Kapil Sibal was the villain for Cyber Crime Victims

Mr Kapil Sibal who was the minister for IT in the UPA 2 Government is seeking election from Delhi Chandi Chowk which is going to polls on 10th of April 2014. Though this site is not a political site and I keep my political opinions to a different forum, I would like to bring to the notice of all that Mr Kapil Sibal was singularly responsible for all the cyber crime victims of India to be denied justice for last two years and voters  need to remember this disservice while voting for him.

It was way back in June 2011 that Justice Rajesh Tandon retired as the chair person of Cyber Appellate Tribunal, Delhi which is the apex appeal court supervising the decisions of the Adjudicating officers of all States and Union territories who form the trial court system for civil disputes for all Cyber Crimes and offences under Information Technology Act. (ITA 2000/8).

Though it was known that the position of Chair person would become vacant, Mr Kapil Sibal did not take any action to fill up the vacancy in time before the retirement.

Since then Mr Kapil Sibal tried to recommend one particular person for the post and when the Chief Justice of India asked for alternate recommendations, refused to send alternate recommendations.  He even kept one Jutice Mr S.K.Krishnan wait for 9 months in the Tribunal without giving him the necessary authority to take up cases. Even when Courts issued notices on the delay, Mr Kapil Sibal gave a political reply that the appointment will be completed expeditiously but never took any action to fill the vacancy. All this was done so that the person whom he favoured alone becomes the Chair Person. He was arrogant and adamant to keep the Court shut since the Chief Justice did not agree with him.

As a result, several judgements which were on appeal in this court including the appeal of ICICI Bank Vs S.Umashankar, Gunashekar Vs PNB, Vijaykumar Vs PNB, Rajedra Yadav Vs ICICI Bank, Gujarat Petrosynthese Vs Axis Bank were all held up in various stages of decision.

To compound the problem, the adjudicator of Karnataka Mr M.N.Vidyashankar gave a bizarre judgement annulling the entire Information Technology Act to benefit Axis Bank and his decision remained effective because the Cyber Appellate Tribunal was not functioning. Even Karnataka High Court failed in recognizing the impact of this biased decision of Mr Vidyashankar virtually shutting all legal remedies of Cyber Justice to cyber crime victims in Karantaka. The Government of Karnataka failed to take any remedial action.

The details of all these developments have been documented in this site in many of the earlier posts.

Thus Mr Kapil Sibal trying to post one favoured individual as the Chair person of Cyber Appellate Tribunal virtually shut off the Cyber Justice system in India. Any number of appeals to people lime Manmohan Singh, Sonia Gandhi, Rahul Gandhi, Pranab Kumar Mukherjee, Chief Justice of India etc failed to see any action and Cyber Crime victims of India have remained  cursing the system. By the time the next Government takes charge and remedies the situation, many of the victims would have grown old and lost interest in fighting for justice.

I sincerely wish that the voters of Chandni Chowk Delhi make Mr Kapil Sibal  pay for their misery of the cyber crime victims by voting against him.


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E Registration of Rent agreement

It is reported that IG Maharashtra has introduced a system of E-Registration of Rent and Lease agreements.

See Report here

“It is necessary for the people to provide their Aadhaar card. The people have to pay and stamp and registration duty through net banking. The duly fulfilled forms will be later sent to the sub-registrar and after his verification, the digitally signed leave and license agreement would be delivered to the inbox of the applicants “

It is unclear how this new procedure is viewed under ITA 2008 according to which “Any contract for the sale or conveyance of immovable property or any interest in such property” is excluded from the provisions of the Act including the legal validity under Section 4 and 5 of ITA 2008.

If “Leave and License Agreement” has the effect of transfer of interest in an immovable property and “Registration” is  mandatory for the transaction to be valid, then rendering any of these documents in electronic form may not have legal validity.

The detailed process needs to he reviewed to understand how this process works.


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Why ECI is hesitant to allow E Voting for NRIs?

Way back in 2010, voting rights were granted to NRIs in India. However it is required for NRIs to physically be present in India to cast their votes. This is practically impossible and hence the so called voting rights to NRIs is a myth.

Presently e-voting has been resorted to under Company’s act and ITACT2000/8 has provided a legal base for e-voting long time back. In fact the EVMs itself is a kind of e-voting mechanism where the voter’s choice is captured in the form of an electronic document, retained and processed as electronic documents, all under the provisions of ITA 2000/8.

It is therefore not logical for ECI to refuse digital signature based voting for  NRIs. Unless ECI is facing opposition from the ruling Congress party for such a move under the fear that it may benefit the BJP, there is no reason why this system should not be introduced in the next Loksabha elections.

