Professional Documents
Culture Documents
• Cyber criminal can destroy websites and portals by hacking and planting viruses, carry out
online frauds by transferring funds from one corner of the globe to another, gain access to
highly confidential and sensitive information, caine harassment by email threats or obscene
material, pay tax frauds, indulge in cyber pornography involving children and commit
innumerable other crimes on theInternet.
• With the growing use of the internet cyber-crime would affect us all in a directly or indirectly and
they have the potential of shaking economies,
• February 6, 7th and 8th of the year 2000 were the darkest nights ever for the Internet and E-
Commerce of the cyber-criminal. Some of the big websites such as Yahoo, Buy.com, eBay,
Amazon.com were choked and shut down for hours.
•The month of May proved to be mayhem for the globe when the cyber-criminal said "I Love You to
the Internet Community. The virus spread around the globe in two hours at a blinding speed which
crippled millions of computers causing an estimated loss of US $ I0 billion.
•Cyber-crime is presently estimated to be growing at the rate of 4.1% per week. From 640 criminal
complaints (1.7 per week) in 1993 to the projected 2,82,000 (773 per day) for the year 2000, it has
not been a slow journey.
•Cyber break-ins caused losses of US $42 million in 1999 which was more than 100% from
1997.
•In December 1999, 3,00,000 credit card numbers were snatched from an online music retailer 'CD
Universe'.
•In March 1999, the Melissa Virus caused an estimated damage to US $80 million paralyzing
email systems.
•The Federal Bureau of Investigation (FBI) has estimated Losses of up to US $10 billion a year in
cyber crime.
• As per the statistic by the Computer Emergency Response Team (CERT) Coordination Center,
an agency which focuses on computer security issues noted that four million computer hosts were
affected by computer security incidents in 1999 alone, by damaging computer viruses.
• In 1999, corporate America spent US $4.4 Security software including firewalls,
intrusion-detection programs, and authentication and authorization software,
• Mr Bill Clinton, former US President. had announced a public private sector joint initiative to
protect US information infrastructure from hackers and viruses. He said, Today our critical
systems, from power structure to air traffic control, are connected and run by computers. We
must make those systems more secure so that America can be more secure."
• Last year, hackers from Pakistan hacked and defaced 40 Indian websites as follows:
• It is shocking to know that a devastating cyber war can be waged by a lone individual in a
basement with a laptop as his weapon
• It is estimated that about 15,330 crores were spent on Indian websites for e-security, yet they
remain vulnerable to the threat hacking and other cyber-crimes.
• As per the recent statistics of 2018, cyber-crime will generate profits of US $1.5 trillion this
year.
1. Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), any
police officer, not below the rank of a Deputy Superintendent of Police, or any other officer of
the Central Government or a State Government authorised by the Central Government in this
behalf may enter any public place and search and arrest without warrant any person found
therein who is reasonably suspected of having committed or of committing or of being about
to commit any offence under this Act.
Explanation: For the purposes of this subsection, the expression "public place" includes any
public conveyance, any hotel, any shop or any other place intended for use by, or
accessible to the public.
2. Where any person is arrested under sub-section (1) by an officer other than a police officer,
such officer shall, without unnecessary delay, take or send the person arrested before a
magistrate having jurisdiction in the case or before the officer-in-charge of a police station.
a. The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) shall, subject to
the provisions of this section, apply, so far as may be, in relation to any entry, search
or arrest, made under this section.On a first glance, section 80 of the IT Act, 2000
appears to be clear and simple but on a closer examination, it creates confusion in
the law and leads to absurd results.
b. The aforesaid construction of the provision only speaks of the place where the
accused is found when he is sought to be arrested, which has to be a public place.
Since the point of committing or of being about to commit" refer to the point of time of
arrest, therefore the third situation as aforesaid arises. The word "in such public
place should have been added at the end of each sub-section
c. By restricting the power of arrest without warrant only from a public place,
Section 80 becomes vulnerable.
Cognizable Offence
2 A Cognizable offence means a case where the police officer has the power to arrest
without warrant.
3. Cognizable offences are those offences which are serious in nature Example- Murder,
Rape, Dowry Death, Kidnapping. Theft, Criminal Breach of Trust, Unnatural Offences. 4. In a
cognizable case, an FIR is registered with the police.
5. In a cognizable case, the police initiate the investigation on its own and do not require the
permission of the Court.
6. In a cognizable case, the State investigates the case from the inception and fights
against the deceased. In other words, the State is the prosecutor and the only
responsibility of a complainant / victim/informant may in the trial of a cognizable case
participate in the legal proceedings only to the limited extent of assisting the Public
Prosecutor who represents the State
7.In a cognizable case, the burden of proving the allegations against accused lies upon the
prosecution, i.e. the State
(1) Every information relating to the commission of a cognizable offence, if given orally to an
officer in charge of a police station, shall be reduced to writing by him or under his direction,
and be read over to the informant and every such information, whether given in writing or
reduced to writing as aforesaid, shall be signed by the person giving it, and the substance
thereof shall be entered in a book to be kept by such officer in such form as the State
Government may prescribe in this behalf.
(2) A copy of the information as recorded under sub-section (1) shall be given forthwith,
free of cost, to the informant.
(3) Any person aggrieved by a refusal on the part of an officer in charge of a police station to
record the information referred to in subsection (1) may nend the substance of much
information, in writing and by post, to the Superintendent of Police concerned who, if
satisfied that such information discloses the commission of a cognizable offence, shall either
investigate the case himself or direct an investigation to be made by any police officer
subordinate to him, in the manner provided by this Code, and such officer shall have all the
powers of an officer in charge of the police station in relation to that offence.
Non-Cognizable Offence
1. A non-cognizable offence means an offence for which, and non cognizable case
means case in which a police officer has no authority to arrest without a warrant
2. Non-Cognizable offences are those which are not serious in nature. Example. Assault,
Cheating, Forgery, Defamation.
3. In a non-cognizable case, a criminal complaint ought to be filed by the complainant in the
court.
4. In a non-cognizable case, no investigation can be carried out by the police without the
order of the court.
7 Section 155 of Cr.R.P.C provides that, in a non cognizable office or the police officer
annot receive or record the FIR unless he obtains prior perminsion from the Magistrate.
8.In non cognizable case, no FIR can be registered. The complainant can only file a
criminal complaint in the court of the Magistrate
9. The Informant make a complaint to the police station, the police would record the
substance of the information as a Non-Cognizable Report (NCR) in the proscribed took and
refer the informant to the judicial Magiatrate, The Magistrate on receiving a criminal
complaint and after applying his judicial mind thereupon may take cognizance of the
offence, after which the Magistrate would examine the complainant and his witnesses
the substance of which shall be reduced to writing The recording of these statements by the
Magistrate Is commonly referred to as preliminary complainant's evidence. The Magistrate
will then apply his mind to the preliminary evidence adduced on behalf of the complainant,
and if he is of the opinion that there in sufficient tround for proceeding, he will sue process to
the accused for facing trial. It takes a very long time, even vera for the case to reach the
stage of issuance of process to the accused under the criminal complaint procedure.
Table 1.2
1. It is presumed that the police officer not below a DSP would fairly exercise the power
of arrest without warrant. It has also been said that whether it is by a DSP or merely
an Inspector they are a part of same police force, share the same morals and thus it
makes no difference.
2. V In the opinion it would not be fair to equate a DSP with an Inspector. In the
context of cyber criminality it is not a reasonable safeguard against arbitrary
arrests and certain other safeguards are also necessary
3. With the advancement of protective technology, cyber-crime is also progressing 4.
Even a high-rank police officer, such as a DSP, cannot keep pace with the technology
race. In the opinion, the law of IT must mandate that the police officer not below a DSP),
or any other Government Officer, must be assisted by an expert from the field of
Information Technology (IT).
5. Investigative skills of a high-ranking police officer (not below DSP coupled with the
technological expertise of an IT professional would be an ideal combination to
effectively investigate crimes under the IT Act and to prevent arbitrary arrests of
innocents as well Such a measure would also act as a check on the potential of
misuse of the power to arrest without warrant.
6. Cyber-crimes such as online frauds and email abuse are within the domain of the
Indian Penal Code, 1860 which would continue to be investigated by lower ranked police
officers in accordance with the Code of Criminal Procedure,1973. As per section of the IT
Act, the power of investigation vested in a police officer not below he Bank of a DSP is
only with respect to the offences under the IT Act
7. In the opinion, even those cyber crimes which are not covered by the IT Act should
be investigated by high-ranking police office with the assistance of IT experts.
8. Cyber-crimes other than those covered in the IT Act, should be identified and then
suitable amendments should be carried out the law for bringing them under one
umbrella.
9. Even without amendments in the law, as a policy, the police ca recruit IT engineers
and experts to render assistance in cyber-crime investigation, rather than only
giving training to the existing police force in the subject of IT.
