On 27th May 2013, an interesting writ petition is coming up before the Karnataka High Court (WP 21049/2013 at Court Hall No 9, #54).

This petition has been filed by Axis Bank Ltd against the Adjudicator of Karnataka as the first respondent and Gujarat Petrosynthese Ltd as the second respondent and a decision on the petition will have a huge impact on the Cyber Crime law in India.

On the face of it the case appears to be a simple “Preliminary Hearing” and the proceedings at the end of the day are unlikely to have any earthshaking consequences. But this perception may not be correct.

During the preliminary hearing the Court will consider admission of the petition and also take a view on the “Interim Stay” granted by the vacation judge on 16th May 2013.

The options before the Court appear to be one of the following.

a) Admit the petition, post it for a detailed hearing on another day and in the meantime continue the Interim Stay granted by the vacation judge.

b) Admit the petition, post it for a detailed hearing on another day but vacate the Interim Stay.

c) Based on the preliminary objections, dismiss the petition.

A normal observer of Court proceedings would say, “What is special about this? This is common for all similar writ petitions”. They may also say that “The most likely decision is the first one where an opportunity is given for detailed hearing and in the interim the status quo  may be continued. The status quo in this case means continuation of the interim stay.

In order to understand the impact of a decision on the above preliminary hearing on the Cyber Judiciary in India, it is necessary to understand the background of the case and the meaning that can be ascribed to the above three decision options that are possible.

The decision will interalia determine

a) Whether the Adjudicator of Karnataka can effectively discharge the duties cast on him under ITA 2000/8

b) Whether Individual Cyber Crime victims can file any adjudication complaint against any companies such as a Bank

c) Whether any Company can file any adjudication complaint or hacking or denial of service etc complaint against any other individual or a company.

As an example let us take the recent case in which some persons hacked into the systems of two BPOs in India (One of which is in Bangalore) and stole some information/modified some information unauthorizedly and caused a fraud of over Rs 250 crores. Some of these hackers have been arrested in New York. Had they been in Karnataka, the Company here which suffered hacking cannot file a complaint which is sustainable under Section 66 of ITA 2000/8.

Another example is that if some body hacks into Infosys or Wipro, then Infosys or Wipro cannot file a Section 66 complaint with the Police or Section 43 complaint to the adjudicator.

If somebody hacks into an ATM in Bangalore by any means, the Bank cannot file a Section 66 (Hacking) Complaint against such a person.

To appreciate why such an adverse impact can arise we need to understand  what a “Continuation of Interim Stay Means” as a legal precedent.

The background of the case is as follows:

In around June 2011, M/S Gujarat Petrosynthese Ltd, (GPL) a company having an account with Axis Bank, Marathhalli found that Rs 39 lakhs vanished from its account. On filing a complaint with the Bank as well as the Police it was found that the amount had been transferred to several other branches of Axis Bank, Indus Ind Bank, Standard Chartered Bank, ING Vysya Bank etc.  Bank gave the account details to the Police and Police are trying to identify the existence of such customers.

In the meantime, GPL filed a complaint under Section 43 to the Adjudicator of Karnataka alleging that Axis Bank and the other Banks who received the proceeds transferred from their account should compensate them for the loss.

Axis Bank objected to the filing of the complaint stating that the “Adjudicator does not have jurisdiction” to entertain the complaint under Section 43 of ITA 2000.

The reason stated by Axis Bank for the purpose was

1. Under Section 43, any “Person” can file a complaint against another “Person”.  Here the word “Person” means an “Individual”. GPL is not an individual. Also Axis Bank is not an individual. They are “Body Corporates”. Hence Section 43 is not applicable.

2.Recognizing the lacuna of Section 43 that it was not applicable for Companies, an amendment was brought to the Act to introduce Section 43A.

Despite objections from GPL, the then Adjudicating officer agreed with the contention of Axis Bank and issued a decision that the complaint cannot be entertained by him since Section 43 cannot be invoked by GPL since it is a corporoate entity. He confirmed his conviction on this view in another instance where the complainant was an individual but the respondent was ICICI Bank which was a corporate entity.

By these two decisions, the Adjudicator created a precedent that “Section 43 cannot be invoked by a Company and cannot be invoked against any Company”. This also applied to partnership firms and association of persons.

