Cyber Law India

Cyberspace-A new front of war

2010-12-09T20:03:00.000-08:00

The incidents of war happened in the real world is mirrored in cyber space, given the recent incidents of hacking of government websites by state or non state group of hackers for political, military, espionage purposes. As the world becomes increasingly dependent on the internet and increasingly connected through it, another threat is beginning to loom large – Hacking and defacement of Government website and other cyber infrastructure. Recently, a hacker group from Pakistan calling itself as ‘Pakistan Cyber Army’ made a mockery of the country’s cyber security by infiltrating into the CBI website supposed to be one of the most secure websites as it is maintained by National Informatics Centre, reported to be employing strict cyber security measures.

Today the CBI’s website, connected to the command centre of world police organisation — Interpol — 24x7 has been hacked, but what about tomorrow? What is the guarantee that next cyber attack may take place on something more critical, like the power grid?

The hacking of Government websites is not new and in past too the hackers group with patronage of government establishment successfully penetrated the highly secure websites belonging to Government of India. However, it is not a one sided affair as there are hacker group from either side who in retaliation or out of political or strategic compulsion hack each other websites. It is no more a secret that our neighbors with whom we have troubled relations find it politically and strategically useful to have arms-length relationship with hackers. One blogger has written that the hackers claim that they are sometimes paid secretly by the Chinese government -- a claim the Beijing government denies. There is a number that circulates the web (not confirmed data) that the Chinese government pays to up to 50,000 highly skilled military hackers to use the Internet for specific purposes that are defined by the government officials (cyber expert James Mulvenon told a congressional commission in 2008). The hacker community is diverse with different purposes, for example; (a) Script-kiddies – people, teenagers who are doing it for fun or to show off or to see what they can actually accomplish (b) Criminal Hackers-criminals who are just hacking for financial gains, (c) Patriotic hackers – people that hack websites out of a kind of nationalistic feeling (d) Government backed hackers; There are hackers that are probably employed by the government, probably by the military and the security agencies that are used to attack specific targets for political reasons and last but not the least there are hackers in the military that are thinking about how cyber would be used in an actual military conflict.

The category to which the Pakistani Hackers group who hacked the CBI website is not difficult to imagine. The Pakistan Cyber Army, claim that the Indian Cyber Army had allegedly hacked into the oil and gas regulatory website in Pakistan. The Pakistan Cyber army in retaliation has therefore also hacked the website of CBI. So, the group clearly fall under point (c) mentioned above i.e. patriotic hackers, however it is equally true that they have the government sponsorship too.

As far as the law is concerned, we have Information Technology Act, 2000 on statute book which deals with hacking, particularly the government owned website, say Section 66 (punishing the offence of hacking) read with Section 70 Information Technology Act (punishing access or attempt to access the protected systems). However, these sections are not effective as far as cross border cyber crimes are concerned, more so if one traces the digital footprints of hacking to hostile countries with which we have troubled relations and do not have bilateral treaty. The only solution seems to be is to first identify the critical and vulnerable cyber infrastructure, upgrade their security, setting up of a cyber command structure with experts in cyber security and warfare to continuously look at the cyber security aspects and suggest measures to upgrade the security, make preemptive cyber attacks against enemy cyber infrastructure and last but not the least thwart any similar cyber attacks emanating from foreign land.

The need for international cooperation on these critical issues and the role that international law can play in containing the threat cannot be undermined. As far as the cyber espionage is concerned, there is no known international treaty on this issue, however, on the criminal front there is a convention on cyber-crime drawn up by Council of Europe which is the first international treaty seeking to address Computer crime and Internet crimes by harmonizing national laws, improving investigative techniques and increasing cooperation among nations. However, the problem with this convention or treaty is that most of the major players including India itself have not signed it which could have gone a long way consistent legal enforcement standards across national borders about dealing with instances of cross border cyber crimes. As an alternative to the aforesaid convention, as a short time security measure we can enter into treaty with the Pakistan and China like the one we have with Pakistan to not attack each other nuclear installations, in similar manner we can agree to not launch cyber attacks on each other identified critical cyber installations.

Neeraj Aarora
Advocate

FIR in Cyber Squatting: Misinterpretation of IT Act

2010-11-25T23:21:00.000-08:00

Recently, a FIR has been lodged by the Economic Offences Wing of the Delhi Police on the complaint of the President Secretariat alleging the existence of the domain name www.pratibhapatil.com having no connection with the Hon’ble President. The preliminary enquiry revealed that a person from Kerala has got it registered and the website was hosted from Germany. The website has been got removed. There was no content on the website except some links of the other websites. The FIR u/s 66/66A IT Act and Section 469 Indian Penal Code was registered by the EOW with the opinion of the Public Prosecutor.

How much it is difficult for a common folk to get register FIR in a genuine case as heinous as rape where police simply turn down the complaint and do not register the FIR except when they are forced to do so by the order of the Court. However, the police acted very promptly on a complaint of President Secretariat where the preliminary enquiry made by police itself reveals that no offence is made out and Sections imputed under the Information Technology Act and Indian Penal Code is gross abuse of law and wastage of time by the investigating agencies that should devote its productive time to curb crimes and do some meaningful investigations into the genuine complaint registered as FIR. The Sections of the IT Act and IPC imputed in the aforesaid FIR has no connection with the allegations as mentioned in the FIR. Section 66 IT Act is applicable when a person dishonestly or fraudulently, does any act referred to in section 43 which contains mainly ten acts which mainly comprises of downloading, copying from computer without permission, introducing virus or contaminant, hacking etc. Clearly, the registration of the domain in the name of the President does not fall under any of the ten acts specified under Section 43 IT Act. Further, Section 66A is applicable for sending offending messages through communication device etc. which is clearly not applicable to allegations as made in the complaint. Lastly, the Section 469 IPC is applicable when electronic record forged is used or intended to be used to harm the reputation of other. The alleged website with the domain name containing the name of the President is without any content. Now, the question arises, how can it harm the reputation of the President except misleading the general public.

The aforesaid allegation in the complaint simply discloses the abusive registration of the domain name using the name of the President, which is a case of cyber squatting. The word “cyber squatting” is not defined under the Indian Laws. However, Cyber squatting (also known as domain squatting), according to the United States federal law known as the Anti cyber squatting Consumer Protection Act, is registering, trafficking in, or using a domain name with bad faith intent to profit from the goodwill of a trademark belonging to someone else. The cyber squatter then offers to sell the domain to the person or company who owns a trademark contained within the name at an inflated price.

The aforesaid case of cyber squatting or domain name squatting is not first of its kind in India. There have been instances where the domain names in the name of the famous personalities have been registered. One such domain name www.arunjaitley.com containing the name of Senior Counsel and BJP Leader Mr. Arun Jaitley was registered by the cyber squatter. Mr Jaitley filed the suit in the Hon’ble Delhi High Court, stating that his name was being used by some other person who had made a website using his name. Justice S Murlidhar granted an injunction to use the website and directed Network Solutions & Portfolio Brains Ltd not to sell or transfer the domain in his name until the proceedings of the court were completed.

The recourse available to the prominent person in whose name there is abusive registration of the domain name as alleged in the complaint filed by the President Secretariat is to:-

a) Filing a case under the Uniform Domain Name Dispute Resolution Policy (UDRP) created by ICANN
b) Pursuing a litigation in the Court of Law or
c) Buying the Domain name

Thus, the allegation as contained in the complaint made by the President Secretariat do not attract any provisions of the Information Technology Act or the Indian Penal Code and the registration of the FIR is gross abuse of process of law and wastage of time by investigating agency.

Neeraj Aarora
Advocate

SEBI: STRENGTHEN EFFECTIVENESS AND TRANSPARENCY OF ARBITRAL MECHANISM OF EXCHANGES

2010-09-26T20:48:00.000-07:00

Recently, the Indian Stock Market Regulator SEBI has taken some strong measure to strengthen the Arbitration Mechanism available in Stock Exchanges for settlement of disputes vides its circular No. CIR/MRD/DSA/24/2010 of 11/08/2010 & CIR/MRD/DSA /29/2010 of 31/08/2010.

It has been decided that every stock exchange shall maintain its own penal of arbitrators as per number of disputes so as to enable to the arbitrators to handle the arbitration references easily and to dispose off them within the prescribed time limit. The stock exchanges shall ensure that the arbitrators have adequate qualifications and are included in the panel in accordance with fair and transparent criteria & there has been a short code of conduct for the arbitrators. Specifically the arbitrators are to act in a fair, impartial and independent manner, and shall disclose circumstances where there is conflict of interest. The stock exchange shall provide at least seven days of continuing
education to every arbitrator each year & and an appraisal would be given to the arbitrators as per their performances.

The arbitrator should be appointed within 30 days after receiving the arbitration reference by the exchange. Arbitration claims can also be filed after six month under the new framework since the limitation period for arbitration has now been modified to three years as prescribed under the Limitation Act, 1963. An award should be passed within four months after appointment of the arbitrator. The time for issue of arbitral award may be extendes for upto two months on a case to case basis after recording the reasons for the same. An appeal may be filed before the appellate panel of arbitrators of the stock exchange within one month from the date of receipt of arbitral award.

Uncertainty about arbitration fees has been removed by fixing the maximum limit. A client filing an arbitration reference for claim/counter claim upto Rs. 10 lakh within six months does not have to pay any fees. For such clients, the costs are to be borne by the stock exchange. Six months shall be computed from the end of the quarter during which the disputed transaction(s) were executed/ settled, whichever is relevant for the dispute, and after excluding the time taken by the Investors Grievances Redressal Committee of the Stock Exchange to resolve the dispute and the time taken by the member to attempt the resolution of the dispute.

As per the circulars, the arbitration and appellate arbitration shall be conducted at the regional centre (Delhi, Mumbai, Kolkata and Chennai) nearest to the client. The application under Section 34 of the Arbitration and Conciliation Act, 1996, if any, against the decision of the appellate panel shall be filed in the competent Court nearest to such regional centre. Other stock exchanges shall provide the arbitration facility, including appellate arbitration, at the place where it is located.

The arbitral award shall be disclosed by the stock exchange on its website in different formats. The stock exchange shall preserve the arbitral and appellate arbitral award with acknowledgements, confirming receipt of award by the disputing parties, permanently and other records pertaining to arbitration for five years from the date of arbitral award, appellate arbitral award or Order of the Court, as the case may be; and register of destruction of records relating to other records permanently.

The initiative taken by the SEBI will certainly increase the transparency into the arbitration mechanism of the exchanges and will improve the quality of arbitral awards apart from protecting the interest of small investors.

Neeraj Aarora
Advocate

Fake profile of President posted by imposter

2010-09-08T05:07:00.000-07:00

The imposter have not even spared the first citizen of India and made a fake profile in the name of the Hon’ble President her Excellency Pratibha Devi Sing Patil. The fake profiles in the social networking websites are doing the rounds in Face book and Orkut and one can find many fake profiles in the name of celebrities, even one can find 10-15 fake profiles in the name of single celebrity. Recently, a complaint has been received from the Additional Comptroller, President Household, President Secretariat who made a complaint regarding the four fake profiles created in the name of Hon’ble President in the famous social networking site, “FACE BOOK”. The said complaint reportedly stated that president house has nothing to do with the facebook and the said fake profile is misleading the general public. The First Information Report Under Sections 469 IPC and 66A Information Technology Act, 2000 was registered based on the said complaint at the police station, Economic Offences Wing, the elite wing of Delhi Police which specializes in investigating economic crimes including cyber offences. The investigation is still going on in the said FIR and culprits are yet to be arrested. Similar incident was witnessed on cyber space when the fake profile of President of President of Guyana Mr. Bharrat Jagdeo appeared on Facebook. The Annual Threat Report of Aladdin states that the potential damage of these fake profiles can be devastating, both on the personal level by creating difficulties in employment, ruining social and professional connections, damaging reputations; as well as on a financial level, such as stealing customers, corporate data etc. It has been found that the social networking sites are being exploited by the spammers who use fake profiles to spread spam or viruses. Further, the fake profiles also poses threat to data security, as is revealed from the study conducted by one Thomas Ryan from a security company who created fake profile and befriended persons from US Military, intelligence agencies some of whom shared personal and professional information which could have compromised corporate and possibly even national security. The provisions of Information Technology Act and Indian Penal Code do have some provisions to deal with menace posed by fake profiles on Social networking sites. They are particularly, Section 66, 66A, 66C, 66D, 67, 67A & 67 B of the Information Technology Act and Section 469 and 499/500 IPC is attracted. The victim of the fake profile can lodge FIR with local police under the said appropriate provisions of IT Act and IPC. They should also save the screen shots of such fake profiles for the evidentiary purposes.

Neeraj Aarora
Advocate

Forensic Accountant: Reliability & admissibility as Expert Witness

2010-09-05T21:22:00.000-07:00

Forensic Accounting

Forensic accounting is a rapidly growing area of accounting concerned with the detection and prevention of financial fraud and white-collar criminal activities. George A. Manning in his book "Financial Investigation and Forensic Accounting" defines Forensic Accounting as the science of gathering and presenting financial information in a form that will be accepted by a court of jurisprudence against perpetrators of economic crimes. The integration of accounting, auditing, and investigative skills yields the specialty known as Forensic Accounting which focuses very closely on detecting or preventing accounting fraud. "Forensic", according to the Webster’s Dictionary means, "Belonging to, used in or suitable to courts of judicature or to public discussion and debate." The word accounting is defined as "a system of recording and summarizing business and financial transactions and analyzing, verifying, and recording the results." The term ‘forensic accounting’ refers to financial fraud investigation which includes the analysis of accounting records to prove or disprove financial fraud and serving as an expert witness in Court to prove or disprove the same. Thus, basically, the forensic accounting is the use of accounting for legal purposes.

The History of Forensic Accounting

The forensic accounting can be traced back as far as 1817 to Meyer v. Sefton, a Canadian case that allowed an ‘expert witness’ to testify in court. The term ‘forensic accounting’ was first published in an article in 1946 "Forensic Accounting- Its Place in Today’s Economy" authored by Maurice E. Peloubet, a partner in Price Waterhouse. He stated that, "during the war both the public and industrial accountant have been and now engaged in the practice of forensic accounting". Many scholars have traced the roots of investigative accounting to his work. Interest in forensic accounting spread through the United States and England early in the twentieth century. One of the first institutions to use the services of such investigative accountants was the IRS. The story of Al Capone the famous mobster being caught on a tax evasion scheme is well-known. The FBI decided to use forensic accountants and employed nearly 500 such agents during World War II. As a profession, forensic accounting continued to grow during the latter half of the century, as GAAP and tax laws became widespread and mandatory.

The need for Forensic Accounting

Forensic Accounting is a fast emerging field in the "World of Accounting". Although it has been around for a long time, it has become increasingly popular and much relevant today in view of global financial crisis due to the downfall of the Lehman Brothers and its ripples felt across the globe. Thus, a new avatar of Accountant has emerged known as Forensic Accountant. Although Investigative Accounting has been around for years, it has only recently begun to transform into a new branch of accounting, hence Forensic Accounting. Forensic accountants unlike traditional accountants, look beyond the numbers, put their nose and eye deep into the financial books, records and data to uncover fraud, hidden assets, siphoned funds and the like. The word forensic is defined as the application of scientific knowledge to legal problems and legal proceedings. The word accounting is defined as "a system of recording and summarizing business and financial transactions and analyzing, verifying, and recording the results." By combining these two definitions it can be concluded that forensic accounting utilizes his regular accounting principles & practices in legal situations. Forensic Accounting is like the bridge which connects accounting system to legal system. Thus, we can say that the forensic accounting is an accounting that is used in a court of law. One of the most notable legal situations in the recent past would be the Enron scandals; where large numbers of American forensic accountants were employed. The wave of financial crisis primarily caused by corporate malfeasance and fraudulent financial activities eroded public trust and investor confidence in financial reports and audit services and need was felt to look beyond the conventional accounting function which only fulfilled the compliance requirements i.e. company’s books of accounts are kept in accordance with rules & regulations. In view of the increasing number of financial frauds committed by conspiracy with complex accounting records manipulation, it was felt that a new tribe of Accountant is needed to detect the financial fraud in companies with his accounting, auditing, and investigative skills and also assist in legal matters. This area of accounting came to be known as ‘forensic accounting’. There is a global awareness to fight the cases of financial frauds. Though many strategies have been formulated and many actions have been taking to fight against it, the problem still persists. One of the major hindrances in fighting financial crime cases is lack of quality forensic analysis of the financial statements and records due to lack of forensic accounting professionals. This author who had been an investigating officer during his tenure with Delhi Police in number of major cases of financial crimes have faced this dearth of quality forensic accounting experts who could have come handy in timely & accurate investigation of the intricate financial crimes and unearth the complex modus operandi adopted by the fraudsters who are themselves in some cases highly qualified financial professionals. The reason why there has been rampant increase in white collar financial crimes because they think that they can get away with it with impunity and the greatest deterrent to thwart the criminal act is law enforcement. However, the conviction rate in the financial fraud cases was very low due to weak law enforcement which is attributable to weak litigation support in prosecution process. Without full support of accounting expert, prosecutors often fail to prove and provide strong evidence to put fraudsters behind bar. Here, the Forensic accounting can play an important role here by providing accounting or financial information or other evidentiary inputs for legal purposes. To achieve the aim, forensic accountant besides having financial accounting expertise, should also have proven skill in law, scientific investigative technique, interpersonal and communication skills etc.

Growth of Forensic Accounting

The Western Countries are utilizing the forensic accounting expertise to address the financial fraud cases. United States and Canada are pioneers in development & implementation of Forensic Accounting. The Canadian Institute of Chartered Accountant recently recognized Investigative and Forensic Accounting as an accounting specialty. The CICA has started granting its members to use the designation initials CAâ€¢IFA who complete three years post qualification experience as a CA with Diploma in Investigative and Forensic Accounting (DIFA) from the University of Toronto. The CA-designated specialist in investigative and forensic accounting (CAâ€¢IFA) combines the well-recognized and respected attributes of the CA – in particular integrity, understanding of business, and financial acumen – with an in-depth knowledge and experience in investigative and forensic accounting. The CA-designated specialist in investigative and forensic accounting (CAâ€¢IFA) combines the well-recognized and respected attributes of the CA – in particular integrity, understanding of business, and financial acumen – with an in-depth knowledge and experience in investigative and forensic accounting. This is accomplished through a profession-endorsed certification process that has ongoing experience and education requirements. The CAâ€¢IFA tells litigation lawyers, law enforcement professionals, the courts and other legal forums that the designated holder is well positioned to practise in areas such as fraud and economic loss quantification, including:

• investigating and analyzing financial evidence;

• testifying as an expert witness ;

• becoming involved in criminal investigations and uncovering financial evidence in employee or insurance fraud cases;

• Investigating in the rapidly evolving area of computer and Internet fraud.

Forensic Accounting implementation in India

However in India, this branch of accounting has not got its due recognition even after alarming increase in the complex financial crimes and lack of adequately trained professionals to investigate and report on the complex financial crimes. The task of Forensic Accountants is handled by Chartered Accountants who apart from handling traditional practice of auditing as required under the Companies Act, 1956 or Income Tax Act are called upon by the law enforcement agencies or the companies or private individuals to assist in investigating the financial crime or scam. The CA or CWAs in India are best suited for this profession due to their financial acumen acquired during their rigorous training which can be further honed by introducing post qualification degree or diploma in Investigating and Forensic Accounting similar to one introduced by CICA. The CA or CWA who acquire post qualification in Investigative & Forensic Accounting can use the designation CA-IFA or CWA-IFA and be legally recognized as the Forensic Accounting Experts to handle the investigation of financial crimes and give expert testimony in the Court of Law. However, no efforts has so far been made by the ICAI and ICWAI, the two leading statutory accounting professional bodies to move in this direction and set up a institute which can offer the post qualification diploma in Investigative and Forensic Accounting to its members.

However, growing financial fraud cases, recent stock marker scams, failure of non financial banking companies, phenomena of vanishing companies and plantation companies and failure of the regulatory mechanism to curb it has forced the Government of India to form Serious Fraud Investigation Office (SFIO) under Ministry of Corporate Affairs which can be regarded the first step of Government of India to recognize the importance and advance the profession of forensic accountants. The SFIO is a multidisciplinary organization having experts from financial sector, capital market, accountancy, forensic audit, taxation, law, information technology, company law, customs and investigation. These experts have been taken from various organizations like banks, Securities & Exchange Board of India, Comptroller and Auditor General and concerned organizations and departments of the Government. However, the main important law enforcement agency involved directly in combating white-collar crimes is the Police, CBI, DRI etc. There is a total lack on the part of these law enforcement agencies to train their investigators in this specialized part of investigating white-collar crimes involving forensic accounting. The investigation of the major financial crimes is handled by ordinary investigating officers who after spending some time in investigation of conventional crimes are shunted to the economic offence wing and they are expected to handle the financial crime cases involving complex & intricate financial records which is required to be analyzed to unearth crime or unique MO adopted by the white collar criminal. The result is obvious, the case dies its natural death and the criminals roam free as the IO given his lack of specialized knowledge & qualification fails to properly investigate the financial crime to its logical conclusion. On the other hand if we look at the western countries particularly USA, the law enforcement agencies of which like DEA, FBI, CIA has well marshaled its pool of special agents having forensic accounting backgrounds that are the backbone of the bureau’s financial crimes and terrorism financing units and investigate with professional acumen, the complex financial crime like money laundering, internet crimes, financial institution fraud and other economic crimes. Today, there are more than 600 FBI agents with accounting backgrounds. Thus, it is highly imperative on the part of law enforcement agencies in India that they follow the suit and engage specialist forensic accountant on its roll whose engagements relating to criminal matters typically arise in the aftermath of financial fraud.

The Indian Law which refers to Forensic Accounting:

1) The Companies Act, 1956:

a) Section 235 and 237: There are provisions in Companies Act (Section 235 and 237) which empowers the Central Government to inspect the books of accounts of a company, to direct special audit, to order investigation into the affairs of a company and to launch prosecution for violation of the Companies Act, 1956. Books of accounts and other documents of the companies are inspected by the officers of the Directorate of Inspection and Investigation and the Registrars of Companies. These inspections are designed to find out whether the companies conduct their affairs in accordance with the provisions of the Companies Act, 1956 to see whether any unfair practices prejudicial to the public interest are being resorted to by any company or a group of companies and to examine whether there is any mismanagement which may adversely affect any interest of the shareholders, creditors, employees and others. Wherever inspection reports disclose any information that may be of interest to other Departments or agencies like the Ministry of Commerce and Industry, Central Board of Direct Taxes, Enforcement Directorate, State Government or Provident Fund Authorities, such information is passed on to them. If an inspection discloses a prima facie case of fraud or cheating, action is initiated under provisions of the Companies Act, 1956 or the same is referred to the Central Bureau of Investigation.

b) Provisions of Sick Industrial Companies Act incorporated into the Companies Act, 1956: The Section 424A(5) of the Companies Act, 1956 empowers National Company Law Tribunal (NCLT) to examine as preliminary issue whether the company is a sick industrial company u\s 2(46AA). Thus even before examining the viability of the scheme of revival proposed by the company, NCLT can check the genuineness of the reference made to it. Thus, inquiry by operating agency will only be to enable NCLT to decide the viability of the scheme and to assess whether the company has the ability to revive on its own. Further, Section 424B of the Companies Act, 1956 empowers the tribunal to make such inquiry as it may deem fit for determining whether any industrial company has become a sick industrial company. Further, the Tribunal may, if it deems necessary or expedient so to do for the expeditious disposal of an inquiry, require by order any operating agency to enquire into the scheme for revival and make a report with respect to such matter as may be specified in the order. Operating agency is group of experts consisting of persons having special knowledge in banking & industry in which sick industrial company is engaged and includes public financial institution, State level institution, scheduled bank or any other any other person as may be specified by general or special order as its agency by the Board. Thus, Forensic Accountant can be part of operating agency and investigate whether the reference made by the company is genuine or the accounts are manipulated or fabricated to suit the scheme of reference made to NCLT to declare it as sick company and thereby siphon public funds.

2) SEBI Act, 1992:

The share market is highly volatile and the brokers indulge into various unfair and fraudulent trade practices like synchronized share trading, manipulate and fabricate the books of accounts and cheat the gullible investors. Regulation 11 C of the SEBI Act, 1992 empowers the SEBI to direct any person to investigate the affairs of intermediaries or brokers associated with the securities market whose transactions in securities are being dealt with in a manner detrimental to the investors or the securities market. Thus fraudulent and unfair trade practices of the brokers or market intermediaries are investigated by the investigator appointed by SEBI which require the broker or market intermediary to furnish information, books of accounts, registers, documents or records etc. which is analyzed by the investigator to find out any manipulation, fraudulent practice or otherwise of the broker. Thus, Forensic Accountant can play a lead role in assisting the SEBI to unearth the complex share related frauds perpetrated by the brokers.

3) The Insurance Act, 1938:

Section 33 of the said Act empowers the IRDA to direct any person ("Investigating Authority") to investigate the affairs of any insurer. The investigating authority may seek assistance of the auditor (or actuary or both) who shall be the Chartered Accountant within the meaning of Chartered Accountant Act, 1949 for the purpose of assisting him in any investigation. The books of account, registers and other documents are taken by the investigating authority in its custody to analyze it to find out the manipulations or fabrication in the books of accounts. Thus, Chartered Accountants plays a front role as an Forensic Accountant and aid in the investigation conducted into the affairs of the insurer as per the provisions of Insurance Act, 1938.