10. It is being argued that the requirement of reasonable suspicion too subjective and
virtually depends upon the whims and fancies et the investigating police officer. 11. In the
opinion, the words "reasonably suspected" in section 80 well known to criminal law.
Reasonable suspicion implies that the has to be some credible basis or material. The
judiciary mue enforce the compliance of the requirement of reasonable suspicion for
arrest without warrant. Since police officer (not below DSP) ma be able entertain
reasonable suspicion due to lack f understanding of
advanced technology. So, it is suggested as befor to take the assistance of IT
expert.
1.8 ARRESTS FOR "ABOUT TO COMMIT" AN OFFENCE UNDER THE IT ACT: A TRIBUTE TO
DRACO
● Section 80 of the IT Act, 2000 seeks to penalise citizens "about to commit any offence
under the Act.
● The word "about" according to the Black's Law Dictionary means :
a. Near in time, quantity, number, quality or degree
b. Substantially, approximately
● In the context in which the words about to commit are used is Section 80, they imply a
preparation to commit any offence under the IT Act, 2000.
● In the opinion, this component of Section 80 is wide open for misuse and is ex-facie
Draconian.
The preamble of the IT Act reflects the objectives with which the Government of India enacted the
Act.
The objectives of the Act are:
1. To provide legal recognition for transactions carried out by means of electronic data interchange
and other means of electronic communication, commonly referred to as electronic commerce",
which involve the use of alternatives to paper-based methods of communication and storage of
information.
2. To facilitate electronic filing of documents with the Government agencies and further to
amend the Indian Penal Code, The Indian
Evidence Act, 1872, The Bankers Books Evidence Act, 1891 and the Reserve Bank of India Act,
1934 and for matters connected therewith or incidental thereto".
The IT Act got President Assent on 9th June 2000, and it was my effective from 17th October
2000.
• The Act also provides for the constitution of the Cyber Advisory Committee, which shall advise the
government as regard Regulation
any rules, or for any other purpose connected with the said act.
• The said Act also proposed to amend to; The Indian Penal Code 1860, The Indian Evidence Act,
1872, The Bankers' Book Evidence
Act, 1891, The Reserve Bank of India Act, 1934,etc
• The IT Act is spread in total 13 chapters. There are total 90 sections.
• The Act in embedded with two schedules. The first schedule deals with Documents or
Transactions to which the Act shall not apply The Second Schedule deals with electronic
signature or electronic authentication technique and procedure.
2.2 HACKING
•It also says "destroys or delete or alter any information residing is a computer resource or
diminishes its value or utility or affects injuriously by any means"
• Hackers can also be classified as Code Hackers, Phreakers, Cyber punks and Crackers. •Code
Hacker have Knowledge of the intricacies of computer systems and their operations. Phreakers
have deep knowledge d the Internet and telecommunication systems. Cyber-Punks specialize in
cryptography, Crackers are breaks into computer security systems.
•Out of all cyber crime, criminal hacking is amongst the best threats to the Internet and e-
commerce Cyber break-is caused losses of US $42 million in 1999.
• if hacking remains unchecked, it would seriously affect the future of e-commerce. Hacking also
makes e-commerce costlier because of huge investment required to install systems to guard against
hackers.
• Hacking has already become a major problem in India. There have been major instances of Indian
websites allegedly being hacked by Pakistani hackers. Some time back, hackers inserted a link to a
pornographic website from a website of SEBI (Stock Exchange Board of India)
. In terms of motivating factors and causes for hacking, there are four types of hacking which are
most prevalent today:
● For fun as a hobby, mostly by teenagers obsessed with the Internet.
● By Internet security companies to test their clients systems and win their confidence. • The
IT Act, 2000 defines and punishes "hacking" as follows:
(1)Whoever with the intent of cause or knowing that is likely to cause wrongful loss or damage to the
public or any person destroys or deletes or alters any information residing in a computer resource or
diminishes its value or utility or affects it injuriously by any means, commits hacking.
(2)Whoever commits hacking shall be punished with imprisonment up to three years, or with fine
which may extend up to two lakh rupees, or with both.
• Like all criminal offences, hacking also requires knowledge and the act of commission to be
covered under section 66 (1) of the IT Act, 2000
• Damages for hacking can also be claimed by the victims from the hacker, under the general civil
law.
Case Law - In February 2001, two persons Amit Parsai and Kapil Juneja blocked access to the
complainant website on the grounds of non-payment of charges for hiring web space. They not only
blocked the web page but also displayed the message "Site closed due to non-payment of bill"
Blocking access was legal but display of the message amounted to "hacking" and "wrongful
loss" under tin 66 of IT Act and section 23 of IPC means loss by unlawfulmeans of property to
which the person losing it is legally entitled
• The IT Act also covers damages for up to one crore on the commission of either or more of the
following acts which are done by any person or person in charge of computer systems, without the
permission of the owner.
● Damage to computer systems including networks, computer and databases etc. Sec 43(d)
of IT Act, 2000.
● Disruption of any computer system or part of computer systems.Sec 43(e) of IT Act,
2000.
● Assistance to any person to facilitate access to computer systems in contravention of the IT
Act, rules or regulations made therein. Sec 43(g) of IT Act, 2000.
• To determine the quantum of compensation for any wrongful acts as described in the Act the
adjudicating officer would have due regard for:
● Amount of gain or unfair advantage made as a result of such defaults ●
Amount of loss caused to any person as a result of the default.
● Repetitive nature of the default.
● Artech, Name System, Team Holocaust and Doodoo Krew are teenage web vandals also
called by security experts as Ankle-Biters, Packet Monkeys and Script Kiddies.
● It is said that most of these teenage web vandals either deface web pages or tag
remarks on website.
Sections in IPC
Section In IPC Offence Punishment
403 Dishonest misappropriation of Imprisonment which may
Property extend to 2 years or fine or
both
Illustration
The Love Bug virus comes as an attachment to an email with the subject "I Love You". When the
victim clicks on the attachment, the virus overwrites all files on the victim's computer with junk
data thereby destroying and damaging all the data.
"Damage" means to destroy, alter, delete, add, modify or re-arrange any computer resource by any
means
.
"Computer Contaminant" means any set of computer instructions that are designed to
Illustration: John sends an online greeting card to Rosy. The greeting card is an image file that is
infected with a "Computer Trojan". When Rosy clicks on the greeting card to view it, the Trojan gets
installed on her computer. The Trojan usurps the functioning of Rosy's computer. It gives complete
control of the computer to John. He can now remotely alter files on Rosy's computer. This is an
example of computer contaminant.
● The IT Act, 2000 thus imposes a monetary liability of damages as compensation not
exceeding rupees one crore to victim, upon person who introduces or causes to be
introduced any computer contaminant or computer virus into any computer, computer
system or computer network, irrespective of whether it is done intentionally, negligently,
erroneously , inadvertently or innocently.
● The Act of planting a virus and other computer contaminants,would also amount to the
criminal offence of mischief, which is defined in Section 425 of Indian Penal Code Mischief:
Whoever, with intent to cause, or knowing that he is likely to che Wrongful loss or damage to the
public or to any person, caunes the destruction of any property, or any such change in any property
or in the Situation thereof an destroy or diminishes its value or utility, or affects injuriously commits
mischief
Explanation 1:
It is not essential to the offence of mischief that the offender should intend to cause loss or
damage to the owner of the property injured or destroyed. It is sufficient if he intends to cause, or
knows that he is likely to cause, wrongful loss or damage to any person by injuring any property.
whether it belong to that person or not
Explanation 2:
Mischief may be committed by an act affecting property belonging to the person who commits the
act, or to that person and others jointly
• The offence of mischief which causes a damage to the amount of t 50 or upwards is punishable
with imprisonment for a term extending to two years, or with fine, or with both as per Section 427 of
IPC.
Defamation is a criminal offence under the Indian Penal Code. consists of the following
ingredients:
● Making or publishing an imputation concerning any person:
● The imputation is made with the intention of causing harm to, or knowing or having
reason to believe that such imputation will harm, the reputation of such person;
● The imputation is made by words, which are either spoken or intended to be read, or by signs
or by visible representations,
The punishment as provided in section 500 of the IPC is imprisonment for a term which may
extend up to 2 years, or with fine, or both.
Publishers and editors of newspapers, journals, etc. containing defamatory matter are also
liable for defamation as per Section 501 of IPC.
However, imputations falling under any or more of the following ten exceptions do not amount to the
offence of defamation as per sec, 499 of OPC:
1. Imputation which is true concerning any person, if it is for public good. 2. An opinion in good
faith regarding the conduct of a public servant in the discharge of his public functions, or
regarding his character,only so far as his character appears in that conduct.
