In today's economic world where all financial transactions
are computer based, it is no surprise that most financial frauds in India also attract
Section 66 of ITA-2000. One such case is the case of financial fraud that is
reported to have occurred in Chennai in which a center manager of NIIT
Franchisee allegedly defrauded to the extent of Rs 26 lakhs her employer.
This case attracts academic interest because it not only
demonstrates the link between ITA-2000 and financial frauds in an electronic
system but also because it has the potential to test the liability under Section
43 of the beneficiary company in which the alleged fraudulent employee and one
of her associates is a director.
The reason why financial frauds attract Section 66 of
ITA-2000 is because though we recognize the section as defining the offence of
"Hacking", the section covers far more than what traditionally "Hacking" has
been associated with.
Let us take a look at the section first:
Section 66 of ITA 2000:
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(1) |
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Whoever with the intent to cause or
knowing that he 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. |
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(2) |
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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.
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The most important aspect of this section is that the
offence here is recognized whenever information residing inside a computer
gets affected injuriously through any means when the person responsible
knew that his action could cause such an effect.
The section does not make it mandatory for "Intention" to
cause harm to be present. "knowledge" is enough.
The section does not make it mandatory that the access
should be there to the information to cause damage. "Any Means" means that
irrespective of how the "Deletion/Damage/Alteration" or "injurious effect" or
"diminishing in utility or value" occurs, the section can be invoked.
"Fraud" is generally considered as "Posing Untruth" as
"Truth" by a person knowingly and for financial gain. If therefore a fraud has
taken place in an electronic account
system, it means that "Posing Untruth" as "Truth" must have happened through
electronic information. This
cannot but be considered as "Affecting the information injuriously or
diminishing its value". The value of information residing inside a computer
comes from its reliability and its synchronization with some business
happenings. If the information is rendered unreliable by desynchronizing the
real information from the information residing inside the computer, then we
can conclude that the value has been diminished.
Let us take an example of a Banking scenario.
Mr A has a Banking account (maintained in the form of an
electronic ledger) in which there is a balance of Rs 20000/-. There is a
credit of RS 5000/- and debit of Rs 4000/- to be posted to the account. If
these entries are posted, then the electronic information which consists of
the present balance, a credit of Rs 5000/- with relevant particulars and a
debit of Rs 4000/- with relevant particulars together represents the
information residing inside the computer. The full value of the information is
when all these material details are properly recorded. If somebody
deliberately omits either of the entries credit or debit or otherwise changes
the amounts etc, ultimately the value of the information is diminished. It can
be noted that the "Value of the information gets diminished even when the
balance amount is increased". It cannot be argued that since the balance in
the account increased, there was no harm to the customer. (This may be
relevant to some extent when damages are claimed under Sec 43 but not for
determining the section 66 offence)
Hence there can essentially be no fraud in an electronic
accounting system without first reducing its value or committing a section
66-ITA-2000 offence.
The key questions to be asked for determining Section 66
offence is
a) Is there an information residing inside a computer?
b) Has its utility been reduced?
c) Was the person causing such reduction "Knowing that he
is likely to cause that effect"?
If answers to these are "yes" than section 66offence has
happened. It is then to be determined if the secondary offence is cheating,
defamation, extortion, or any other crime under IPC or any other statute.
Just as "Forgery" and "Cheating" can be concurrently applied
in an all IPC crime, Section 66 of ITA-2000 and Section 420 of IPC can be
applied concurrently.
(Views are
Welcome)
Naavi
May 12, 2005
Related Articles:
In Hindu of 12th May 2005 :
In Hindu again
At naavi.org
