STATEMENT OF OBJECTS AND REASONS
New communication systems and digital technology have made dramatic
changes in the way we live. A revolution is occurring in the way people transact
business. Businesses and consumers are increasingly using computers to create,
transmit and store information in the electronic form instead of traditional
paper documents. Information stored in electronic form has many advantages. It
is cheaper, easier to store, retrieve and speedier to communicate. Although
people are aware of these advantages they are reluctant to conduct business or
conclude any transaction in the electronic form due to lack of appropriate legal
framework. The two principal hurdles which stand in the way of facilitating
electronic commerce and electronic governance are the requirements as to writing
and signature for legal recognition. At present many legal provisions assume the
existence of paper based records and documents and records which should bear
signatures. The Law of Evidence is traditionally based upon paper based records
and oral testimony. Since electronic commerce eliminates the need for paper
based transactions, hence to facilitate e-commerce, the need for legal changes
have become an urgent necessity. International trade through the medium of
e-commerce is growing rapidly in the past few years and many countries have
switched over from traditional paper based commerce to e-commerce.
1 The United Nations Commission on International Trade Law
(UNCJTRAL) adopted the Model Law on Electronic Commerce in 1996. The General
Assembly of United Nations by its Resolution No. 51/162 dated 30th January, 1997
recommended that all States should give favorable considerations to the said
Model Law when they enact or revise their laws. The Model Law provides for equal
legal treatment of users of electronic communication and paper based
communication. Pursuant to a recent declaration by member countries, the World
Trade Organisation is likely to form a work programme to handle its work in this
area including the possible creation of multilateral trade deals through the
medium of electronic commerce.
3. There is a need for bringing in suitable amendments in the
existing laws in our country to facilitate e-commerce. It is, therefore,
proposed to provide for legal recognition of electronic records and digital
signatures. This will enable the conclusion of contracts and the creation of
rights and obligations through the electronic medium. It is also proposed to
provide for a regulatory regime to supervise the Certifying Authorities issuing
Digital Signature Certificates. To prevent the possible misuse arising out of
transactions and other dealings concluded over the electronic medium, it is also
proposed to create civil and criminal liabilities for contravention of the
provisions of the proposed legislation.
4. With a view to facilitate Electronic Governance, it is proposed
to provide for the use and acceptance of electronic records and digital
signatures in the Government offices and its agencies. This will make the
citizens interaction with the Governmental offices hassle free.
5. It is also proposed to make consequential amendments in the
Indian Penal Code and the Indian Evidence Act, 1872 to provide for necessary
changes in the various provisions which deal with offences relating to documents
and paper based transactions. It is also proposed to amend the Reserve Bank of
India Act, 1934 to facilitate electronic fund transfers between the financial
institutions and banks and the Bankers' Books Evidence Act, 1891 to give legal
sanctity for books of account maintained in the electronic form by the banks.
6. The proposal was also circulated to the Stale Governments. They
have supported the proposed legislation and have also expressed urgency for such
Bill seeks to achieve the above objectives,
Clause 4.— This clause provides that where
any law requires any information or matter should be in the typewritten or
printed form then such requirement shall be deemed to be satisfied if it is in
an electronic form.
Clause 5.— This clause provides for legal
recognition of Digital Signatures. It shall be authenticated by means of Digital
Signatures affixed in such manner as may be prescribed by the Central
Clause 6.— This clause lays down the foundation of
Electronic Governance. The filing of any form, application or other documents,
creation, retention or preservation of records, issue or grant of any licence or
permit or receipt or payment in Government offices and its agencies may be dune
through the means of electronic form.
Clause 1.— This clause provides for the documents,
records or information which has to be retained for any specified period shall
be deemed to have been retained if the same is retained in the electronic form.
Clause 8.— This clause provides for the
publication of rules, regulations and notifications in the Electronic Gazette.
Where any law requires the publication of any rule, regulation, order, bye-law,
notification or any other matter should be published in the Official Gazette,
then such requirement shall be satisfied if the same is published in an
electronic form. It also provides where the Official Gazette is published both
in the printed as well as in the electronic form, the date of publication shall
be the date of publication of the Official Gazette which was first published in
Clause 9.— This clause provides for the conditions
stipulated in sections 6, 7 and 8 shall not confer any right to insist the
document should be accepted in an electronic form by any Ministry or Department
of the Central Government or the State Government.