GPL submitted a request for review immediately within 2 days of the decision on 29th December 2011. The review was kept pending by the Adjudicator.

In the absence of a review  of the said order of 27th December 2011, no cyber crime victim in Karnataka could approach the Adjudicator under Section 43. Since Section 43 is directly linked to the definition of offences under Section 66, if a Company cannot be considered as part of Section 43, he could not be part of Section 66 also. (Please see Section 43/and  Section 66 here). Under Section 61 of ITA 2000/8 the Adjudicator has the sole jurisdiction for any claim for damage upto Rs 5 crores. The Civil Judiciary therefore believes that any claim for damages arising due to contravention of any of the provisions of ITA 2000/8 is falling under the sole discretion of the Adjudicator and they would therefore refuse to entertain any complaints.

The situation was similar to the jurisdictional police station and the Cyber Crime police station bouncing a cyber crime complainant from one to another. There was therefore a void created in the Cyber Judicial System in the state of Karnataka.

Recently the Karnataka Human Rights Commission took suo-moto cognizance of the adverse effect of the lack of Cyber Judicial process in Karnataka and in the month of March 2013 issued a notice to the current IT Secretary of the State to set things right. The current IT Secretary who is holding the Adjudication responsibilities and having the review request in his files took an opinion of the State Law department and as per their opinion cancelled the order of 27th December 2011 and started hearing the complaint once again on 15th May 2013. During the hearing Axis Bank sought time to file a reply and the hearing was adjourned for the next hearing on 31st May 2013.

On 16th May 2013, the vacation judge of the Karnataka High Court considered the writ petition challenging the order of the current adjudicator dated 26th April 2013 cancelling the earlier order dated 27th December 2013 and deciding to continue the process making several allegations against the IT department, the Law department as well as the complainant. The Court  issued notices to the respondents namely the Adjudicator and GPL for hearing on 27th May 2013. However the Court routinely approved the request for interim stay.

The interim stay was on the action of the new order which cancelled the order of 27th December 2013  which had held that “No Company has a right to invoke Section 43 or no body can invoke Section 43 on any Company”.

If On 27th 2013, the interim stay is not vacated, it would mean that until such time where the Court changes the order later in the future, the adjudication order of 27th December 2011 will be operative and the cancellation will not be effective.

If the Court vacates the Stay and continues hearing the case then the adverse impact of the stay will be prevented.

However if the High Court proceeds to hear the writ petition, it would be over ruling the powers of the Adjudicator as envisaged under ITA 2000/8 and would be also destabilizing the natural process of “Appeal” that has been envisaged under ITA 2000/8. This would mean that the role of the Cyber Appellate Tribunal is irrelevant. In otherwords the Karnataka High Court would change the hierarchy of Cyber Judiciary from

-Adjudicator of a State to Cyber Appellate Tribunal to the High Court of the State and then the Supreme Court of India to

-Adjudicator of a state to High Court of the State and then the Supreme Court of India.

The system of Cyber Appellate Tribunal can therefore be considered as redundant and ITA 2000/8 provision will effectively stand amended.

It is not clear if the High Court has this power to cause an effective amendment of ITA 2000/8 by agreeing to continue the hearing..

The option where the petition is dismissed and returned to the adjudicator for continuation would avoid setting of the above precedents which may add some confusions in the Cyber Law situation in India.

The objective of placing this detailed analysis of the forth coming  hearing is to enable the media to take note of the importance of the case and follow up the case.

I wish Mr Arnab Goswami of  Times Now, Mr Rajdeep Sardesai of CNN IBN, Mr Rahul Kanwal of Head Lines Today, Ms Bukah Dutt of NDTV, Mr Vishweshwar Bhatt of Suvarna News (Kannada) and others from TV 9 (Kannada), Samaya, (Kannada), Public TV (Kannada) and other channels to take note. I also invite attention of the print media such as Hindu, Deccan Herald, Economic Times, DNA, Deccan Chronicle, Bangalore Mirror, Times of India, Business Standard, Kannada Prabha, etc also to take note.

I request viewers who have contacts with these journalists to draw their attention to this article so that they show some interest in the case.

Naavi

 

 

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