3. An opinion in good faith regarding the conduct of any person touching any public question,
and regarding in character, only so far as his character appears in that conduct 4. . Publishing
substantially a true report of the proceedings of a Court of Justice or of the result of any such
proceedings.
5. Merits of case decided in Court or conduct of witnesses and others concerned. It is not
defamation to express in good faith any opinion whatever respecting the merits of any case,
civil or criminal, which has been decided by a Court of Justice, or respecting the conduct of
any person as a party, witness or agent, in any such case, or respecting the character of
such person, as far as his character appears in that conduct, and no further.
Illustrations:
a) A says-'I think Z's evidence on that trial is so contradictory that he must be stupid or
dishonest". A is within this exception if he says this is in good faith, in as much as the opinion
which he expresses respects Z's character as it appears in Z's conduct as a witness, and no
further.
b) But if A says "I do not believe what Z asserted at that trial because I know him to be a man
without veracity": A is not within this exception, in as much as the opinion which he express of Z's
character, is an opinion not founded on Z's conduct as a witness
UNIT- II
● ‘Electronic Commerce’ is defined as the buying and selling of goods, or the rendering of services
using the Internet.
● E-Commerce is about using technology to streamline business model, creating savings and
increasing efficiency. It is about lowering costs and establishing closer, more responsive
relationship with your customers, suppliers and partners”.
● Internet is in the process of capturing and revolutionizing commerce across the globe. Many
official entities and private research firms have estimated recent and future levels of e-
commerce sales.
● A strong and growing demand for Internet access through cellular phones and televisions is also
deriving the growth of e-commerce.
• The modes of doing business have been redefined by the Internet since the costs are substantially
lower than the conventional ways and the speed of business transactions over the Internet is
phenomenal.
● There are broadly four types of e-commerce transactions that blend and correlate : information
access, interpersonal communication, shopping services, and virtual enterprises.
● Information access provides the users with a search and retrieves facility.
● Interpersonal communication services provide the users methods of exchange information,
discuss ideas and improve their cooperation.
● Shopping services allows users to seek and purchase goods or avail of services through the
electronic network or the Internet.
● And, the virtual enterprises are business arrangements where trading partners who are
separated by geography and expertise are able to engage in joint business activities.
● Since every E-Commerce transaction, like any other commercial transaction, is in essence a
contractual relationship between the transacting parties, there is a great importance of the law
of contracts.
● In India, the law of contract is stated in the Indian Contract Act, 1872 and the law pertaining to
the sale of goods is laid down in the Sale of Goods Act, 1930.
● Though every e-commerce transaction is in substance a contract, due to the distinct nature of e-
commerce transactions, certain provisions have been incorporated in the Information
Technology, Act, 2000, which have significant implications on e-contract formation.
● Also, every contract needs to be tailored in accordance with the needs of the transaction.
● A lawyer engaged to draft a contract, needs to be properly briefed on the needs of the
transaction and appraised of the potential areas of dispute which may arise, so that these
aspects are fully covered in the contract.
● Every manager and entrepreneur in the IT industry needs to be aware of various legal aspects of
e-contracts.
● Similarly, every e-consumer must understand the terms of the contract before entering into a
transaction.
● It need to be stated at the outset that the It Act, 2000 does not apply to the following
transactions by virtue of section 1(4):
✔ A negotiable instrument as defined in section 13 of the Negotiable Instruments Act, 1881.
✔ Any contract for the sale or conveyance of immovable property or any interest in such property.
✔ Any such class of documents or transactions as may be notified by the Central Government in
the Official Gazette.
3.2 CLICK-WRAP AND SHRINK-WRAP CONTRACT : STATUS UNDER THE INDIAN CONTRACT ACT, 1872.
● A click-wrap agreement is mostly found as part of the installation process of software packages.
It is also called a "click through” agreement or click-wrap licence. The name "click wrap" comes
from the use of "shrink wrap contracts" in boxed software purchases.
i) Type and Click where the user must type "I accept” or other specified words in an on-screen
box and then click a "Submit” or similar button. This displays acceptance of the terms of the
contract. A user cannot proceed to download or view the target information without following
these steps.
ii) Icon Clicking where the user must click on an "OK” or "I agree" button on a dialog box or pop-
up window. A user indicates rejection by clicking "Cancel" or closing the window.
Upon rejection, the user can no longer use or purchase the product or service. A click-wrap
contract is a "take-it-or-leave-it" type contract that lacks bargaining power.
The terms of service or license may not always appear on the same web page or window, but
they must always be accessible before acceptance.
✔ The user should be expressly notified of the terms and con contained in the click-wrap
agreement.
✔ The click-wrap agreement should be stated in a manner such that it can be viewed before the
option of acceptance or rejection is exercised. The click options of "I agree" or "I accept", etc.
should be placed at the end of the terms of agreement.
✔ Á user may by mistake click the "I accept” / “I agree" icon and to avoid such mistaken
acceptance, a confirmatory acceptance mechanism should be prescribed. This implies a two-
step process, i.e. first the consumer would click “I accept" and then the program should provide
another icon such as “I confirm" as a confirmation of the acceptance. To avoid doubts, it should
be specifically stated that for contract formation, the confirmation / second click would be
considered.
✔ A user should be allowed to exit the process easily at any point of time.
● Shrink-wrap contracts are license agreements or other terms and conditions which can only be
read and accepted by the consumer after opening the product. The term describes the shrink
wrap plastic wrapping used to coat software boxes, though these contracts are not limited to the
software industry.
● It has been a long-standing practice to enclose warranty cards and contract terms inside boxes
containing products other than software. These terms are generally available for review only
after the product has been bought, and opened usually in a location distant from the point of
sale.
Various debates / controversies / disputes in the US pertaining to legality of shrink wrap software license
agreement are as follows: v The main argument against the validity of a shrink-wrap agreement are as
follows:
✔ The main argument against the validity of a shrink-wrap agreement is that the consumer does
not get an opportunity to know and consent to the terms and conditions of the software license
before its purchase and until he tears upon the shrink-wrap.
✔ The terms found in the license agreements are not really consented to and hence are
unenforceable under the law of contract.
✔ It is argued in favour of a shrink-wrap agreement that the law has never required manufacturers
of products, distributors, retailers and buyers to negotiate contracts at a round table and reach
an explicit agreement on individual basis and terms.
✔ It is argued that usually the manufacturer sets fixed terms that go along with the product.
✔ Unless these terms are void as being opposed by public policy, they are enforced if they are
assented to by any expression.
✔ It is also argued that Contracts of sale on the basis of "pay now, terms later" have been common
and, till the IT revolution, did not pose a crisis for the law of contracts.
● Legislative measures have been initiated inter-alia to protect shrink-wrap licenses in the US
through amendments in the Uniform Commercial Code (UCC) by introducing Article 2B therein.
● An attempt has been made to adapt the UCC to the needs of the software industry by the
addition of Article 2B.
● The article provides that term inconsistent with customary practices or which conflict with
previously negotiated terms may become part of the agreement only with conspicuous language
and manifest assent.
● In India, there is no decision on the validity of a shrink-wrap contract, It is reiterated that since
the Indian Contract Act, 1872 and Sale of Goods Act, 1930 are open to any mode of
communication of a proposal and its acceptance (unless the proposal prescribes the manner of
acceptance), tearing of the shrink-wrapping is a legally valid form of communication.
a) When one person signifies to another his willingness to do or to abstain from doing anything, with-a
view to obtaining the assent of that-other to such act or abstinence, he is said to make a proposal;
b) When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be
accepted. A proposal, when accepted, becomes a promise;
c) The person making the proposal is called the "promisor", and the person accepting the proposal is
called the promise";
d) When, at the desire of the promisor, the promise or any other person has done or abstained from
doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or
abstinence or promise is called a consideration for the promise;
e) Every promise and every set of promises, forming the consideration for each other, is an agreement;
f)Promises which form the consideration or part of the consideration for each other, are called reciprocal
promises
i) An agreement which is enforceable by law at the option of one of more of the parties thereto, but not
at the option of the other or others, is a voidable contract;
j) A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable.
Sections 4 and 5 of the Indian Contract Act, 1872 form a scheme of provisions pertaining to
communication of offer, acceptance, and revocation of offer and acceptance :
The communication of a proposal is complete when it comes to the knowledge of the person to whom it
is made.
as against the proposer, when it is put in a course of transmission to him so as to be out of the power of
the acceptor; as against the acceptor, when it comes to the knowledge of the proposer.
as against the person who makes it, when it is put into a course of transmission to the person to whom it
is made, so as to be out of the power of the person who makes it; as against the person to whom it is
made, when it comes to his knowledge."
A proposal may be revoked at any time before the communication of its acceptance is complete as
against the proposer, but not afterwards.
An acceptance may be revoked at any time before the communication of the acceptance is complete as
against the acceptor, but not afterwards”.
