legal predictability for electroais commerce. In particular, it is intended to overcome abstacies arising fon statutory provisioris that may not be varied contractually by providing equal treatment to paper-based and electronic information. Such equa! treatment is essential for enabling the use of paperless communication, thus fostering efficiency in international trade. Why is it Refevant? ‘The MLEC was the first legislative text to adopt the fundammenta! principles of non-discrimination, technological neutrality and fictional equivalen that are Widely regarded as the founding elements of modern givctroni commerce law. The principle of non-diserimination ensures that w dacurn: Would not be denied legal effect, validity or enforceability solely oa the grou that itis in electronic form. The principle of technological neutratity mandates the adoption of provisions that are neutral with respect to technology used. in light of the rapid technological advances, neutral rules aim at accommodating28 Fundamentals of Information Technnioss any future devetopment without further legislative work. The function: ‘equivalence principle lays out criteria undef which electronic communications may be considered equivaient to paper-based communications. in particuter, it sefs out the specific requirements that electronic communications need :0 meet in order to fulfil the same purposes and fumctions that certain notions in ‘the traditional paper-based system - for example, “writing.” “original,” “signed,” and “record”- seek to achieve. Key Provisions Besides formulating the legal notions of non-discrimination, technological neutrality and functional equivalence, the MLEC establishes rules for the formation and validity of contracts concluded by electronic means, for the attribution of data messages, for the acknowledgement of receipt and for determifiing the time and piace of dispatch and receipt of data messages. Ht should be noted that certain provisions of the MLEC were amended i the Electronic Communications Convention in fight of recent electror commerce practice. Moreover, part If of the MLEC, dealing with electronic. commerce in connection with carriage of goods, has been complemented by other legislative texts. includiag the United Nations Convention on Contzacts for the Intemational Carriage of Goods Wholly or Partly by Sea (te “Rotterdam Rules”) and may be the object of additional work of UNCITRAL in the future. Objectives The use of modern means of communication such as electronic mail and electronic data interchange (EDI) for the conduct of international trade transactions has been increasing rapidly and is expected to develop further es technical supports such 2s information highways and the INTERNET become more widely accessible. However, the communication of legally significant information in the form of paperless messages may be hindered by legal obstacles to the use of such messages, o by uncertainty as to their legal effect, or validity. The purpose of the Model Law is to offer national legislators a set of internationally acceptable rules as to how a number of such legal obstacles may be removed, and how a more secure legal environment may be created for what has become known as “electronic commerce”. The principles expressed in the Model Law are also intended to be of use to individual users of electronic commerce in the drafting of some of the coniractuai solutions that might be needed to overcome the tegal obstacles to the increased use of electronic commerce. Legal Recognition and Autkentiontion of Electranio Records 29 The decision by UNCITRAL zo formulate model !egistation on electronic ‘commerce was taken in response to the fact that in » number of counizies, the existing legislation governing communication and storage of information is inadequate or outdated because it does not contemsiaie te use of siectronic commerce. In certain cases, existing legislation imposes or implies restrictions ‘on the use of modern means of communication, for example by prescribing the use of “written”, “signed” or “original” documents. While a few countries have adopted specific provisions to deal with certain aspects of electronic~ comunerce, there exists no legislation dealing with electronic commerce as 2 whole. This. may result in uncertainty as to the legal nature and validity of information presented in a form other than a waditional paper document. Moreover, while sound iaws and practices are necessary in all countries where the use of EDI and electronic mail is becoming widespread, this need is also felt in many countries with respect to such communication techniques as telecopy and telex. The Model Law may aiso help to remedy disadvantages that stem from. the fact that inadequate legislation at the national level creates obstacles to international trade, a significant amount of which is linked to the use of modern communication techniques. Disparitics among, and uncertainty about, nationa? legal regimes governing the use of such communication techniques may contribute to limiting the extent to which businesses may access international markets. Furthermore, at an international level, the Model Law may be useful in certain cases as a tool for interpreting existing international conventions and. other international instruments that create fega! obstacies to the use of electroni¢ commerce, for cxample by prescribing that certain documents or contractual clauses be made in writton form. As between those States parties ‘to such international instruments, the adoption of the Model Law as a rule of interpretation might provide the means to recognize the use of electronic commerce and obviate the need to negotiate a protocel to the interaaionai instrument involved. ‘The objectives of the Model Law, which include enabling or