Clause 10.— This clause provides for the
power to make rules by the Central Government in respect of Digital Signature.
Clause 11.— This clause deals with the
attribution of the electronic records to the originator.
Clause 12.—This clause provides for the
acknowledgment of receipt of an electronic record by various modes.
Clause 13.—This clause provides for the time
and place of despatch and receipt of electronic record sent by the originator.
Clause 14.— This clause provides for the
security procedure which has to be applied to an electronic record for being
treated as a secure electronic record.
Clause 15.— This clause provides for the
security procedure to be applied to Digital Signatures for being treated as a
secure digital signature.
Clause 16.— This clause provides for the power of
the Central Government to prescribe the security procedure in respect of secure
electronic records and secure digital signatures.
Clause 17.— This clause provides for the
appointment of Controller and other officers to regulate the Certifying
Clause 18.— Ibis clause provides for the
functions of the Controller in respect of activities of Certifying Authorities
which may be prescribed by regulations.
Clause 19.—This clause provides for the
power of the Controller with the previous approval of the Central Government to
grant recognition for foreign Certifying Authorities subject to such conditions
and restrictions as may be imposed by regulations.
Clause 20.— This clause provides that the
Controller shall be acting as repository of all Digital Signature Certificates
issued under the Act. He shall also adhere to certain security procedure to
ensure secrecy and privacy of the digital signatures and also to satisfy such
other standards as may be prescribed by the Central Government.
Clause 21.— This clause provides that a
licence to be issued to a Certifying Authority to issue Digital Signature
Certificates by the Controller shall be in such form and shall be accompanied
with such fees and other documents as may be prescribed by the Central
Government. Further, the Controller after considering the application either
grant the licence or reject the application after giving reasonable opportunity
of being heard.
Clause 22.— This clause provides that the
application for licence shall be accompanied by a certification practice
statement and statement including the procedure with respect to identification
of the applicant.
Clause 23.—This clause provides that the
application for renewal of a licence shall be in such form and accompanied by
such fees not exceeding five thousand rupees which may be prescribed by the
Clause 24.— This clause deals with the
procedure for rejection of licence on certain grounds.
Clause 25.— This clause provides for suspension of
licence on the grounds such as incorrect or false material particulars being
mentioned in the application and also on the ground of contravention of any
provisions of the Act, rule, regulation or order made thereunder.
Clause 26.— This clause provides that the
Controller shall publish a notice of suspension or revocation of licence as the
case may be in the data base maintained by him.
Clause 27.— This clause provides that the
Controller may in writing authorise the Deputy Controller, Assistant Controller
or any officer to exercise any of his powers under the Act.
Clause 28.— This clause provides that the
Controller shall have power to investigate contraventions of the provisions of
the Act or the rules or regulations made thereunder either by himself or through
any officer authorised in this behalf.
Clause 29.— This clause provides that the
Controller or any person authorised by him. if lie has reasonable cause to
suspect that contravention of the provisions of the Act or the rules or
regulations is being committed, shall have access to any computer system, data
or any other material connected with such system.
Clause 30.— This clause provides for the
Certifying Authority to follow certain procedure in respect of Digital
Clause 31. — This clause provides that the
Certifying Authority shall ensure that every person employed by him complies
with the provisions of the Act, or rules, regulations or orders made thereunder.
Clause 32.— This clause provides that the Certifying Authority
must display its licence at a conspicuous place of the premises in which it
carries on its business.
Clause 33.— This clause provides that the Certifying Authority
whose licence is suspended or revoked shall immediately surrender the licence to
Clause 34.— This clause provides that every Certifying Authority
shall disclose its Digital Signature Certificate which contains public key
corresponding to the private key used by that Certifying Authority and other
Clause 35.—This clause deals with the form in which Digital
Signature Certificate may be issued by a Certifying Authority.
Clause 36.— This clause provides for the Certifying Authority to
certify while issuing a Digital Signature Certificate that it has complied with
the provisions of the Act, the rules and regulations made thereunder and also
with other conditions mentioned in the Digital Signature Certificate.