The following examples would help the above legal provisions clear:
Further to our discussion, I am ready to pay 25 lakh for the source code for the PKI software developed
by you. Let me know as soon as you receive this email.
I am resending you my earlier email in which I had offered to pay 25 lakh for the source code for the PKI
software developed by you. Please acknowledge receipt of my email latest by next week.
Kush does not acknowledge the email even after a week. The initial email sent by Deep will be treated to
have never been sent.
3.4.1 Where acknowledgment is not a part of the contract formation process, when and where does
the contract come into existence?
The answer depends upon the mode of e-communication adopted by the parties which are as follows:
● Where the agreement is entered into by online instantaneous communication between the
parties, the place where acceptance is received by the proposer is the place of contract subject
to section 13(3) of the IT Act, 2000.
● In click-wrap agreements, a party posts terms on its web-site thereby offering to sell goods or
render services. To buy the goods or hire the services, purchaser/ hirer is required to indicate
his assent to be bound by the terms of the offer, typically by clicking on the button "I agree".
The website is an information system programmed by or on behalf of a party to operate
automatically. In such a situation, on accessing the web-site over the Internet, the webpage is
technically returned to the computer of the consumer user. Therefore, when he clicks upon the
"I agree" button, the contract is formed at that very place, i.e. where "I agree" is clicked. In
other words, the contract is formed at the location of the computer of the user.
● In the transmission of e-records, by e-mail or any similar system the contract would come into
existence on the transmission of the acceptance so as to be out of the control of the acceptor.
The place of contract would be the place of business of the acceptor. This conclusion is based on
the harmonious application of section 4 of the Indian Contract Act, 1872.
● The Indian Contract Act, 1872 grants substantial freedom to the transacting parties to stipulate
the terms and conditions governing the contract they enter into. The parties must only ensure
that the terms and conditions are not void as declared by the Indian Contract Act, 1872.
✔ it is forbidden by law;
✔ it is of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent;
✔ it involves or implies, injury to the person or property of another; or the Court regards it as
immoral, or opposed to public policy.
Where the agreement is in restraint of marriage of any person, other than a minor, is void.
Agreement,----
a) by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any
contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which
he may thus enforce his rights; or
b) which extinguishes the rights of any party thereto, or discharges any party thereto, from any liability,
under or in respect of any contract on the expiry of a specified period so as to restrict any party from
enforcing his rights, is void to that extent. As an extension, a contract to refer dispute for arbitration is
valid.
(Page 80):
The Internet is said to have led to the disappearance of physical boundaries. In this context, the Internet
community has created for itself one of the most debated questions, i.e. of jurisdiction. Which court
would have jurisdiction to adjudicate disputes between parties transacting on the Internet?
The questions on jurisdiction are mainly the result of a serious contradiction. On one hand, it is said that
physical and geographical boundaries have vanished in cyberspace. On the other hand, for determining
jurisdiction, we return to the world of boundaries. It is only when a strong nexus is created between the
Internet and the place from where a netizens actually operates or resides, that many of the problems of
jurisdiction are automatically resolved substantially.
4.2 QUESTIONING THE JURISDICTION AND VALIDITY OF THE PRESENT LAW OF JURISDICTION
● The present law of Jurisdiction has been challenged by the IT and the legal communities at the
global level on mainly the following to grounds:
✔ The risk of web-sites facing litigation in foreign lands thereby causing them extreme
hardships;
✔ Inconsistent and harsh decisions of courts on the applicability of the law of jurisdiction to
the cyber world;
● Internet being a global network permits and facilitates global business. The Internet provides a
platform to reach every consumer on the map. The Internet reaches to anywhere and
everywhere.
● It is the global nature of the internet and the conscious global actions of web-sites which will
either invite them to foreign courts or help them to comply with the local laws of different
countries which day wish to attract. The law of jurisdiction cannot thus be blamed for inviting
them to foreign courts and for the consequent hardships. Jurisdictional invitations from foreign
courts depend upon the intent and the activities of the web-sites.
● The courts have held that jurisdiction cannot be assumed merely due to the fact that the web-
site can be accessed from the forum state.
(Page 81):
● "Creating a site, like placing a product into the stream of commerce, may be felt
nationwide or even worldwide but, without more, it is not an act purposefully directed
towards the forum state".
● The present law of Jurisdiction does not penalized web-sites merely for their existence
on the Internet, by conferring global jurisdiction.
● The mere existence of a web-site does not ispo - facto imply that every court on the
world map would have jurisdiction just because the web site can be accessed from that
place.
● Since global web players are the ones who run the maximum risk of receiving
jurisdictional invitations from every nook and corner of the earth, they are the ones who
are making much of the noise about the hardships of having to face litigation anywhere
and everywhere.
● But they fail to understand that hardships and inconveniences are due to the nature of
the Internet and their global acts which would invite global implications including that of
jurisdiction. These web players looking for markets at the global level and a slice of the
US $1 trillion worth e-commerce cake in the baking must understand that they are, or at
least are like, MNCs (Multi-National Corporations) and therefore must follow the
principles on which MNCs operate. MNCs operate globally or in several countries, by
adjusting their actions in compliance with the laws of different countries.
● Before passing any judgement upon the second ground of ‘inconsistency' in the
application of the present law of jurisdiction, it is necessary to first at least have a
glimpse of our laws of-jurisdiction here in India and the decisions of the courts in the
United States of America on jurisdiction over the Internet.
● The journey to the courts in the US is necessary because the Indian judiciary is yet to be
confronted with issues of Internet jurisdictions and because these decisions are likely to
have a persuasive value in our courts though they would not have a binding effect.
Jurisdiction of civil courts in India can be broadly classified in the following three categories :
▪ Pecuniary
▪ Subject matter
▪ Territorial
✔ Jurisdiction with reference to subject matter means that jurisdiction for certain subject has been
exclusively vested in a particular court.
✔ Territorial Issues are concerned with the issues on hand . Territorial Jurisdiction is subject to
pecuniary limits and of jurisdiction based on the subject matter.
● As per the Code of Civil Procedure, 1908, a suit regarding immovable property (i.e. land,
building, etc.) is required to be instituted in the court within whose jurisdiction the property is
situated. (Section 16 of Code of Civil Procedure, 1908).
● Where the immovable property is situated within the jurisdiction of different courts, the suit
may be instituted in either of the said courts. (Section 17 of Code of Civil Procedure, 1908).
● Where it is uncertain as to within whose jurisdiction out of two or more courts any immovable
property is situated, any of the said courts, if satisfied that there is ground for uncertainty, may
adjudicate the same. (Section 18 of Code of Civil Procedure, 1908).
● Therefore, disputes between the parties pertaining to immovable property, whether arising
through the Internet or otherwise, do not present any difficulty as to the jurisdiction of the civil
court to entertain and adjudicate the suit which as aforesaid, depends upon the location of the
immovable property, subject to only one exception stated above.
● In a case for compensation for wrong done to a person or to movables, if the wrong was done
within the jurisdiction of one court and the defendant resides, or carries on business or
personally works for gain, within the jurisdiction of another court, a suit can be filed at the
option of the plaintiff, in either of the courts having jurisdiction over the said places. (Section 19
of Code of Civil Procedure, 1908).
Example 1: A residing in Delhi beats B in Calcutta. B may sue A either in Calcutta or in Delhi.
Example 2 : A, residing in Delhi, publishes in Calcutta statements defamatory of B, B may sue A either in
Calcutta or in Delhi.
▪ Subject to the aforesaid principles, suits are required to be instituted in either the following
courts:
✔ Where the defendant on each of the defendants, actually and voluntarily resides, or carries on
business, or personally works for gain, at the time of the commencement of the suit; or
✔ In a case where the defendants reside at different places, the place where any of the defendants
at the time of the commencement of the suit, actually and voluntarily resides, or carries on
business or personally works for gain, provided that in such case either the permission of the
court is given, or the defendants who do not reside, or carry on business, or personally work for
gain, in sun place as aforesaid, acquiesce in such institution expressly or impliedly by their
conduct; or
✔ Where the cause of action, wholly or in part, arises. (Section 20 of Code of Civil Procedure,
1908).
Explanation : Where the defendant is a corporation which includes a company within its ambit,
the following two situations are provided for in the Code of Civil Procedure.
▪ Where a corporation has its sole or principal office at a particular place, the courts within whose
jurisdiction such office is situated would also have jurisdiction even if the defendant does not
actually carry on business at that place. By legal fiction, it is provided that it shall be deemed
that the corporation is carrying on business at the place where the sole or principal office is
located.
▪ Where cause of action arises at a place where subordinate office of the corporation is located,
courts at such place would have jurisdiction and not the principal place of business.