facititating the use of electronic commerce and providing equal treatment to users of paper-based documentation and to users of computer based information, are essential for fostering economy and efficiency in international trade. By incorporating the procedures prescribed in the Model Law in its nasionai legislation for those situations where parties opt to use electronic means of communication an enacting State would create a medin-neutral environment.30 Fundamentals of Information Technology UNCITRAL MODEL LAW ON ELECTRONIC SIGNATURES (2001) Purpose ‘The Model Law on Electronic Signatures (MLES) aims to enabie and facilitate the use of electronic signstures by establishing criteria of technical Tellabifity for the equivalence benween electronic and hand-written signatures. ‘Taus, the MLS may assist States in establishing a modem, harmonized and fair legislative framework to address effectively the legal treatment of electronic signatures and give certainty to their status, Why is it Relevant? ithe increased use of electronic authentication techniques as substitutes for handwritten signatures and other traditional authentication procedures suggested the need for a specific legal framework to reduce uncertainty as to the legal effect that may result from the use of electronic means. In response fo such needs, the MLES builds oa the fundamental principle underlying article 7 ofthe UNCITRAL Model Law on Llectronic Commerce with respec! to the fulfilmentof the signature function in ax electronic environment by following atechnology-neutral approach, which avoids favouring the use of any specific technology or process. This means in practice that fegislution based a this Model Law may recognize both diyita! signatures based on cryptography (auch as public key infrastructure - PKI) and electronic signatures using other technologies. Key Provisions The MLES is based on the fundamental principles common to ali UNCTTRAL texts relating to electronic commerce, namely non-diserimination, technological neutrality and functional equivalence. The MLES estabtishes Stiterin of technical reliability for the equivalence between eicctronic and hand-vvitten signatures as well as basic rales of conduct that may serve as Guidelines for assessing duties and liabilities for the signatory, the relying Party and trusted third parties intexvening in the signature process. Finally, the MLES contains provisions favouring the recognition of foreign certificates and electronic signatures based on a principle of substantive equivalence that disregards the place of origin of the foreign signature, Purpose and Origin of the Model Law ‘The increased use of electronic authentication techniques as substitutes for handwritten signatures and other traditional authentication procedures hae Suggested the need for a specific legal framework to reduce uncertainty as to ‘the Tegal effect that may result from the use of such modem techniques (which Legal Recognition and Authentication of Electronic Resords 3h may be referredi to generally as “electronic signaures”). The risk that diverging legislative approaches be taken in various countries with respect to electronic signatures calis for uniform legislative provisions to establish the basic rulos of what is inherently an intemationa! phenomenon, waere legal harmony #5 weil as technical interoperability is a desimble cdjective. Building on the fundamental principies underlying article 7 of tke UNCITRAL Model Law on Electronic Commerce (atways referred to in this publication under its full title to avoid confusion} with respect to the fulfilment of the signature function in an electronic environment. this new Model Law is designed to assist States in establishing a moder, harmonized and fair iegislative framework to address intore effectively the issues of electronic signatures. In a-modest but significant addition w tie UNCITRAL Model Law on Electronic Commerce, the new Model Law offers practical standards against which the technical reliability of elestronis signatures may be measured. In addition, the Model Law provides a ‘inkage between suen technical reliability and the jegal effectiveness that may be expected from 3 givon electronic signature. The Model Law adds substantially to the ‘UNCITRAL Modei Law on Electronic Commerce by adopting an approach under which the legal effectiveness of o given cleotronic signature technique may be predetermined (or assessed prior to being actually used). The Mode! 1.aw is thus intended to foster the understanding of electronic signatures and the confidence that certain electronic signature techniques can be relied upon in legally significant transactions, Moreover, by establishing with appropriate flexibility a set of basic rules of conduct for the various parties that may becon involved in the use of electronic signatures (i.e. signatories, relying parties and third-party certification service aroviders) the Model Law may assist in shaping more harmonious commercial practices in cyberspace. The objectives of the Model Lav, which include enabling or facitivating the use of electonic signatures an¢ providing equal teaiment to usors of paper-based documentation and users of computer-based information, ar essential for fostering economy and efficiency in internationet trade. By incorporating the procedures prescribed in the Model Law {and also the provisions of the UNCITRAL Model Law on Electronic Commerce) in it national legislation for those situations where parties opt to use electro: means of communication, an enacting State would appropriately create a media-neutral environment. The media-neutral approach also used in th UNCITRAL Model Law on Electronic Commerce is intended to provide in principle for the coverage of all factuai situations where information is generated, stored