"I think the bill is a good attempt to cover the use of information technology" - Views on News from Equitymaster

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  • May 26, 2000 - "I think the bill is a good attempt to cover the use of information technology"

"I think the bill is a good attempt to cover the use of information technology"

May 26, 2000

Anil Harish is one of the leading legal experts on matters relating to taxation, property transactions, and the Foreign Exchange Regulation Act.

He is a partner of D. M. Harish & Co, one of India's leading legal firms. Anil has addressed conferences on a wide-range of subjects such as the budget, foreign exchange laws, property laws, and taxation in Bombay, Delhi, Dubai, Madras, Muscat, Pune, and Singapore. Anil assisted his father - the late D. M. Harish in writing India's definitive guide to taxation laws: a 10,000-page 8-volume magna opus that is also available on CD-ROM.

In an interview to Equitymaster.com, Anil Harish, Partner, D. M. Harish & Co, spoke of the new Information Technology Bill, which in his opinion is an instance of the law being ahead of technology.


EQM: What are the key issues that have been dealt with in the IT Bill? How have the provisions pertaining to these issues been altered? Will they conflict with any existing law (such as contract Act)?

Mr. Anil Harish: Some of the key issues that have been addressed by the Information Technology Bill are the legal recognition of electronic records, legal recognition of digital signatures and the use of electronic records in the government and its agencies. Apart from these, there is one other important issue that has been addressed and that is about computer or cyber crime and hacking.

Now there are laws relating to use of records, including paper records. There is the Evidence Act, that everyone has a signature that is personal to himself and it is recognised in court of law. But in case of a digital signature the law does not provide for it as these laws were framed 150 years ago when such technology did not exist. Existing laws will continue to work well for paper documents but not for digital documents and signatures.

India is only the 13th country to have a law relating to the use of digital signatures and digital records. Technology developed and therefore the law has to develop. There will be new situations that will keep arising but the key ones that we are going to be concerned with on a day to day basis is that if a person has made an electronic record, can it be produced as evidence in a court of law. Suppose a person wants to file an income tax return over the Internet, will it be acceptable by the Income Tax department or not? Today, what the income tax department is doing is that in the case of TDS (tax to be deducted at source) they are already accepting information on a floppy, provided that there is a signature given on a separate page stating that the concerned entity is giving that information. Although this is done sort of informally, the law is now going to provide that accepting not only information on a floppy but accepting a return on a floppy or in electronic form is going to be permitted.

One has to understand the nature of technology and put it in a form capable of definition. The law should provide for all its definition in words, being as clear as possible. To take an example:

"The authentication of the electronic record shall be effected by the use of asymmetric crypto systems and hash function which envelop and transform the initial electronic record into another electronic record. For the purposes of this sub section hash function means an algorithm mapping for translation of one sequence of bits into another, generally smaller, set that the record yields the same hash result every time the algorithm is executed using the same record as input; it is computationally infeasible that a record can be derived or reconstituted from the hash result produced by the algorithm; and it is computationally infeasible that two records can be found that produce the same hash result using the algorithm."

The law says that for the electronic signature to be made it has to be technologically done in such a way that no other person can use it and the user cannot deny it at a later date. If a person files an income tax return electronically, and it is found later that he has some other income that he has concealed would it be possible for the income tax department to say that the concerned person has signed it? If the law were not properly defined the concerned person may say No, I have not signed it, and get out of a situation. So the law states that harnessing technology and defining that technology is very important. So that signatures done only in a particular way are valid. For instance, in case of a bank locker, until the concerned person's key matched with that of the banker's to generate the desired combination, the locker will not open. In the same way, the electronic private key and the electronic public key together combine to form a signature which cannot be duplicated easily. Now it is very good that the government has taken these measures. There will be difficulties in the way, but the government has been very proactive in all this. We need this law otherwise e-commerce will not be possible at all.

EQM: Does the bill take measures to protect the interest of the public at large? Does the bill cover issues pertaining to copyright? Security?

Mr. Anil Harish: If a person hacks into another computer system or destroys someone else's computer system the law says that there could be a penalty of upto Rs 10 m. In my view it is a good idea to have a penalty but I don not agree with the rationale to have a maximum limit to the penalty. This is because the loss of one person may be much more than the upper limit imposed by the law. The penalty should be levied as a multiple of the amount of destruction caused i.e. 1 time, 2 times or maybe 5 times the amount of the damage. The law has thus provided for a measure that cannot be provided by other laws because these are not normal means of damage.

A person sitting at his computer in Manila normally under the Indian Penal Code cannot be said to have damaged something or caused destruction or loss to a person sitting in India. But it is possible through the Internet.

This law does not cover other laws that are already there. It is a web in a sense that connects other laws to this kind of technology. For instance there is an Indian Arbitration Act, Indian Penal Code, Income Tax Act and there is a Patent Law. This law does not provide for arbitration or for patents or for income tax. But it states that we are aware of all those laws and we are aware that technology should be used in the implementation of those laws. This is like an enabling law. But many issues will arise. For example the jurisdiction issue will arise. Does the Indian government have jurisdiction over a hacker sitting in Manila? One does not have an answer to that. Maybe that the Indian courts will have to issue a process which will go to a Manila court, which would then conduct an enquiry or take up the case.

Another issue is the Income tax. Now suppose, an Indian site, registered in India, whose servers are located in the US sells goods to a person in Britain. The goods to be sold are stocked in Hong Kong. Issues would arise over which state has rights over the income tax angle and which state has rights over the sales tax angle.

EQM: How do you think the passage of the bill will affect the prospects of e-commerce activities in the country?

Mr. Anil Harish: It will enable it. It will give legal recognition to it, which will mean that if a dispute arises at least the courts will have the jurisdiction to go into these angles to take note of the electronic record. But it's not that issues will become easier. Technology is going to change very rapidly. And therefore there will be situations undreamt of and the law will have to apply itself to these situations.

EQM: Has the bill proposed adequate remedial measures in case of disputes arising out of transactions conducted over the Internet?

Mr. Anil Harish: A cyber tribunal has been set up, which is very good. The focus of the tribunal as distinct from the courts is that it is a specialized body and the judges who will be sitting on the tribunal will know the cyber law and keep in touch with advances in technology and in law.

EQM: Are there any draconian provisions that may not be in the best interests of the society?

Mr. Anil Harish: It is very important to have the powers of search and seizure in this law or in any law for that matter. Sometimes the power is misused. But suppose a person steals your goods and keeps it in his house. Then the police will not be able to check his house and take the stolen goods into possession. What is being done on the computers is not tangible but intangible. And yet the concerned authority should have the right to go to a person's house and prevent him from causing further damage by the usage of his computer. This is a very important clause.

EQM: Are there any shortcomings in the IT Bill that you wish had been plugged? Is there any issue that you wish had been covered by the IT Bill?

Mr. Anil Harish: No I think the bill is a good attempt to cover the use of information technology.

EQM: Is there anything that you wish to convey to our audience?

Mr. Anil Harish: The law is very necessary, even though at times we may not feel so. The philosopher Hobbs has said, "Life without law would be nasty, brutish and short".


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