4) The Prevention of Money-Laundering Act, 2002:

Section 3 of the Prevention of Money Laundering Act, 2002 defines the offence of money laundering as involvement of a person in any process or activity connected with the proceeds of crime and projecting it as untainted property. The three important stages in the money laundering process are:

• Placement: Physical disposal of cash acquired from illegal sources by depositing the cash in domestic banks or other kinds of financial institutions.

• Layering: Working through complex layers of financial transactions to distance the illicit proceeds from their source and disguise the audit trail.

• Integration: Making the wealth derived from crime appears legitimate.

Forensic Accountant can often be involved in the following antimony laundering activities:

• Investigating and analyzing financial evidence to establish a suspicious transaction;

• Developing computerized applications to assist in the analysis and presentation of financial evidence;

• Communicating their findings in the form of reports, exhibits and collections of documents that assist the banks in submission of the suspicious transaction reports to the regulator; and

• Assisting in legal proceedings, including testifying in court as an expert witness and preparing visual aids to support trial evidence.

5) The Companies (Auditor’s Report) Order, 2003:

CARO, 2003 requires the auditor to report to the effect that if a substantial part of fixed assets have been disposed off during the year, whether it has affected the going concern status. In order to carry out the duties, the auditor has to draw a corollary and reference to the section 293 Companies Act, 1956, AS 24 (’Discontinuing Operations’) and to AAS 16 (Going Concern) and thereafter make his observations on this matter. It also requires the auditor to report on Frauds i.e.; if any fraud on or by the company has been noticed or reported during the year.

Expert forensic accounting evidence

Who is an expert witness?

An expert witness is a witness, who by virtue of education, training, skill, or experience, is believed to have knowledge in a particular subject beyond that of the average person, sufficient that others may officially (and legally) rely upon the witness’s specialized (scientific, technical or other) opinion about an evidence or fact issue within the scope of their expertise, referred to as the expert opinion, as an assistance to the fact-finder. Expert evidence is evidence given to a court or tribunal by a person, skilled and experienced in some professional or technical sphere, of the conclusions he has reached on the basis of his knowledge, from facts reported to him or discovered by him by tests, measurements or similar means. It is commonly given by, for example, doctors, chemists, surveyors, architects, accountants and the like. In a Scottish case, Davie v Edinburgh Magistrates (1953) , it was said that the function of an expert witness "…is to furnish the judge with the necessary scientific criteria for testing the accuracy of his conclusions, so as to enable the judge to form his own independent judgment by the application of those criteria to the facts proved in evidence" .

An expert witness is different from ordinary witness

Expert witnesses have a different status from ordinary witnesses when giving evidence at a Court or other judicial or quasi-judicial tribunals. The evidence of the "expert" differs from that of the ordinary witness who testifies as to facts observed, in that the expert is permitted to express his/her opinion on a matter that has occurred in the past, or may occur in the future which have not been actually observed by the expert, who is providing evidence. The relevance and weight which the Court or tribunal will attribute to such an opinion within the total evidence which is adduced is a matter for the Court or tribunal.

An expert, unlike other witnesses, is allowed, because of his special qualifications and/or experience, to give opinion evidence. It is for his opinion evidence that he is called, not for his view of the facts or circumstances of the dispute, although his interpretation of the facts is often necessary in order to explain and/or justify his conclusions.

Forensic Accountant as an Expert Witness:

The tradition and law relating to the status of the experts as witnesses dates back to English Courts around 1550. However, the first recorded use of an accountant as an expert witness was in Meyer V. Sefton, 2 Stark. 274 (1817). The use of Forensic Accountant testifying as an expert witness in the Court of law is becoming increasingly prevalent today in view of the rapid increase in the financial fraud cases. In court cases where the knowledge of an expert can help to better explain the facts in issue or relevant facts, an "expert witness" may be called upon to give expert testimony.

Section 45 of the Evidence Act which makes opinion of experts admissible, lays down that when the Court has to form an opinion upon a point of foreign law, or of science, or art, or as to identity of handwriting or finger impressions, the opinions upon that point of persons specially skilled in such foreign law, science or art, or in questions as to identity of handwriting, or finger impressions are relevant facts. However, neither the Indian Evidence Act nor there is any seminal judicial pronouncements which clarifies as to when, how and under what circumstances, the testimony of Forensic Accounting Expert would be admissible or inadmissible.

In order, to bring the evidence of a witness as that of an expert it has to be shown that he has made a special study of the subject or acquired a special experience therein or in other words that he is skilled and has adequate knowledge of the subject. The Cost Accountant or Chartered Accountant can be considered as an expert to give testimony within the meaning of Section 45 of the Evidence Act. Moreover, the draft of "The Companies Bill, 2008" includes the definition u/s 2 (1) (zn) which interalia includes Cost Accountant and Chartered Accountant in the definition of "Expert" which can be also considered/extended for relying upon their testimony in the Criminal/civil cases by the court.

In USA, however, the admissibility of the Forensic Accounting Expert testimony is supported by the Judicial Pronouncements and Federal Rule of Evidence. Over the years, the US Supreme Court has delivered several decisions clarifying its standards for the admission of expert testimony:

In Frye v. U.S., the Court stated that expert testimony will be admitted if based on a methodology "generally accepted" by the scientific community.

In Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993) the Court concluded that the trial judge must act as a gatekeeper for expert testimony, considering several nonexclusive factors applicable
to the testimony’s reliability and relevance, including:

• Whether the theory or technique has been or can be tested,

• Whether the theory or technique has been subjected to peer review or publication,

• The known or potential rate of error, and

• Whether the theory or technique is generally accepted in the relevant scientific community.

Although Daubert focused on the admissibility of scientific expert testimony, its progeny have had a great impact on Financial Expert testimony. In Kumho Tire Co. V. Carmichael, 526 U.S. 137 (1999), the Court made clear that the gatekeeper function applies to all expert testimony, not just scientifically-based testimony.

Rule 702 of the Federal Rules of Evidence effectively codifies the Supreme Court’s decisions in "Daubert" and "Kumho". Rule 702 provides that if the Court finds that scientific, technical or other specialized knowledge "will assist the trier of fact to understand the evidence or to determine a fact in issue," and if the Court finds that the witness is qualified as an expert "by knowledge, skill, experience, training, or education," then the Court may permit the witness to testify — so long as the witness’ testimony is based on "sufficient facts or data," the testimony "is the product of reliable principles and methods," and the witness has "applied the principles and methodology reliably to the facts of the case.

Further, concerning determinations of nonscientific expert testimony reliability, financial expert testimony (which includes Forensic Accountant Testimony) in particular, the Advisory Committee on the Federal Rules of Evidence and the Standing Committee on Rules of Practice and Procedure ("Committee") which proposed amendments to the texts of Rules 701, 702, and 703, specifically observed:

"Some types of expert testimony will not rely on anything like a scientific method, and so will have to be evaluated by reference to other standard principles attendant to the particular area of expertise. . . . The expert’s testimony must be grounded in an accepted body of learning or experience in the expert’s field, and the expert must explain how the conclusion is so grounded. "Whether the testimony concerns economic principles, accounting standards, property valuation or other non-scientific subjects, it should be evaluated by reference to the ‘knowledge and experience’ of that particular field."

Therefore, under the Federal Rules of Evidence, a judge will permit an accountant to testify as an expert witness only if the judge decides that:

The accountant’s testimony will help the jurors or judge understand the evidence or determine a fact in issue.

The accountant is qualified as an expert by knowledge, skill, experience, training, or education.

The accountant can show that his or her testimony (a) will be based on sufficient facts or data and (b) will be the product of reliable principles and methods that have been applied reliably to the facts of the case. (These requirements are often referred to in shorthand as "qualification, reliability, and fit.")
Thus, under the rule announced in Daubert v. Merrill-Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993) and expanded in Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999), the courts must ensure that experts-scientific and otherwise-will offer testimony that is methodologically sound and relevant to the facts of the case before admitting their expert testimony.

Qualifying as an Expert Witness

Challenges to financial expert testimony have skyrocketed in recent years. Since Daubert v. Merrell Dow Pharmaceuticals, Inc. (1993), an increasing number of testifying experts have been subjected to challenges by opposing counsel in an attempt to prevent the experts from testifying (Journal of Forensic Accounting: 1524-5586/Vol.IV(2003), Page-113). Figlewicz and Sprohge in their article, "The CPA’s Expert Witness Role in Litigation Services: A Maze of Legal and Accounting Standards," offer ten guidelines to help avoid legal challenges:

1. Know the relevant professional standards.
2. Apply the relevant professional standards.
3. Know the relevant professional literature.
4. Know the relevant professional organizations.
5. Use generally accepted analytical methods.
6. Use multiple analytical methods.
7. Synthesize the conclusions of the multiple analytical methods.
8. Disclose all significant analytical assumptions and variables.
9. Subject the analysis to peer review.
10. Test the analysis-and the conclusions-for reasonableness.

Now the various investigation agencies such as Police, CBI etc. are taking the help of CA/CWA as a Forensic Accountant and using their report as evidence in the cases of criminal/civil nature. Whether the aforesaid principles/guidelines laid down by the two US Supreme Court Judgments incorporated into Federal Rules of Evidence would be followed by Indian Courts or not will become clear in the due course of time.

However, the fact is that though till today there is general acceptance of admissibility of scientific evidence and expert’s opinion in Indian Courts, there is no special law with respect to this which lays down criteria, principles or guidelines in clear terms with regard to when the expert opinion would be admissible and when it will not as is the case under the US federal law. Section 45 of the Indian Evidence Act is insufficient in this regard. However, in case of doubt, the principles laid down by US Supreme Court can be adhered to. In conclusion, one should understand that it is ultimately for the Court Of Law to decide as to who is qualified as an expert by knowledge, skill, experience, training or education, who may testify thereto in the form of an opinion or otherwise if:

1. The testimony is based upon sufficient facts or data,
2. The test is the product of reliable principles and methods, and
3. The witness has applied the principles and methods reliably to the facts of the case

However, no doubt, with the rapid increase in the cases involving misappropriation of funds, manipulation of books of accounts, banking fraud cases, Securities scams etc. involving complex financial transactions, the Forensic Accountants and admissibility of their testimony needs to be elucidated and these would be determining factors for deciding the fate of these cases. The involvement of Forensic Accountant in financial fraud cases and his testimony will not only take these cases to logical conclusion but also will go a long way ahead to put a curb on these menace of white collar offences.

Neeraj Aarora
(Advocate)

Legislation to protect Individual Privacy

2010-06-21T23:35:00.000-07:00

The Right to privacy is recognition of the individual's right to be let alone and to have his personal space inviolate. India does not have a constitutional right to privacy, although the courts have found an implicit right to privacy in the constitution. No one has a right to peep into one’s privacy and the law of privacy is a recognition of the of the individual's right to be let alone and to have his personal space inviolate. Right to Privacy is a ‘right to be let alone’ and a citizen has a right ‘to safeguard the privacy of his own, his family, marriage, procreation, motherhood, child-bearing and education among other matters’. Right to privacy is not enumerated as a fundamental right in our Constitution but has been inferred from Article 21. The Right to Privacy has been developed by the Supreme Court over a period of time and with the expansive interpretation of the phrase `personal liberty', this right has been read into Article 21.

Amid going concern over possible misuse of data under government control, the government has set up a panel comprising of senior babus to prepare a blueprint laying down the ground rules for privacy and data protection and fixing the criminal liability of offenders. The government has moved forward to enact new legislation on privacy in the backdrop of Aadhaar, the project to provide unique identity cards to residents of the country, and the National Intelligence Grid (Natgrid) which will give access to 21 categories of database like rail and air travel, income tax, phone calls, bank account details, credit card transactions, visa and immigration records, driving licenses of all citizens. The NIG database will be accessed by a total of 11 agencies, including the recently set-up National Investigation Agency (NIA). The Civil Right Activists made a huge cry over the possible misuse of the individual privacy and insisted on legislative measure to stop the possible misuse and punish the violators of the privacy, including the government.

The present Information Technology Act, 2000 does contain some provisions which deal with data base security and privacy for instance Section 43, 43 A, 66E and 72A. However, these provisions deals with the security of the electronic records, e-commerce transactions, and web content alone and do not address “individual privacy”. As the organizations, government non government acquires more personal information store in electronic form, privacy and confidentiality have become urgent issues. This author feels that the privacy of an individual be given due respect and should be protected by uniform, national legislation. Privacy legislation needs to be constructed carefully and prudently to protect the privacy of individuals, while facilitating the ongoing national mission to ensure the security of the state that can benefit us all.

Neraj Aarora
(Advocate)

SEBI should promote transparency in bourses by implementing RTI Mechanism

2010-06-16T22:20:00.000-07:00

The Right to Information Act, 2005 was brought to statute book to secure access to information under the control of public authorities, in order to promote transparency and accountability in the working of every public authority. The Right to information is held to be fundamental right in various judicial pronouncements.

The SEBI was established under an act of Parliament in 1992 in accordance with the provisions of SEBI Act, 1992. The main objective of SEBI as reflected in its preamble is to protect the interest of investors in securities and to promote the development of, and to regulate the securities market. The SEBI is thus a “Public Authority” as defined u/s 2 (h) of the RTI Act. The RTI Applications have flooded the SEBI which largely comes from that of investors who are victim of various fraudulent practices relating to the securities market, some of which are so gross that they even attract provisions of IPC or Information Technology Act, 2000 besides SEBI Act, 1992. The brokers or the market intermediaries who themselves are the perpetrators of the fraudulent practice would not supply the information and the investors look upon the SEBI as market regulator under whose regulatory regime the stock exchanges & broker falls. The SEBI has deep pervasive control over the stock exchanges under the various provisions of the Securities Contracts (Regulation) Act, 1956 as well as SEBI Act, 1992 which gives vast regulatory power to SEBI over stock exchanges. Moreover, the various judicial pronouncements show that the Stock Exchange is “State” or instrumentality of “State” under Article 12 of Constitution. Moreover, the SEBI itself in a RTI case has stated that ‘public authority’ is broader and more generic than the word ‘state’ under Article 12 of the Constitution of India. Therefore, the Stock Exchange being “State” is also “Public Authority” under the RTI Act. The Chief Information Commissioner accepting the contention of the SEBI held that Stock Exchange are public authority & directed them to put RTI mechanism in place which was upheld by the Hon’ble Delhi High Court. The order of the CIC clearly directs the Securities and Exchange Board of India (Sebi) as market regulator to use its power pro-actively to seek information from market intermediaries to address investor grievances & ensure that stock exchanges function in a transparent manner, especially in respect of investor protection. However, the issue whether the Stock Exchange is public authority or not is still controversial and the pending adjudication before the Hon’ble Bombay High Court. However, the CIC in Bhojraj case has observed that the stay by the Bombay High Court on the issue whether the BSE is a “Public Authority” within the meaning of the RTI Act would not preclude the SEBI from accessing information from the Stock Exchange u/s 2(f) of the RTI Act.

In view of the aforesaid rulings, the SEBI as a market regulator endeavor to provide the information sought from it by the investors under the RTI Act, 2005 to ensure market transparency and fair play in the stock market. The rationale for bringing the bourses under the purview of the RTI Act is in fact very sound and cannot be questioned as the investor and client protection is an important function of SEBI as capital market regulator. Last but not the least, any denial of the information on the part of the SEBI would be against the very objective & Preamble of SEBI Act as well as the RTI Act. The information sought by the investing public with respect to their shares trades executed via brokers/stock exchanges relates to an public activity, are within the access of SEBI. The information sought by the investors should be provided by the SEBI by exercising its power under RTI Act over Stock Exchanges, which would go a long way to ensure transparency, integrity and accountability in the share market and the transparency of such information is vital in the larger interest of the investing public. The denial of such information in actual possession & within the reach of the SEBI would increase the incidents of share frauds as the fraudsters illegal activities in the stock market would not come to light being immune from the RTI Act which would harm the economic growth as public would lose faith in the stock market the working of which is of public nature and therefore, not good in the larger interest of investing public.

Neeraj Aarora
(Advocate)

State cannot claim sovereign immunity in Motor Accident cases-Says Delhi High Court

2010-05-28T21:11:00.001-07:00

The already devastated legal heirs of deceased victim of the vehicle accident involving government vehicle now, no longer have to run from pillar to post to get compensation which is denied to them on the ground of government vehicle engaged in so called sovereign duty and thus claim sovereign immunity which is an archaic concept. No civilized country in this world which claims itself to be founded on the notions of the welfare state, shun its liability towards accident victims and their legal heirs involving its own vehicle on the ground they were doing a government duty, thus, entitled to act in any manner as it is sovereign. No legal system today can place the State above law as it is unjust and unfair for a citizen to be deprived of his life or property illegally by negligent act of employees or officers of the State without any remedy. The Government and its functionary have trend to deny their liability towards the poor victim or the legal heir victim of state negligent act by raising the plea of the sovereign immunity, showing their apathy towards the victims which reflects the medieval mindset borrowed from the British Raj.

The Motor Accident Claims Tribunal awarded the compensation to the poor widowed lady whose husband died in an accident cause by the Air Force Vehicle. The Air force filed an appeal in the High Court that it is not liable to pay compensation as its vehicle was exercising a sovereign function, an oft repeated plea taken by various departments of governments to shun their liability towards the accident victim. Advocate Neeraj Aarora took the noble cause to fight for justice for the poor lady pro bono and represented the poor lady in the Delhi High Court against the irresponsible behavior of the Air Force. Advocate Neeraj Aarora argued at length the dichotomy between sovereign and non-sovereign functions citing leading judgments of Apex Court and various High Courts which shows that the doctrine of sovereign immunity has no application so far as claims for compensation under the Motor Vehicles Act is concerned.

The Hon’ble Mr. Justice J.R. Middha, taking the note of the important constitutional issue that whether the “Doctrine of Sovereign Immunity” is available to defeat the claim for compensation under the Motor Vehicles Act, 1988 appointed Amicus Curie and also requested the Additional Solicitor General to assist the case. The legal luminaries submitted that the Motor Vehicle Act, 1988 was a special law and no exception had been carved out in the statute in respect of use of government vehicle for defense purposes. It was also submitted that the doctrine of sovereign immunity had no place in Indian Jurisprudence citing the judgment of the Hon’ble Apex Court in State of Rajasthan Vs. Vidyawati, AIR 1962 SC 933. The said principle has been reiterated by the Supreme Court in a large number of decisions and in one of the decisions; the concept was described as ‘Old and Archaic”. In addition to the judgments of the Supreme Court, there are a substantial number of judgments of various High Courts which have rejected the plea of sovereign immunity. The doctrine of sovereign immunity is based on the supremacy of the monarchy of the England. In India, which is a parliamentary democracy governed by the Constitution, there is no equivalent to monarch.

The Hon’ble Mr. Justice J.R. Middha took note of the contentions raised against the illogical principles of sovereign immunity reflecting the apathy of the state towards the poor victims of the accident involving government vehicles and rightly observed that it did not behoove the State to take cover under the principle of sovereign immunity only to shun liability for the consequences of the negligence of its servants. However, before passing any final verdict on the issue, the Hon’ble Mr. Justice J.R. Middha considering the adverse implications of the government raising the plea of sovereign immunity in claims under the Motor Vehicles Act, 1988 despite clear and well settled law by the Hon’ble Supreme Court issued the direction to the Ld. Attorney General seeking its opinion as to in how many cases, the state has taken or raised the plea of “sovereign immunity” in pending motor accident claim cases in various courts and tribunals and also directed the Attorney General to consider the possibility of issuance of a circular/Government of India directive in respect of all pending motor accident claim cases as well as cases that may arise in future.

The aforesaid directions of the Hon’ble Mr. Justice J.R. Middha are judicious, well thought-out, highly commendable as it seeks out to curb the government apathy and irresponsible behavior in motor accident cases once and for all not only in present pending cases but also the similar cases which may arise in future through the country.

The Ld. Solicitor General Mr. Gopal Subramaniam in his communiqué dated 19^th May, 2010 addressed to the Hon’ble High Court of Delhi opined that taking into account correct legal position as enumerated above, a clear office memorandum should be issued to the effect that the defence of sovereign immunity not be pleaded by Department of Government in cases involving compensation arising out of motor vehicle accidents involving the use of Government vehicles on Government duty and advised the Ministry of Law & Justice to issue the said memorandum.

Thus, the aforesaid direction of the Hon’ble Justice Mr. J.R. Middha has paved a new foundation for justice and corrected a grave constitutional error in form of doctrine of sovereign immunity which can now no more be pressed as defence by the government departments to shun their liability towards its poor subjects.

Neeraj Aarora

Advocate

The Legislative response to Grossly Offensive or menacing emails and SMS

2010-05-20T21:23:00.000-07:00

The electronic communications has changed the way the world communicates and also the communication habit. The communication via SMS or electronic email manifests the freedom of speech and expression guaranteed by our constitution to every citizen [Article 19 (1) (a)], however, the freedom is not absolute, it is a qualified right, as constitution also sets significant limitations on that freedom, as the state may by law effect such reasonable restrictions as it deems necessary or expedient in the interest of the security of the state, the sovereignty and integrity of India, friendly relations with foreign states, public order, decency or morality or in relation to contempt of court, defamation or incitement to an offence.

Due to the misuse of the modern communication device and increased incidents of sending hate messages, threatening SMS, threatening Email to politicians, VIPs in politically charged environment, the legislature introduced Section 66A Information Technology (Amendment) Act, 2008 notified w.e.f. 27th October, 2009 which reads as follows:-
“66A. Punishment for sending offensive messages through communication service, etc.- Any person who sends, by means of a computer resource or a communication device,—
(a) any information that is grossly offensive or has menacing character; or
(b) any information which he knows to be false, but for the purpose of causing annoyance, inconvenience, danger, obstruction, insult, injury, criminal intimidation, enmity, hatred or ill will, persistently by making use of such computer resource or a communication device,
(c) any electronic mail or electronic mail message for the purpose of causing annoyance or inconvenience or to deceive or to mislead the addressee or recipient about the origin of such messages, shall be punishable with imprisonment for a term which may extend to three years and with fine.

‘Explanation.— For the purpose of this section, terms “electronic mail” and “electronic mail message” means a message or information created or transmitted or received on a computer, computer system, computer resource or communication device including attachments in text, images, audio, video and any other electronic record, which may be transmitted with the message.”

Thus, the legislative intent was to make act of sending SMS, emails, or posting of any messages via communication device or computer resource which is grossly offensive or of menacing character or any information which the sender knows to be false but posted for the purpose of causing annoyance, inconvenience, danger, obstruction, insult, injury, criminal intimidation, enmity etc. or disguised or anonymous emails or fake emails to cause annoyance.

“Grossly offensive or menacing character”: However, when an information or message shall be termed as grossly offensive or having menacing character has not been defined or explained in the Section 66A IT Act which leaves room for controversy. Interestingly, the Section 66A IT Act is deeply influenced and probably originated from Section 127 of the Communication Act 2003, an UK Legislation.

The wordings of Section 127 of the Communication Act, 2003 are as follows:-
“127 Improper use of public electronic communications network
(1) A person is guilty of an offence if he—
(a) sends by means of a public electronic communications network a message or other matter that is grossly offensive or of an indecent, obscene or menacing character; or
(b) causes any such message or matter to be so sent.
(2) A person is guilty of an offence if, for the purpose of causing annoyance, inconvenience or needless anxiety to another, he—
(a) sends by means of a public electronic communications network, a message that he knows to be false,
(b) causes such a message to be sent; or
(c) persistently makes use of a public electronic communications network.
(3) A person guilty of an offence under this section shall be liable, on summary conviction, to imprisonment for a term not exceeding six months or to a fine not exceeding level 5 on the standard scale, or to both.
(4) Subsections (1) and (2) do not apply to anything done in the course of providing a programme service (within the meaning of the Broadcasting Act 1990 (c. 42)).”
Thus, the Communications Act 2003 section 127 covers the sending of grossly offending or menacing messages via public electronic communications network. Section 127(1)(a) relates to a message etc that is grossly offensive or of an indecent, obscene or menacing character and should be used for indecent phone calls and emails. Section 127(2) targets false messages and persistent misuse intended to cause annoyance, inconvenience or needless anxiety. The judgment of DPP v. Collins ([2005] EWHC 1308 (Admin)), an UK High Court decision sheds some light to what is “Menacing Character”, in which it observed that “A menacing message, fairly plainly, is a message which conveys a threat – in other words, which seeks to create a fear in or through the recipient that something unpleasant is going to happen. Here the intended or likely effect on the recipient must ordinarily be a central factor in deciding whether the charge is made out. Obscenity and indecency, too, are generally in the eye of the beholder; but the law has historically treated them as a matter of objective fact to be determined by contemporary standards of decency.”

Further, House of Lords has clarified what makes a message sent by means of a public electronic communications network "grossly offensive" and therefore capable of amounting to a crime under the Communications Act 2003 ("Act") in Director of Public Prosecutions (Appellant) v. Collins (Respondent) on appeal from [2005] EWHC 1308 (Admin). Their Lordship held that “to determine as a question of fact whether a message is grossly offensive, that in making this determination the Justices must apply the standards of an open and just multi-racial society, and that the words must be judged taking account of their context and all relevant circumstances.