or communicated, imespective of the medium on which such32 Fundamentals of information Technology information may be affixed (see the Guide to Enactment of the UNCTTRAL Model Law on Electronic Commerce, para. 24). The words “a medianeutral environment”, 25 used in the UNCITRAL Model Law on Electronic Commerce, reflect the principle of non-discriminatign between information supported by a paper medium and information communicated er stored electronically. The new Model Law equally reflects the principle that 10 Siscrimination should be made among the various techniques that may be used fo cominunicate or store information electronically, a principle that is often referred to as “technology neutrality” - ‘The Model Law as a Tool for Harmonizing Laws As the UNCITRAL Model Law on ilectronic Commerce, the new Modei Law is in the form of a legislative text that is recommended to States for incorporation into their national law. The Model Law is not intended to interfere with the normal operation of the rules of private international law (see below, para. 136). Unfike an international convention, model iegistation does not require the State enacting it to notify the United Nations or other States that may have also enacted it. However, States are strongly encouraged , to inform the UNCITRAL Secretariat of any enactment of the new Mode! Lave (or any other mode! law resulting from the work of UNCITRAL). Im incorporating the text of the model legistation into its tegel system, a State may modify or leave out some of its provisions. In the case of a convention, the possibility of changes being made to the uniform text by the States parties (normally referred to as “reservations”) is much more restricted; trade law conventions in particular usually either totally prohibit reservations or allow only very few, specified ones, The flexibility inherent in model legislation is particularly desirable in those cases where it is Likely that the State would wish to make various modifications to the uniform text before it would be ready to enact it as national law. Some modifications may be expected, in particular when the uniform text is closély related to the national court and procedural system. This, however, also means that the degree of, and certainty about, harmonization achieved through model legislation is likely to be lower than in the case of a convention. However, this relative disadvantage of model legislation may be balanced by the fact that the number of States enacting mode! legislation is likely to be higher than the number of States adhering to a convention. In order to achieve a satisfactory degree of harmonization and cortainty, it is recommended that States make as few changes as possible in incorporating the new Model Law into their legal systems and that they take due regard of its basic principles, including technology neutrality, nondiscrimination between domestic and foreign Legal Recognition and Authentication of Slectronic Records 33 clestronic signatures, party autonomy and the intemational origin of the Model Law. In general, in enacting the new Model Law (or the UNCITRAE Medel ‘Law on Electronic Commerce), it is advisable to adhere as much 2s possible w the uniform text in order to make the national law as transparent ar a3 possible for foreign users of the national law. ~ Ttshould be noted that some countries consider that the legal issues relaied ‘to the use of electronic signatures have already been solved by tite UNCITRAL, Model Law on Electronic Commerce and do not plan to adopt further mites ‘on electronic signatures until market practices in that new area are better established. However, States enacting the new Model Law alongside the UNCITRAL Model Law on Electronic Commerce may expect additional benefits. Por those countries whore governmental and legislative authorities are in the process of preparing legislation on electronic signature issues, including the establishment of PKI, certain provisions of the Model Law offer ‘the guidance of an intornational instrument that was prepared with PKI issues and PKI terminology in mind, For ail countries, the Model Law offers a set of basic rules that can be applicd beyond the PKI model, since they envisage the interplay of two distinct functions that are involved in any type of electronic signature (Le. creating and relying on an electronic signature), and a third function involved in certain types of electronic signatures (Le. certifying an electronic signature). Those three functions should be dealt with irrespective ‘of whether they arc in fact served by three or more separate entitics (0.8 where various aspects of the certification function are shared between different entities) or whether two of those functions are served by the same person (e.g. where the certification function is served by a relying party). The Model Law thus provides common grounds for PKI systems relying on independerit ification authorities sud elecironic signature sysiems where no such independent third party is involved in the electronic signature process. Digital signatures and other electronic signatures In discussing the desirability and feasibility of preparing the new Modei Law and in defining the scope of uniform rules on electronic signatures, UNCITRAL has examined vatious electronic signature techniques currently being used or still under development. The common purpose of those techniques is to provide functional equivalents to (a) handwritten signatures; and (b) other kinds of authentication mechanisms used in @ paper based environment (e.g. seais or stamps). The same techniques may perform additional functions in the sphere of eiectronic commerce, which are derived from the functions of a signature but correspond to no strict equivatent in a paper-based environment.