Probably ECI can set up a centralized digitally signed e-voting system and make it available to all voters whether in India or abroad to cast their votes through a valid digital signature issued by an Indian licensed Certifying authority.

In the least, this facility can be offered to the NRIs who have no other option.


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Electronic Frauds in Banks.. New guidelines to benefit Customers

The year 2014 has started with some good news for Bank fraud vicitms. According to today’s Economic Times, it is stated that the new code released by the Banking Codes and Standards Board of India (BCSBI) states that

“Customers will have to be compensated for electronic frauds unless the bank can prove the fraud occurred due to negligence on part of the client”

See the Article

This is to be considered as a positive development for the reason that this narrows down the defense of the bank in avoiding the liability through litigation.

Further this may reopen the opportunity for customers to approach the Banking Ombudsman since non compliance of the BCSBI code could be a cause of action for the Ombudsman to intervene. Earlier the Banking Ombudsman was reluctant to take up the complaints on the ground that it involved a Cyber Crime and required evaluation of complicated digital evidence.

According to BCSBI, “The revised code says that if the customer incurs any direct loss due to a security breach of the Internet banking system that is not contributed or caused by the customer, the bank will bear the loss, unless it is able to establish that the customer is guilty.” 

The revised code which will be effective from January 2014   also  says banks will be responsible for any acts of omission and commission committed by business correspondents.

Naavi has been personally fighting for such mandate for several years now and Banks such as ICICI Bank and Axis Bank have been frustrating his efforts through litigation. These guidelines therefore come as a big relief.


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Year 2013 in retrospect

The year 2013 ended with an intense debate on Bitcoins the virtual currency system that caused lot of ripples in the market. over the last one month, Naavi.org has been full of discussions on Bitcoin to the extent that discussions on other aspects of Cyber Law actually receded to the background.

However if we try to trace the developments on Cyber Law in India during the last year, the following points emerge.

1. Debate on Section 66A:

The controversy on Sec 66A continued during the year ending with a direction from the ministry of communications and information technology that no arrests should be made without the permission of higher officials in the department. Though the reference in the Supreme Court on the constitutional validity of Section 66A is still pending, there has not been any adverse news about the misuse of Section 66A.

2. Karnataka as Cyber Crime Haven

Another issue that on which lot of activity took place but remained unresolved through out the year was the status of Cyber Judiciary in Karnataka. After the December 27, 2011 when the then adjudicator gave out a judicial verdict holding that a “Company” can either be the complainant or an accused under Section 43 of ITA 2000/8, the undersigned has been fighting to get the order reversed. Though the next IT Secretary briefly reopened the case, Axis Bank managed to silence him with a vacation judge’s order of the Karnataka High Court. The Cyber Appellate Tribunal has registered the appeal but has no chair person to conduct proceedings since our Ministry in the center is not interested in appointing anybody but a chosen person who is not acceptable to the Chief justice of India. The Chief Ministers of the State are not concerned that the net effect of this development is that a cyber criminal cannot be prosecuted in Karnataka for most of the violations. Recently a writ has been filed by an advocate in Karnataka High Court to resolve the issue. Probably we may find a solution one way or the other for this imbroglio  in 2014.

In comparison, the Maharashtra adjudicator Mr Rajesh Agarwal was very active through out the year and decided on scores of cases.

3. Frauds on Exporters and  Importers

During the year the Exporters and Importers in India were specifically targetted with an e-mail based attack where the money due to be paid out to a designated business contact abroad or receivable from such a business contact was diverted to fraudster’s accounts. The amounts involved were huge and in most cases the losses have not been recovered since the fraudster is abroad.

4. E Banking Safety

Naavi continued his efforts on campaigning for better safety of E Banking and conducted workshops at RBI as well as some Banks.  During the year RBI also announced the possibility of new Banking licenses to be announced and Naavi has been bringing to the attention of RBI that the technology dependence of Banks is on the increase and it is time to make Cyber Crime Insurance mandatory at least for the new banking licencees.

During the year RBI also tried to issue new regulations which would Dis-Incentivize” the use of cheques and force public to resort to E Banking. Naavi conducted an intense campaign against the proposal which subsequently did not see the light of the day during the year. Hopefully the proposal has been dropped.

5. Bitcoins

Finally during the end of the year the Global Bitcoin conference that was held in Bangalore on December 15 2013 focussed the attention of the entire country on the phenomenon of Cryptocoins. However the publicity attracted adverse attention of the regulators and Enforcement Directorate and Income Tax authorities raided a number of Bitcoin operators in Ahmedabad and Tumkur and launched some enquiries. The full impact of this development will pay out in the next year and may have a huge impact on the Netizens.