Example : A resides at Shimla, B at Calcutta and C at Delhi. A, B and C being together at Benaras, B and C
make a joint promissory note payable on demand, and deliver it to A. A may sue B and C at Benaras
where the cause of action arose. He may also sue them at Calcutta, where B resides, or at Delhi, where C
resides; but in each of these cases, if the non-resident defendant objects, the suit cannot proceed
without the leave of the Court.
Hence, as aforesaid, for civil disputes, which may arise between the parties, the legal principles of civil
law to ascertain the jurisdiction depend, as the case may be, upon either the location of immovable
property, or the place where the wrong is done, or the place of residence or business or gainful work of
the defendant, at the time of the commencement of the suit, or where the cause of action arises.
● ‘Cause of action' means the fact or facts which give a person the right to seek judicial relief.
● It is a situation or state of facts which would entitle a party to sustain action and give him the
right to avail a judicial remedy. Cause of action' means the whole bundle of material which are
necessary for the plaintiff to prove in order to entitle him to succeed in the suit.
● Everything which if not proved would give the defendant a right to immediate judgement in his
favour, would constitute the cause of action.
● ‘Cause of action' also includes the circumstances forming the infringement of the right or the
occasion for the action.
● It does not however comprise of every piece of evidence which is necessary to prove each fact,
but it is every fact which is to be proved.
● It is a settled legal principle that even if an infinitesimal part of a cause of action arises in a place,
the doors of the courts having jurisdiction over such a place are open for the plaintiff to bring an
action.
● The Law does not require that a substantial part of the cause of action must arise in a place to
give jurisdiction to the court in that place. The place where the cause of action arises depends
upon the facts and circumstances of each case. Where the cause of action arises partially in
different places, all such places would have jurisdiction and the choice of a place from the same
vest with the plaintiff.
Unit 3
Chapter 5
Every computer on the Internet is assigned a unique address called an internet Protocol Address OF
Address A typical ip address looks like this I 192.168.10.20
The above IP address belongs to a web server in which the googie.com website is hosted. You use an
Internet browser and type in http://192.168.10.20 in the address bar You will reach the google.com
website However, it is very inconvenient to remember such numbers
It is much easier for human remember name ( google.com) Domain name. This is why the domain name
system (DNS) was developed It is the Dns that enables you to type http://www.google.com instead of
http://192.168.10.20
Cyber-Squatting
One of the crimes related to web in the recent years is called “cyber- squatting .
cyber Squatting is registering, selling or using a domain name with The intent of profiting from the
goodwill of someone el se’s well known trademark
• cyber Squatting is defined as malpractice where individuals use a domain name reflecting the name of
a prior existing company intending to attain profit from the goodwill of Trademark already belonging to
someone else Trademark.
A cyber squatter identifies popular trade names, brand names, trademarks or even names of celebrities,
and register or more of them in his name with the malicious intent of extorting money from those who
are legitimately interested or associated with such domain names
Other motives for cybersquatting include appropriation of goodwill, attraction of web traffic, selling the
domain names for a profit in the market, etc
Another cause of frequent domain name disputes is the first come first serve principle adopted for
registration of domain names. At the time when a domain name is registered, no inquiry is made as to
whether it is in conflict with others’ rights under the Intellectual Property law.
There are numerous ways of cyber squatting. It can be done obtaining a second- Level Domain (SLD)
name registration of well known company or a brand within a Top -Level Domain (TLD
• The Internet Corporation for assigned Names and Number ICANN) administers the policy for domain
name system.
• Realizing the problem of cyber-squatting, on October 24, 1999. ICANN Approved its Uniform Domain
Name Dispute Resolution Policy (UDRP and the accompanying Rules of Procedure, for the purposes a
resolving domain name disputes.
• The dispute resolution service providers have their respective panels For dispute resolution, called
Administrative Panel of Arbitration panel. An Administrative Panel in composed of one or three
independent and impartial persons appointed by the dispute resolution service provider that is selected
to administer the dispute in accordance with the UDRP Policy and Rules of ICANN
The procedure for appointment of the Administrative Panel is fair and equitable.
✔ If both the complainant and respondent indicate that they would like the dispute to be decided
by a single Panelist, the Panelist will be appointed by the WIPO Centre from its list of Domain
Name Panelists
✔ If the complainant designates three Panelists and the respondent designates one Panelist, or vice
versa, then the WIPO Centre will appoint a three-person Administrative Panel. In doing so, the
WIPO Centre will try to appoint one of the candidates nominated by the complainant and one of
the candidates nominated by the respondent. If it in unable to do so, the Centre will make an
appropriate appointment from its list of Domain Name Panelists.
The following are some of the circumstances any of which if if found by the Arbitration / Administrative
Panel to be proved. Would be demonstrative of the rights and legitimate interests of the respondent /
registrant to the domain name in dispute.
1. Where before any notice of the dispute, to the respondent, his use of demonstrable
preparations to use, the domain name or a name corresponding to the domain name, is a
connection with bonafide offering of goods and services
2. The respondent-registrant has an (individual, business, or other organization )has been
commonly known the domain name, even If the respondent/ registrant is acquired no
trademarks or service Mark rights or;
3. The respondent-registrant is making a legitimate non-commercial fair use of the domain name,
without intent for commercial gain o misleadingly divert consumes or to tarnish the trademark
or service mark at issue
• The UDRP does not seek to bypass or close the door of legal remedies. The UDRP does not prevent
either the respondent -registrant or the complainant from submitting the dispute to a court of
competent Jurisdiction for independent resolution, before the mandatory Administrative / arbitration
proceedings are commenced or after such proceedings are concluded
Paragraph 3 of the Rules of Procedure prescribes the requirements for filling a complaint by which
administrative /arbitration proceedings are sought to be initiated by the complainant against the
respondent / restraint. Clause (xiii ) of sub para (b) Paragraph 3 of the said Rules, provides that the
complaint must state
“that complainant will submit, with respect to any challenges to a decision in the administrative
proceeding cancelling or transferring the domain name, to the jurisdiction of the courts in at least one
specified Mutual Jurisdiction”.
Paragraph 4 (k) of the UDRP also provides that if ICANN receives the said official documentation
regarding the commencement of a lawsuit by the respondent-registrant within the stipulated period of
10 business days, they (ICANN) will implement the administrative
Panel determines, in its sole discretion and as an exception matter, that much a hearing is necessary for
deciding the complaint
✔ The fees for dispute resolution under the UDRP are very nominal,
✔ The dispute resolution mechanism does not seek to bypass legal Remedies, rather gives due
respect to the decisions of the competent Courts;
✔ The UDRP mechanism in judicious, fair, independent, equitable and competent to decide
domain name disputes.
Meta-tagging in process whereby a website owner places certain words on his web-site, so that the site
figures on search engines when search of that particular word is made
A company’s name or well-known trademark may be improperly used As a meta-tag to divert an Internet
user to another web-site,
Meta tag are codes contained within websites that provide description of the website. An example of
Mumbai University Website. When a student visits www.mu.ac.in, he does not see the description and
Keywords meta tag illustrated below:
Then the are embedded in the source code of the website. They art Put so that search engines te
google.com.yahoo.com, etc.) can Accurately identify what the websites relate to.
From the above illustration : 1. The description tag contains a description of the web page
2. The keywords tag contains relevant associated keyword. When the user searches for Mumbai
University in google.com, the First search results clearly contains the description of the Mumbal
University website as per the description tag.
In late 1999, the Anti-cybersquatting Consumer Protection Act was Enacted in the US
The Anti-cybersquatting Consumer Protection Act amended Section 43 of the Trademark Act to prohibit
bad-faith registration of trafficking in, or use of a domain name that is a registered trademark, is
identical or confusingly similar to a distinctive mark registered or not, or in confusingly similar to or
dilutive of a fame mark
• Traditional remedies under the Trademark Act are available in most cases. Alternatively, a plaintiff can
elect to sue for statutory damages between US $1000 and US $1,00,000 per domain name, the final
amount awarded is at the direction of the judge The court has also been empowered to order the
transfer or forfeiture of the domain Name.
• The ICANN has recently introduced seven new domain name extensions (aero, museum,.coop, .biz,
info, name) innovative mechanism have been introduced with respect to some of the Aforesaid
extensions, which could reduce the threat of cybersquatting
• for example, the concept of a sunrise period has been introduced under which way trademark holders
would be allowed to register domain names for the first month and only thereafter the extension would
be opened for the general public. For the extension .biz unique system of “IP claim has been introduced
whereby any trademark owner can file an IP claim for his trademark by giving the relevant registration
particular.
• If two or more applications are filled for the same name, the registrar would on a particular day pool in
all the applications and randomly choose the registrant.
Thereafter, the aggrieved party mayor to the process called “STOP Startup Trademark Opposition Policy.
Under the procedure, the Domain name would be frozen for a month. The domain name dispute Shall
then be settled and decided. However, the burden of proving bad Faith registration is not as heavy as
under the Uniform Domaine Dispute Resolution Policy (UDRI).