Clause 37.—This clause provides for the suspension of Digital
Signature Certificate under certain circumstances. Further, such certificate
shall not be suspended for a period of exceeding 15 days unless the subscriber
has been given an opportunity of being heard.
Clause 38.—This clause provides for the revocation of Digital
Signature Certificates under certain circumstances. Further, such revocation
shall not be done unless the subscriber has been given an opportunity of being
heard in the matter.
Clause 39.—This clause provides that the Certifying Authority
shall publish the suspension or revocation of a Digital Signature Certificate in
Clause 40.—This clause provides that the subscriber shall generate
a key pair using a secure system.
Clause 41.—This clause provides for the circumstances under which
a subscriber shall be deemed to have accepted a Digital Signature Certificate.
Clause 42.—This clause provides that the subscriber shall exercise
all reasonable care to retain control of his private key corresponding to the
Clause 43.—This clause provides penalty for damage caused to any
computer, computer network etc. by introduction of computer virus, unauthorised
access and other types of mischief. Any person who is found guilty of
contravening this section is liable to pay damages by way of compensation not
exceeding ten lakh rupees to the person affected thereby.
Clause 44.—This clause provides penalty for failure to furnish
information, returns, etc., which is required to be furnished by any person
under the Act which may extend up to one lakh and fifty thousand rupees for each
such failure. It further provides for if the failure continues, he shall be
liable to a penality not exceeding five thousand rupees for every day during
which such failure continues.
Clause 45.—This clause provides liability to pay a compensation
not exceeding twenty-five thousand rupees by a person who contravenes any
regulations made under the Act for which no liability has been separately
provided under the Act to the person affected by such contravention.
Clause 46.—This clause provides for the power to adjudicate
contravention.; under the Act by an officer not below than the rank of a
Director to the Government of India or an equivalent officer of a State
Government and for holding an enquiry in the prescribed manner after giving
reasonable opportunity of being heard.
Clause 47.—This clause provides that while adjudicating the
quantum of compensation, the adjudicating officer shall have due regard to the
amount of gain of unfair advantage and the amount of loss caused to any person.
Clause 48.—This clause provides for establishment of one or more
Appellate Tribunals to be known as Cyber Regulations Appellate Tribunal.
Further, the Central Government by notification specify the matters and places
in relation to such Tribunal.
Clause 49.—This clause provides for the Cyber Regulations
Appellate Tribunal which shall consist of one person only who shall be appointed
by notification by the Central Government.
Clause 50.—This clause provides for the qualifications for
appointment as a Presiding Officer of the Tribunal.
Clause 51.—This clause provides that the Presiding Officer shall
hold office subject to a maximum age limit of 65 years.
Clause 52.—This clause provides for the salary and allowances and
other terms and conditions of service of the Presiding Officer.
Clause 53.—This clause provides for filling up of any vacancy
occurring in the office of the Presiding Officer of Cyber Regulations Tribunal
and also the procedure to be followed in case of a casual vacancy.
Clause 54.—This clause deals with the procedure for resignation or
removal of the Presiding Officer.
Clause 55.—This clause provides that no order appointing any
Presiding Officer of shall be called in question merely on the ground of any
defect in the constitution of the Tribunal.
Clause 56.—This clause provides that the Central Government shall
provide such officers for the functioning of the Cyber Regulations Appellate
Tribunal. It empowers the Central Government to frame rules relating to
salaries, allowances and other conditions of service of such officers and
Clause 57.—This clause provides for appeal by an aggrieved person
against an order made by an adjudicating officer to the Cyber Appellate
Clause 58.—This clause provides for the procedure and powers of
the Cyber Appellate Tribunal. The Tribunal shall also have the powers of the
Civil Court under the Code of Civil Procedure, 1908.
Clause 59.—This clause provides that the appellant may either
appear in person or may be represented by a legal practitioner to present his
case before the Tribunal.
Clause 60.—This clause provides for period of limitation for
admission of appeals from the aggreived persons to the Cyber Appellate Tribunal.