The above is just a glimpse of some of the developments and I invite those who are interested to know the details to explore the site further.

In the meantime Naavi.org wishes all its readers a Happy and prosperous New Year.


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RBI Advisory on Bitcoins causes a stir

After RBI released its advisory cautioning the public and Bitcoin intermediaries about the legal and financial risks, it is reported that many Bitcoin intermediaries have suspended their operations.

Refer Indian Express Article here

The intention of RBI’s advisory was mainly to keep the public alerted that if they invest their hard earned savings in Bitcoins expecting super profits, they may be facing the risk of speculative loss. It also warned the intermediaries about the legal risks arising out of the foreign exchange and anti money laundering loss. It also spoke of the cyber security risk which could result in the hacking of their websites and consequential losses.

During recent days, many new operators had sprung up suddenly to take advantage of the spurt in the popularity of Bitcoin in the recent days and started offering services to buy and sell Bitcoins. These were not “Miners” and had to acquire stocks only from the public. Most of the sellers were from abroad since the holding of Bitcoins in India is not very high.

Excepting a few most operators  had no controls either on the information security side or controls for preventing the possible use of their systems for money laundering purpose. It was only right for them to now to show prudence and suspend their operations until they try to make their operations compliant with the known laws.

Users and traders should always remember that Bitcoin is a “Private” arrangement between a set of people who have agreed to exchange services in terms of Bitcoins without any backing of a Government agencies. This community is small compared to the overall population which is otherwise interested in investment in shares or currencies or commodities. As a result the volatility in Bitcoin price is inevitable. Presently the international value of Bitcoin is around $750 but this price is holding for some time. Any speculator should be open to such risks which RBI has called the “Financial Risk”.

The legal risk that RBI has referred to arises due to the possibility of the use of Bitcoins for settlement of any criminal activity such as drug trade etc and also includes Bitcoins stolen by a cyber criminal from a genuine holder.The biggest risk for both users and traders s the possibility of holding a stock which is “tainted”. The taint may come about because the earlier transaction of the commodity could have passed through the hands of a money launderer.

At present Bitcoin does not enjoy the benefit of a “Negotiable Instrument” that can clean out the earlier taint in certain conditions. Hence investors and users are only safe if the Bitcoins are mined within India or bought from other known miners. At present the number of bitcoins mined in India may be near zero. Hence the entire floating stock if any are acquired by some body from abroad. This is equivalent to an “Import” under an OGL. If the purchase is through a reputed exchange the buyer may be relatively safe since he cannot be accused of “bad faith” or “Prior knowledge” of taint if any. If the purchase is from a private person, then the buyer is exposed to the risk of tainted bitcoins being passed on particularly if the buyer cannot identify the seller. Hence a proper KYC (Know your customer) is required to secure such transactions to a reasonable extent.

However, any tainted transaction is liable to be dispossessed if the authorities can prove the taint irrespective of whether the buyer is otherwise accused of any criminal wrong doing. This is the legal risk that RBI is referring to.

As regards the Cyber Security risk, any internet operator should be aware of risks of Phishing, Hacking, Man in the browser attack etc which are already prevalent in the Banking system. RBI is aware that it is not able to even motivate the Bankers to provide adequate security for the internet and mobile transactions despite the resources available and RBI mandate from time to time. Hence the possibility of private Bitcoin intermediaries not providing adequate information security is  very real. Good Bitcoin intermediaries who handle an informal exchange system need to have a structured information security system in place to ensure “reasonable Security” for the sensitive personal information that they may handle.

The RBI advisory is therefore well intentioned and needs to be seriously looked at. It may however be noted that RBI has not made any statement equivalent to “Banning” the use of Bitcoins and those operators who understand the Techno Legal security issues and are able to manage them may still continue their operations.

If RBI wants to ban Bitcoins, they need to bring about an amendment to ITA 2008 or to RBI Act/Currency Act/Coinage Act/Payment and Settlement Act.

If RBI however wants to encourage Bitcoins or other forms of Virtual Currencies, an amendment can be made to the Negotiable Instruments Act bringing virtual currencies as a new class of negotiable instruments like Cheques, Bill of Exchange and Promissory notes.

It would be interesting if RBI considers a legislation on virtual currencies which are those forms of assets that have the potential of being used as payment settlement instruments with only a “Peer to Peer Backing”.


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