Due to the growing importance of e-commerce and the domain name System, these innovative
measures would go a long way to deter cyber squatter
• The philosophy behind the Internet is freedom of, and or, information .The nature of the Internet
permits free access to information netizens can access, to copy and transmit any information on the
Internet and thus a natural consequence the Internet should be free From the regime of intellectual
property.
• The opposing school of thought argues that the Internet Is just another Medium of communication,
interaction and business; hence the regime of intellectual property should apply it does in the physical
world.
• The internet today is not only a mode of interaction of source of information, but I also marketing at a
phenomenal place
• With such commercialisation and exponential growth of the Internet,In futile to argue against a regime
of intellectual property on the Internet as the sakes for granting freedom are too heavy
Therefore , the law of intellectual property has applied, is being applied And shall always apply to the
Internet
. • The law of copyright in India in contained in the Copyright Act, 1957 and applies to the physical and
the cyber world
Section 43 (b) which is as follows, has been introduced into the IT Act 2000 to take care of certain
important aspects of intellectual property protection in the electronic world
“A person without permission of the owner or any other person Who is in charge of computer, computer
system or computer network
(b) downloads, copies or extract any data, computer database Information from the computer,
computer system or computer network including information data held or stored in any removable
storage Medium
He shall be able to pay damages by way of compensation net exceeding one crore rupees to the person
so affected.
The entire mechanism of adjudication and appeal with respect to the aforesaid violations, has also been
provided in the IT Act.
Copyright subsists throughout India in the following classes of works subject to the provisions of the
Copyright Act, 1957.
✔ In the case of a published work, the work is first published in India,Or where the work in first
published outside India, the author in at The date of such publication, or in a case where the
author was dead at that date, was at the time of his death, a citizen of India
✔ in the case of an unpublished work other than work of architecture, the author is at the date of
the making of the work a citizen of India Or domiciled in India and
✔ ✓ In the case of work of architecture, the work is located in India.
The aforesaid rules conditions do not however apply to foreign works to which the Government
grant protection under section 40 and 41 of the Act
In the case of a work of joint authorship, the aforesaid conditions Conferring copyright must be satisfied
by all the author of the work.
● In any cinematograph film a substantial part of the film in an infringement of the copyright in my
other work.
● In any sound recording made in respect of a literary, dramatic or Musical work, if in making the
sound recording copyright in such Work has been infringed.
The copyright in a cinematograph film or sound recording shall not affect the separate copyright in any
work in respect of which or substantial part of which the film, or on the cure may be the sound recording
is made.
In the case of work of architecture, copyright shall subsist only in the artistic character and design and
shall not extend to processes or method Of construction.
Even in India, the Copyright Act, 1957 governs computer software. Computer Software is specifically
included in the category of literacy work. The definition of “literary work specifically includes compute
Programme, tables and compilations including computer databases
“Computer programme means a set of instructions expressed I words, codes , schemes or in any other
form, including a machine readable Medium, capable of causing a computer to perform a particular task
Or Achieve a particular result
Meaning of copyright –For the purposes of this Act,”copyright means the exclusive right subject to the
provisions of this Act, to do or authorize the doing of any of the following acts in respect of a work or ang
Substantial part thereof namely up
a) In the case of a literary, dramatic or musical work, not being computer programme,
I. To reproduce the work in any material form including the storing of it in any medium by
electronic means
II. To issue copies of the work to the public not being copies already In circulation,
III. to perform the work in public, or communicate it to the public
IV. to make any cinematograph film or sound recording in respect of The work
V. to make any translation of the work;
VI. to make any adaptation of the work
VII. to do in relation to a translation or an adaptation of the work any of the acts specified in
relation to the work in sub-clauses (I) To (vi. )
3.7LICENSE OF COPYRIGHT
• According to section 30 of the Copyright Act, the following can grant interest in a copyright by way of
licenses:
• The license must be given in writing and signed by the above or their authorized agents
. Example 1 : Saloni has created a computer program. She can grant Scan a license to all the program
from his website
Example 2: Saloni in working to create a computer program. She in Currently testing the “beta” version
of the program. She can grant Soham a license to sell the final program from his website once it is randy.
This license will take effect only when the final program comes into existence.
Example 3: Saloni is working to create a computer program. She in currently testing the beta version of
the program. She path Raj license to all the final program from hia website once it is ready. The final
program is ready on 12 July 2018. But by the Rahas passed away. In this case, Raj’n legal representatives
are entitled to the benefit Of the license.
The following are the important exceptions to copyright Infringement With respect to a computer
program, provided in the Copyright Act.
A the making of copies or adaptation of a computer programme by the lawfull pocessor of a copy of
such computer programme, from Such copy
I. In order to utilise the computer programme for the purpose for which it was supplied
II. To make back-up copies purely a temporary protection against loan, destruction or damage in
order only to utilize the computer programme for the purpose for which it was supplied
Software licenses also prohibit copying. Distribution or otherwise Transfer of the same , reverse-
engineering, modifications or adaptation Of the code contained in the software. Violation of the terms of
License constitutes infringement under the copyright law.
According to section 22 of the Copyright Act, copyright subsist in a Computer program for 60 years from
the beginning of the calendar year Next following year in which the author die
Example 1 Surabhi creates a computer program in 2016. She dies on 29 March, 2017. The copyright in
the computer program will subsist for 60 years from 1 January 2018
Example 2 Surabhi and Suresh create a computer program in 2007 Surabhi dies on 12 March 2009 while
Buren dies on 15 July, 2010. The copyright in the computer program will subsist till 60 years From 1
January 2014
According to section 25 of the Copyright Act, in the case of photograph, copyright shall subsist until 60
years from the beginning Of the next calendar year following year in which the photograph is Published
• According to section 26 of the Copyright Act, in the case of cinematograph film, copyright shall submit
until 60 years from the beginning of the next calendar year following year in which the film in published
• According to section 27 of the Copyright Act, in the case of sound recording, copyright shall subsist
until 60 years from the beginning of the next calendar year following year in which the record is
published
For extending the Copyright Act to works published in other countries The Government of India has been
issuing orders under section 40.
By the International Copyright Order of 1958, the provisions of the Copyright Act, 1957 were made
applicable to work published in countries covered under the Berne Convention, the Universal Copyright
Convention the Phonograph Convention. The salad order of 1991 has been Superseded by The
International Copyright Order, 1999. The Schedule to the said order contains the list of countries under
the Berne Convention, universal Copyright Convention, Phonograph Convention and WTO. Since the
Internet is a global network an which millions of copyrighted works are
• When a webpage is downloaded for the purposes of any viewing the same, it does not amount to
copyright infringement. Since the intern and purpose of the user is to only view the webpage and since
downloading only taken place out of technical necessity, no question at Infringement of copyright arisen.
Downloading out of technical necessity for viewing / accessing a web page is technically distinguishable
from storage on a hard-disk or On a floppy.
• Whenever material in posted onto the Internet, it is done with the intention that such material is read
and viewed
Hence, the legislature should clarify in the Copyright Act, 1957. That The downloading which taken place
out of technical necessity while Viewing a web page on the Internet, would not amount to copyright
Infringement.
Linking in one of the primary means through which Internet users can quickly and conveniently navigate
through the numerous website on The Internet.
• Linking is a system which permits the user, who click on a specified location on the linking site, to be
automatically connected to the linked Site.
• In simple word. Hyperlink is a reference to a webpage or document On the Internet
Surface-linking automatically and directly takes the user from the Linking site to the first / home page of
the linked site.
Deep-linking implies that the user is linked directly into the interior Pages of the linked site and not the
home page which is bypassed
This page la located at http://www.mu.net The above web page consists of several links to other web
pages eg if the user click on ‘Exams and Results link, he will be taken to the page Containing details of the
examination and results of different course.
To the use the link appears Examinations and Results In the source code of the website, the link appears
an
Normally, an organization or person objective if someone puts a hyperlink to their homepage. The
objection comes when someone puts link directly to an inner page or document.
For example, Mumbai University would not object if someone provides link to the MU homepage
(http://www.mu.ac.in/index.htm).
However, if someone provides a link to a document "deep" in the MU website, them MU may have an
objection. Suppose Robin put a hyperlink in his website named "RSA Algorithm". On clicking the link, the
MU sponsored white paper on the topic opens up from
Deep hyper-linking may give rise to a claim for pursuing off as ordinary user may infer a business
association between Robin and MU. MU can claim that Robin has indulged in misleading and deceptive
conduct.
It is in advisable to put a suitably worded disclaimer and acknowledgement with clearly inform the
visitor about the relationship between the two mites (Robin's and MU iin this case. For example, Robin
could put the following disclaimer next to the link to MU website.