Clause 61.—This clause provides that no court shall have
jurisdiction to entertain any suit or proceeding in respect of any matter which
an adjudicating officer has jurisdiction to determine.
Clause 62.—This clause provides for an appeal to the High Court by
an aggreived person from the decision of the Cyber Appellate Tribunal.
Clause 63.—This clause provides that any contravention under the
Act shall be compounded by the Controller or adjudication officer either before
or after the institution of the adjudication proceedings subject to such
conditions he may impose.
Clause 64.— This clause provides for recovery of penalty as an
arrear of land revenue and for suspension of the licence or Digital Signature
Certificate till the penalty is paid.
Clause 65.—This clause provides for punishment with imprisonment
up to three years or with a fine which may extend to two lakh rupees or with
both whoever knowingly or intentionally tampers with the computer source
Clause 66.—This clause provides for punishment to whoever
transmits or publishes or causes to be published or transmitted, any material
which is obscene in electronic form with imprisonment for a term which may
extend to two years and with fine which may extend to twenty-five thousand
rupees on first conviction and in the event of second or subsequent conviction
with imprisonment of either description for a term which may extend to five
years and also with fine which may extend to fifty thousand rupees.
Clause 67.— This clause provides that the Controller may give
directions to a Certifying Authority or any employee of such authority to take
such measures or cease carrying such activities specified in such direction.
Clause 68.— This clause empowers the Controller, if he is
satisfied that it is necessary or expedient so to do in the interest of
sovereignty and integrity of India, the security of the State, friendly
relations with foreign States or public order to intercept any information
transmitted through any computer system or computer net work.
Clause 69.—This clause empowers the appropriate Governments by
notification to declare any computer, computer system or computer network to be
a protected system. Any unauthorised access of such systems will be punishable
with imprisonment which may extend to ten years or with fine.
Clause 70.—This clause provides that if any person
misrepresentating or suppressing any material fact to the Controller or the
Certifying Authority shall be punished with imprisonment for a term which may
extend to two years or with fine which may extend to one lakh rupees or with
Clause 11.—This clause provides a punishment for breach of
confidentiality and privacy with imprisonment for a term which may extend to two
years or with fine which may extend to one lakh rupees or with both.
Clause 72.—This clause provides punishment for publishing a
Digital Signature Certificate false in material particulars or otherwise making
it available to any other person with imprisonment for a term which may extend
to two years or with fine which may extend to one lakh rupees or with both.
Clause 73.—This clause provides for punishment with imprisonment
for a term which may extend to two years or with fine which may extend to one
lakh rupees or with both to a person whoever knowingly publishes for fraudulant
purpose any Digital Signature Certificate.
Clause 74.—This clause provides for punishment for commission of
any offence or contravention by a person outside India irrespective of his
nationality if the act or conduct constituting the offence or contravention
involves a computer, computer system or computer network located in India.
Clause 75.—This clause provides for confiscation of any computer,
computer system, floppies, compact disks, tape drives or any other accessories
related thereto in respect of contravention of any provision of the Act, rules,,
regulations or orders made there under.
Clause'76.—This clause provides that penalty and confiscation
provided under this Act shall not- interfere with other punishments provided
under any other law for the time being in force.
Clause 77.—This clause provides for power to investigate the
offences under the Act by a Police Officer not below than the rank of Deputy
Superintendent of Police.
Clause 78.—This clause provides that the Network Service Providers
not to be liable in certain circumstances.
Clause 79.—This clause empowers Police Officer not below the rank
of Deputy Superintendent of Police or any other Officer of the Central or State
Government to enter, search and seize and arrest any person who is reasonably
suspected to have committed any offence under this Act.
Clause 80.—This clause provides that the provisions of the Act
shall have overriding effect over the other law.
Clause 81.—This clause provides that the Controller, Deputy
Controller and Assistant Controller shall be deemed to be public servants within
the meaning of section21 of the Indian Penal Code.
Clause 82.—This clause provides for the Central Government to give
directions to the Government of States as to the carrying into execution, the
provisions of the Act
Clause 83.—This clause provides for protection of action taken in
good faith by the Central Government, the State Government, the Controller or
any person acting on behalf his under the Act.