Usages and sensitivities may change over time. Language otherwise insulting may be used in an unpejorative, even affectionate, way, or may be adopted as a badge of honour (“Old Contemptibles”). There can be no yardstick of gross offensiveness otherwise than by the application of reasonably enlightened, but not perfectionist, contemporary standards to the particular message sent in its particular context. The test is whether a message is couched in terms liable to cause gross offence to those to whom it relates.”

The instances/cases of offending emails, SMS
Cases abroad:
• A blogger who "let off steam" about the way he was treated by police was convicted of posting a grossly offensive and menacing message. Gavin Brent, 24, from Holywell, Flintshire, was fined £150 with £364 costs by magistrates at Mold. The court heard Brent had been charged with theft offences - which have yet to be dealt with - and posted a message about a police officer's new-born baby. Magistrates said any reasonable person would find the comments menacing.
• A man was found guilty for tweeting airport bomb threat. His tweet, "Robin Hood airport is closed. You've got a week and a bit to get your shit together, otherwise I'm blowing the airport sky high!!" The tweeter Paul Chambers was actually just kidding. However, the police arrested him and he was charged with sending by a public communications network a message that was grossly offensive or of an indecent, obscene or menacing character contrary to Section 127 of the communications Act 2003. A district judge at Doncaster Magistrates Court ruled that the Tweet was ''of a menacing nature in the context of the times in which we live''. Chambers has been ordered to pay a £385 fine, a £15 victims surcharge and £600 costs.
• A man from South Yorkshire who sent offensive, threatening and abusive emails directed at children's social workers in East Sussex was convicted. The accused sent number of very disturbing, obscene and threatening emails in the Children's Services department. On the complaint of Children’s service department, the police investigated and the man behind the messages was traced and charged with offences under section 127 of the Communications Act.
India
The threatening emails and SMS were hitherto covered under Section 506 Indian Penal Code. However, with the insertion of Section 66A IT Act, in force w.e.f. 27th October, 2009, these offending emails, SMS are covered under IT Act.
• Threatening Email to Naveen Patnaik, Chief Minister of Orissa: The news report shows that various threatening emails have been sent to the Chief Minister, Orissa Mr. Naveen Patnaik. A person was arrested and the investigation revealed that though the e-mail was sent in the name of one Prakash Behera alias Babuli Behera, the police nabbed his cousin Pratap Behera (35) of Astarang in Puri who confessed to the crime during interrogation. The investigation revealed that the Prakash Behera has no knowledge of Internet. The investigsation revealed that Pratap's family had some land dispute with Prakash's family and to settle a score Pratap created an e-mail ID in the name of Prakash and sent the mail to the Chief Minister. The case was registered u/s 66A IT Act, r/w 506 IPC.
• Man arrested for making hoax call: A 25-year-old man was arrested on 9TH May, 2010 for making an anonymous call warning that Delhi Chief Minister Sheila Dikshit’s life was in danger. Veer Singh, a resident of Farsh Vihar in east Delhi, allegedly made the call Thursday to implicate a man who was harassing him to repay his dues. He had stolen a mobile phone from Narela in outer Delhi to make the call to the police control room and then called up the other man. Veer Singh thought the police would track down the other person and arrest him in connection with the death threat to the Delhi chief minister.
• Threatening SMS sent to Shashi Tharoor, Ex-Union Minister for State and other Parliamentarians: The accused person “A” was having animosity towards other person “B” in a love triangle, and the A in order to frame B, impersonated himself as B and send threatening SMSs to parliamentarians. The various FIRs were registered u/s 66A IT Act, r/w 506, 507, 509 IPC was registered in various police stations in Delhi, Haryana and Himanchal Pradesh.

The aforesaid incidents revealed that the offending SMS, emails were generally send by the accused persons via electronic medium be it mobile phone or computer network to implicate others. Thus, the alleged act of sending SMS via mobile phone or offending or threatening Email involving criminal intimidation including danger and obstruction are squarely covered under Section 66 A of Information Technology Act, 2000 and there is no application of Section 506 IPC to the alleged act. It would be pertinent to mention here that the bail of the accused person who sent threatening email to CM Naveen Patnaik was denied because of the applicability of Section 506 IPC which in State of Orissa is non bailable. However, the invoking of Section 506/507 IPC to the alleged act is not correct by virtue of Section 81 of the Information Technology Act, 2000 which gives an overriding effect to the provisions of the IT Act over the other Acts including the Indian Penal Code. It clearly states that, “the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force.” Thus, this section of the Information Technology Act 2000 if read with Section 66A makes the legislative mandate very clear & loud that in matters pertaining to threat or criminal intimidation via a computer resource or communication device, the IT Act 2000 would have an overriding effect over other law including the Indian Penal Code in view of the clear mandate of Section 81 IT Act. The Section 81 IT Act, is reproduced below:-
“81. Act to have overriding effect.
The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force.
Provided that nothing contained in this Act shall restrict any person from exercising any right conferred under the Copyright Act, 1957 or the Patents Act, 1970.”

Even otherwise, Hon’ble Apex Court in case titled as Suresh Nanda Vs. C.B.I. in Criminal Appeal No. 179 of 2008 in SLP (Crl.) No. 3408 of 2007 held that the Special Act prevails over General Acts. The author has successfully represented the accused persons in the Shashi Tharoor SMS case and secured their bail by successfully arguing that in view of the specific provisions in the I.T. Acts, 2000, which are bailable in nature, the same would have the overriding effect by virtue of non obstante clause in Section 81 IT Act and the other offences of the IPC have been added by the prosecution merely for the purpose of making the offence non bailable in nature and they are not applicable. The author argued in length and stated vehemently before the Session Court that as the result of the investigation done by the Delhi Police which clearly reveals that the alleged act of threatening, criminal intimidation and endanger was with the sole intention to harass the other person involved in love triangle and clearly, there was no intention to execute the threat or commit extortion which is one of the essential ingredients to bring home the offences mentioned under Section 506 IPC. Even otherwise the offence u/s 506 IPC in Delhi is bailable. Further, no overt act has been alleged to be done by the accused persons which show any intention to execute the threat or extortion.

Neeraj Aarora
(Advocate)

Prying eyes on privacy through peeping toms

2010-04-28T02:20:00.000-07:00

In an age of modern & revolutionized communication electronic equipments, the privacy of an individual is under siege. The video surveillance equipment has become smaller, more portable, more easily concealed and more accessible to the general public; its clandestine application has contributed to today’s cultural fascination with voyeurism. This advance video surveillance equipment has had a profound adverse impact upon our concept of privacy as we know it. The India is not untouched by the adverse impact of these peeping toms and the newspapers were flooded with various unsavory stories (even from small towns) of surreptitiously concealed video cameras prying into bedrooms, bathrooms, malls, changing rooms, washroom, swimming pool in prurient attempt to film unsuspecting victims while in various states of undress. There has been an unprecedented increase in incidents involving the surreptitious video tapping of the private parts of unwilling females even in public places like Lady’s washroom in Call Centre’s or BPOs where one can reasonable expect his or her privacy. The BPOs are prone to these voyeuristic acts as females constitute the major work force in this sector and most of them work in night shifts.

A male employee of a call center at Pitampura, Rohini, Delhi was detained by the police, on the suspicion that he placed a spy camera pen in the female washroom of the call centre with the intent to click the female workers in various states of undress. Although the offending act of this male employee may appear as ridiculous or laughable at the first instance, it is in fact a very invasive and intimidating crime particularly in our society where the females or ladies are respected or worshipped. Many of innocent victims mostly women, ladies or even minor girls have unwittingly become the object of video voyeurism websites whose privacy have been surreptitiously invaded using the high gadget peeping toms installed in the washrooms. It is the general human tendency particularly females who take great precautions that to ensure that either certain bodily actions or specific body parts remain guarded from public view whether they are situated at public place or private place.

The Law to deal with Voyeuristic Conduct:

While in many other countries, there are now a variety of statutes to deal with voyeuristic conduct in place that seeks to protect these inviolable rights, India is not legging behind to check this new form of felony due to the advancement in the technology, the legislature introduced Section 66E vide the Information Technology Amendment Act, 2008 which came into force on 27 October, 2009. The Section recognizes the right of privacy as inviolable and makes the felony punishable with imprisonment which may extend to three years or with fine not exceeding two lakh rupees, or with both. The section recognizes the natural human desire of privacy. It deserves respect and particularly in our society and cultural ethos & values as we know, it deserves legal protection too.

With flagrant disregard, the video voyeur blatantly defies this legitimate desire for privacy by utilizing technology to observe, record, and often to disseminate images of the very acts and body parts that were never intended or reasonably assumed to be open to public inspection. In effect, the video voyeur disrobes the victim without knowledge or consent and in so doing, strips the victim of both privacy and dignity. The Section 66E IT Act, 2000 recognizes the right to protect the human body from unreasonable and obscene intrusion by surreptitious video technology and adequately protects the individual privacy from the crime of video voyeurism which destroys personal privacy and dignity by secretly videotaping or photographing unsuspecting individuals.

Section 66E Information Technology Act, 2000:

“Punishment for violation of privacy- Whoever, intentionally or knowingly captures, publishes or transmits the image of a private area of any person without his or her consent, under circumstances violating the privacy of that person, shall be punished with imprisonment which may extend to three years or with fine not exceeding two lakh rupees, or with both.

Explanation.— For the purposes of this section—

(a) “transmit” means to electronically send a visual image with the intent that it be viewed by a person or persons;
(b) “capture”, with respect to an image, means to videotape, photograph, film or record by any means;
(c) “private area” means the naked or undergarment clad genitals, public area, buttocks or female breast:
(d) “publishes” means reproduction in the printed or electronic form and making it available for public;
(e) “under circumstances violating privacy” means circumstances in which a person can have a reasonable expectation that—
(i) he or she could disrobe in privacy, without being concerned that an image of his private area was being captured; or
(ii) any part of his or her private area would not be visible to the public regardless of whether that person is in a public or private place.”

Transmit, capture or publish the image: The section says that whoever with willful intention (read mens-rea) captures, publishes or transmits the image of private area of any person without his/her consent under circumstances violating the privacy of that person, shall be punished with imprisonment or fine as prescribed. The wordings of the section suggests that even the act of capturing by a digital or non digital camera of images of private parts of an individual without his or her consent would be covered under this section. It is not necessary that publication of the images should take place only through an electronic medium as is the case in Section 67 IT Act, 2000. The publication covers electronic & print medium both. However, the electronic transmission of objectionable images is also covered under this section.

Meaning of “under circumstances violating privacy”: The most significant expression used in the section is “under circumstances violating privacy” which means that circumstances under which a person can have reasonable expectation that he can change in privacy without being concerned that his or her private images may be surreptitiously clicked or any part of his or her private area would be visible whether he or she is in a public place or private place. Thus, the section rejects formalistic distinctions regarding space and prohibits patently unreasonable invasions of privacy wherever they occur. The clause (e) of Section 66E explaining the expression “under circumstances violating privacy” recognizes that even a person can have reasonable expectation of privacy in public places say office. Though a person has more privacy in the cool comfort of his home but it does not mean that anyone can disrobe of her privacy in the public place, say by hiding camera in office and surreptitiously clicking her objectionable photo without her consent.

Invasion of privacy may be in Public or Private space: The wordings recognizes that criminal law must break free from fallacious distinctions between public and private space and must specifically recognize an individual’s legitimate expectation of privacy even in the public space. After all Video Voyeurism is not limited to window peeping. Modern electronics have transformed the deviant, usually solitary, act of peeping into a booming and perverse online-industry, built specifically upon the exploitation of non-consensual pornography.

The blatant invasion of privacy is not limited to private place alone; it can be anywhere even in public places like lady washroom in the BPO, thanks to the advance technology. The legislature was well aware of the fact that the failure on their part to include public place where one can have legitimate expectation of privacy would tacitly grant the video voyeur a license to act with impunity, and leaves victims with little or no recourse.

Thus, the wording clearly suggests that the surface of the body is itself, a private space. The ability to determine when, to what degree, to whom, and under what circumstances the body is exposed, is among the most fundamental aspects of the right to privacy and deeply tied to the concept of human dignity. Therefore, in response to the crime of video voyeurism, the legislature rejected the fallacious notions of any difference between private place where persons can have reasonable expectation of privacy and public place where he cannot. Instead, the legislature recognized a limited, but fundamentally reasonable, expectation of privacy that is sensitive to an individual’s desire to control exposure to both intimate acts and intimate body parts regardless of setting.

In other words, the Section 66E protects individual privacy in both enclosed and public settings. It does not rely on the vague test of the reasonable expectations of the victim, and instead focuses directly on the unreasonable and offensive nature of the conduct committed by the video voyeur. “Private area” means the naked or undergarment clad genitals, pubic area, buttocks or female breast.

Section of IT Act dealing with Video Voyeurism based on US Federal Law: The section is deeply influenced and based on Section 1801 of ‘‘Video Voyeurism Prevention Act of 2004’’ a Federal Law of USA dealing with the felonious act of video voyeurism. The section has been introduced in the Information Technology Act, 2000 by IT Amendment Act, 2008 in view of the dramatic advances in the field of video technology aiding covert clicking of photos without the subject even have a hint about it. The insertion of the said section is a specific attempt to prohibit voyeuristic conduct and by corollary, to protect individual privacy.

Legal Provisions do not have deterrent effect:

The police have arrested the culprit under Section 509 Indian Penal Code and not invoked the provisions of the Information Technology Act, 2000, may be they may not be aware of the applicability of the provisions of the IT Act to the offending act. Nevertheless, the very offending act attracts the provisions of the Section 509 IPC as the intention of the accused was to cause insult to the modesty of a woman which has been done by intruding upon the privacy of such woman. As stated above, even the capturing of image of private area is sufficient to constitute an offence under Section 66E, and it is not necessary that the transmission or publication is necessary to complete the offence. Further, the pen drive has been seized by the police and if the images stored in the pen drive has been further transmitted by the accused, then it would also attract the offence under Section 67 IT Act which makes punishment for publishing or transmitting of material containing sexually explicit act in electronic form.

However, the offences under both Section 509 IPC, Section 66E & 67 IT Act though cognizable is bailable and in view of the increased incidents of gross intrusion of privacy of woman at work place by use of peeping cameras, it is imperative on the legislature to make the offence non-bailable and also enhance the punishment. The offence is not simple as it seems to be. It is a very serious offence having deep adverse ramifications. Let’s take the example of this case, what if, accused person transmits or post the obscene images on internet. It would definitely cause irreparable damage to the reputation of the victim girl or her family and would spoil her life. So, the legislature, categorize the offence as non-bailable offence in view of the seriousness of the offence.

Neeraj Aarora
(Advocate)

Ex- Director held liable for misappropriation of the source code of the software by hacking

2010-02-02T00:49:00.000-08:00

A company was incorporated by some technocrats of the prestigious Indian Institute of Technology and other reputed technological institutions of India. The company dealt in all kind of software and program for use or applicable in telecommunication equipment and services etc. The Indian company soon bagged a very valuable contract floated by the Telecom Authority in a South East Asian Country along with a local company based in that South East Asia Country (local representative of Indian Company) for design, manufacture, supply, installation etc. of Caller Ring Back Tone (CRBT) for installation at that country with system HW capacity of 500,000 with the right-to-use (software license) for 1,00,000 subscribers.

The Indian company and the local company at the South East Asian country entered into MOU along with an Equipment supply Agreement for supply of Caller Ring Back Tone, according to which the Indian Company shall sell and local company shall purchase the Caller Ring Back Tone System (CRBT); Management System for Monitoring, Managing and provisioning of services for installation and commissioning of the system at the South East Asian country. Incidentally, the agreements etc. were signed by the Ex-Director on behalf of the Indian Company.

The software development team of the Indian company and other software engineers under the employment of the Indian Company designed and developed the software solution, called “Caller Ring Back Tone System” (CRBT) to be deployed in the South East Asian Country via the local company as per the tender requirement. The CRBT which is commonly known as personalize ring back tone is a service by which a subscriber (mobile user) can choose a ring tone (the tone heard by the caller when making a call indicating that other person’s phone is now ringing) of his choice. This ring tone can be in a form of a song, musical tune, devotional songs, dialogues or any other recording and the said technology is very common and is a popular value added service provided by most of the leading mobile operators under various brands for instance; AIRTEL, a major telecom operator provides CRBT service in the name of Hello Tunes.

The aforesaid software CRBT was designed and developed to support 5,00,000 subscriber base and software license was issued to local company at South East Asian Country for 1,00,000 subscribers initially extendable to support 5,00,000 subscriber base. To control the subscription base of licensed capacity of 1,00,000 subscriber, the software team of the Indian company also designed and developed the license key generator software and also implemented this key in the core CRBT software to check the licensed capacity of the system, so that the system cannot be operated beyond licensed capacity. The Indian Company stored the source codes of the aforesaid software including the license key generator software in the CVS installed on two machines in the software development lab situated at its one of office based at Delhi. The limited access was granted to the technical team (including Ex-director) to the software and software license control mechanism comprising of software control key for the purpose authorized by the Indian company only. This key was not part of deliverable to client as purpose of this software is meaningful to control the license. Only the license key was implemented in database servers installed at client sites.

It would be meaningful to mention here that the software solution christened “Caller Ring Back Tone System” (CRBT) along with the license key generator software is a “computer programme” within the meaning of Section 2 (ffc) of the Copyright Act, 1957 and thus a “literary work” as defined u/s 2 (o) of the Copyright Act, 1957 and therefore, is a copyrightable subject matter u/s 13 of the Copyright Act, 1957. It is an established law all over the world now that source code or object code of computer program constitute an original literary work and therefore copyrightable. Further, the copyright of the aforesaid software vests with the Indian Company as the same has been developed by its in-house software development team in the course of employment for remuneration paid, under contract of service, thus Indian company is the copyright owner within the meaning of Section 17 (c) of the Copyright Act, 1957.

Soon the development team comprising of Ex-director & other members went to the South East Asian Country for deployment of CRBT project where the software key for equivalent to 100,000 subscribers was implemented. This key was stored in database and whenever any subscriber wishes to subscribe to this CRBT service, a license check mechanism is implemented in software modules to check if licensed capacity is not exhausted.

Thereafter, a very important development took place, the said ex-director resigned from the company citing personal reasons and formed a partnership firm by the name very similar to the name of the Indian company and at the very first appearance, and one would confuse the same with that of the Indian company and think that both are related or same entity. Some other employees/officers left the Indian company and joined the Ex-director in his partnership firm. The partnership firm owned by the ex-director and his associates represented/disguised themselves to Telecom authority of the South East Country as the Indian Company and not only that they also misused the email and website of the Indian company to disguise themselves as so to the concerned authorities in that South East Asian Country.

Soon the Telecom Authority in the South East Asian Country placed an additional order for additional 4,00,000 subscribers for right-to-use license under existing contract. The partnership firm floated by the ex-director and his associates grabbed the same in connivance with the local company who were local representatives of Indian Company at such South East Asian Country.
The management of the Indian Company was surprised to learn that the firm with a very similar name is supporting the CRBT system at South East Country along with its ex-director and other ex-officials who were once part of software development team. The management of the company when contacted the Telecom authorities at the South East Asian Country, the concerned authority sent an email to the management and the content of the email revealed that software have been upgraded by the accused persons from existing installed capacity of 1,00,000 subscribers to 5,00,000 subscribers by hacking/ cracking the software code of the software belonging to the Indian company through their partnership name having deceptively similar name as that of Indian company and thus posing itself as the constituent of Indian company. The management of the Indian Company was surprised in the backdrop of the fact that they have implemented a very robust license control software mechanism so that system cannot be operated beyond licensed capacity. The management of the Indian Company contacted its local representative and the concerned Telecom Authority at the South East Asian Country which confirmed the fact that they have upgraded the license capacity with the technical support of the partnership firm run by the ex-director and his associates, once part of software development team of the Indian Company. This technical support was not possible without having source code of the software. Also, providing the license key to support 500,000 subscribers, cannot be possible without License key generation Software, which was the proprietary software of the Indian company and was a closely guarded secret maintained at its server based at Delhi. It can be only generated by someone having the key generator software and knowhow of how to use the key generator software and complete know how of the system that where this key has to be updated in servers running at Telecom Authority at South East Asian Country.

The accused persons have opened bank accounts with different banks, where they transferred the funds they received from the illegal up gradation of the licensed capacity by hacking the software of the Indian Company. The bank account statement reveals the transfer of funds from the South East Asian Country to the concern of the accused persons. Further, there are Emails between the accused persons and the concerned authorities at the South East Asian countries which reveal the offence committed by the accused persons.

The aforesaid sequence of events revealed that the ex-director and other ex-employees illegally accessed the computer system situated at one of the office of the Indian Company at New Delhi and illegally copied the source code of the software and license key generation software, its source code and misused the same in upgrading the licensed capacity of the subscriber base from existing installed capacity of 1,00,000 subscribers to 5,00,000 subscribers at the South East Asian Country causing huge revenue loss to the Indian Company. The illegal activity which can be aptly described as misappropriation, also infringes the copyright which the Indian Company has over its proprietary software which was developed by the software development team comprising of the ex-director and his other accomplices in the course of employment for remuneration paid, under contract of service. The accused persons by unauthorized accessing the computer system of the Indian company and hacking the computer system by way of unauthorized accessing and down loading and copying the software’s which is the property of the Indian company, the accused persons have also committed an contravention under Section 43 Information Technology Act, 2000 and also an offence u/s 66 under the said Act. Section 43 of the Information Technology Act, 2000 defines Hacking as an illegal act by any person who without permission of the owner or any other person who is incharge of a computer, computer system or computer network destroys, deletes or alters any information residing in a computer resource or diminishes its value or utility or affects it injuriously by any means. The said act makes liable the offender to pay compensation to the aggrieved party. Further, if the aforesaid illegal activity is committed dishonestly or fraudulently (the expression “dishonestly or fraudulently” is defined under the Indian Penal Code) by the accused persons, the same makes him liable for the criminal prosecution under Section 66 Information Technology Act, 2000.

The Economic Offences Wing of the Delhi Police has registered a case u/s 66 IT Act r/w Section 420/468/471 IPC and the accused persons were held to be liable. The case is under investigation.

Neeraj Aarora
(Advocate)

CERT-In to serve as national agency for incident response

2010-01-17T21:14:00.000-08:00

CERT-In is a functional organization of Department of Information Technology, Ministry of Communications and Information Technology, Government of India, operational since 2004, with the objective of securing Indian Cyber space. Now with Information Technology (Amendment) Act, 2008 coming into force w.e.f. 27th October, 2008, the CERT-In is a legal authority under newly inserted Section 70-B of Information Technology Act read with notification published in Part II, Section 3, Sub-section (ii) of the Gazette of India, Extraordinary, dated 27th October, 2009.

Under Section 70-B (4), as inserted by the recent Information Technology (Amendment) Act, 2008, CERT-In has been designated to serve as the national agency to perform the following functions in the area of cyber security:

• Collection, analysis and dissemination of information on cyber incidents;
• Forecast and alerts of cyber security incidents;
• Emergency measures for handling cyber security incidents;
• Coordination of cyber incidents response activities;
• Issue guidelines, advisories, vulnerability notes and whitepapers relating to information security practices, procedures, prevention, response and reporting of cyber incidents;
• Such other functions relating to cyber security as may be prescribed.

For carrying out the aforesaid activities, the CERT-in has been vested with the powers to call for information & give directions to the service provides, intermediaries, data centres, body corporate and any other person. Failure to provide the requisitioned information is a punishable offence with imprisonment for a term which may extend to one year or with fine which may extend to one lakh rupees or with both under Section 70B (7). However, it may be noted that the court can take cognizance of offence under this section only on a complaint made by an officer authorized in this behalf by the CERT-In.

Neeraj Aarora
(Advocate)

Government contemplating blocking of website depicting wrong Indian Map

2010-01-12T03:09:00.000-08:00

The government is contemplating ban on Google Maps and Bing Maps for questioning the territorial integrity of the country. It has been come to notice of the Government authorities that Global version (.com domain) & Chinese version (.cn domain) of Google is displaying the maps in distortive manner which is grossly misrepresentative of stated Indian official position with regard to its political maps in accordance with rules and guidelines laid down by the Survey of India, a Government arm which is responsible for topographical surveys and publishing authoritative topographical and geographical maps of India. The Government of India considers that maps published for use in the country should contain accurate and reliable information, particularly with regard to the external boundaries and coast-lines of India as wrong depiction of these amounts to questioning the territorial integrity. Accordingly, instructions have been issued from time to time by the Government of India (Ministry of Defence, External Affairs, Home and erstwhile Ministry of Scientific Research & Cultural Affairs) imposing restrictions on scale and contents of maps which are published. It would be pertinent to mention here that that publication of maps depicting inaccurate external boundaries and coast-lines of India tantamount to questioning the territorial integrity of India and is a cognizable offence under the Criminal Law Amendment Act, 1961. Section 2 of the Criminal Law Amendment Act, 1961 (Act No.23 of 1961) clearly states that whoever by words either spoken or written, or by signs, or visible representation or otherwise, questions the territorial integrity or frontiers of India in a manner which is, or is likely to be prejudicial to the interests of the safety or security of India, shall be punishable with imprisonment for a term which may extend to three years, or with fine, or with both. Further, the provision of Section 5 of the Official Secret Act, 1923 is also attracted to the offending act which interalia punishes a person with imprisonment of three years or/with fine if he has in possession any sketch, plan, model, article, note, document or information which is likely to assist, directly or indirectly, an enemy or which relates to a matter the disclosure of which is likely to affect the sovereignty and integrity of India, the security of the State or friendly relations with foreign States -------“.

