Ip law newsletter VOL XI ISSUE No. 05

March 5, 2019
Cyber theft
VOL XI
ISSUE No. 05
March 19, 2019

Cyber Theft – A Serious Concern in India

Cyber crime
Cybercrime is one of the most crucial problems faced by the countries across the globe these days. It includes unauthorized access of information and break security like privacy, password, etc. of any person with the use of internet. Cyber theft is a part of cybercrime which means theft carried out by means of computers or the Internet.

 

India: Supreme Court settles the Law with regard to ‘seat vs venue’ of Arbitration

The Hon’ble Supreme Court in the case of Union of India v Hardy Exploration and Production, held that the contractual clause between the parties to the contract stipulating Kuala Lumpur as the ‘venue’ of arbitration did not amount to a choice of juridical seat between the parties.

India: Section 69 (2) of Indian Partnership Act, 1932 does not bar filing of a suit based on dishonour of a cheque

In the case of Delhi high CourtThe Delhi High Court in the case of M/S. Hindustan Infrastructure Construction Corporation Limited & Anr. V. M/s. R.S. Wood International, ruled that when the suit was purely based on the liability created under the Negotiable Instruments Act, 1881, and was not based on the statutory rights created under the contract between the parties, then suit cannot be considered as barred under Section 69 (2) of the Indian Partnership Act,1932.

 

 


Cyber Theft – A Serious Concern in India

Cyber theft - A serious concern

Cybercrime is one of the most crucial problems faced by the countries across the globe these days. It includes unauthorized access of information and break security like privacy, password, etc. of any person with the use of internet. Cyber theft is a part of cybercrime which means theft carried out by means of computers or the Internet.
The most common types of cyber theft include identity theft, password theft, theft of information, internet time thefts etc.

Identity Theft

Identity theft pertains to illegally obtaining of someone’s personal information which defines one’s identity for economic benefit. It is the commonest form of cyber theft. Identity theft can take place whether the fraud victim is alive or deceased. Creating a fake account or impersonation by creating multiple email-ids has become quite common and has resulted in commission of fraud in order to obtain any such information which can be used by cyber criminals to take over the victim’s identity to commit myriad crimes. The advancement of technology has made things much easier as it is much difficult to track the person impersonating as Internet and online transactions provides a kind of anonymity and privacy to an individual. There are various techniques through which data theft could be committed and personal information could be procured from electronic devices. These are as follows: –

  • Hacking- The persons known as hackers unscrupulously break into the information contained in any other computer system. Section 66 deals with the offence of unauthorized access to the computer resource and defines it as “Whoever with the purpose or intention to cause any loss, damage or to destroy, delete or to alter any information that resides in a public or any person’s computer. Diminish its utility, values or affects it injuriously by any means, commits hacking.” The offence of hacking is a violation of one’s fundamental right to privacy as provided by the Constitution. It is a method wherein viruses or worms like malware divert information from another computer system by decrypting it to the hacker who after obtaining the information either use it themselves or give it to others to commit fraud using such information.
  • Phishing-It uses fake email-ids or messages containing viruses affected websites. These infected websites urge people to enter their personal information such as login information, account’s information.
  • E-Mail/SMS- Spoofing– The spoofed e-mail is one which shows its origin to be different from where it actually originated. In SMS spoofing, the offender steals identity of another person in the form of phone number and sending SMS via internet and the receiver gets the SMS from the mobile number of the victim.
  • Carding- The cyber criminals makes unauthorized use of the ATM debit and credit cards to withdraw money from the bank accounts of the individual.
  • Vishing- The cyber-criminal calls the victim by posing to be a bank representative or call center employee, thereby fooling them to disclose crucial information about their personal identity.

Internet time theft

It refers to the theft in a manner where the unauthorized person uses internet hours paid by another person. The authorized person gets access to another person’s ISP user ID and password, either by hacking or by illegal means without that person’s knowledge.
It refers to the theft in a manner where the unauthorized person uses internet hours paid by another person. The authorized person gets access to another person’s ISP user ID and password, either by hacking or by illegal means without that person’s knowledge.Theft of intellectual property Intellectual property (IP) theft is defined as theft of material that is copyrighted, the theft of trade secrets, and trademark violations etc. One of the most commonly and dangerously known consequence of IP theft is counterfeit goods and piracy.