This link leads to content on the website of Mumbai University (MU). The homepage of MU is
www.mu.ac.in
Robin has no business or other association with MU and has provided in link purely for information
Framin
Framiing is a link to another site whereby such a site is displayed within a window or frame. A webpage
can be divided into server frames
In Framing the Internet user remains at the framing site and view the contents of the framed site within
a window or a frame.
• Framing was introduced in 1996 as a feature of Netscape Navigator Browser. Framing technology
allows a website designer to embed independently scrollable window within its own border
When a web page or site is framed within another website, it’s URL domain name in not displayed.
Instead, the URL and web page border from the originally accessed site appears within thin border.
Further, users are not able to bookmark the target site, as the bookmark will Save the URL of the framer.
Infringement under the trademark law may thus be argued by the Framed site.
In US, the copyright law has also been invoked against framing
Framed companies may resort to claim under the law of torts and torts and for Unfair trade practices
under the MRTP Act, 1973
Framing can give rise to an action for loss or dilution of advertising Potential of a site. Since the target
site is framed, its advertising may Get distorted or appear ineffectively small. .
It is advisable that before framing permission should be obtained from the website sought to be framed.
5.12 LIABILITY OF ISPS FOR COPYRIGHT VIOLATION IN THE CYBER WORLD LEGAL DEVELOPMENTS IN THE
US . –
For the removal of doubts, is hereby declared that no person providing any service as a network service
provider shall be liable under this Act, rules or relations made thereunder for any third party information
or data made available by him if he proves that the offence or contravention was committed without his
knowledge or that he had exercised all due diligence to prevent the commission of such or
contravention.
Computer software piracy is a global problem., It is generally misunderstood that software piracy i.e
unauthorized copying , installation, redistribution or sale of software program is a major problem only
for the software industry consisting of manufacturers and authorized sellers.
- Loss of job
- Higher costs to the software industry and higher prices of software for legitimate
consumer
– Loans on taxes
- Dampens the spirit to innovate and invest in the development of new software
According to information released by the Business Software Alliance, the worldwide loss due to software
piracy was a staggering US dollar 11.4 Billion in 1997. Up from 11.2 billion in 1996
Steve Ballmer, President of Microsoft Corporation said, “You might think software theft hurts only those
of us who create software, buy the truth is, the damage goes much further, Impacting jobs, wages, taxes
and retail sales right in your community
Software piracy cannot be effectively checked merely by severe we And their enforcement
UNIT 4
Chapter 6
• As per the Income Tax Act, 1961, an Indian resident is liable to be taxed on his global income
and a non-resident on his income which;
In cross-border commerce, the principle may lead to double taxation of a person. For instance,
if A, a resident of country X earns business income in country Y, he may be taxed twice, i.e. in
both the said countries.
• The law of country X may tax him on the basis of his residence. At the same time, the law of
country Y may tax him on the basis of source of income. To avoid such double taxation of the
same transaction in different countries, the system of Double Taxation Avoidance Agreements
(DTAAs) has been evolved, in which the principle of Permanent Establishment (also called as PE)
has been incorporated.
• There are two models of tax treaties which serve as a guide for DTAAs. These are:
• The developed countries, through the OECD, have made the set of rules to tax income
generated out of cross-border trade.
• The OECD model uses the concept of Permanent Establishment (PE) to determine the
contact necessary to tax business profits in the source countries.
• PE is a fixed place of business in a country or a dependent agent in a country who has
the authority to enter into contracts on behalf of the assesse and who habitually
exercises such authority.
• Permanent establishment is defined in Article 5 of the OECD Model Treaty and is
interpreted in the commentary as containing three conditions:
- The existence of a “place of business" i.e. a facility such as premises or, in certain
instances, machinery or equipment.
- This place of business must be "fixed", i.e. it must be established at a distinct place with a
certain degree of permanence.
- The business of the enterprise should be carried out through this fixed place of business.
This usually means that persons who, in one way or another, are dependent on the
enterprise (personnel) conduct the business of the enterprise in the State in which the fixed
place is situated.
• The commercial activity of the enterprise must be done through some connection
with the fixed place of business.
• Article 5 excludes the "use of facilities solely for the purpose of storage, display or
delivery of goods’ Therefore, the mere existence of a warehouse in the source country
would not constitute a PE there.
Under Article 5(5), even if an enterprise does not have a fixed place of business in the
source state, permanent establishment shall be deemed to exist where:
State, -has an authority to conclude contracts in the name of that enterprise, and -
6.1.1 Is the PE concept relevant and appropriate to cross border e-commerce or should it be
rejected?
There are two conflicting views as to the relevance and applicability of the OECD's Permanent
Establishment principle e-commerce.
It is been argued that it was formulated in, and for, the non-digital era where transactions
across borders were primarily in tangible goods and when business in another country generally
required, as a matter of expediency, permanent physical presence in that country.
would not apply and they would not be subject to taxation in the source country.
• In the opinion, the principles pertaining to agency as deemed PE in the UN Model are
appropriate for cross-border e-commerce. However, the PE principle in the OECD Model and
the UN Model is obsolete, irrelevant, illogical and inappropriate to the cyber world.
6.4 THE LAW OF DOUBLE TAXATION AVOIDANCE AGREEMENTS AND TAXABLE JURISDICTION
OVER NON-RESIDENTS, UNDER INCOME TAX ACT, 1961.
The Internet encourages global business. It provides the most efficient, easiest and cost-friendly
mode of communication between a business and a consumer.
Double Taxation
• Section 90 of the Income-tax Act, 1961('the Act): Domestic tax law will apply to the extent it is
more beneficial than the DTAA
- Resident (also called "resident and ordinarily resident" or "R & OR")
The rules for determining residential status in India are stated in Section 6 of the Income Tax
Act.
a) Is in India in that year for a period or periods amounting in all to one hundred and eighty-two
days or more; or
c) Having within the four years preceding that year been in India for a period or periods
amounting in all to three hundred and sixty- five days or more, is in India for a period or periods
amounting in all to sixty days or more in that year.
2. A Hindu undivided family, firm or other association of persons is said to be resident in India in
any previous year in every case except where during that year the control and management of
its affairs is situated wholly outside India.
i) it is an Indian company, or
ii) during that year, the control and management of its affairs is situated wholly in India.
4. Every other person is said to be resident in India in any previous year in every case, except
where during that year the control and management of his affairs is situated wholly outside
India.
6. A person is said to be “not ordinarily resident” in India in any previous year if such person is
a) an individual who has not been resident in India in nine out of the ten previous years
preceding that year, or has not during the seven previous years preceding that year been in
India for a period of, or periods amounting in all to, seven hundred and thirty days or more;
6.6 SOURCE VERSUS RESIDENCE AND CLASSIFICATION BETWEEN BUSINESS INCOME AND
ROYALTY
Residence based taxation is easier to administer in the e-commerce environment than source
based taxation. It is argued that a person should be subjected to income tax in the country
where he resides or maintains the strongest ties. According to this thought, income can be
easily determined between different tax jurisdictions on the application of the rule of
residence. The system of taxation shall also be equitable between all countries. If the pro
residence based tax principles are applied to e- commerce, developing countries stand to lose
revenue because few of the high technology companies will engage in e-commerce activities in
developing countries while being a resident there. They will conduct business activities in
developing countries while being permanently based in the developed world which the medium
of the Internet facilities.
Residence-based taxation of e-commerce would also facilitate evasion and encourage tax
havens.
If a publisher acquires the right to download and use copyrighted material for his publication,
then the payments made by him would be characterized as royalty.
• Online customer supports such as installation advice and troubleshooting information have
become common features. This can be done by online technical documentation, a
troubleshooting database and even by e-mail with a human interface. It has been agreed by
TAG (Technical Advisory – Group) members that payment is such a situation would be in the
nature of FTS (Fees for Technical Services).
Payment for advertisement has been characterized as business profits. Web-based advertising
is gaining popularity these days and is likely to be a major profitable activity in the cyber world
in future also.
TAG has also visualized professionals such as lawyers, doctors, etc. providing advice to client via
e-mail, video conferencing, etc. It has been unanimously agreed new name universally a great
that Income in the hands of these professionals would be in the nature of business profits.
Income from search and retrieval facilities of general online information and data has also been
characterized as business profits. However, if the data made available is tailored according to
the needs of the user there is an element of research and application of specialized skills, it
should be treated as FTS (Fees for Technical Services).
If a website operator places a content provider for the right to display his copyrighted material,
the income accruing to the content provider is in the nature of royalty. However, where the
content providers are is paid for creation of new content and the web operator becomes the
owner of such content and the web operator becomes the owner of such content, the income
accruing to the content provider should be classified as business profits.