The wrongly depicted map in the aforesaid websites are going to be blocked / banned in India by the Ministry of Communications and Information Technology, by invoking the Section 69A of the Information Technology (Amendment) Act, 2008 read with the Information Technology (Procedures and safeguards for Blocking of Access of Information by Public) Rules 2009. While the newly inserted Section 69A empowers the designated government authority to direct any Intermediary (read Internet Service Provider) any website or transmission of any information to be accessed by the general public. The blocking order can be issued by the designated government authority in the interest of sovereignty and integrity of India, defense of India, security of the State, friendly relations with foreign States or public order or for preventing incitement to the commission of any cognizable offence. It may be noted that grounds mentioned in Section 69A to block the websites are similar to those mentioned under Article 19 (2) of the Constitution of India which restricts the fundamental rights including right to freedom of speech & expression. The Information Technology (Procedures and safeguards for Blocking of Access of Information by Public) Rules 2009 as the name suggests lays down the procedures, guidelines for blocking of the website or information generated, transmitted via internet for the general public. The rule makes provision for designated officer not below the rank of Joint Secretary who shall be designated by the central government for the purpose of issuing direction for blocking for access by the public any objectionable website. As per the said rules the general public cannot make complaint directly to the designated officer who shall act only on the complaint received by either the Nodal officer to be nominated by each government organization or the competent court. As in the present case, a person may complaint to the nodal officer of the survey of India who in turn would bring it to the notice of the designated officer as mentioned in the aforesaid rules. The rule makes provision for the establishment of the committee comprising of the designated officer as its chairman, and representatives (not below the rank of Joint Secretary) from the Ministry of Law & Justice, Ministry of Home Affairs, Ministry of Information & Broadcasting and Indian Computer Emergency Response Team. The committee shall examine the complaint along with the contents of the objectionable website, information etc. The committee would also send notice to the intermediary or person in possession of the computer resource hosting the objectionable content and give them an opportunity of making a representation and finally would make its recommendation to the to the Secretary, Department of Information Technology, Ministry of Communications & Information Technology, Government of India. If the recommendation of the committee is approved by the Secretary DIT, the designated officer shall direct any agency of the Government or the intermediary to block the offending information generated, transmitted, hosted etc. in their computer resource for public access with the stipulated time as mentioned in the said direction. The provision also provides for the blocking of information in case of emergency in which delay cannot be tolerated and in such a situation the right of the intermediary to make a representation before the committee is done away with, which means that in such an emergency situation the designated officer can block the offending content. However, in this case also the committee after blocking the website has to make recommendation (for blocking) to the Secretary DIT which can accept the recommendation or reject it in which case the intermediary can unblock the information which was temporarily blocked by the order of the designating officer.

The Google authorities are justifying their global policy to depict disputed regions as per the claims made by the disputing / claiming nations on its global properties which does not in any way endorse or affirm the position taken by any side but merely provides complete information on the prevailing geo-political situation to our users of global properties in a dispassionate and accurate manner. Moreover, the Google authorities are claiming that in a particular country, they have to comply with the local laws, which means that when operating in Chinese Cyberspace, they have to depict Indian map as per the official Chinese position. Despite the legal compulsion, claimed by the Google authorities, the fact is that the maps depicted by them amounts to questioning the territorial integrity of India which is punishable under Section 2 of the Criminal Law Amendment Act, 1961 read with Section 5 of the Official Secret Act, 1923. The Indian authorities have every right under Section 69A IT Act, 2000 to block the access of such websites depicting such wrongful maps for access to the general public.

Neeraj Aarora
(Advocate)

Fake Social Networking Profiles Still Big Problem- What To Do

2009-12-30T03:32:00.000-08:00

Online social networks have rapidly increased in popularity, especially over the past couple of years. Social networking sites are popular because they easily allow you to find, connect with, and develop friendships with other internet users, often ones that share the same interests as you. There are various SNSs available which is very popular among net savvy younger generation such as Facebook , MySpace, Friendster, Orkut and Xuqa which allows users to post personal profiles, photographs, and random musings; to link to the profiles of "friends", thereby creating "networks" of people with supposedly common interests; and to establish and join groups on any and every topic visible in their mind like topics of personal interest for ex; Their Girl Friends, Their first date, Experiences of their first date and topics of political interest like Free Tibet etc. For obvious reasons these services are extremely popular for it gives the public particularly the younger generation a platform to share their view, ideas, stories, photographs etc. Among the most popular SNS in India is Orkut (belongs to Google) which operates in a similar way to other big sites such as Myspace, Friendster and Facebook. Registered users can create profiles, upload photographs, communicate with other members and join groups. Like most social networking sites, Orkut is largely self-policing and relies heavily on its users to report illegal and immoral activity.

However, despite the advantages, the SNS brings in; there is a dark side of it too. There has been a spurt in Orkut-related obscenity cases in various parts of India. Cases of misuse on Orkut have been reported widely. Most common among them are Orkut-related complaints concerning pictures of young girls that have been posted on communities with lewd allusions and a listing of the victims’ mobile numbers. Let’s have a look on some of these recent incidents:-

• An air-hostess residing in Delhi and working for Kingfisher Airlines filed an application in a city court to order the Delhi Police for registering a case against Orkut after a vulgar profile was posted by someone. The fake profile had a pic of her in her work uniform and her neighbors’ (an official at the Lok Sabha Secretariat) telephone number listed for ‘friendship’. Her neighbors were flooded with vulgar calls leading to a lot of harassment.

• The father of a South Delhi schoolgirl suffered from the fake profile of his daughter posted on Orkut that not only described the teenager as a ’sex teacher’, but also contained obscene photographs and her contact details. He lodged a complaint with the Cyber Cell of the Delhi Police’s Economic Offences after his family started receiving calls following the appearance of the fake profile.

• A student of Bachelor of Management Studies was arrested some months ago for creating a classmates profile and uploading her picture with offensive messages on an online community site without her permission. The Cyber Cell of Thane Police swing into action as soon as they got complaint from the victim girl about being abused Orkut.com they contacted all the way to Sweden (Orkut servers are located at Sweden) and got the IP of the Profile creator and tracked him down to his house.

• A 20 year old economics student at Mumbai University received hundreds of vulgar phone calls after someone posted a fake profile of hers on Orkut. She later complained to Cyber Crime Cell in Mumbai.

The investigation of cases of posting of fake obscene profiles in another names particularly innocent girls/ladies have revealed that they are usually created by the people who know the personal details of a user and create a profile to impersonate him or her and there by causing all sorts of problems for the victim. These so called ‘pranksters’ are not unknown strangers living in a far off country but some of the people most closest to the victim or their families. They usually include classmates, college friends, ex boyfriends, neighbors, colleagues, relatives, family or business rivals who are jealous to victim due to variety of reasons. Like a frustrated lover who has been turned down by a girl who is her classmate, an employee who has been yelled at by her female boss, a student who has been punished by her female teacher etc. However, there are some psychos do it simply as a ‘prank’ or joke as they seek kind of pleasure and adventurism in it.

If suppose you or any of your relative/friend is a victim of such obscene profile on Orkut or other SNS, the question, then, is what – if anything – to do about it. You must always remember that Cyberspace is not a separate, law-free jurisdiction. There are few steps you can take:-

Guess who the ‘prankster’ is. It will usually be someone you know like your classmate or your colleague or your old boyfriend or your immediate neighbor. Watch their reactions and the language used to describe you in the site and you may be able to guess who the prankster is. Tell that person to stop and threaten him/her with legal action/media publicity. However, if that person seems like a psycho then don’t contact them.

Report to SNS or Orkut:- You may make a formal complaint giving the detail of the url of your profile and the bogus profile, then report them as bogus to the administrator of social networking website like Orkut with a request to remove the objectionable content.

Legal Action under the Information Technology Act, 2000:- If the fake profile is not withdrawn and the obscene phone calls continue, don’t panic because there is a legal recourse available to you. Section 67 of the Information Technology Act of 2000 provides that publishing of information that is obscene in the electronic media is amenable for imprisonment for a term or extended to five years and with fine which may extend to Rs 1 lakh. The offence is cognizable and non-bailable. Thus, it is considered a very serious offence. So serious is the offence, that as per the provision of IT Act, every offence under the IT Act is to be investigated by an officer not below the rank of Deputy Superintendent of Police. It is advisable that you make a written complaint clearly disclosing the commission of cognizable offence (i.e. fact of posting of fake obscene profile in your name) to the dedicated Cyber Cell of the State Police which is well equipped and specially created to handle this type of complaints. Before making complaint ensure that the copy of the objectionable content & concerned URL Link is saved by you as the same would be required for the investigation, more so it is also necessary due to the fact that the prankster may remove the objectionable content to escape the criminal liability. Insist on the registration of the FIR as the Criminal Procedure Code clearly mandates that the FIR has to be registered on the complaint if it discloses the commission of cognizable offence (a cognizable offence is one where a police officer may arrest a person without a warrant). If the cyber cops refuse for some reason to register your FIR, then it is open to you to send the complaint in writing and by post to the concerned Superintendent of Police under Section 154 (3) of Cr.P.C. It is also open to the informant to directly approach the Court of Magistrate of the concerned Police Station with the information under Section 200 of Cr.P.C. with a prayer to direct the police to investigate the offence.

There is a need to sensitize the public particularly the younger generation to sensibly use the cyberspace. Awareness must be created that they are not anonymous on the cyberspace and there is always a trail of their misdeeds on the cyber space.

Neeraj Aarora
(Advocate)

Engineer held for creating fake obscene orkut profile

2009-12-30T03:29:00.000-08:00

Recently an engineer has been held on 23/12/2009 by the Bangalore police for a cyber crime committed by him punishable under Section 67 Information Technology Act, 2000. The engineer was in domestic feud with his wife and a dowry harassment case was registered against him. The accused Prakash Rao an engineer by profession wanted to settle scores with his wife and in laws. He created a fake obscene profile on orkut in the name of his wife’s relative containing the phone number of that relative and inviting people to call for sexual favors. The victim started receiving obscene calls from unknown persons asking her for sexual favors. She filed a police complaint with the Cyber Crime Police Station, Bangalore. The cyber crime cell started investigation and the digital footprints of the crime led the police to Rao, an engineer with a private firm Chennai.

Neeraj Aarora
(Advocate)

Hi-Tech Peeping Toms- A Man with Tiny Digicam had wrong click

2009-12-30T03:10:00.000-08:00

A new phenomenon of video voyeurism also known as cyber peeping has emerged in recent times where images of private area of an individual are captured without his knowledge and then transmitted widely without his consent thus violating privacy rights. Video Voyeurism is the act of secretly or discreetly photographing certain parts of the body mostly unclothed without the person’s consent. Video voyeurism typically refers to up-skirt or down-blouse images taken of women without their consent. We have seen the rise in the cases of video voyeurism, where the victims have been clicked without ever knowing that they have been clicked revealing their private parts. The phenomenal growth of the internet and its user, mostly of the younger age has given rise to this up-skirt and down-blouse photography which one can view easily at host of video voyeurism websites. The voyeurs who are psychopath to satisfy their lust see surreptitious video surveillance as a form of high-tech hunting and take pride in showcasing their talent in various video voyeurism Web sites which has mushroomed at the World Wide Web and mostly go free taking shelter under the current gap in the law. The Acts of video voyeurism are not only an invasion of a person’s privacy, but are also a serious threat to the liberties of a free society as we know and also against our high moral & cultural values or ethos. These criminal activities undermine the most basic levels of privacy to which every citizen is entitled.

Realizing the ever growing menace of the Video Voyeurism, the USA, passed federal legislation known as the Video Voyeurism Prevention Act of 2004, which prohibits knowingly capturing an image of private area of an individual by video tape, photograph, film, or any means or broadcast without that individual consent and under circumstances in which the individual has a reasonable expectation of privacy. Thus the said law, make it a crime to secretly record or distribute images of people in places where they have a reasonable expectation of privacy, such as bathrooms, dressing rooms, locker rooms, hotel rooms and mall etc. The law defines a "private area" as the naked or undergarment clad genitals, pubic area, buttocks, or female breast of an individual. The law however makes an exception and does not apply to people engaged in lawful law enforcement or intelligence activities. The relevant section 1801 of ˜Video Voyeurism Prevention Act of 2004 states:

1801. Video voyeurism

(a) Whoever, in the special maritime and territorial jurisdiction of the United States, has the intent to capture an image of a private area of an individual without their consent, and knowingly does so under circumstances in which the individual has a reasonable expectation of privacy, shall be fined under this title or imprisoned not more than one year, or both.

(b) In this section

(1) the term capture, with respect to an image, means to videotape, photograph, film, record by any means, or broadcast;

(2) the term broadcast means to electronically transmit a visual image with the intent that it be viewed by a person or persons;

(3) the term a private area of the individual means the naked or undergarment clad genitals, pubic area, buttocks, or female breast of that individual;

(4) the term female breast means any portion of the female breast below the top of the areola; and

(5) the term under circumstances in which that individual has a reasonable expectation of privacy means

(A) circumstances in which a reasonable person would believe that he or she could disrobe in privacy, without being concerned that an image of a private area of the individual was being captured; or

(B) circumstances in which a reasonable person would believe that a private area of the individual would not be visible to the public, regardless of whether that person is in a public or private place.

(c) This section does not prohibit any lawful law enforcement, correctional, or intelligence activity.

India followed the US Legislation in proposed amendment to IT Act, 2000
In India also, we have seen increasing incidents of video voyeurism due to advance technology that has made today’s hidden cameras tiny, sleek and adapted for WiFi connections to make transfer of the captured film or movie clip to the web easier and faster. Internet is a product of US Technology, so issues relating to Internet are heavily flavored by US Constitutional and Legal doctrines. The legislature was aware of this problem and there was no stringent law to specifically deal with the menace of video voyeurism which was rampant due to modern technology. The amendment proposed to the IT Act, inserted a new Section 66E which specifically addresses video voyeurism which is inspired by the Video Voyeurism Prevention Act of 2004 of US. The wordings of proposed Section 66E which makes this sort of cyber peeping a felony is as under:

66E Punishment for violation of privacy.

Whoever, intentionally or knowingly captures, publishes or transmits the image of a private area of any person without his or her consent, under circumstances violating the privacy of that person, shall be punished with imprisonment which may extend to three years or with fine not exceeding two lakh rupees, or with both
Explanation. - For the purposes of this section–

(a) means to electronically send a visual image with the intent that it be viewed by a person or persons;

(b) with respect to an image, means to videotape, photograph, film or record by any means;

(c) private area means the naked or undergarment clad genitals, pubic area, buttocks or female breast;

(d) publishes means reproduction in the printed or electronic form and making it available for public;

(e) under circumstances violating privacy means circumstances in which a person can have a reasonable expectation that–

(i) he or she could disrobe in privacy, without being concerned that an image of his private area was being captured; or

(ii) any part of his or her private area would not be visible to the public, regardless of whether that person is in a public or private place.

This provision will protect against voyeurs who destroy personal privacy and dignity by secretly videotaping or photographing unsuspecting individuals. This new provision, with its stringent punishment, will no longer allow these crimes to fall through the cracks of our legal system. Law enforcement will now have the ability to swiftly provide justice to the victims of Video Voyeurism and book those found guilty of these heinous acts. This is crucial provision to protect individuals from violations of the privacy they have every right to expect. Hopefully, it will not only to punish offenders but also would deter anyone contemplating these crimes.

Neeraj Aarora
(Advocate)

UNIQUE CASE OF EXTORTION THROUGH INTERNET

2009-12-30T02:58:00.000-08:00

• ACCUSED EXTORTING MONEY THROUGH INTERNET ARRESTED !

• EXTORTIONIST CLAIMED TO BE AMEMBER OF SOME DUBAI BASED HALALA GROUP !

• DEMANDED RS. 2.2 CRORES AS PROTECTION MONEY THROUGH E-MAIL !

The Police in its effort to crackdown on ‘Crimes of Persuasion’, has arrested an accused Nasir a resident of U.P., involved in an elaborate extortion racket, run exclusively through Cyber Networks from Delhi, Noida, Dehradun, Moradabad and Agra.

A prominent exporter based in Delhi and Moradabad has made a complaint to Police wherein it was alleged that he and his son had received an email message on 20.12.05, from unknown persons claiming themselves to be a hit cum collection squad of some Dubai based ‘Halala Group’. The email claimed that the group was in the business of ‘protection’. The alleged sender of the email possessed detailed information about the complainant’s family. The sender of the email used the email ID xxxxxx@yahoo.com and signed as Chengez Babar.

The email claimed that the Group had now started operations in Delhi and the NCR Region and dealt solely with Protection Money. It was only after assessing the total ‘net worth’, the liquidity of the complainant, that a ‘figure’ was put on him. The total net worth of the complainant was claimed to be anywhere between 20 crores to 35 crores. The protection money initially demanded was Rs 1.1 crores payable in two to three installments. The email assured that this payment would ensure complete protection from all smaller gangs operating in the region for the next 10 years. The sender of the email claimed that the complainant would be given a ‘Customer Number’, and a Dubai based phone number, which would be accessible round the clock, as an online service. However after the end of the first 10 year period, the net worth of the complainant would be assessed again, and he would be liable to pay up a certain amount!

The email claimed that the ‘Group’ was a very professional organization and once a person had been targeted to make a payment, they never left him. He either paid, or ceased to live. The Group’s success rate was more than 98 %, where the target had paid up without resistance. The email claimed that several local teams operated in the area, who had gathered intelligence on the complainant and his family members, his business, movements, and above all their weaknesses. The email categorically claimed that whenever they encountered resistance from a target, the local teams, cause harm, through various means and keep on doing it, till the moment the target paid up.

The email was sent from a Cyber Cafe in Lajpat Nagar. Within two days another email was sent to the official email ID of the complainant. This time however the email was sent from a different Cyber Cafe in East of Kailash. At exactly the same time similar emails were sent to another prominent exporter of Delhi with business contacts in Moradabad. The emails appeared to have been written in perfect grammatical English was evidently the handiwork of an educated person.

Neither of the intended targets responded to the emails. However, another threatening e-mail was received on the email ID of the complainants this time from a Cyber Cafe in Sector 26 Noida. The extortionist demaned Rs 2.2 crores and threatened that in case of delay in the payment of the protection money, the complainant’s wife, children or the complainant himself would be killed. As the extortionist was quite persistent in his demands and kept on sending emails a case FIR was registered and investigation was taken up by the Police. Another case was also registered on the basis of a different complaint and investigations were taken up separately by the local police.

However, the events took a turn for the worst when the next email received by the complainant, was found to have been sent from Dehradun, where the grandchildren of the complainant studied. A special team of police was formed to investigate the case and catch the culprits. Although the extortionist used the name i.e. Changez Babar, he used two different email IDs namely, yyyyy@yahoo.com and zzzzz@yahoo.com. In order to track the extortionist down a separate email id xxxxx@sify.com was created to communicate with the suspect. It was also decided that all communications would be carried out the by the police, to facilitate faster tracking.

It became a cat and mouse game between the police team and the extortionist. Between 1.2.09 and 20.2.09, a total of 10 emails were exchanged with the alleged accused. These e-mail correspondences were all tracked and it was found that they had originated from various Cyber Cafes in Noida, Dehradoon, Agra & Moradabad. With police teams deployed at all these places a profile of the suspect was built up. From descriptions obtained from the Cyber Cafes it became clear that, one person, speaking fluent English, age around 40 years, with dark completion, round face short hair and a moustache, was sending these emails. From the contents of the email it was evident that the alleged had intimate knowledge of the brass-handicraft- export business.

Through subtle hints that payments are being arranged the extortionist was slowly sucked into a trap to the point that he became careless in his approach. Being in the same business, and from an analysis of the contents of the email, it was evident that the suspect would also be participating in the same Expo. This guess proved correct as all the emails between, 13.2.09 to 22.2.09 all originated from different Cyber Cafes in Noida and Greater Noida and that too between 6 and 10 pm, after the Expo closed.

In order to keep the extortionist hooked, emails were sent carrying photographs of the money arranged in a bag as if the complainant was ready to pay up all the money. With the money in sight, the suspect became careless and impatient in his approach. The locations of all the Cyber Cafes used so far in Noida and Greater Noida were mapped and it was found that they fell in a straight road from Delhi to Greater Noida, through Sector 18, 26, 27, 53 and 61. The analysis revealed a clear cut pattern in the movements of the accused. A survey of all the Cyber Cafes in these sectors was carried out and it was deduced that that there were about seven cyber cafes in these sectors which had not been used. There was a strong possibility that the Cafe in Sector 18 would be used as those in Sector 26 and 53 had already been used. Based on this analysis and deduction, police teams were deployed in all the identified Cyber Cafes not used by the suspect till date.

On 22.02.06, the accused Nasir reached the Cyber Cafe at, Sector-18, Noida, UP at around 8 pm and access the Internet and opened the e-mail box of aaaaa@yahoo.com. The accused Nasir was caught red handed accessing the net and e-mail box of aaaaa@yahoo.com by the police team stationed there. He has signed on the register itself as Changez Babar and had also purchased a Sify card with a unique number to access the Internet. The print out of the inbox and sent item folder of e-mail box of aaaaa@yahoo.com was taken on the spot and the entire correspondence between the alleged person and the complainant was recovered from the e-mail box. Further, at the instance of the accused various raids were conducted at Moradabad, Agra and the computer as well as laptop containing incriminating material was recovered.

The interrogation of the accused reveals that he was also sending the extortion mails to one other exporter. The accused Nasir is a well educated person and based in U.P. Recently he had been slighted by one of the intended victims and started sending him these emails to trouble him. He also was quite jealous of the success and fame of the complainant and wanted to divert his attention so that his business suffered. Amazingly, he did succeed to a great extent.

Case is under trial in Delhi Court.

Neeraj Aarora
(Advocate)

CASE STUDY OF BPO DATA THEFT CASE

2009-12-29T01:32:00.000-08:00

• EX-EMPLOYEES INVOLVED IN DATA THEFT FROM CALL CENTRES ARRESTED!

• ROUTED PROPRIETARY COMPANY DATA THROUGH THEIR OWN PARALLEL COMPANY!

• CAUSED LOSSES TO COMPANY OF OVER Rs 3.3 CRORES!

The Police in its effort to crackdown on clandestine theft of data and other information from call centres has apprehended four ex-employees, involved in such activities.

The brief facts of the case are that a complaint was received from M/s Pintach Technologies Ltd. (PTL), i against Mr. Binoy, M/s Telequick and some other employees of their organization, for fraud & cheating, through theft and clandestine sale of their proprietary data. M/s PTL had a subsidiary company in United States of America under the name and style of M/s Pintach Technologies Inc. (PTI) which did business with Mortgage Originators in USA. Mortgage Originators provided loans to US residents for residential premises. The prospective loan seekers were called leads.

The business of Pintach involved providing leads to Mortgage Originators. The said company bought calling data related to leads from Data Vendors in USA. The data included the particulars of the loan seekers and their telephone numbers. M/s PTI generated leads through arrangements with Call Centres in India to call from the data and shortlist home owners who were interested in availing refinance facility on their existing mortgage loans (leads). M/s PTL coordinated between M/s PTI and the call centres to give effect to the above process through its program management services.

M/s PTI sent the data to M/s PTL in India who in turn provided this data to various call centres. In the year 2004, M/s PTI realized that there was a sudden drop in the productivity of the call centres and therefore the production of leads although the inputs at the end of the company meant to be given to various call centres by the employees of the company had remained same as before and increased as well to some call centres. The concerned officials of the company got alarmed and made an in house enquiry. On a careful and a meticulous scrutiny it was revealed that accused Binoy one of the employee of M/s PTL in connivance with some other officers of their organization, had been deceiving and causing wrongful loss to the company and wrongful gain for themselves, by selling the data purchased by M/s PTI in USA through a parallel company M/s Telequicks. On the said complaint a case FIR No.: XXX u/s 420/408 IPC r/w 66 IT Act, was registered and investigation taken up by the Police.

The process of data receipt and delivery, follows a complicated route before the leads are delivered to the prospective buyers. The data purchased in USA by M/s PTI is emailed to M/s PTL, India in batches called buckets, usually comprising of lacs of records. It is then scrubbed with ˜Do Not Call lists and sent to designated call centres for making telephone calls to various persons in USA. The willing clients called ˜hot leads are short-listed by the call centres and sent back to M/s PTL as prospective clients. The list of hot leads is then emailed to USA for selling to the end buyers who may be Banks, Insurance Companies etc.

Preliminary investigations revealed that Mr. Binoy was working with M/s PTL since November, 2001. He was holding the post of Senior Program Manager and was the team leader for data management. While still employed at M/s PTL, Binoy along with his father P.K. Saha in January 2004, opened a partnership firm in the name and style of M/s Telequick. Binoy thereafter, brought a rediff pro email id in the name of ˜tele quick. Come from Rediff.com. Using this id he started passing on the data bought by and belonging to M/s PTI to various call centres as if the same belonged to M/s Tele quick, to make the calls on their behalf for the generation of leads.

The accused, Binoy had roped in two of his colleagues namely Abdul and Sanjeev who actively assisted him in his clandestine activities. Abdul, while still an employee of the complainant company, co-ordinated with various calls centres on behalf of M/s Telequicks. Sanjeev on the other hand had facilitated the installation of proprietary sequencing software in the personal computer of Binoy. In order to have a clientele base in USA, Binoy had sought the assistance of one Rajesh Srivastava an employee of PTI, based in USA. The hot leads obtained from various call centres, by Telequicks, were sold in USA to clients introduce by Rajesh. Rajesh also followed up on the payments due to Telequicks in USA.