Clause 84.—This clause provides for offences committed by
Clause 85.—This clause confers the power upon the Central
Government to remove certain difficulties arising out of implementation of the
provisions of the Act.
Clause 86.—This clause confers power upon the Central Government
to make rules.
Clause 87.—This clause provides for
constitution of a Cyber Regulations Advisory Committee which may advise the
Central Government on certain matters under the Act.
Clause 88.—This clause provides for power to
the Controller to make regulations under the Act.
Clause 89.—This clause provides power to the
State Government to make rules.
Clause 90.—This clause provides for amendment of
the Indian Penal Code. The Indian Penal Code provides for offences relating to
documents. It is proposed to amend various sections so as to take care of
offences relating to electronic records also Accordingly,—
(i) a new definition clause containing "electronic record"
is inserted as section 29A;
(ii) sections 167, 172, 173, 175, 192, 204 and 463, being amended to
include electronic record also;
(iii) section 464 is being amended to provide punishment formaking a
false document or false electronic records;
(iv) sections 466, 468, 469, 470, 476 and 477A are being amended to
include "electronic record" also.
Clause 91.—This clause provides for
amendment of the Indian Evidence Act, 1872. The amendments are being made to
take care of admissibility of electronic records along with paper based
documents. Other consequential amendments are also being made to take note of
the provisions of the Information Technology Act, 1999. Salient features of the
amendments are as follows:—
(i) in section 3, in the definition of "evidence" for
"all documents produced for the inspection of the Court" the words
"the contents of electronic records" is also proposed to be inserted;
(ii) after the definition of "India" the expressions
"Certifying Authority", "Digital Signature", Digital
Signature Certificate", "electronic form", "electronic
records" "information" and "subscriber" shall have the
meanings assigned to them in the Information Technology Act, 1999;
(iii) after section 22, a new section 22A is being inserted to
provide lor relevance of oral admissions as to contents of electronic records in
(iv) in sections 34 and 35, the words "electronic record"
are also proposed to be added in addition to books of account and records;
(v) this clause seeks to substitute Wilson 39 which provides for
extent to which a statement forming part of a longer statement will be
admissiblein or take care of statement contained in electronic record;
(vi) after section 47, a new section 47A is proposed to be inserted
in the Act in respect of opinion to be formed by the Court as to the digital
signature by the Certifying Authority;
(vii) in section 59, the contents of "documents" is being
substituted by contents of "documents" or "electronic
(viii) after section 65, two new sections namely, 65 A and 65B are
being proposed to be inserted which are special provision relating to electronic
records and admissibility of computer outputs which is based on the lines sec
36A of the Central Excise Act, 1944 and section 138C of Custom Act, 1962;
(ix) after section 67, a new section 67A is proposed to be inserted
providing for the circumstances in which the digital signature of a .subscriber
may be proved;
(x) after section 73, a new section 73A is proposed lo be inserted
to empower a court to direct a subscriber Certifying Authority or the Controller
to produced a Digital Signature Certificate.
(xi) after section 81, a new section 81 A is proposed to be inserted
with reference to presumption as to the Official Gazette;
(xii) after section 85, three new sections 85A, 85B :NIA 85C arc
proposed to be inserted with reference to presumptions as to electronic
agreements, a electronic records, digital signatures and Digital Signature
(xiii) after section 88, a new section 88A is proposed to be
inserted in respect of presumptions as to electronic messages;
(xiv) after section 90, a new section 90A is proposed lo be inserted
in respect of presumptions as to electronic records five years old;
(xv) section 131 is proposed to be substituted for production of
documents or electronic records which another person, having in Isis possession
could refuse to produce.
Clause 92.—Provides for the amendment of the Banker's Book
Evidence Act, 1891 as follows—
(i) to amend clauses (3) and (8) of section 2 which relates to
definitions of "Banker's Book" and "certified copy".
(ii) after section 2, a new section 2A is proposed to be inserted
imposing certain conditions in the print out.
Clause 93.—Provides for amendment of
the Reserve Bank of India Act, 1934 to insert a new clause (pp) after clause (p)
in sub-section (2) of section 58 with reference to -the regulation of the fund
transfer through electronic means.
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