Laws governing identity thefts in India

The crime of identity theft consists of two steps:

  • Wrongful collection of personal identity of an individual
  • Wrongful use of such information with an intention of causing legal harm to that person information

An identity theft involves both theft and fraud, therefore the provisions with regard to forgery as provided under the Indian Penal Code, 1860 (IPC) is often invoked along with the Information Technology Act, 2000. Some of the Sections of IPC such as forgery (Section 464), making false documents (Section 465), forgery for purpose of cheating (Section 468), reputation (Section 469), using as genuine a forged document (Section 471) and possession of a document known to be forged and intending to use it as genuine (Section 474) can be coupled with those in the IT Act.
The Information Technology Act, 2000 (IT Act) is the main act which deals with the legislation in India governing cybercrimes. Some of the Sections dealing with Cyber Theft are: –

  • Section 43 If any person without permission of the owner damages to computer, computer system, etc. he/she shall be liable to pay compensation to the person so affected.
  • Section 66 If any person, dishonestly or fraudulently, does any act referred to in section 43, he shall be punishable with imprisonment for a term which may extend to three years or with fine which may extend to five lakh rupees or with both.
  • Section 66B Punishment for dishonestly receiving stolen computer resource or communication device is Imprisonment for a term which may extend to three years or with fine which may extend to rupees one lakh or with both.
  • Section 66C provides for punishment for Identity theft as: Whoever, fraudulently or dishonestly make use of the electronic signature, password or any other unique identification feature of any other person, shall be punished with imprisonment of either description for a term which may extend to three years and shall also be liable to fine with may extend to rupees one lakh.
  • Section 66 D on the other hand was inserted to punish cheating by impersonation using computer resources.

With the increase in the number of frauds and cyber related crime, the government is coming up with refined regulations to protect the interest of the people and safeguard against any mishappenning on the internet. Further, stronger laws have been formulated with respect to protection of “sensitive personal data” in the hands of the intermediaries and service providers (body corporate) thereby ensuring data protection and privacy.

 


India: Supreme Court settles the Law with regard to ‘seat vs venue’ of Arbitration

The Hon’ble Supreme Court in the case of Union of India v Hardy Exploration and Production, held that the contractual clause between the parties to the contract stipulating Kuala Lumpur as the ‘venue’ of arbitration did not amount to a choice of juridical seat between the parties. The decision rendered by the three judge bench of the Apex Court tends to provide clarity on the ‘venue vs seat’ conundrum in arbitration cases.

Facts

A production-sharing contract (PSC) was entered into between Hardy Exploration and Production (India) Inc. (hereinafter referred to as ‘Hardy Exploration’) and the Indian Government (UOI) for the extraction, development and production of hydrocarbons in a geographic block in India. Dispute arose between the parties, on account of which the matter was referred to arbitration under PSC. As per PSC, the venue of arbitration was provided as Kuala Lumpur, unless otherwise agreed between the parties. The Arbitral Tribunal rendered its award in favor of Hardy Exploration’ and the award was signed and delivered in Kuala Lumpur.

The award was challenged by UOI under Section 34 of the Arbitration and Conciliation Act,1996 (hereinafter referred to as ‘the Act’) before the Delhi High Court and in its rebuttal, Hardy Exploration contended that the High Court had no jurisdiction to entertain an application under Section 34 of the Act and on the other hand, Hardy Exploration sought enforcement of the award before the Delhi High Court. On July 09, 2015, the Learned Single Judge after considering the terms of the agreements between the parties and the legal precedents held that the Indian Courts had no jurisdiction to entertain the said application.

The order passed by the Single Judge was further challenged before the Division Bench of the Delhi High Court, which was further dismissed by the said Bench.

An appeal by Special Leave Petition was preferred by UOI in the case
Union of India v Hardy Exploration and Production (India) Inc., whereby the Division Bench of the Supreme Court after considering the issues involved in the said case, referred the matter to the larger Bench of the Supreme Court in exercise of its power under Order VI Rule 2 of the Supreme Court Rules, 2013.

Issue before the Apex Court

The issue to be dealt and decided by the Hon’ble Supreme Court of India was when the arbitration agreement between the parties provided for the venue for holding the arbitration sittings by the arbitrators but does not specify the “seat”, then on what principles, the Court had to decide the seat of the arbitral proceedings.

Observations and Conclusion

After considering the submissions made by the respective parties in the case at hand, the Apex Court, before delving into the issue raised before it, had placed reliance in various settled proposition of laws on the difference between seat and place and venue of arbitration (venue).