During investigations all the call centres who had been paid by Telequicks were contacted to obtain emails and the raw data sent to them as attachments. Such data was obtained from one of the call centre namely, M/s Savron, Gurgaon and compared with the data purchased by the complainant company during the period June-September 2004. As the data to be analysed was voluminous, SQL queries were formulated and the data was imported from worksheets to SQL tables. On running the queries it was revealed that some of the data buckets purchased by the complainant company matched completely with the data sent by M/s Telequick to M/s Savron. Further, a scrutiny of the emails indicated that the emails with data attachments sent by M/s Telequick had originated from the exclusive IP address allotted to M/s Pintach (PTL), the complainant company, by VSNL

Accused Binoy, Rajesh, Abdul and Sanjeev have been arrested by a team of Police from Gurgaon and Faridabad. Binoy is BTech (Textiles) and an MBA from IIT Delhi. Co-accused Rajesh Srivastava is a BE (Electronics) from Regional Engg. College, MP. Abdul is BSc (Hons) and an MBA Marketing from AMU, Aligarh. Sanjeev Sharma, is a post graduate in computer application from GNIIT and a B Com graduate. All the four accused persons were working together in M/s Pintach Technologies at one point of time were they hatched this idea to use the data of M/s Pintach for their own benefit.

Binoy and Rajesh had since left M/s PTL and are running a company by the name of M/s Protech from Gurgaon. Both the accused claim themselves to be representatives of M/s LeadPointer, USA, apparently a sister concern of M/s MortagagePointer, USA to whom the leads generated through the stolen data were originally sold.

The hot leads generated are highly priced. Due to diversion of the data the productivity (ratio of total working hours to total leads generated) of operations of the complainant company fell from 0.31 to 0.21 a fall of 33 % over a four month period. As a result the company faced a loss of about 14,000 odd leads. Priced at about Rs 2400, the parallel operations planned and run by the accused persons led to over Rs 3.3 crore loss to the complainant company.

Neeraj Aarora
(Advocate)

UNIQUE CASE OF EXTORTION THROUGH INTERNET

2009-12-29T01:03:00.000-08:00

• ACCUSED EXTORTING MONEY THROUGH INTERNET ARRESTED !

• EXTORTIONIST CLAIMED TO BE AMEMBER OF SOME DUBAI BASED HALALA GROUP !

• DEMANDED RS. 2.2 CRORES AS PROTECTION MONEY THROUGH E-MAIL !

The Police in its effort to crackdown on ‘Crimes of Persuasion’, has arrested an accused Nasir a resident of U.P., involved in an elaborate extortion racket, run exclusively through Cyber Networks from Delhi, Noida, Dehradun, Moradabad and Agra.

A prominent exporter based in Delhi and Moradabad has made a complaint to Police wherein it was alleged that he and his son had received an email message on 20.12.05, from unknown persons claiming themselves to be a hit cum collection squad of some Dubai based ‘Halala Group’. The email claimed that the group was in the business of ‘protection’. The alleged sender of the email possessed detailed information about the complainant’s family. The sender of the email used the email ID xxxxxx@yahoo.com and signed as Chengez Babar.

The email claimed that the Group had now started operations in Delhi and the NCR Region and dealt solely with Protection Money. It was only after assessing the total ‘net worth’, the liquidity of the complainant, that a ‘figure’ was put on him. The total net worth of the complainant was claimed to be anywhere between 20 crores to 35 crores. The protection money initially demanded was Rs 1.1 crores payable in two to three instalments. The email assured that this payment would ensure complete protection from all smaller gangs operating in the region for the next 10 years. The sender of the email claimed that the complainant would be given a ‘Customer Number’, and a Dubai based phone number, which would be accessible round the clock, as an online service. However after the end of the first 10 year period, the net worth of the complainant would be assessed again, and he would be liable to pay up a certain amount !

The email claimed that the ‘Group’ was a very professional organization and once a person had been targeted to make a payment, they never left him. He either paid, or ceased to live. The Group’s success rate was more than 98 %, where the target had paid up without resistance. The email claimed that several local teams operated in the area, who had gathered intelligence on the complainant and his family members, his business, movements, and above all their weaknesses. The email categorically claimed that whenever they encountered resistance from a target, the local teams, cause harm, through various means and keep on doing it, till the moment the target paid up.

The email was sent from a Cyber Cafe in Lajpat Nagar. Within two days another email was sent to the official email ID of the complainant. This time however the email was sent from a different Cyber Cafe in East of Kailash. At exactly the same time similar emails were sent to another prominent exporter of Delhi with business contacts in Moradabad. The emails appeared to have been written in perfect grammatical English was evidently the handiwork of an educated person.

Neither of the intended targets responded to the emails. However, another threatening e-mail was received on the email ID of the complainants this time from a Cyber Cafe in Sector 26 Noida. The extortionist demaned Rs 2.2 crores and threatened that in case of delay in the payment of the protection money, the complainant’s wife, children or the complainant himself would be killed. As the extortionist was quite persistent in his demands and kept on sending emails a case FIR was registered and investigation was taken up by the Police. Another case was also registered on the basis of a different complaint and investigations were taken up separately by the local police.

However, the events took a turn for the worst when the next email received by the complainant, was found to have been sent from Dehradun, where the grandchildren of the complainant studied. A special team of police was formed to investigate the case and catch the culprits. Although the extortionist used the name i.e. Changez Babar, he used two different email IDs namely, yyyyy@yahoo.com and zzzzz@yahoo.com. In order to track the extortionist down a separate email id xxxxx@sify.com was created to communicate with the suspect. It was also decided that all communications would be carried out the by the police, to facilitate faster tracking.

It became a cat and mouse game between the police team and the extortionist. Between 1.2.09 and 20.2.09, a total of 10 emails were exchanged with the alleged accused. These e-mail correspondences were all tracked and it was found that they had originated from various Cyber Cafes in Noida, Dehradoon, Agra & Moradabad. With police teams deployed at all these places a profile of the suspect was built up. From descriptions obtained from the Cybe Cafes it became clear that, one person, speaking fluent English, age around 40 years, with dark completion, round face short hair and a moustache, was sending these emails. From the contents of the email it was evident that the alleged had intimate knowledge of the brass-handicraft- export business.

Through subtle hints that payments are being arranged the extortionist was slowly sucked into a trap to the point that he became careless in his approach. Being in the same business, and from an analysis of the contents of the email, it was evident that the suspect would also be participating in the same Expo. This guess proved correct as all the emails between, 13.2.09 to 22.2.09 all originated from different Cyber Cafes in Noida and Greater Noida and that too between 6 and 10 pm, after the Expo closed.

In order to keep the extortionist hooked, emails were sent carrying photographs of the money arranged in a bag as if the complainant was ready to pay up all the money. With the money in sight, the suspect became careless and impatient in his approach. The locations of all the Cyber Cafes used so far in Noida and Greater Noida were mapped and it was found that they fell in a straight road from Delhi to Gretaer Noida, through Sector 18, 26, 27, 53 and 61. The analysis revealed a clear cut pattern in the movements of the accused. A survey of all the Cyber Cafes in these sectors was carried out and it was deduced that that there were about seven cyber cafes in these sectors which had not been used. There was a strong possibility that the Cafe in Sector 18 would be used as those in Sector 26 and 53 had already been used. Based on this analysis and deduction, police teams were deployed in all the identified Cyber Cafes not used by the suspect till date.

On 22.02.06, the accused Nasir reached the Cyber Cafe at, Sector-18, Noida, UP at around 8 pm and access the Internet and opened the e-mail box of aaaaa@yahoo.com. The accused Nasir was caught red handed accessing the net and e-mail box of aaaaa@yahoo.com by the police team stationed there. He has signed on the register itself as Changez Babar and had also purchased a Sify card with a unique number to access the Internet. The print out of the inbox and sent item folder of e-mail box of aaaaa@yahoo.com was taken on the spot and the entire correspondence between the alleged person and the complainant was recovered from the e-mail box. Further, at the instance of the accused various raids were conducted at Moradabad, Agra and the computer as well as laptop containing incriminating material was recovered.

The interrogation of the accused reveal that he was also sending the extortion mails to one other exporter. The accused Nasir is a well educated person and based in U.P. Recently he had been slighted by one of the intended victims and started sending him these emails to trouble him. He also was quite jealous of the success and fame of the complainant and wanted to divert his attention so that his business suffered. Amazingly, he did succeed to a great extent.

Case is under trial in Delhi Court.

Neeraj Aarora
(Advocate)

Acquisition Of Company: May Fell Into Thug Trap

2009-12-28T22:43:00.000-08:00

Non-compete clause as central theme and luring clause to cheat the buyer company

The Non-Compete clause in acquisition of high stake business forms a central and most important clause in which buyers insist that Sellers enter into an obligation not to compete with the Buyer, the acquired entity and its business for a given period. This type of a restrictive clause is termed “covenant not to compete”, “promise not to compete”, or “contract not to compete”.

A non-compete covenant may be aimed at preventing various events, which can occur after the entity is sold, e.g. a Seller may start operating a competing business or set up a new company that will compete with the acquired entity or any of its activities; solicit employees or contact former clients; take away the data base, confidential records, know-how, IPR’s or otherwise interfere with the business sold. All the above actions could impair the entity’s goodwill. A non-compete provision is often supplemented by a penalty clause. The aim of such a provision is to protect and preserve the value of the acquired entity and to obtain some sort of certainty that the Seller does not re-enter the market soon after the sale has been completed. Without the non-compete clause the sale of business agreements would be meaning less and the companies won’t spend billion of dollars for acquiring the entity for operational convenience, increased profitability, if they have to again face the stiff competition.

What if one lures a established business house to sell an entity with a covenant in the Purchase Agreement that bars the seller to take on competing business for a period of say 5 years and induces the established business house to enter into a contract and gets purchase consideration and later on through their proxies opens up a competing company with a similar line of business with the database, technical know-how, IPR they sold to the buyer along with the entity. Is it mere violation of the terms of contract when they from the very beginning at the time, when they induced the buyer to enter into contract, have malafide intention to set up a competing parallel business with poaching of key employees along with database, technical know how, trade secrets & IPR’s and the inclusion of non-compete clause was mere a farce to induce the buyer to cough up millions of dollars in acquiring the business set-up under the belief & false representation by the seller that he would not re-enter the market for a specified period of time after the sale has been completed. It is a well crafted design to cheat the innocent corporate house in the garb of commercial contract.

One such case of cheating came to notice recently where the directors of lesser known logistics company approached a renowned logistics company having its offices all over India to sell their entity. The management of renowned logistics company was led to believe that after the take over of the company, the promoters directors of the vendor company won’t re-enter the market scene & compete with the buyer company for a period of five years and the buyer company would have an competitive edge with the competitive state of art software developed by the vendor company through its IT department for inventory management solutions and databases comprising of business strategies, methodologies, client profile containing specific client profile, client inventory details, inventory cost data etc. The buyer logistics company with offices all over India induced by the vendor, seen it as a golden opportunity to acquire the company to get competitive edge in the market, expand its market share and attain near monopoly. The buyer company and the vendor company entered into a Share Purchase Agreement (SPA) for the purchase of 100 % shareholding from the existing shareholders/directors of the vendor company. There was one Non-Compete Clause of the SPA which barred the erstwhile directors (sellers) to take on competing business involving providing logistic services in relation to warehousing and transportation to third parties for a period of 5 years from the execution of the agreement. It seemed to be a smooth business takeover where the buyers spend around Rs. 60 Crores to take over the entity from the vendor. However, it was not the case; the crooked vendor directors have something else in mind. They have devised a meticulously planned well crafted strategy to cheat the well known logistics company and make them poorer by Rs. 60 Crores.

Facts of the case

• The Vendor Company lets say ABC company is a well known logistics company having its offices all over India engaged in the business of cargo handling including freight forwarding, custom clearance, transportation and material handling, warehousing and warehouse management. The company basically provides domestic logistics management services to leading telecom segment players like Bharti Airtel, Tata Teleservices, Reliance Telecom, Ericsson India, Motorola, Siemens, etc.

• The directors of lesser known vendor company say XYZ Ltd. approached the management of ABC Company and induced them to buy/takeover the XYZ Ltd. They represented that they have a pool of talented employees who are developing a state of art software which is basically inventory management software and provides complete warehousing solution applications for Telecom Industry. Further, the XYZ Ltd. in order to cater to the requirements of its esteemed clients maintained the huge database on its server containing inter-alia specific client profile, client inventory details, inventory cost data, business strategies and methodologies etc. The software was very crucial and important to provide effective warehouse support and other value added services to the clients and along with the valuable data base it can give the buyer company ABC Ltd. a competitive edge over other competitors, if it acquires, XYZ Ltd.

• The management of the ABC Ltd. entered into a Share Purchase Agreement (SPA) for the purchase of 100 % shareholding from the existing shareholders/directors of the XYZ Ltd. There was one Non-Compete Clause of the SPA which bars the erstwhile directors (sellers) to take on competing business involving providing logistic services in relation to warehousing and transportation to third parties for a period of 5 years from the execution of this agreement. The management of the ABC Ltd. were under belief that they were acquiring the XYZ Ltd. with its assets, human resources, IPRs consisting of copyrighted software and huge data bases.

Modus Operandi

• The Management of ABC Ltd after take-over of the XYZ Ltd. noticed that one recently launched logistics company hereinafter referred to as rival company (incorporated about 5 months after the take over of XYZ Ltd.) approached some of esteemed clients of the ABC Ltd. and made bids at slightly lower prices than the ABC Ltd. The Rival Company surprisingly, used same methodologies, strategies as that of ABC Ltd.; as if they knew beforehand what the management of ABC Ltd. are upto which looked quite weird. The management of ABC Ltd. was helpless as they could not do anything as there is nothing illegal in approaching or soliciting other clients even if it means huge loss to ABC Ltd. on the well established legal maxim “Damnum Sine Injuria”[i].

• The management of ABC Ltd. kept it fingers crossed until one day an ex-employee of the ABC Ltd. working at the Rival company informed the management of ABC Ltd. that the management of rival company Rival company has been using software which is nothing but exact replica of the customized software the ownership of which now vests with the ABC Ltd.. The said employee also send an e-mail to Head IT Development Team of the ABC Ltd., attaching the executive file of the said software for further analysis to find out the copying/duplicity of the copyrighted work.

• On analysis of the copyrighted software with the software purportedly developed by the rival company, it was revealed that the literal elements of copyrighted software i.e. source code, as well as its non literal elements i.e. the structure, sequence and organization, that is to say overall organization of a program, the structure of a program’s command system, the program’s flow charts, the screen presentation, graphical user interface etc. has been literally copied into the software purportedly developed by the Rival company

• The conduct of the rival company in approaching its customers, submitting quotations/bidding to its customers just below price quoted by ABC Ltd., using methodologies, operations similar to ABC Ltd., using its copyrighted software for a new company which has just come into operation could not have been possible without unauthorized accessing the huge proprietary database maintained in its server which was acquired by ABC Ltd. along with take over of XYZ Ltd.. Further, the developing such methodologies, operational procedures and development of such software can only be possible by spending resources, manpower, collection of data over a long period of time and the startling fact was that the rival company has just came into operation merely 5 months after the take over of XYZ Ltd. and it was highly improbable that it managed the impossible with its limited resources within such a short span of time.

• Later on it was revealed that one key employee of the development team who was having dominion and control over the database of the complainant and also part of the software development team has resigned in the suspicious circumstances and joined rival company along with few other key employees and shifted the acquired database of the ABC Ltd. to rival company. Later on it was revealed that the directors of rival companies are mere puppets whose strings are in the hand of erstwhile directors of XYZ Ltd. who have since resigned after the take over by the ABC Ltd.

Legal Propositions

The offence of Cheating

• It was now revealed that the intentions of the erstwhile directors from the very beginning of entering into contract with management of ABC Ltd. was malafide and the inclusion of non-compete clause was mere a farce to induce the management of ABC Ltd. to enter into Share Purchase Agreement and pay the huge purchase consideration of Rs. 60 crores. The erstwhile directors have dishonest intention from the very beginning to start a competing company with the misappropriated database and hacked software code with the help of their ex-employees whom they have induced to join the rival company after they sold XYZ Ltd. The Ex-employee acting under the instructions of accused erstwhile directors of XYZ Ltd. copied and took away databases consisting of specific client profile, client inventory details, inventory cost data, business strategies and methodologies etc. and other software containing the crucial clients information which has been used by rival company launched by erstwhile directors through their proxies with impunity to lure or solicit the clients of the ABC Ltd. to divert business from them causing major loss to them.

• The factual matrix of the case clearly discloses the offence of cheating which is defined under Section 415 IPC in following words:-

“415 CHEATING.

Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to “cheat”.

Explanation : A dishonest concealment of facts is a deception within the meaning of this section.”

• Clearly, the erstwhile directors of the XYZ Ltd. induced the management of the ABC Ltd. to enter into contract and pay huge purchase consideration on the false representation that they would not enter the market scene for the period of 5 years; the stipulation to this effect was also incorporated in the written agreement. Had they not incorporated this non-compete clause into written agreement, the deal of the take over of the company would not have materialized. But the intention of the erstwhile directors of the company was malafide from the very beginning. They hatched a criminal conspiracy with some of the key employees of XYZ Ltd. and sold the company XYZ Ltd. with the said non-compete clause and later on they through the ex-employees misappropriated the huge database and software source code and started new company with similar line of business with puppet directors on board. It’s a unique MO adopted by these corporate fraudsters, who again are establishing the company and will certainly look for other corporate prey and defraud them in same manner in the way, they defrauded the management of ABC Ltd.

Other penal provisions also attracted

• Section 66 IT Act, 2000: The illegal hacking of the computer source code from the computer resource of the ABC Ltd. by its Ex-employee and its misappropriation to make infringed software for rival company has diminished the value and utility of the information residing in the system of complainant company, as the same has fallen into the hands of rival who used the same along with other stolen secret trade information, computer database to lure the clients of complainant which caused it huge losses. Thus, the accused persons have committed the offence punishable under Section 66 of the Information Technology Act, 2000.

• Section 408/409 Indian Penal Code: Further, as the ex-employees and erstwhile directors were entrusted with the data of the XYZ Ltd. while they were in employment/directors of the company which they misappropriated for their illegal gain causing corresponding loss to the ABC Ltd., the offence u/s 408/409 Indian Penal Code is also attracted.

• Section 63/63 B Copyright Act: Further, the proprietary database along with source code of the software constitutes literary work within the meaning of Section 2 (o) of the Copyright Act, 1957 & therefore copyrightable work within the meaning of Section 13 of the Copyright Act, 1957. Therefore, any illegal copying, use of the misappropriated data attracts the offence U/s Section 63 of the Copyright Act. Further, as the copyrightable source code of the ownership of which now vests with ABC Ltd. has been copied to make the infringing software, it also attracts offence u/s 63 read with Section 63-B as there has been a knowing use of infringing software by the accused persons.

• A case has been registered by the Cyber Cell, CBI which constituted a team and conducted raid at the offices of the rival company situated at Delhi and NOIDA. During the raid, the CPU, hard disk, compact disk containing the infringed software/database and other incriminating documents were seized. Further, during the raid, the offices of the erstwhile directors of XYZ Ltd. was found at the corporate office of rival company. Further, the disclosure of few employees/officials of the rival company disclosed that the erstwhile directors were in the actual control of affairs of the rival company and directors of the said company are mere puppets in the hand of those erstwhile directors.

So, isn’t it a clear case of cheating. What do you think?
________________________________________
[i] The maxim means loss or injury to someone which does not give that person a right to sue the person causing the loss.

Neeraj Aarora
(Advocate)

Embezzlement of Telephonic minutes: A Case Study on Data Theft by Hacking

2009-12-28T22:13:00.000-08:00

NET4INDIA Case: The present case pertains to online theft of prepaid internet telephony minutes belonging to the complainant company maintained on its server by one of its employees. The said employee unauthorisedly accessed the server containing the PINS of the Internet Telephony minutes which was restricted by password and access was available to only few key employees. The unauthorized access was noticed from unknown (Internet Protocol address) IPs which the offender used to make unauthorized access.

The brief facts of the case:

• The company N4India Ltd. (N4India) is engaged in providing a range of internet related services including internet telephony and voice over IP network services. It markets its internet telephony services under the brand name of “Phonewala.com”.

• Track Online Net India (P) Ltd. is the US Arm of N4India which buys bulk internet telephony minutes from US Companies like; Net2phone, Go2Call etc. The Internet Telephone Minutes (TM) sold in India as (1) Cash Calling Cards (2) Online Cash Cards. The PIN Number of TM is kept online at server of Net2Phone USA (Vendor) under its control –Restricted/protected by passwords to key employees of N4I.

• The management noticed the theft of internet telephony minutes which was most surprising as the access to the server was restricted by password which was available to few key employees only. The prepaid Internet Telephony cards belonging to N4I were available at cheaper rates in market not sold by Net4India causing it huge revenue loss.

How the culprit was caught: Obviously, it appeared to be handiwork of some insider. The investigating agency advised the company to change the password and give access to few select key employees. The idea was to trap the person who is making unauthorized access to the server of Net2phone where the PINS of Internet Telephony minutes belonging to Net4India were stored. The intruder making unauthorized access would surely leave behind its footprint in the form of IP address. As predicted, failed unauthorized access was noticed at the web application of US Company Net2Phone server from a specific set of IP addresses.

IP Address captured by Web Application
Net2Phone’s application recorded failed/successful login from the IP addresses shown below:-

Table A:

IP Address Date Time Event
221.134.63.151 19/08/2005 02.00 AM Incorrect Password
221.134.63.151 19/08/2005 02.04 AM Incorrect Password
221.134.63.151 19/08/2005 02.07 AM Incorrect Password
221.134.63.8 20/08/2005 00.30 AM Login Success
221.134.63.8 20/08/2005 00.36 AM Login Success

Thus, someone was trying to make unauthorized access to the web application.

Who is the intruder?

It was noticed that an engineer of the N4India has accessed his email ID harish.s@n4i.net during the same time (as per IST) from the same IP addresses as above. Thus, he was the culprit and mouse trapped.

The log detail of the email ID of Mr. Harish was obtained from ISP:

Table B:

IP address Date Time Event
202.71.133.12 18/08/05 06.10 PM IP belongs to N4I
221.134.63.151 19/08/05 01.57 AM User ID: Harish.s@n4i.netMachine ID: 10.251.132.151Franchise Details:B1-43, Near East End Apartments, New Ashok Nagar
202.71.133.12 19/08/05 06.45 PM IP belongs to N4I
221.134.63.8 20/08/05 00.28 AM User ID:Harish.s@n4i.netMachine ID: 10.251.132.151Franchise Details:B1-43, Near East End Apartments, New Ashok Nagar

The comparative analysis of the Table A vis-à-vis Table B was made which revealed the following:

1. Unauthorised access made by Harish to the web application but he failed.

2. Harish made unauthorised entry to the Corporate office of the N4I at Noida.

3. He accessed his email account unauthorisedly from the network of one colleague

4. He collected the updated authentication details and sent it by his official mail harish.s@n4i.net to his personal E-mail account.

5. After this he returned home and he tried to access the Net2phone application but his login failed.

6. He again came to the corporate office and managed to get the appropriate password from the computer at corporate office.

7. He returned home and accessed his email account and made a successful login to the Net2Phone application

Accused persons arrested: The accused Harish was arrested. He confessed his involvement. He emailed the unauthorized PIN Numbers to his fictitious Email IDs. The PINs & passwords were kept in these emails and forwarded to various buyers. He disclosed the names of buyers; one of such buyer was Mukesh Jindal of Chandigarh. Mukesh Jindal was arrested and he accepted that he purchased TM from Harish and received the same at his personal email ID. The detail of email Id of Mukesh Jindal collected from Rediffmail reveals that said ID was being used by the accused Mukesh Jindal.

Collection of electronic evidence:

• The fake E-mail Id of the Harish was accessed containing pins and passwords to various cash cards of TMs. The data was seized.

• One hard disk of the computer belonging to Harish was made, seized from his residence:

1. The image copy prepared, generated hash value.

2. Seizure Memo prepared.

• The laptop used by Mukesh Jindal containing the email records was seized from him:

1. The image copy prepared, generated hash value.

2. Seizure Memo prepared.

• The mirror image copy of the Hard disks were analyzed-Contained incriminating evidence.

• Accused persons accessed their personal Email Ids- Misappropriated PINS found.

Other connecting evidence collected:

1. The bank account statements of the banks in which money pertaining to misappropriated data exchanged hands.

2. Entry register record establishing the entry of Harish at the Corporate office.

3. Statement of officials of N4I u/s 161 Cr.P.C..

Conclusion of the case: The aforesaid mirror image copy and the hard drive was sent to FSL for forensic report. Forensic Report received corroborating the above facts, thus, connecting the accused persons to crime. Charge sheet against the accused person is filed in the court and awaiting verdict of court.