• TAG has also considered the issue as to the nature of income derived from subscription-based
interactive access to websites. The web-site operator features digital content including
information, music albums, video games, etc. on the web-site, for which the registered user
plays a fixed periodic fee for access to the interactive site, Subscriptions are paid for availing of
services. Subscription payments should be treated as business income.
• Where the service provider offers space on its server for hosting the web-sites, such a service
provider does not obtain any right in the copyright created by the developer on the content of
the web-site. The payment is made for renting space on the server and its time based in nature.
The transaction is done in the course of business of the service provider in offering space on his
server. TAG has recognized that such payments should normally be considered as business
income.
• FTS is broadly defined as payments of any kind in consideration for services of a managerial
technical or consultancy nature except the payments for independent personal services. Under
the narrow definition, FTS means consideration for services, ancillary and subsidiary, for the use
of property for which royalty is paid or consideration for services, which make available
technical knowledge, experience, skill, know-how or processes, or consist of the development
and transfer of a technical plan or technical design.
• Although our Income Tax Act, 1961 contains the mechanism of taxing non- residents, it would
be of no good in the e-commerce environment with the present PE concept in tax treaties. Our
tax policy makers should not be swayed by the views of OECD working groups and others.
These views may be considered but it would be fatal to follow them blindly. The tax policies
should be fair, just and practically workable.
The nature of the Internet has the effect of defeating the law governing customs duties,
because it disregards imports and exports by land, sea or air. The Internet does not recognize
land customs barriers and check-posts on borders, sea-ports and airports. The customs
authorities all over the globe have been rendered virtually impotent by the Internet.
• The problem lies in the regulation of import and export of electronic transmissions delivered
through the Internet. Several countries realizing the inherent and practical difficulties of the
task and accepting the power of the Internet, have declared a moratorium on imposition of
customs duties on electronic transmissions.
Electronic transmissions are also not chargeable to customs duties in India. The
European Union has been making serious efforts to tax sales of digital products.
• The OECD is also working on ways and guidelines to tax Internet download. Technological
means are being developed to tax e-deliverables. It is proposed that taxes should be deducted
from the payment to the suppliers. Imposition customs duties on electronic transmissions is a
challenge to the global community which raises the following issues of significance:
Chapter 7
The Information Technology Act 2000 (IT Act) prescribes digital signatures as a means to
authenticate the document, to identify the person and to make the contents of the document
binding to person putting digital signature.
In short, a digital signature has the same function as that of a handwritten signature.
• A valid digital signature gives a recipient reason to believe that the message was created by a
known sender, and that is not altered in transit.
• Digital Signatures are based on public key encryption. The functioning of DS is based on
public key cryptography.
• Public-key cryptography refers to a cryptographic system requiring two separate keys, one of
which is secret and one of which is public. Although different, the two parts of the key pair are
mathematically linked. One key locks or encrypt the plain text, and the other unlocks or decrypt
the cipher text. Neither key can perform both functions. One of these keys is published or
public, while the other is kept private. It can also assure the recipient of the authenticity of a
document because a private key can be used to encode a message that only public key can
decode.
• Since public key encryption is slow and time consuming the hash function is used to transform
a message into a unique shorter fixed length value called the Hash result.
Hash serves the purpose of an index of the original text. It is an algorithm mapping or
translation of one sequence into another. The hash function is such that the same hash result is
obtained every time that hash function is used on the same electronic record.
In other words mapping is one to one and not many to one. One cannot reconstruct the original
message from the hash result. The encryption of a hash result of the message with the private
key of the sender is called a Digital signature.
For Efficiency: The signature will be much shorter and thus save time since hashing is generally
much faster than signing in practise.
For Authentication: Digital Signatures can be used to authenticate the source of messages.
When ownership of a digital signature secret key is bound to a specific user, a valid signature
shows that the message was sent by that user.
For Integrity: The sender and receiver of a message may have a need for confidence that the
message has not been altered during transmission.
A major benefit of public key cryptography is that it provides a method for employing digital
signatures.
• Digital Signatures enable the recipient of the information to verify the authenticity of the
information's origin, and also verify that the information is intact. Thus digital signatures
provide authentication and data integrity.
• A digital signature also provides non-repudiation, which means that it prevents the sender
from claiming that he or she did not actually send the information.
Digital Certificates serve as an identity of an individual for a certain purpose, e.g. a driving
license identifies someone who can legally drive in a particular country.
A Certificate Authority or Certification Authority (CA) is an entity that issues digital certificate.
It is a grant of a right by certifying authorities who have the licence to issue digital signature
certificate in favour of the subscribers for which a procedure has to be followed.
The Digital Signature Certificate application form would be as provided by the Certifying
Authority.
• The application form must be accompanied by fees not exceeding Rs 25000 as may be
prescribed by the Central Government, to be paid to the Certifying Authority. Different fees
may be prescribed for different classes of applicants by the Central Government.
• A "Certification practice statement" has been defined in the IT Act, 2000 as a statement
issued by the CA to specify the practices that the CA employs in issuing Digital Signature
Certificates.
No application for issuance of a Digital Signature Certificate can be rejected unless the applicant
is given a reasonable opportunity of showing cause against the proposed rejection.
must Confirm that the user's name does not appear in its list of compromised
users.
Comply with the procedure as defined in his Certification Practice Statement including
verification of identification and /or (was not clear at all in pdf)
• A Digital Signature Certificate cannot be suspended for a period exceeding 15 days unless a
subscriber has been given an opportunity of being heard in the matter. The suspension of a
Digital Signature Certificate is required to be communicated to the subscriber by the Certifying
Authority.
• A Certifying Authority also has been empowered to revoke a Digital Signature Certificate
issued by it:
Where the subscriber or any other person authorized by him makes a request to that
Upon the dissolution of the firm or winding up of the company where the subscriber is a firm
or a company.
On suspension or revocation of a Digital Signature Certificate, as the case may be, the
Certifying Authority is required to publish a notice of the same in the repository specified in the
Digital Signature Certificate for publication of such notice.
• The IT Act, 2000 defines a "Certifying Authority" as a person who has been granted a license
to issue a Digital Signature Certificate. (Section 2 (1) (g) of the IT Act, 2000).
• The role of Certifying Authority only begins with the license to issue Digital Signature
Certificates and extends to managing the functioning of the system of digital signatures and
giving evidence of the proof of digital signatures.
• The natures of their duties are vital as integrity and safety of system depends upon the
certifying authorities.
E-Commerce at the global level can result in legal disputes between parties in different
countries.
UNIT 5
Unit-5
47A. Opinion as to handwriting, when relevant: -
● When the Court has to form an opinion as to the digital signature of any
person, the opinion of the Certifying Authority which has issued the Digital
Signature Certificate is a relevant fact".
● Since electronic accounts are nothing but electronic records, therefore,
compliance of section 65B, would be required for proof of the same through
the computer output, i.s. print-outs on paper, or stored, recorded or copied
in optical or magnetic media (CD, floppy, etc.).
● Besides relevancy, admissibility of a fact is also to be shown before any
evidence of the same can be adduced in any proceedings.
● Admissibility, in simple terms, implies permissibility to adduce that
evidence.
● There are facts which are admissible but may not be relevant.
● For example, where a client sends an e-mail to an Advocate stating be has
committed forgery and he wishes the Advocate to defend him. Such a
communication though relevant, is protected from disclosure and is not
admissible.
● Admissibility of a fact, without any exception, has to be shown for adducing
the evidence of the same. However, there are exceptions that even if a fact
is not relevant to the controversy, it is considered admissible and can be led
in evidence Generally, both the tests of admissibility and relevancy ought to
be satisfied before evidence permitted to be adduced.
Authorship of an Electronic Record
● After satisfying the tests of admissibility and relevancy of facts, the next
step in the process would be to prove the authorship of the electronic
record.
● Where the author of an electronic record is also the person who may
give the certificate under section 65B, ie. the person occupying a
responsible official position in relation to the operation of the computer
or the management of the activities regularly carried on during the
period when the computer was used regularly to store or process
information for such activities, then such other person (author) shall
have to give evidence of the authorship of the electronic record.
● However, if the author of the electronic record is a person other than
the aforesaid persons, then such other person (author) shall have give
evidence of the authorship of the electronic record.
• The ordinary method of proving a document is by calling as a witness the person
who had executed the document, or saw it being executed or signed it, or is
otherwise qualified and competent to express his opinion as to the handwriting in
the document.
● If an electronic record has been digitally signed, the digital signatures would
be required to be proved as evidence of the execution of such an electronic
record.
● Evidence as to the authorship of a document proofs the content thereof.
• There is a distinction between the facts and events in the contents and the
contents as facts.
● "Fact under section 3 of the Indian Evidence Act means and includes:
⮚ Anything, state of things, or relation of things capable of being
perceived by the senses.
⮚ Any mental condition of which any person is conscious.
● In terms of the definition of "fact", contents of a document can classified
as: