Information Technology Act-2000 was passed as a special law
applicable to electronic documents. It was vide Section 81 of the Act also
given overriding powers against other laws.
The Communication Convergence Bill (Still to be passed by
the Parliament) was the first subsequent attempted legislation that would
overlap with the provisions of ITA-2000. This interference would mainly be in
the Cyber Crime area involving E-mails and carrying of obscene content on a
convergent media in digital form.
The guidelines issued to ISP s from the DOT were another
quasi legislative regulation that has some overlapping issues with ITA-2000.
Similarly the IRDA guidelines on advertising and RBI guidelines on Internet
Banking already have contradictions with ITA-2000.
Now, with the passage of the Negotiable Instruments
Amendment Act 2002 (NIAA-2002) which is yet to be notified for effect,
provisions of ITA-2000 has been subordinated to the notifications to be made
by the Parliament in consultation with RBI so as to give effect to the
provisions of NIAA-2002 in respect of Electronic cheque and Truncated cheques.
This has created a precedent for various other acts to be
amended independently and consequential amendments to be made to
ITA-2000. Soon we may see several amendments to acts in other spheres stating
some thing to the meaning "..If the communication is through electronic means,
the provisions of this amendment and the amendments made herein overrides
ITA-2000"
This could soon lead to contradictions and complications in
interpreting the provisions of ITA-2000.
When we are still grappling with understanding the basic
aspects of Cyber Laws, complicating it further with such numerous legislations
will be counter productive.
Some of the legislations passed in respect of use of
electronic documents in areas involving E-Governance and Corporate Governance
have already created several inconsistencies which if contested in Courts
would cause a lot of embarrassment to the legislators.
Objectives of NIAA-2002
Looking at the NIAA-2002, let us debate what is the purpose
of the amendment and whether it has been fulfilled.
No doubt two kinds of cheques have now been recognized
(Subject to the date of notification) by ITA-2000 namely the Electronic Cheque
and the Truncated Cheque.
In passing the amendment, sufficient thought has not
however been given to the practical utility of the amendment.
For example,
Would this legislation make it possible for a customer of a
Bank to issue an electronic cheque to his business associate?
Can this electronic cheque be negotiated so as to create a
"Holder in Due Course"?
-If not, what is the idea of calling an "Electronic Cheque"
a "Negotiable Instrument?"
How is the Electronic cheque delivered?
How is the Electronic Cheque Presented for payment? ..by a
holder in due course?
How is the Electronic cheque crossed?
How is a "Bearer" electronic cheque handled?
How is the copy of the transmitted electronic cheque be
destroyed?
What is the effect of a "Stop Payment Instruction" received
when the Electronic cheque is "Under Presentment?"
These are all issues that arise in the minds of the users.
The truncated cheque of course is more an internal matter
of Bankers even though, the provisions of creating a truncated cheque by a
Paying Banker and the footnote certificate to be provided by him as a proof of
payment are a little ambiguous.
Perhaps these issues could have been better handled if
the impact of the NIAA-2002 could have been properly assessed before the
legislation through a public debate.
We may in future expect similar legislations from SEBI
applicable to Companies, IRDA for Insurance Companies, IT department for
filing of returns, Registration department for Stamping, etc.
If these legislatory changes are not handled with finesse,
there will be complication which will surface in courts and create confusion
for the public.
For example, it would have perhaps been enough to amend
Section 1 of ITA-2000 and make its provisions applicable to cheques rather
than embark on a number of changes to the well established NI Act.
In such a case, any form of electronic writing,
contents of which satisfies the definition of a "Cheque" under the old
section 6 of NI Act would have become an Electronic Cheque.
In view of the Section 4 and 5 of the ITA-2000, it would
then have been possible to extend all aspects of cheques to electronic
cheques.
Banks could have made only procedural alterations to suit
their requirements.
There was therefore no need to amend NI Act to redefine two
new types of quasi negotiable instruments called Electronic Cheques and
Truncated Cheques. Now these are two new kinds of instruments which may create
several complications for which we need to be ready.
Tinkering with an Act such as NI Act which has established
innumerable "established practices" over a period of time, related to
the "law" will be dysfunctional since some of the amendments made to sections
such as Section 64 or 131 may be used to upset the earlier understanding of
"Negligence" of a Collecting Banker or a "Paying Banker".
It is therefore suggested that as far as possible, all
legislations concerning electronic documents in future are done under one
special act which is the ITA-2000 and if there is any doubt as to the
operational aspects, the clarifications can be provided under ITA-2000.
(Please send your views
if any)
Naavi
December 10 , 2002
Related Articles:
ITA-2000 stands
amended through NI Act Amendment 6/12/02
ITA-2000 and
Negotiable Instruments Act-2/11/00
Virtual
Negotiable Instruments…A Fantasy?-22/2/2001