Neeraj Aarora
(Advocate)

Forensic Accountant: Reliability & admissibility as Expert Witness

2009-12-28T21:36:00.000-08:00

Fake Social Networking Profiles Still Big Problem- What To Do

2009-12-28T21:25:00.000-08:00

Engineer held for creating fake obscene orkut profile

2009-12-24T22:47:00.000-08:00

The CITIBANK hacking traced via traffic on ISPs previously used by the Russian Gang

2009-12-24T19:49:00.000-08:00

Though the CITIBANK and FBI are in denial mode, the Wall Street Journal (WSJ) suggests that the FBI is supposedly looking into a computer-security breach targeting Citigroup Inc. that resulted into tens of millions of dollars being siphoned from the customers account. A Russian Business Network (RBN), a notorious gang behind several hacking incidents is suspected to be behind the heist. Apart from bank account hacking, the RBN is said to be involved in child pornography and spam also.

The Security breach at the CITIBANK came to light when traffic from Internet addresses formerly used by the RBN gang was noticed by the US investigators. The hackers have used a program called Black Energy, designed by a Russian hacker. The tool can be used to command a botnet, or a large group of computers infected by malware and controlled by an attacker, in assaults meant to take down target Web sites. This year a modified version of the software appeared online that could steal banking information, and in the Citi attack a version tailored to target the bank was used, the WSJ reported. What concerns Security officials that beyond stealing money, hackers could try to manipulate or destroy data, which could wreak havoc on the banking system and financial markets. When intruders get into one bank, officials say, they may be able to blaze a trail into others.
Why the bank authorities are denying the hacking incident of such a magnitude is not difficult to fathom, as it would put a question mark on their online security mechanism and create panic in the customers.

Joe Petro, managing director of Citigroup's security and investigative services in a press release has denied any type of hacking incident and its probe by the FBI, he said "We had no breach of the system and there were no losses, no customer losses, no bank losses………. Any allegation that the FBI is working a case at Citigroup involving tens of millions of losses is just not true."

Neeraj Aarora
(Advocate)

CBI Taking The Lead Role In Fighting Software Infringement And Database Theft

2009-12-21T19:28:00.000-08:00

Neeraj Aarora: AICWA, LLB, PGD (Cyber & DLTA), CFE (USA)

“The modern thief can steal more with a computer than with a gun“

– National Research Council, “Computers at Risk”, 1991.

With the growth of e-commerce, the security of the database to prevent the improper disclosure/copying of information to unauthorized users is of utmost importance in present automated environment. These customized software’s and information’s/data organized, compiled & stored on the computer systems of the organization in the form of a huge database, tables & compilations of essential information and know-how are being developed by the organization by appointing expert staff and spending huge investment in the form of resources and therefore constitutes original literary & artistic works, therefore copyrightable within the meaning of Section 13 of the Copyright Act, 1957 and the organization is the owner of such copyright within the meaning of Section 17 of the Copyright Act. Therefore, unauthorized reproduction/use and copying of the database & information from the system of the organization by the employees would be a cognizable offence by virtue of Section 63 Copyright Act.

Further, use of infringed software & database apart from the infringement of the copyright would inevitably result in diminishing the value of these works in the hand of the organization & injuriously effecting the same more particularly when such confidential/secret information is passed on to competitors and thus taking away the benefit/edge of the organization which it have because of these works over its competitors. Thus, the act is squarely covered under Section 66 IT Act within the meaning of “hacking” and punishable under it because the employees while accessing (which may be authorized or unauthorized, doesn’t matter however) to the database/software and making copies and then secretly transfer such data/software residing therein to the competitor, the act would become one of ‘hacking’ as though the data residing in the “computer resource” has not been destroyed or altered but it value has been lost or reduced as the secret data/customized software which gave an competitive edge to the organization has fallen in the hand of competitor who may use it resulting in loss to the organization.

One such case of database theft came to notice when a renowned logistics company lodged a complaint with the Cyber Cell, CBI against the database theft and infringement of customized software developed by its IT Department by none other but one of its ex-employee who was key member of the IT Development team while he was working for the complainant company and switched over to the rival company having same line of business as that of the complainant company. The complainant has also alleged that the directors of the rival company were instrumental in instigating its key employees involved in the development of proprietary software for inventory management to commit the hacking of the source/object code of the software and databases maintained at its server and join the rival company. The brief facts disclosing the Modus Operandi adopted by the accused persons and how they hacked the database are as follows:-

• An ex-employee of the complainant company working at the rival company informed the management of the complainant company that the management of rival company has been using software which is nothing but exact replica of the customized software that was being developed by the complainant company for inventory management solutions. The said employee also send an e-mail to Head IT Development Team of the complainant company, attaching the executive file of the said software for further analysis to find out the copying/duplicity of the copyrighted work.

• Earlier it was noticed by the management of the complainant company that the rival company approached some of its esteemed clients/customers like Bharti Airtel, Tata Teleservices, Reliance Telecom, Ericsson India, Motorola, Siemens, etc. and made bids at slightly lower prices than that of the complainant company. The rival company surprisingly used same methodologies, strategies as that of Complainant Company; as if they knew beforehand what complainant are up to which looked quite weird, strange.

• About the Software: The software developed by the complainant company was basically inventory management software and provides complete warehousing solution applications for Telecom Industry. The software was very crucial and important to provide effective warehouse support and other value added services to the clients and gave the complainant company competitive edge over other competitors. The said software was completely designed and developed by the software development team of Complainant Company. During the development phase of the software, the source code of the software was known to the members of in-house development team. The source code of the said software was a closely guarded secret as the same was a key to the development of software and would lose its value if it falls into the hand of the competitors.

• On analysis of the copyrighted software with the software purportedly developed by the rival company, it was revealed that the literal elements of copyrighted software i.e. source code, as well as its non literal elements i.e. the structure, sequence and organization, that is to say overall organization of a program, the structure of a program’s command system, the program’s flow charts, the screen presentation, graphical user interface etc. has been literally copied into the software purportedly developed by the rival company.

• The striking similarities noticed between the copyrighted software and infringed software clearly lead to the conclusion that the source code of complainant software has been stolen and subsequently by making cosmetic changes, rival company were using the same software. Further, analysis of the data structure of both the software using Starlnix Software “SQL Compare” also reveals that the data structure has been copied and which also leads to conclusion that same cannot be possible without the theft of source code of copyrighted software.

• Thus, as suspected by the management of the complainant company, the conduct of the rival company in approaching its customers, submitting quotations/bidding to its customers just below price quoted by complainant, using methodologies, operations similar to complainant, using its copyrighted software for a new company which has just come into operation could not have been possible without unauthorized accessing its huge proprietary database maintained in its server. Further, the developing such methodologies, operational procedures and development of such software can only be possible by spending resources, manpower, collection of data over a long period of time and the startling fact was that the rival company has just came into operation in November 2007 and it was highly improbable that it managed the impossible with its limited resources within such a short span of time.

• Later on it was revealed that one key employee of the development team who was having dominion and control over the database of the complainant and also part of the software development team has resigned in the suspicious circumstances and joined rival company along with few other key employees and shifted the database of the complainant to rival company.

• The database maintained by Complainant Company: The complainant company in order to cater to the requirements of its esteemed clients maintains the specific client profile, client inventory details, inventory cost data, business strategies and methodologies etc. These enormous and valuable data which is in the nature of trade secret has been compiled by the technical staff of the complainant company on which huge amount is spent in form of salaries, other day to day expenses etc. These information & data are organized, compiled & stored on the computer systems of complainant company in the form of a huge database, tables & compilations of essential information and know-how, the access of which is granted to few key employees to whom the information is entrusted to be used for authorized purposes only. This confidential information/data base in the nature of trade secret is also original literary work. Any compromise, breach of secrecy, misuses etc. these works & information would inevitably result in diminishing the value of these works in the hand of company & injuriously affecting the same.

• The literal copying of the source code, structure, sequence and organization of the software is further conclusively established from errors found in original copyrighted software which have been also found in the data structure, text fields, description etc. inadvertently carried over in the infringed software when the software including the pertinent computer databases, information hacked from complainant system was blatantly copied by the development team of rival company headed by ex-employee in conspiracy with Managing Director of rival company.

• The aforesaid copying provides an intrinsic circumstantial evidence of ex-employee who indulged into slavish imitation of inventory detail, databases, compilations maintained on complainant’s computer server which had been illegally accessed by ex-employee to unauthorisedly copy this literary, proprietary information. The striking similarities noticed in the two software could not have existed but for the fact of ex-employee having made use of our computer database.

• The Ex-employee acting under the instructions of MD of rival company copied and took away databases consisting of specific client profile, client inventory details, inventory cost data, business strategies and methodologies etc. and other software like TALLY Software and billing software containing the crucial clients information which has been used by rival company with impunity to lure or solicit the clients of the complainant to divert business from them causing major loss to them.

• The conspiracy between ex-employee and MD of rival company is further established from the fact that these methodologies, operational procedures, software and data cannot be used without the active participation of the management as they are the main beneficiaries of the wrongful gain accrued to the rival company. Thus, the ex-employee has illegally & unauthorizedly copied the confidential computerized databases, source code & other software etc. from the computer system used by him while in employment with the complainant & was contemplating to engage in competing business and misusing the same to indulge in the same business as that of the complainant company in conspiracy with the management of the rival company.

• The illegal hacking of the computer source code from the computer resource of the complainant by its Ex-employee and its misappropriation to make infringed software for rival company has diminished the value and utility of the information residing in the system of complainant company, as the same has fallen into the hands of rival who used the same along with other stolen secret trade information, computer database to lure the clients of complainant which caused it huge losses. Thus, the accused persons have committed the offence punishable under Section 66 of the Information Technology Act, 2000.

• Further, as the ex-employees were entrusted with the data by the complainant company while they were in employment which they misappropriated for their illegal gain causing corresponding loss to the complainant company, the offence u/s 408 Indian Penal Code is, also attracted. Further, the proprietary database along with source code of the software constitutes literary work within the meaning of Section 2 (o) of the Copyright Act, 1957 & therefore copyrightable work within the meaning of Section 13 of the Copyright Act, 1957. Therefore, any illegal copying, use of the misappropriated data attracts the offence U/s Section 63 of the Copyright Act. Further, as the copyrightable source code of the complainant company has been copied to make the infringing software, it also attracts offence u/s 63 read with Section 63-B as there has been a knowing use of infringing software by the accused persons.

• The case was registered by the Cyber Cell, CBI which handles the crucial cases of database theft and software infringement. A team was constituted and a raid was conducted at the offices of the rival company situated at Delhi and NOIDA. During the raid, the CPU, hard disk, compact disk containing the infringed software/database and other incriminating documents were seized.

A Word of caution for the companies maintaining huge valuable database on its server

Organizations which maintain confidential data base need to develop robust measures to protect the same from the unauthorized use, without compromising the employee’s ability to carry out his duties. In today’s competitive world, if the integrity of sensitive data is compromised, the accompanying repercussions are heavy; both economical and otherwise. It is not only necessary to hire the professionals for maintaining cyber security but also to set up a mechanism for taking prompt action and to preserve the digital footprints as admissible under the law. If the valuable database is suspected to have been compromised, please take prompt action to file a police complaint in consultation with your legal counsel.

Money Circulation Scheme or Money Cheating Scheme

2009-12-21T00:30:00.000-08:00

Neeraj Aarora: AICWA, LLB, PGD (Cyber & DLTA), CFE (USA)

Money Circulation Schemes throughout the nation is mushrooming under different guises and nomenclature, eating away monies of the gullible public by luring them to become rich overnight through money circulation schemes. This kind of cheating under various attractive captions have taken a major section of people from different walks of life to fall prey benefiting a section of people and huge loss of money to larger section of people. It is said that people are being cheated of Crores of Rupees by these companies all over India. This menace committed against the society is going unchecked.

Many small companies have mushroomed themselves in every nook and corner of the country. The promoters of the money circulation schemes through high profile campaign have entrapped lower middle class people eagar to become rich overnight. By enrollment into such scheme one would be getting back the initial paid investment and keep gaining financially by enrolling new members. So also, the second set of enrollers keep multiplying and gain financially, fascinating every onlooker to get engrossed into such dubious money circulation schemes. Such a system of chain to work endlessly to provide profit to everyone concerned would ultimately breakdown at some stage, resulting the financial benefit to some who joined the scheme at initial stages (they will be none other than the promoters of the scheme), resulting in big financial loss to those who joined at a later stage. When a person fails to get his required clients or enrollers, the promoters of the scheme does not tell about the non-viability of the scheme but blame it as one personal failure.

The gullible people are taken unaware when the real picture of the money circulation schemes emerges. By the time the people realize that they were taken for a ride and cheated, it would be too late.

The Hon’ble Supreme Court in Kuriachan Chacko and Ors. Vs. State of Kerla JT2008(7)SC614 has rightly observed as under:

The promoters of the scheme very well knew that it is certain that the scheme was impracticable and unworkable making tall promises which the makers of the promises knew fully well that it could not work successfully. It could work for some time in that `Paul can be robbed to pay Peter’ but ultimately when there is a large mass of Peters, they will be left in the lurch without any remedy as they would by then have been deceived and deprived of their money.

How they operate- The Modus Operandi

The promoters of such schemes float companies with attractive names like viz. Wonder King Co. Miracle Co. Euro Life India Big way Golden Platinum Quest Herbal Life Merry Life Co. and the like to start with in a particular area and keep shifting over to new 1key areas on attaining saturation of member enrollments. The names of these companies itself speaks about their mensrea (guilty intention). While promoting the schemes they induce the Film stars, Politicians, Bureaucrats, Sportspersons, Engineers, Doctors etc., and honor them by organizing indoor and outdoor parties/functions with big fanfare to make the general public believe bona-fide of schemes, while enrolling other members in the chain with attractive and stylish titles to the enrolled members as Silver member, Gold member, Diamond member, Platinum member, so on and so forth. They also call them as Master Distributor, Super Distributor, Double Super Distributor etc., etc. They also use attractive slogans like Earn in rupees or dollars. Work from home Work four hours and earn Rs.50,000 per month U R the boss of your business, so enroll immediately Earn up to Rs.35,000/- + Monthly by just working 2 hours at home Do u want to earn extra by sitting at Home? Then contact us Do u want to lose your weight, then contact us Your pathway to Heaven Enroll with us for Healthy and Wealthy life Do u want to travel in Benz Car within one year then enroll with us Sky is the limit with us, so enroll immediately, before u miss the bus Earn while you earn etc. Many of these companies are taking promotional trips to Bangkok, Singapore, Srilanka, Malaysia and other countries in the name of Conferences, Meetings etc. Locally also they conduct meetings, conferences in 5 star hotels. These dubious companies do whatever possible to attract gullible public. Ultimately the easy prey, the middle class building castles in the air, loses all their savings even at the cost of their blood relations, the kith and kin and are victimized. Worst sufferers in such schemes are none other than poor middle class women, retired persons, educated youth, unemployed men and women who lose their health, wealth in the chase of wild goose and dreams. Such schemes ultimately have destroyed the families and friendships

Do we have legal provisions in place to deal with these dubious MLM SCHEMES?

In India, money circulation schemes are banned under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978. Further, relevant sections under cheating Section 420 of IPC, Drugs and Cosmetics Act 1940, Drugs and Magic Remedies Objectionable (Advertisement)Â Act, 1954, are abundantly available to be invoked and effectively check and prevent progress of such dubious floated companies. Section 2 (c) of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 defines a money circulation scheme as, any scheme, by whatever name called, for the making of quick or easy money, or for the receipt of any money or valuable thing as the consideration for a promise to pay money, on any event or contingency relative or applicable to the enrolment of members into the scheme, whether or not such money or thing is derived from the entrance money of the members of such scheme or periodical subscriptions.
Andhra Pradesh was the first state to Ban Money Circulation Schemes in the year 1965, much before the Central Government bought the Central Act in the year 1978 banning Money circulation Schemes in India through Prize Chits and Money Circulation Schemes (Banning) Act 1978.

Brief overview of the Prize Chits and Money Circulation Schemes (Banning) Act 1978

Section 2 is legislative dictionary and defines certain terms. The phrase `Money Circulation Scheme’ is defined in Clause (c) of Section 2. Section 3 bans money circulation schemes or enrolment as member to any such scheme or participation in such scheme. Sections 4 and 5 are penal provisions and prescribe punishment. Section 6 deals with offences committed by Companies. Section 7 authorizes Police Officer not below the rank of officer in charge of a police station to exercise power to enter and search premises and to seize things used for such scheme. Section 8 provides for forfeiture of newspaper and publication containing money circulation scheme. Section 9 declares that no Court inferior to the Court of Chief Metropolitan Magistrate or Chief Judicial Magistrate shall try any offence punishable under the Act. All offences punishable under the Act have been made cognizable under Section 10. Section 11 grants exemption from the operation of the Act to certain money circulation schemes. From the perusal of the above provisions, it is clear that the Act prohibits `money circulation scheme’. Further, the Preamble of 1978 Act declares that it has been enacted “to ban the promotion or conduct of prize chits and money circulation schemes and for matters connected therewith and incidental thereto”.

How the Offence of Cheating U/s 420 IPC is made out

For the application of penal provision of Section 420 IPC, there must be heating as defined in Section 415 IPC. The said Section reads thus:
415. Cheating
Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to “cheat”.
Mere reading of the Section makes it clear that it requires the following ingredients to be satisfied:

1. Deception of any person;

2. (a) Fraudulently or dishonestly inducing that person;

(i) To deliver any property to any person, or

(ii) To consent that any person shall retain any property, or

(b) Intentionally inducing that person to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property. [Hridaya Ranjan Prasad Verma v. State of Bihar (2000) 4 SCC 168; S.W. Palamitkar v. State of Bihar].

There is an element of cheating in such MLM Schemes inasmuch as in most of the promoters induce the common public to part with money on the lure of doubling the amount or quick money and but for such representation and the benefit sought to be given under the scheme, the victims would not have acted on such representation. The Promoters of the scheme knew that the scheme was impracticable and unworkable. Therefore, the Section 415, IPC is squarely applicable and the promoters are liable to be punished u/s 420 IPC.

Judicial Pronouncements

The Supreme Court had examined this question in State of West Bengal Vs Swapan Kumar AIR 1982 SC 949. The Honâ€™ble Chief Justice Chandrachud, after taking note of legislative drafting, reshaped and rearranged the definition of `Money Circulation Scheme’, for the sake of clarity as:

Aany scheme, (a) for the making of quick or easy money or (b) for the receipt of any money or valuable thing as the consideration for a promise to pay money, on any event or contingency relative or applicable to the enrolment of members into the scheme, whether or not such money or thing is derived from the entrance money of the members of such scheme or periodical subscriptions. The court has clearly explained the ingredients, which need to be fulfilled for a scheme to become a money circulation scheme. Thus, any scheme for the making of quick or easy money contingent upon the enrolment of members into the scheme is a money circulation scheme. Similarly, any scheme in which money or any valuable thing is received and a promise is made to return the money on the event of enrolling members into the scheme is also a money circulation scheme.

The Constitutional Validity of the constitutionality of the provision has already been examined and upheld by the Apex Court in Srinivasa Enterprises Vs Union of India AIR 1981 504 SC Justice V.R. Krishna Iyer, observed: Can you save moths from the fire except by putting out the fatal glow.

The Supreme Court has further stated that these types of schemes are prejudicial to the public interest and also adversely affect the efficacy of fiscal and monetary policy. While interpreting the definition of money circulation scheme, one has to look at the mischief, which the legislation has sought to remedy. The Study group headed by Dr. J.S. Raj constituted by the Reserve Bank of India in the year 1974 proposed the legislation. After studying the various schemes which were floated in the country during that time and taking into consideration the impact of such schemes on the economy, the Committee after extensive research and analysis have suggested for a ban on Prize chit and other schemes which were causing a great loss to the economy. A large amount of money that can be used for industrial and developmental activities are wasted on such illegal schemes. The Study group further observed that prize chits or benefit schemes benefit primarily the promoters and do not serve any social purpose. On the contrary, they are prejudicial to the public interest and also adversely affect the efficacy of fiscal and monetary policy. There has also been a public clamour for banning of such schemes; this stems largely from the malpractices indulged in by the promoters and also the possible exploitation of such schemes by unscrupulous elements to their own advantage. We are, therefore, of the view that the conduct of prize chits or benefit schemes by whatever name called should be totally banned in the larger interests of the public.

Recently, the Hon’ble High Court of Madras dismissing the petition filed by FMCG Marketing Pvt. Ltd. v/s Union of India, Chief Secretary and Director General of Police Govt. of Tamilnadu (Writ Petition) with reference to context observed in its landmark judgment that under promise or expectation of getting huge commission (easy or quick money) the public is lured to invest more money in such schemes and that it is only an imaginary profit. The Hon’ble High Court further observed that the event is enrollment of new members; the commission received is linked to such enrollment of new members into the scheme. Thus the so-called Multi-level marketing, though called by a very attractive name squarely falls within the definition of Money Circulation Scheme under the Act. Hence it is prohibited by the Act. The Madras High Court further observed that this MLM scheme creates a chain of customers and the long and unbroken chain ensures a large amount of easy money. The shorter and missing links in the chain results in earning lesser commission. Secondly, the person concerned does not get the value of money he pays. Thirdly, the companies collect service charges on the sale of goods. No service charge can be collected while the goods are sold. Apart from that, the MLM results in exploitation of personal influence of each and every distributor or his close relative. If a Superior officer or his ward involved in MLM, the subordinates are forced to become members in the chain.

Case study of Fraud Money Circulation & Multilevel Marketing (Name of the accused and victims changed)

The Delhi Police EOW busted a gang of cheats who were running a company in the name of M/s Kanchanjunga E-com Marketing Pvt. Ltd. having its office at North-West Delhi. The complainant Shivani Mittal and other 39 victims have filed a complaint with the police wherein they alleged that the directors and promoters of the aforesaid company had cheated them of Rs. 5500/- against each membership by inducing them on the pretext that they will earn lacs of rupees as per the schemes of the company within a span of five years in installments starting from 6th months onward. The company did not fulfill the promises and did not make the payment to the members/investors. All the 40 aggrieved persons had leveled allegations against the promoters and directors of M/s Kanchanjunga E-com Marketing Pvt. Ltd. for having committed cheating by inducing general public to invest in company. On this complaint a FIR u/s 406/409/420/422/120-B IPC & 3/4/5/6 Prize Chit Money Circulation (Banning) Act was registered and investigation was taken up by the police.
During the course of the investigation, it was learnt that the company was running a money circulation scheme under the name of Self Employment Yojana. The conditions of the scheme were:

1. If one becomes a member of the scheme after depositing an amount of Rs. 5500/-, he will get Rs. 10,000/- in a span of five years in installments starting from 6th months onwards, even if he makes no further member.

2. If the new member sponsors one subscriber within 30 days then the first such subscriber who brings in another one would be entitled to Rs. 30,000/-

3. Similarly, if one gets three such subscribers within 30 days, he would be entitled to Rs. 1 lac.

4. If one gets six subscribers within 30 days, he would earn Rs. 3 lacs. If one gets 12 such subscribers then he would get Rs. 10 lacs.

5. One can earn upto Rs. 10 lacs and commission from 10% to 46 % by sponsoring few members to the company.

6. The company was operating in different parts of India.

The investigation by the police revealed that the scheme floated by the company is nothing but a fraudulent pyramid style marketing scheme, which required endless stream of recruits to succeed. It involves an internal re-distribution of wealth from new to old entrants and no substantial trading in products or services takes place. The scheme of the company was not feasible as if one person enrolls six down line members and in turn each of them further enrolls six each, then at the twelfth level the number of persons enrolled becomes 200 crores. The company was not registered with Reserve Bank of India as a non-banking financial institution. The promoters and directors of the company induced the victims, collected money from them in the shake of membership fees, cheated them by making false promises and misappropriated the money of the investors and ran away by closing down their offices. The company had collected crores of rupees from the lacs of its members.

Caution for the general public

You should always remember that there is no free lunch and there is some catch when the money is claimed to be earned so easily and quickly. Therefore, they should be vigilant and should not enroll themselves into Multi Level Marketing Companies, Money Circulation Schemes, Network Marketing Companies and other such Companies and such schemes and get cheated. The general public should not encourage these types of schemes by enrolling themselves into the schemes and encouraging or enforcing others (mostly their friends & relatives) to join the scheme. You can play a very vital role and help the investigating agencies to curb such menace and nip it in the bud before it engulfs the gullible Public. In case you or any of your friend, relative is victim of such dubious MLM schemes, you may complaint against companies and promoters of such schemes to your nearest Police Station. It is to be noted that all the offences under the Act are Cognizable. Under Section 7 of the Act, a police officer not below the rank of an officer in charge of a police station can enter, if necessary by force, by day or night, any premises which he has reason to suspect, are being used for purposes of conducting or promoting any money circulation scheme. He can search such premises and take into custody any person and produce before a Judicial Magistrate all such persons who have been concerned with the use of such premises connected with the promotion or conduct of any money circulation scheme. He can seize all things found in the premises, which are intended to be used, or reasonably suspected to have been used, in connection with any money circulation scheme. Under Section 8 of the Act the State Government can forfeit any newspaper or publication containing any material connected with the promotion or conduct of money circulation scheme.

The Domestic Violence Act- Are the Female “Respondent”?

2009-12-19T03:31:00.000-08:00

Neeraj Aarora: AICWA, LLB, PGD (Cyber & DLTA), CFE (USA)

“I am the parliamentary draftsman
I compose the country’s laws
And of half the litigation
I am undoubtedly the cause”

[As per Section 2 Clause (q) of DV Act, the Respondent means any adult male person who is or has been in a domestic relationship. Hence, a plain reading of this definition clause would show that an application will not lie under the provisions of this Act against a female. There is ambiguity in the definition clause if the main enacting part is read with the proviso which uses, the expression “relative of the husband” thereby extending the meaning of respondent without any gender restriction. The High Courts have different views, while MP High Court & Madras High Court opined that female members cannot be made as respondents in the proceedings under the DV Act, the judgments of Rajasthan High Court held that a female relative is not excluded from the definition of respondent contained in Section 2(q) of the Act. Recently, the Andhra Pradesh High Court in its speaking judgment held that the 'respondent' as defined under Section 2(q) of the Act includes a female relative. However, till date there is no final word of Apex Court with respect to this vexed question of law in view of divergent view of different High Courts. The question is basically with respect to the correct interpretation and scope of proviso to Section 2 (q) DV Act in the context of the scheme underlying the other provisions of the Act as well as in tune with the object set out in the statement of objects and reasons.]

The Protection of Women from Domestic Violence Act, 2005 (DV Act, 2005) came into force on 26/10/2006. The Statement of the objects and reasons of the Act states that the Act was legislated on the basis of the recommendation of The United Nations Committee on Convention on Elimination of All Forms of Discrimination against Women (CEDAW). The Statute is a benevolent piece of legislation aimed to provide for more effective protection of rights of women guaranteed under the constitution who are victims of violence of any kind occurring within the family and for matters connected therewith or incidental thereto. The act inter-alia provides for various reliefs to the “aggrieved person” against the “respondent” like protection order, residence orders, and custody orders. Both the terms “aggrieved person” and “respondent” have been defined under the definition clause of the DV Act, 2005. As far as the definition of “aggrieved person” as defined under Section 2 (a) of DV Act, 2005 is concerned; there is no controversy. However, same is not true when we visit the definition of “respondent” as defined under Section 2 (q) of DV Act, 2005 which defines the same in following words:-

2(q) “respondent” means any adult male person who is, or has been, in a domestic relationship with the aggrieved person and against whom the aggrieved person has sought any relief under this Act:

Provided that an aggrieved wife or female living in a relationship in the nature of a marriage may also file a complaint against a relative of the husband or the male partner.”

The inherent ambiguity in the aforesaid definition clause, is very much apparent from the reading of the main enacting part in which it defines respondent as any adult male person in a domestic relationship with the aggrieved person, at the same time the proviso of the same definition clause says that an aggrieved wife or female living in a relationship in the nature of a marriage may also file a complaint against a relative of the husband (read without any gender bias) or the male partner. A controversy that arose from the aforesaid ambiguity is whether ‘respondent’ as defined under Section 2(q) includes a female person or not under the scheme of DV Act, 2005.

The ambiguity with respect to the correct interpretation and scope of the term “respondent” first came up in the case of Ajay Kant and Ors. v. Smt. Alka Sharma reported in 2008 (2) Crimes 235 (M.P.) in which the Hon’ble Madhya Pradesh High Court dealt with the notice issued by the Magistrate to the petitioners on an application filed under Section 12 of the Act. Learned single Judge after referring to the definition of respondent in Section 2(q) and Statement of Objects and Reasons for enacting the Act held that for obtaining any relief under the Act, an application can be initiated against only adult male person and on such application or under such proceeding, protection order can be passed; those orders will also be passed only against the adult male person and as provided under Section 31 of the Act, non compliance of a protection order or an interim protection order has been made punishable and as such it can be said that the complaint for this offence can only be filed against such adult male person/respondent who has not complied with the protection order, and it is clear that the application under Section 12 of the Act which has been filed by the respondent against petitioners No. 3 and 4 who are not adult male persons is not maintainable and accordingly quashed the proceedings against petitioners 3 and 4 therein.

The aforesaid judgment of the Ajay Kant (supra) was followed by the Hon’ble Madras High Court in the case of Uma Narayanan Vs. Priya Krishna Prasad (2008) 3 MLJ 756 (Mad) in which the Hon’ble Madras High Court held that term respondent would mean only an adult male person thus, an application under Section 12 of the DV Act, 2005 is not maintainable as against a Women.

However, the subsequent decisions of Hon’ble Rajasthan High Court differed from the view taken by the Hon’ble MP High Court and the Madras High Court.

The Hon’ble High Court of Rajasthan in Sarita vs Smt. Umrao, cited as 2008 (1) WLN 359 has categorically held that “From a plain reading of the proviso to Section 2(q) of the Act of 2005 it is a apparent that a complaint by a wife or a female living in relationship in the nature of marriage may also file a complaint against a relative of the husband. The term relative is quite broad and it includes all relations of the husband irrespective gender or sex.” The High Court of Rajasthan in another case Nand Kishore and Ors. Vs State of Rajasthan and Anr. cited as RLW2008 ( 4 ) Raj 3432 has interpreted the S. 2(q) of the Act and its proviso, if read together nowhere suggest that the relative of the husband or the male partner has to be a male. In proviso to section 2(q) of the Act the word is “relative” and not male relative. It further held that a female relative is not excluded from the definition of respondent contained in section 2(q) of the Act.

However, with due respect to the Hon’ble MP High Court and Madras High Court, the author is of the view that the judgment of the Hon’ble MP High Court is based on erroneous interpretation of Section 2(q) of the DV Act, 2005 which purportedly rules out the Woman as “Respondent” under the scheme of DV Act, 2005. The Director of Southern Institute for Social Science Research, Dr. SS.Jagnayak in his report has described the ambiguity in Section 2 (q) as “Loopholes to Escape the Respondents from the Cult of this Law” and opined in the following words:-

“As per Section 2 Clause (q) the Respondent means any adult male person who is or has been in a domestic relationship. Hence, a plain reading of the Act would show that an application will not lie under the provisions of this Act against a female. But, when Section 19 (1) proviso is perused, it can be seen that the petition is maintainable, even against a lady. Often this has taken as a contention, when ladies are arrayed as Respondents and it is contented that petition against female Respondents are not maintainable. This is a loophole which should be plugged.”

The loophole with respect to the inherent ambiguity in Section 2 (q) which Dr. SS Jagnayak suggests to be plugged can be done with correct interpretation of main enactment of Section 2 (q) if read together with proviso to Section 2 (q) DV Act in the context of the scheme underlying the other provisions of the Act as well as in tune with the object set out in the statement of objects and reasons. Now, let’s see the interpretation and scope of Section 2 (q) DV Act in accordance with the accepted principles of interpretation of statutes.

If we look at the definition of “Respondent” as defined under Section 2 (q) of DV Act, 2005, the definition can be segregated into two parts:

(a) Main enacting part which deals with aggrieved person in domestic relationship;

It carves out a situation in which the respondent can only be a male person in domestic relationship with an aggrieved person against whom the aggrieved person has sought any relief. Thus, the generality of main enactment relates to “aggrieved person”.

(b) Proviso; (providing for an exception to main enacting part) when the aggrieved person is wife or female living in a relationship in the nature of a marriage.

It carves out an exception to the generality of the main enactment, which in clear terms says that in case an “aggrieved person” is a wife or female living in a relationship in the nature of a marriage, she may also file a complaint against a relative of the husband or the male partner.

If we look into the definition of the term “Aggrieved Person” as defined under Section 2 (a) DV Act, 2005 which mean any woman who is, or has been, in a domestic relationship with the respondent and who alleges to have been subjected to any act of domestic violence by the respondent. The definition of “aggrieved person” in domestic relationship is wide enough to cover sister, mother, daughter and sister-in-law including the wife or any female living in the nature of marriage. Thus, every relation in the nature of marriage necessarily will be “domestic relationship” but the same is not true the vice versa.

Thus, the proviso to Section 2 (q) carves out a special situation for an aggrieved person who is wife; the respondent may be a female relative of the husband or male partner. In other cases where the aggrieved person is any woman in domestic relationship say sister, mother etc. except wife or female in a relationship in the nature of marriage, the complainant shall be necessarily be a woman and the respondent also shall necessarily be a male as provided in the main enacting part of Section 2 (q).

It is the accepted rule of interpretation with respect to “Proviso” as an internal aid to interpretation as enunciated in the Judgment of Hon’ble Apex Court in J.K. Industries Ltd. and Ors. Vs. Chief Inspector of Factories and Boilers and Ors. 1996 VII AD (SC) 125 that proviso qualifies the generality of the main enactment by providing an exception and taking out from the main provision, a portion, which, but for the proviso would be part of the main provision. As a general rule, in construing an enactment containing a proviso, it is proper to construe the provisions together without making either of them redundant or otiose. Even where the enacting part is clear, it is desirable to make an effort to give meaning to the proviso with a view to justifying its necessity. It is not a proper rule of interpretation of a proviso that the enacting part or the main part of the section be construed first without the proviso and if the same is found to be ambiguous only then recourse may be had to examine the proviso. On the other hand, an accepted rule of interpretation is that a section and the proviso thereto must be construed as a whole; each portion throwing light, if need be, on the rest. A proviso is normally used to remove special cases from the general enactment and provide for them specially.

Therefore, applying the ratio stated in J.K. Industries Ltd.,(supra) the proviso of Section 2(q) should be read together with the main enacting part to give meaning to the proviso with a view to justifying its necessity and both should be read together without making either of them redundant or otiose.

The proviso to Section 2 (q) deals with complaint against two categories of persons i.e., (1) a relative of the husband or (2) the male partner. By construing the main enactment part of Section 2 (q) without taking into consideration the proviso, the meaning of “Respondent” is restricted only to the male persons, which makes the expression “a relative of the husband” redundant as used in proviso to Section 2 (q) which is not contemplated under the scheme of DV Act, if read with Section 19 and Section 21 of the DV Act. The wordings of Section 19 of the DV Act makes it clear that the section provides for disposal of applications made under Sub-section (1) of Section 12 by the Magistrate. Under Sub-section (1) of Section 19, the Magistrate can pass any order against a female person other than the orders under Clause (b). Whereas proviso to Sub-section (1) of Section 19 puts a bar on the power of the Magistrate for passing an order against any person who is a woman under Section 19(1)(b).

In other words, except residence order under Section 19(1) (b), it is competent for the Magistrate to pass orders against the relatives of the husband including a female person under Section 19(1)(c) i.e., restraining the respondent or any of his relatives from entering any portion of the shared household in which the aggrieved person resides. For example, if the aggrieved person along with her husband resides in a house owned by joint family including the presents of the respondent, his brothers and sisters, if any, whether or not the respondent has no legal or equitable interest or title in the shared household, he can be restrained from dispossessing the aggrieved person.

Further under Sub-section (8) of Section 19, if an aggrieved person was provided with residential house towards her Stridhan, which is in occupation of the relatives of the husband, the Magistrate can direct the respondent including the female relative of the husband for return of the possession of Stridhan property or valuable security, namely, gold jewellery etc., which was in possession of the female member of the husband.

Further, Section 21 of the Act deals with grant of temporary custody of any child or children to the aggrieved person or the person making an application on her behalf and specifies necessary arrangements for visit of such child or children by the respondent. For instance, if the children are under the custody of mother-in-law of an aggrieved person, if we give a restricted meaning to Section 2(q), no such order can be passed for giving temporary custody of the child against a female relative of the husband i.e., father, mother who are residing jointly.

It is it is a well settled principle of law that for the interpretation of statute, attempt must be made to give effect to all the provisions and the all the provisions should be read together. No provision should be considered as surplus age or redundant which is clear from the pronouncement of the Hon’ble Apex Court in Bhavnagar University v. Palitana Sugar Mill Pvt. Ltd. and Ors. (AIR 2003 SC 511) . Thus, it is well settled that the Legislature does not use any word unnecessarily. Every word, expression used in a statute has a meaning, a reason and it cannot be devoid from its reason. If we construe a statute without the reason underlying it, it would be like “body without a soul”. The statute should be construed with reference to its reason as observed, in paragraph 9 of the judgment of the Apex Court in Utkal Contractors & Joinery Pvt. Ltd. (supra)

“…A statute is best understood if we know the reason for it. The reason for a statute is the safest guide to its interpretation. The words of a statute take their colour from the reason for it.”

The provisions of DV Act i.e. the definition clauses, provisions of DV Act, if read together with the Statement of objects and reasons under Bill No. 116 of 2005 for passing the DV Act makes it clear that the complainant shall be necessarily be a woman and the respondent also shall necessarily be a male except in cases where the complainant is a wife, the respondent may be a female relative of the husband or male partner. The Bill under Clause 4(i) of the Statement of Objects and Reasons seeks to cover those women who are or have been in a relationship with the abuser where both parties have lived together in a shred household and are related by consanguinity marriage or through a relationship in the nature of marriage or adoption. In addition, relationships with family members living together as a joint family are also included. The Bill enables the wife or the female living in a relationship in the nature of marriage to file a complaint under the proposed enactment against any relative of the husband or the male partner; it does not enable any female relative of the husband or the male partner to file a complaint against the wife or the female partner. It would be pertinent to mention here that the judgment of the MP High Court in Ajay Kant discussed supra though discussed the Statement of Objects and Reasons of DV Act, 2005 has refrained from discussing the aforesaid Clause 4(i) of the Statement of Objects and Reasons which could have thrown some light on intention of the legislature and would have guided the judicial wisdom to interpret the provision of Statute in accordance with the legislative intent.

With due respect to the Hon’ble MP High Court, it is the view of this author that in the said judgment though resort to the Statement of object and reasons was made to but its aid was not taken to understand the true legislative intent. More so, it could not have been done, as the said judgment omitted the vital Clause 4(i) of the Statement of Objects and Reasons.

It is fairly well settled from a series of various judicial pronouncement that reference to the “Statement of Objects and Reasons” is permissible for understanding the background, the antecedent state of affairs, the surrounding circumstances in relation to the statute and the evil, which the statute was sought to remedy. Justice G.P. Singh in his scholarly book “Principles of Statutory Interpretation” 8th Edn., 2001 has observed:

“Reference to the Statement of Objects and Reasons is permissible for understanding the background, the antecedent state of affairs, the surrounding circumstances in relation to the statute, and the evil which the statute sought to remedy.” Further, there are various judicial pronouncements in which the Hon’ble Apex Court used the external aid i.e. “Statement of Objects and Reasons” to find out the true legislative intent. See Central Bank of India v. Workmen: [1960]1SCR200 , B. Banerjee v. Smt. Anita Pan: [1975]2SCR774, Chern Taong Shang v. S. D. Baijal, AIR1988SC603

The aforesaid view of the author finds support in the recent speaking judgment of the Hon’ble Andhra Pradesh High Court in Afzalunnisa Begum & Ors Vs. The State of A.P. & ors Criminal Petition No. 7160 and 8495 of 2008 pronounced on 02/06/2009 in which the Hon’ble High Court after making detailed analysis of Section 2 (q) read with various provisions of DV Act, 2005 particularly Section 19, 21 together with Statement of Objects and Reasons under Bill No. 116 of 2005 for passing the DV Act has in clear term laid down that “the ‘respondent’ as defined under Section 2(q) of the Act includes a female relative of the husband”. The judicial pronouncement of the Hon’ble Andhra High Court makes sense as it has applied the sound principles of interpretation of statutes as discussed by the author in arriving at the aforesaid ratio. The ascertainment of legislative intent is basic rule of statutory construction. A rule of construction should be preferred which advances the purpose and object of legislation. Though a construction according to plain language, which ordinarily be adopted, such a construction should not be adopted where it leads to anomalies, injustice and or absurdities. Having ascertained the intention, the Hon’ble Andhra High Court strived to so interpret the statute as to promote or advance the object and purpose of enactment. The judgment makes sense out of ambiguous & unhappily worded definition of “Respondent” where the purpose of statute is apparent to the judicial eye from the Clause 4 (i) Statement of Objects and Reasons under Bill No. 116 of 2005 for passing the Act.

However, there is no final word from the Hon’ble Apex Court with respect to the correct interpretation and scope of the definition of Section 2 (k) defining the term “Respondent”, and it would be interesting to view the stand of the Hon’ble Apex Court when this vexed question of law comes before it.

Mobile without valid IMEI Number are a threat to National Security

2009-12-18T19:36:00.000-08:00

Neeraj Aarora: AICWA, LLB, PGD (Cyber & DLTA), CFE (USA)

Mobile phones have grown to be indispensable to our life. It has done wonders to stay us connected 24x7. India is being recognized as the fastest growing mobile phone market in the world. However, the same mobile phones may also sometime pose a threat to national security. It is estimated that there are around 30 million Chinese handsets in the country which lack an International Mobile Equipment Identity (IMEI) number which poses a serious threats to the national security as such phones have allegedly been used by the terrorists. The telecom ministry also estimates that around 30 million or eight percent of India's mobile phone subscribers use the cheap handsets without IMEI number that are generally imported from China and Taiwan.

The Chinese handsets without a valid IMEInumber were hitherto (before ban) available very easily in Grey Indian Market and one can buy such Chinese handset mostly imitation of popular costly mobile brands like Nokia N 97 being sold like hotcakes as the customers from lower income groups can purchase it at cheaper rates offering them the same features as that of the costly original version. However, without valid IMEI number, as stated aforesaid the customers were using such sets at the cost of national security.

So what is an IMEI Number ?

IMEI is known as International Mobile Equipment Identity. The IMEI is a 15 digit number which includes information on the origin, model, and serial number of the device. It helps in uniquely identifying a handset and its location on the network and most importantly allows security agencies to track down a specific user. It can be displayed on most phones by dialing *#06#. It is also usually printed on the compliance plate under the battery. The numerical format of IMEI currently utilized is:-

11111111-222222-3

It should be noted that no two mobile handsets in the world should have the same IMEI number. With the IMEI number, the GSM operators can locate, track or immobilize a handset. Whenever a user makes a call from his handset IMEI number on genuine handsets gets reflected at the operator's network thus enabling identification of the caller or lawful interception of all calls and it also allow the investigating agencies to trace various mobile number used on the same mobile instruments. With the IMEI number in hand and working in collaboration with the telecom operators, it becomes very easy for the investigating agencies to detect the location or user of the subject mobile number. It was on the basis of the IMEI number that the police established that LeT operative David Coleman Headley had stayed in Lemon Tree Hotel in Mithakali, before 26/11 attacks . Further, recently in the Mumbai Terror attacks, the investigation into some of the mobile numbers used by the deceased terrorists of the Mumbai terror attacks revealed the Pakistani connection. The terrorists in the course of offence used five mobile handsets for communicating/seeking instructions from the co-conspirators in Pakistan. The investigation into the IMEI numbers of these handsets has revealed that these were manufactured at the Nokia factory, at Dong Guan, China and shipped to Pakistan . The details are as per overleaf:

Sr.No. Details of mobile Place of offence Details of vendor
1. Nokia 1200, IMEI No 353526024049451 Hotel Taj United Mobile, Pakistan
2. Nokia 1200, IMEI No 353526025840890 Hotel Taj 12 Pakistan (Pvt) Ltd
3. Nokia 1200, IMEDI No 353526025828739 Nariman House 12 Pakistan (Pvt) Ltd
4. Nokia 1200, IMEI No. 353526025842235 Nariman House 12 Pakistan (Pvt) Ltd
5. Nokia 1200, IMEI No 353526025933620 Hotel Oberoi United Mobiles, Pakistan

It is further revealed that the address of 12 Pakistan (Pvt) Ltd is, 2nd Typical Floor, Executive Tower, Dolmen City, Block 4, Clifton, Karachi, Pakistan.

The importance of IMEI number from the security point of view cannot be overlooked as investigators investigating the various terrorist attacks in our country have reported that some of the terrorists were using Chinese mobile phones in which the International Mobile Equipment Identity (IMEI) number, or a 15-digit code that appears on the operator's network whenever a call is made, is absent. The intelligence agencies warned that in the past too, terrorists have been found using Chinese phones, in which the code is absent, to carry out attacks in the country. The absence of this IMEI number literally makes the work of the investigating agencies impossible to trace the culprit and connect him with crime particularly when the culprit replaces his existing SIM card with a new SIM card in his mobile phone without a valid IMEI number. However, it is to be noted that though by dialing *#16# one can see IMEI number being displayed on the screen, however, the mobile call records reveal only first 14 digit out of 15 digit and the last digit is always missing which is known as “Check Digit”. The investigating agencies, obviously match the 14 digit IMEI number i.e. made available by the mobile service provider companies with the subject mobile. The defense often raises question/objection with respect to the missing last 15 digit known as “Check Digit”. Generally, the controversy pertains to the last digit recorded in the seizure memo prepared by the investigating agencies when the handset is recovered and the last digit recorded in the call details provided by the service provider. The same question arose before the Supreme Court, in the decision reported as State (NCT of Delhi) v. Navjot Sandhu MANU/SC/0465/2005: 2005CriLJ3950 , the Supreme Court dealt with the said issue as under:

“One more point has to be clarified. In the seizure memo (Ext. 61/4), the IMEI number of Nokia phone found in the truck was noted as ...52432. That means the last digit '2' varies from the call records wherein it was noted as ...52430. Thus, there is a seeming discrepancy as far as the last digit is concerned. This discrepancy stands explained by the evidence of PW 78 - a computer Engineer working as Manager, Siemens. He stated, while giving various details of the 15 digits, that the last one digit is a spare digit and the last digit, according to GSM specification should be transmitted by the mobile phone as '0'....”

How to check the “Check Digit”?

To understand the calculation of “Check Digit”, first let’s see at the structure of the IMEI itself:

1. The origin and model comprise the initial 8-digit portion of the IMEI, known as the Type Allocation Code (TAC).

2. The first two digits of TAC are for the Reporting Body Identifier and indicate the GSMA-approved organization that registered a given mobile device, and allocated the model a unique code.

3. The remainder of the IMEI is manufacturer-defined serial no. which has been uniquely assigned to the specific type of handset.

4. The CD (Check Digit) is used to check the code for its validity (which is never transmitted) for Phase 2 and Phase 2+ handsets. Phase 1 GSM handsets, however, always have zero ("0") as check digit.

Check Digit:

A. The last number of the IMEI is a check digit calculated using the Luhn algorithm.

B. The check digit shall always be transmitted to the network as “0”

C. The purpose of the Check Digit is to help guard against the possibility of incorrect entries to the CEIR and EIR equipment.

D. The Software Version Number (SVN) of a mobile is not included in the calculation

“Computation of Check Digit”

The check digit is validated in three steps:

1. Starting from the right, double a digit every 2 digits (e.g. 7 → 14)

2. Sum the digits (e.g. 14 → 1 + 4)

3. Check if the sum is divisible by 10

Conversely, one can calculate the IMEI by choosing the check digit which would give
a sum divisible by 10. For the example IMEI 49015420323751?

IMEI 4 9 0 1 5 4 2 0 3 2 3 7 5 1 ?
Double every other 4 18 0 2 5 8 2 0 3 4 3 14 5 2 ?
Sum digits 4 + (1 + 8) + 0 + 2 + 5 + 8 + 2 + 0 + 3 + 4 + 3 + (1 + 4) + 5 + 2 + ? = 52 + ?

To make the sum divisible by 10, we set ? = 8, so the IMEI is 490154203237518

This is how the investigating agencies calculate the missing 15th digit which is also known as “Check Digit”.

Evidentiary value of IMEI number: In the number of the cases, conviction has been done on the basis of the mobile record and analysis of the IMEI number found on the mobile which has been well settled in the famous Parliament Attack Case. Further, in a recent case decided by the Hon’ble Delhi High Court in Gajraj V. State decided on 18.03.2009 (Crl. A. No. 461/2008) reveals that the crucial evidence relating to the subject mobile phone having IMEI No. 35136304044030 was considered. In this case the most important piece of evidence brought on record by the prosecution to connect the accused with the commission of the crime was that the handset having IEMI No. 35136304044030 was being used by the deceased just before his death as evidenced from the call record and the said handset was in the possession of the accused soon after the death of the deceased, inasmuch as, call record evidenced that the mobile number 9818480558, which number was registered in the name of the accused, was being used in the said handset with effect from 24.07.2005; the factum of the possession of the said handset by the accused is further reinforced by the fact that the said handset was recovered from his house at the instance of the accused. Thus, independent of the physical recovery of the handset at the instance of the accused, through the medium of the call details of deceased and accused, there is unimpeachable evidence that the mobile phone of the deceased came in possession of the accused/appellant within 19 hours of the death of the deceased. Similarly, in another case of Vinod Kumar Vs. State [Crl. A. No. 561/2008] decided on 16.03.2009 (Delhi High Court), reveals that the IMEI number of the mobile phone used by the accused person connected him with the crime of the murder of the deceased.

Mobile Phone without IMEI Numbers banned in the interest of national security

Taking serious note of the situation pertaining to the circulation of mobile phones without IMEI number and its potential threat for the national security in view of recent Mumbai Terror attacks, the Department of Telecommunication, Government of India, vide its Letter No. 20-40/2006-BS-III(Pt.) (Vol. I)/201, dt. 3rd September, 2009 has directed all the Cellular Mobile Service Providers that calls from the mobile handsets with any IMEI number which is not available in the latest updated IMEI database of GSMA along with without IMEI or all zeros as IMEI are also not processed and rejected with effect from 24 hrs of 30th November, 2009.

The government approved earlier this year a Genuine IMEI Implant (GII) proposal from service providers that programs genuine IMEI on mobile handsets. In a letter to service providers in April, the Ministry of Communications & IT recognized that some of the users of phones without proper IMEIs were “genuine innocent subscribers” . The cellular operators in India in compliance of the DoT communiqué and direction had offered such subscribers without IMEI number to either discard their handsets or bring them to official outlets of cellular companies to re-programme their IMEI numbers. One without valid IMEI number can go to these official outlets and get IMEI reactivated at a nominal charge of Rs 199/- only. The Mobile Standards Alliance of India (MSAI) is exclusively authorized body in India by GSM Association (GSMA) to perform Genuine IMEI Implant program (GII). MSAI is working in partnership with Cellular Operators Association of India (COAI) and Department of Telecommunications (DOT) to implant the genuine IMEI numbers on to the mobile handsets which are carrying bad/non genuine IMEI numbers as a one time Amnesty Program. The subscribers without having any valid IMEI numbers while visiting these GII centre’s (about 1600 such centers) across the country had to carry with a valid identity proof like, PAN CARD, driving license, Voter ID Card, Passport, ration card etc. for identification purposes.

There were significant rush seen at the GII centre’s and some unscrupulous mobile vendors in the Grey market have taken advantage of the situation and claimed that they have the facility to implant valid IMEI number in the mobiles or their mobiles are sold with valid IMEI numbers. The Crime Branch of Delhi Police on the complaint of the Indian Cellular Association have conducted raid on December 9, 2009 at in the Karol Bagh Electronics market and arrested 23 mobile vendors who were found selling banned Chinese mobile phones. The police have seized from them a total of 3,500 mobile handsets without the IMEI numbers. A “Spiderman Software Box” which was imported from China to upload fake IMEI number on handsets has also been seized from these vendors. The implanting of fake IMEI numbers and selling it to innocent customers have very serious ramifications as far as the national security is concerned. Given the large number of banned Chinese mobiles in circulation, it could lead to large scale tampering/manipulation of IMEI numbers. Given the increasing role of cell phone transcripts in monitoring and investigating anti-social activities including high profile terror cases, usage of fake IMEI number could lead to failure of the very objective of the GII drive initiated by the Department of Telecommunications, Government of India.

Earlier, the Mumbai police have also conducted similar raids on October, 2009 and seized banned Chinese mobile phones without IMEI numbers. The offenders were booked under Section 41(d) of the Criminal Procedure Code which empowers the police to arrest any person who is suspected to be in possession of stolen property. However, Section 41 Cr.P.C. is not a penal provision and only empowers the police to arrest a person under certain circumstances mentioned under the said Section 41 Cr.P.C.
However, the implantation of fake IMEI number in the mobile phone attracts the penal provision of Section 420, 468 read with Section 471 Indian Penal Code, as the mobile vendors are cheating the gullible customers by passing them banned mobile phones with fake IMEI numbers as genuine one and part with their hard earned money. Further, they for the purpose of cheating commit forgery of the IMEI number which is an electronic record and thus attracts Section 468 IPC and by showing the mobile having fake IMEI number as genuine one, when they have reasons to believe that the same are forged one, the section 471 IPC is also attracted. The Delhi police have imposed these sections of Indian Penal Code on these unscrupulous vendors of banned Chinese mobile phones which are cognizable and non-bailable and have shown non compromising attitude of the Government of India as far as national security is concerned.

Delhi High Court seeks opinion from Attorney General over sovereign immunity

2009-11-25T22:16:00.000-08:00

The Delhi High Court on the plea of sovereign immunity raised by the state has asked for the opinion of the Attorney General as to in how many cases, the state has taken or raised the plea of “sovereign immunity” in which state claim immunity for its tortious acts and denies compensation to the aggrieved party. It would be pertinent to mention that the doctrine of sovereign immunity is based on the Common Law principle borrowed from the British Jurisprudence that the King commits no wrong and that he cannot be guilty of personal negligence or misconduct, and as such cannot be responsible for the negligence or misconduct of his servants. Another aspect of this doctrine was that it was an attribute of sovereignty that a State cannot be sued in its own courts without its consent.

During the hearing of the Motor Accident Claim case in the Delhi High Court, the Hon’ble Justice Mr. J.R. Middha issued the direction to the Attorney General. This was a case of motor accident in which an Air Force Vehicle was involved and the state has raised the plea of “Sovereign immunity” and contended they should be absolved from liability to pay compensation to the victim party on the principle of “sovereign immunity”. In fact, state representing the Air Force has appealed in the High Court against the order of lower court in which the lower court has ordered the Air Force to pay the victim party a compensation of Rs. 4,75, 000 (Four Lakhs and Seventy Four Thousands). The state appealed against the said order of the lower court in the Delhi High Court. On 22nd May, 1999, one Ram Kumar Giri along with his family was going to Faridabad by Tata Sumo vehicle, which met accident with an Air Force Vehicle. Ram Kumar Giri succumbed to the accident and died.

The victim party was represented by the law firm, Hazen Legal Associates and Mr. Neeraj Aaroa, advocate has successfully argued at length before the Delhi High Court, the dichotomy between sovereign and non-sovereign functions citing leading judgments of Apex Courts and various High Courts and made a forceful contention before the Delhi High Court that the doctrine of sovereign immunity has no application so far as claims for compensation under the Motor Vehicles Act are concerned.

Cyber criminal arrested through digital footprint- An excellent job by Special Cell, Delhi Police

2009-09-28T23:20:00.000-07:00

Neeraj Aarora: AICWA, LLB, PGD (Cyber & DLTA), CFE (USA)
There is lack of security culture amongst the user of computer, computer system, and computer networks. The same is evident from the recent report of Anoushka Shankar (daughter of the legendary music maestro Pandit Ravi Shankar) email hacked into by an offender who took control of some very private photographs stored in the inbox of the email.
Pandit Ravi Shankar has made a complaint to Union Home Ministry that his daughter is blackmailed and threatened via email by some unknown person. Later the complaint was referred to the Delhi Police and the investigation of the case was taken up by Inspector Pawan Kumar under the supervision of ACP Sanjeev Yadav elite Special Cell of Delhi Police. The unknown accused person was allegedly blackmailed and threatened Anoushka via emails that he would make some of her photographs public found in her email inbox, if his demand of $ 100,000 is not paid by her. The unknown accused person apparently hacked the email account of Anoushka and took control of some of private photographs stored in the inbox.
The aforesaid officers of Elite Wing of the Delhi Police, the Special Cell, did a commendable job. Apparently, the accused person took control of the password of the email account of Anoushka by hacked into it. He found some very private photographs of her and thought to make some easy bucks out of it, by blackmailing Anoushka as it would cause great embarrassments to the father daughter duo who are internationally recognized musicians.
The special cell cops traced the internet protocol address (IP address) from which the Emails were sent. An IP address or "Internet Protocol" address is the unique number assigned to every device such as a computer on an internet network so that data can be routed to and from that device and no other. It is much similar to a postal mailing address that identifies the physical location of your post office and allows the mail carrier to know where to deliver the mail, a device's IP address is what allows the internet to know where to send the data destined for the particular computer. It’s not an easy task to trace the physical location of the computer to which an internet IP address has been assigned and thereby identify the computer's user as we are made to believe through some Hollywood movies. It’s not that just you located the IP address, you located a criminal. It’s nowhere that easy.
The IP address are assigned to a netuser not based on his location but from the Internet service provider (ISP) from where he gets the net connectivity, which may be different from user to user, if they avail the services of different ISPs. Even, if the user avails the services of the same ISPs there are no hard & fast rules that the IP addresses necessarily appear "close" to one another in any sense, other than the convenience of the ISP.
The IP address can be tracked from the header of the Email IDs. There are various IP address locator available like http://www.whois-search.com from where one can get information about the ISP address to which the particular IP address belongs. Some additional information may be available that indicates the general area that an IP address might reside, i.e. the location of the country or city, if ever, but nothing more specific than that. Here the help of the ISP is required to pinpoint the location and identity of the user. The ISP that allots the IP address to particular computer knows where the user lives. But the ISP’s would not provide the information to the general public due to the strict privacy policy which they adhere to. Here the role of law enforcement machinery comes into picture. The Police and the courts can, with appropriate cause, direct the ISP that the requisite information with respect to the IP addresses be provided. The Section 91 of Code of Criminal Procedure, 1973 and Section 69 of the Information Technology Act, 2000 makes provision to this effect.
The extortive emails sent by the offender were found to be sent mostly from Gmail Account. However, the Gmail blocks the IP address of the sender and it is not visible to the recipient of the email. However, one email was found to be from other email service provider and it was found that it had been sent from India; rest of the emails were found to be from Dubai, elsewhere in the UAE, and the USA. The police tracked down one of the IP address to a residential address located at MUMBAI and nabbed the accused person, whose name came to be known as Junaid Jameel Ahmed Khan who confessed to his crime. The cops seized the hard disk of the computer from which the alleged emails were sent, prepared the mirror image of the same and the hard disk was sent to the Forensic Science Laboratory, Hyderabad for further analysis. The cops also seized the passport of the offender through which it was found that the offender was at Dubai on the same date when the extortive emails from Dubai were received by Anoushka, which clearly corroborates the offence committed by the offender.
The Special Cops did a commendable job in nabbing the accused person who was blackmailing Anoushka and giving her sleepless nights. The police have seized and preserved the crucial digital evidences and other documentary evidences which would prove the guilt of the accused person. Cyber technology is an extremely complicated field and the internet is being increasingly used as a place to commit crimes using personal computers, as well as network-based computers. It clearly shows that the Special Cell Cops know their job; they not only understand the criminal mindset but also Computers and networks, how they work, and how to track down information on them and know the basics of gathering evidence and bringing offenders to justice.
The Special Cell cops registered the case under Section 386 Indian Penal Code which deals with offence of extortion. The maximum punishment for such a crime, if proven guilty, is 10 years’ imprisonment. The offence is cognizable and non bailable. The accused hacked into the email of the Anoushka, however the police at the preliminary investigation stage did not invoked Section 66 IT Act, because the modus operandi of the offender was not known as how he took control of the private photographs of Anoushka, which during investigation and seizure of the computer become apparent that the same has been copied into his computer by hacking the email id of Anoushka. Now Section 66 IT Act has been added as the same is attracted to the offence. The material evidence seized by the cops proves the involvement of the offender as the IP address has been traced to his residence. Further, the examination and analysis of the seized hard disk of the computer of offender at the forensic laboratory would prove that the emails have been hacked into and photographed copied by the offender from the inbox of the email. If it is further revealed by the analysis of the hard disk that the photographs (read obscene or nude) found in the possession of the offender, have been transmitted by him electronically, say some of his friends, the same would amount to publication in electronic form which would be squarely covered and punishable under Section 67 of the IT Act, 2000 as well.
Thus, the excellent investigation done by Inspector Pawan Kumar under the supervision of ACP Sanjeev Yadav of the Special Cell, Delhi Police should be applauded which gives a warning to the prospective criminals that they are not anonymous in the virtual world. Their activity on the internet leaves a footprint through which they can be traced and brought to justice. However, at the same time the netizens need to be educated about the best security practices they should adopt and keep in mind while they use computers, computer systems, computer networks and should not fell into the trap of cyber criminals, like Anoushka. After all, prevention is better than cure. Any Quarry Please Send the mail nkacyber@gmail.com

Ghaziabad Changing Room Incident Shines Spotlight On Video Voyeurism

2009-09-28T23:18:00.000-07:00

Neeraj Aarora: AICWA, LLB, PGD (Cyber & DLTA), CFE (USA)
The arrest of famous store room owner at Ghaziabad for allegedly planting secret camera to make clippings of the female customer while using the trial room has shown adverse impact upon our concept of privacy. The peeping cameras are becoming technologically advanced, tiny and easily available at cheaper prices. They can be planted secretly with ease and its pervasive application has contributed to the growing fascination for younger generation obsession with voyeurism. The Ghaziabad incident is not an unprecedented act and various newspapers have reported similar incidents of surreptitiously concealed peeping toms prying into locker rooms, changing rooms of malls, swimming pools in prurient attempts to film unsuspecting victims while in various state of undress. The said newspaper reports are alarming being a very invasive and intimidating crime which also poses a fundamental challenge to individual privacy.
What is Video Voyeurism?
A new phenomenon of video voyeurism also known as “cyber peeping” has emerged in recent times where images of private area of subject mostly females are captured without her knowledge and then transmitted widely without her consent thus violating privacy rights. Video Voyeurism is the act of secretly or discreetly photographing certain parts of the body mostly unclothed without the person's consent. Video voyeurism typically refers to “up-skirt” or “down-blouse” images taken of women without their consent. We have seen the rise in the cases of video voyeurism, where the victims have been clicked without ever knowing that they have been clicked revealing their private parts. The phenomenal growth of the internet and its user, mostly of the younger age has given rise to this “up-skirt and down-blouse photography” which one can view easily at host of video voyeurism websites. The voyeurs who are psychopath to satisfy their lust see surreptitious video surveillance as a form of high-tech hunting and take pride in showcasing their talent in various video voyeurism Web sites which has mushroomed at the World Wide Web and mostly go free taking shelter under the current gap in the law. The Acts of video voyeurism are not only an invasion of a person's privacy, but are also a serious threat to the liberties of a free society as we know and also against our high moral & cultural values or ethos. These criminal activities undermine the most basic levels of privacy to which every citizen is entitled.
Do we have law to deal with menace of Video Voyeurism?
Realizing the ever growing menace of the Video Voyeurism, the USA, passed federal legislation known as the Video Voyeurism Prevention Act of 2004, which prohibits knowingly capturing an image of private area of an individual by video tape, photograph, film, or any means or broadcast without that individual’s consent and under circumstances in which the individual has a reasonable expectation of privacy. (See relevant Section 1801 of Video Voyeurism Prevention Act of 2004) Thus the said law, make it a crime to secretly record or distribute images of people in places where they have a reasonable expectation of privacy, such as bathrooms, dressing rooms, locker rooms, hotel rooms and mall etc. The law defines a "private area" as the naked or undergarment clad genitals, pubic area, buttocks, or female breast of an individual. The law however makes an exception and does not apply to people engaged in lawful law enforcement or intelligence activities.
In India also, we have seen increasing incidents of video voyeurism due to advance technology that has made today's hidden cameras tiny, sleek and adapted for WiFi connections to make transfer of the captured film or movie clip to the web easier and faster. Internet is a product of US Technology, so issues relating to Internet are heavily flavoured by US Constitutional and Legal doctrines. The legislature was aware of this problem and there was no stringent law to specifically deal with the menace of video voyeurism which was rampant due to modern technology. The amendment proposed to the IT Act, inserted a new Section 66E which specifically addresses video voyeurism which is inspired by the Video Voyeurism Prevention Act of 2004 of US. The wordings of proposed Section 66E which makes this sort of “cyber peeping” a felony is as under:
“66E Punishment for violation of privacy”
Whoever, intentionally or knowingly captures, publishes or transmits the image of a private area of any person without his or her consent, under circumstances violating the privacy of that person, shall be punished with imprisonment which may extend to three years or with fine not exceeding two lakh rupees, or with both
Explanation.- For the purposes of this section--
(a) “transmit” means to electronically send a visual image with the intent that it be viewed by a person or persons;
(b) “capture”, with respect to an image, means to videotape, photograph, film or record by any means;
(c) “private area” means the naked or undergarment clad genitals, pubic area, buttocks or female breast;
(d) “publishes” means reproduction in the printed or electronic form and making it available for public;
(e) “under circumstances violating privacy” means circumstances in which a person can have a reasonable expectation that--
(i) he or she could disrobe in privacy, without being concerned that an image of his private area was being captured; or
(ii) any part of his or her private area would not be visible to the public, regardless of whether that person is in a public or private place.
Why the Ghaziabad Police have invoked the Indian Penal Code and not the aforesaid provision of IT Amendment Act?
In the reported cases of similar nature the police have invoked Section 294 IPC (obscene acts) and Section 509 IPC (insult to modesty of Women) both of which are bailable as per the 1st Schedule to the Code of Criminal Procedure, 1973. The 1st Schedule to the Cr.P.C. categorizes the offences as Cognizable/non cognizable or Bailable/non-bailable. The IT Amendment Act has yet not been notified by the Government and therefore, the offender cannot be booked under newly inserted Section 66E of the IT Amendment, in view of the clear mandate of Article20 (1) of the Constitution of India which says that, “No person shall be convicted of any offence except for violation of the law in force at the time of the commission of the act charged as an offence….”. However, it would be pertinent to mention here that aforesaid Section 66E is bailable offence as per the scheme of the yet to be notified Act and if it would have been invoked had the amendment act been notified, would not have much difference for it would not have any deterrent effect on the offender as he can walk out freely, the offence being bailable.
Nevertheless, the police should have invoked the provisions of Section 67 IT Act, 2000 (which deals with publication or transmission of obscene information in electronic form) which is stringent penal provision of the IT Act, 2000 as the same is cognizable and non-bailable offence and attracts imprisonment of upto five years and fine upto one lakh rupees in case of first conviction. However, it has been seen that the police in similar cases including the present one have not resorted to Section 67 IT Act, 2000 for the reasons best known to them only. The provisions of Section 67 IT Act, 2000 is clearly attracted as there has been publication or transmission of clippings of female client in various state of undress and same has been transmitted, generated or received stored in electronic/computer equipment which is magnetic, optical or similar device. Thus, the offence is complete in view of Section 67 IT Act read with Section 2 (r) IT Act(defines “Electronic Form”). The provision of Section 67 IT Act, 2000 and Section 2 (r) IT Act is reproduced below:
“67. Publishing of information which is obscene in electronic form.
Whoever publishes or transmits or causes to be published in the electronic form, any material which is lascivious or appeals to the prurient interest or if its effect is such as to tend to deprave and corrupt persons who are likely, having regard to all relevant circumstances, to read, see or hear the matter contained or embodied in it, shall be punished on first conviction with imprisonment of either description for a term which may extend to five years and with fine which may extend to one lakh rupees and in the event of a second or subsequent conviction with imprisonment of either description for a term which may extend to ten years and also with fine which may extend to two lakh rupees.”
“Section 2 (r) "electronic form" with reference to information means any information generated, sent, received or stored in media, magnetic, optical, computer memory, micro film, computer generated micro fiche or similar device.”
Thus, not invoking the provisions of Section 67 IT Act, 2000 which has a deterrent effect on the offenders as well as which would deter the prospective offenders to commit the crime, in a way amounts to shielding the criminal from the criminal process of law and would encourage them to commit the crime with impunity without any fear of law as they know that they can walk out freely, in view of bailable sections slapped on them by the police.
If Any Query Send the mail in neeraj@hazenlegal.com

Blatant misuse of Information Technology Act

2009-05-29T04:47:00.000-07:00

NEERAJ AARORA, ADVOCATE

The blatant misuse of penal provision by the law enforcement agencies due to ignorance of law is not new. The same is true with technical legislations like Information Technology Act, 2000. As per the mandate of the IT Act, 2000, the offences under such Act has to be investigated by the police officer not below the rank of Deputy Superintendent of Police or Assistant Commissioner of Police where police commissioner-ate system is in force. Despite the investigation being given in the hands of superior officer, there have been instances where the IT Act, 2000 should have been invoked in crime situation, where it has been not been invoked and there are some cases where it has been invoked where it should not be. One such case was investigated by Delhi Police in which the provision of Section 67 Information Technology Act was wrongly added by misinterpreting the said section and subsequently the innocent person was arrested and sent to Tihar Jail for the offence which he never committed.

Facts of the Case

The complainant Avinash Bansal made a complaint at a local police station against Rohit who was a colleague of his wife, both of whom were working with a government department. The wordings of the complaint run as follows:-

“Respected Sir, This is to bring to your most urgent notice that constant threats, firthy SMS messages, abusive telephone/Mobile calls are made by Rohit in connivance with his goonda friends/colleagues, one of them name Pramod. The content of SMS given from email id: xxxx@rohitfriend.com at my mobile no. 98xxxxxxxx.

10/12/2004: Time (5:45 P.M to 6:00 P.M)

Bloody wife or your fucking story? Stop calling my office & spitting foul words about me. You did it again today?
Yourself motherfucker? But instead, I am just warning you that KEEP AWAY FROM ME? HENCEFORTH? I don?t have any interest in your
If you do it again then you will be in deep shit? I hope this is clear to you? No more SMS or CALLS to me or to my office?
For a SMS like the one you sent me in the morning I would have replied? FUCK YOU & FUCK YOUR BELOVED WIFE? Arsehole? Go screw

It is prayed from police that I am constantly threatened, abused, physically assaulted by Rohit to fulfill his ill desire of marrying my wife Sunita. I am under constant pressure/threat/harassment by Rohit. Kindly strict action be taken against him to that he is not successful in fulfilling his mal intentions.”

On the aforesaid complaint, initially a FIR was registered u/s 509/34 IPC and the investigation was taken by the local police. The local police arrested the accused Rohit and his friend Pramod and recorded the statement of the mother of the complainant who alleged to have received filthy messages about her on her son’s mobile no. 98xxxxxxxx which was found to be sent by Rohit and Pramod. The mobile phone detail of the complainant was also collected. During the investigation, the complainant Avinash Bansal made a submission to the local police for adding Section 67 IT Act, 2000, as the SMS he received on his mobile phone (which is an electronic medium) and read by his mother were filthy & obscene, and thus, Section 67 IT Act is applicable. The police in its wisdom (misinterpretation of IT Act) hastily added Section 67 IT Act, 2000 to the case without examining the issue in detail. However, subsequently the case was transferred to the Cyber Cell, EOW, Delhi Police.

The Cyber Cell made a detailed investigation and examined the applicability of penal provisions including Section 67 IT Act which revealed that:

The E-Mail address from which the obscene SMS was sent to the Mobile of the complainant was found in the name of Rohit, R/o xxxx, yyyy, New Delhi. The said E-Mail was found to be hosted from the server of M/s Rediff.Com India Ltd.
The mother of the complainant stated that her son Avinash Bansal & his wife Sunita have strained relations and a case of divorce is going on between them. She further stated that she checked the mobile phone of her son Avinash Bansal and found that the filthy messages about her were received on the mobile which was found to be sent by Rohit.
There is an ongoing dispute between the complainant and the alleged person Rohit. The complainant has earlier filed number of complaints against the alleged person Rohit. There has been a compromise signed between the alleged person Rohit & the complainant which reveals that there has been heated exchange of abusive SMS & calls between the alleged Rohit & the complainant. In the compromise dated 18/12/2004 signed by both the parties, the alleged person has stated in the said compromise letter that “I should not be troubled with SMS and calls to me or to my office.
The content of the SMS allegedly send by Rohit were restructured which reads as follows:

“For a SMS like the one you sent me in the morning I would have replied? FUCK YOU & FUCK YOUR BELOVED WIFE? Arsehole? Go screw Yourself motherfucker? But instead, I am just warning you that KEEP AWAY FROM ME? HENCEFORTH? I don?t have any interest in your Bloody wife or your fucking story? Stop calling my office & spitting foul words about me. You did it again today! If you do it again then you will be in deep shit? I hope this is clear to you? No more SMS or CALLS to me or to my office?”

Thus, the contents itself indicates that the said message was sent by the Rohit in response to the message sent by complainant. However, the message send by the complainant could not be collected because the same was not preserved by Rohit. However, the mobile detail of complainant reflects the sending of SMS by him to Rohit.

Legal Proposition

No offence is made out

The aforesaid sequence of the case clearly reveals that it is the animosity between two persons and the complaint has been filed by the complainant to settle his personal grudge against his old foe. Not only there has been blatant misuse of Section 67 IT Act but also the offence u/s 509 IPC is not made out either.

Section 506 IPC

There is an ongoing dispute between the complainant and Rohit and both have filed a number of complaints against each other.
The complainant in his complaint has himself stated that filthy SMS has been addressed to him.
The wording of the aforesaid SMS sent by Rohit reveals that the SMS is abusive and is sent in rage to the complainant in response to the SMS sent by the complainant to the alleged person.
Both the complainant and the alleged person are males and the SMS was sent by the alleged person with sole intention to offend the complainant. Though, the mother of the complainant has stated that she has read the message but the content, circumstances and the investigation reveals that the message was not intended for her. Thus, there is no intention of the Rohit to outrage the modesty of any female member of the family of the complainant and thus, section 509 IPC is not made out.

Section 67 Information Technology Act, 2000:

As per the provision of the Section 67 IT Act, 2000 any information transmitted or published thru electronic form is obscene if: o It is lascivious or appeals to the prurient interest or o If its effect is such as to tend to deprave and corrupt persons who are likely, to read, see or hear the matter contained or embodied in it.
The wordings of the SMS are offending and abusive towards the complainant and by no stretch of imagination can be said to be obscene.
The message was given by the male person of adult age to other male person of the adult age and the wordings of the message of the SMS can at most be said to be offending and abusive sent by the complainant as an outrageous act with the sole intention to offend or hurt the complainant but the wordings of the SMS can hardly cause the feeling of lust or any kind of sexual reflections. Therefore, Section 67 of the IT Act, 2000 is also not attracted in the present case.

Thereafter, the cyber cell has cancelled the case and filed the cancellation report in the court which is pending adjudication.

There is utmost need to make educate and train the police officers at the local police stations with respect to the applicability of the provision of Information Technology Act, 2000 to the crime situation. There should be at least one trained officer at the local police station who should be specifically trained & qualified in cyber crime investigation and the IT Law. Further, the officers at the cyber crime investigation cells should be drawn from qualified IT Professionals and special training sessions should be organized for them to keep them update about the ever changing scenario of the cyber crime situation.

Note: The name of the complainant and the accused persons have been changed for the sake of privacy.