  • The case of Sumitomo Heavy Industries Ltd. v. ONGC Ltd and Ors. reported in [(1998) 1 SCC 305], as relied upon by the UOI that in the absence of an express seat, the challenge to an arbitration must be governed by the proper law of contract was rejected by the Supreme Court by stating that it was decided as per the Arbitration Act, 1940, and subsequent developments in Bharat Aluminum Company v Kaiser Aluminum Technical Services Inc. reported in [(2012) 9 SCC 552] had rendered Sumitomo case ineffectual.
  • Reliance was placed in the case of Bhatia International v. Bulk Trading S.A. and Anr. wherein it was held by the Court that Part 1 of the Act applied even to international commercial arbitrations seated outside India unless the parties had expressly or impliedly agreed to exclude Part I of the Act.
  • The Judgement rendered by the Court in Bhatia International (Supra) was overruled by the Court in the case Bharat Aluminum Company v Kaiser Aluminum Technical Services INC or (BALCO), whereby the Court held that Part 1 of the Act applied only to the arbitrations seated in India or within the territory of India.
  • In the case of Union of India v Reliance Industries, the Court placed reliance in the case of Harmony Innovation Shipping Limited v. Gupta Coal India Limited and another and held that Part I of the Act would be excluded if: (i) the juridical seat is outside India; or (ii) the law governing the arbitration agreement is a law other than Indian law.
  • The Supreme Court noted that an arbitration clause must be read holistically to understand its intentions to determine the seat of arbitration. As per the Article 32 of the arbitration agreement, the contract between the parties was to be governed as per the laws of India and as per Article 33 of the agreement, it was stated that “33.9 Arbitration proceedings shall be conducted in accordance with the UNICITRAL Model Law on International Commercial Arbitration of 1985 except that in the event of any conflict between the rules and the provisions of this Article 33, the provisions of this Article 33 shall govern.33.12 The venue of conciliation or arbitration proceedings pursuant to this Article unless the parties otherwise agree, shall be Kuala Lumpur and 25 shall be conducted in English language. Insofar as practicable the parties shall continue to implement the terms of this contract notwithstanding the initiation of arbitration proceedings and any pending claim or dispute.”
  • The Court analyzed Article 20 and Article 31(3) of the UNICITRAL Model Law.
    “Article 20. Place of arbitration. —(1) The parties are free to agree on the place of arbitration. Failing such agreement, the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties. (2) Notwithstanding the provisions of paragraph (1) of this article, the arbitral tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of goods, other property or documents.Article 31. Form and contents of award- (3) The award shall state its date and the place of arbitration as determined in accordance with article 20(1). The award shall be deemed to have been made at that place.”It was observed by the Court that as per Article 20, if the parties do not agree with respect to the place of arbitration, the same had to be determined by the Arbitral Tribunal and as per article 31(3), the award passed shall state the date and place of arbitration in accordance with Article 20(1).
  • Reliance was placed in the case of IMAX corporation v E-City Entertainment (India) Pvt. Ltd., whereby the Court observed that in the said case the seat of arbitration had not been specified in the arbitration clause and the only stipulation given the contract was that the arbitration was to be conducted as per ICC Rules. In IMAX corporation (supra), Court held that the parties had agreed to have seat of arbitration as decided by the ICC and the ICC had chosen the seat to be ‘London’ and was duly complied with by the parties.
  • The Court held that if the parties had not agreed upon with regard to the place of arbitration, the Tribunal had to determine the same keeping in mind the convenience of the parties and the determination should be stated in the ‘form and content of award’. The Court stated that in the case in hand there was no determination with respect to the seat of arbitration. The Court observed that when only the term ‘place’ was mention in the agreement between the parties then, the place of the arbitration would be equivalent to ‘seat’ of arbitration. But, if a condition precedent had been attached to the term ‘place’ in the agreement, then the said condition had to be satisfied to consider ‘place’ as ‘seat’ of arbitration.
  • The Court while relying in the case of Ashok Leyland Limited v. State of T.N. and Another, stated that the expression of determination signified an expressive opinion and there had been no adjudication and expression of an opinion. The Court held that the place cannot be used as seat and Kuala Lumpur was not a seat or place of arbitration. The seat and place cannot be used interchangeably when no conditions are postulated.
  • In such circumstances, the Court decided that it was the “irresistible conclusion’ that the jurisdiction to hear a challenge of the award lies with the Courts of India and the order of the Delhi high Court was set aside.

 


India: Supreme Court settles the Law with regard to ‘seat vs venue’ of Arbitration

Supreme Court Settles
Source:www.supremecourtofindia.nic.in

The Delhi High Court in the case of M/S. Hindustan Infrastructure Construction Corporation Limited & Anr. V. M/s. R.S. Wood International, ruled that when the suit was purely based on the liability created under the Negotiable Instruments Act, 1881, and was not based on the statutory rights created under the contract between the parties, then suit cannot be considered as barred under Section 69 (2) of the Indian Partnership Act,1932.

Brief Facts:

A civil suit No.613734/16 titled as M/s. R.S. Wood International vs. M/s. Bhayana Builders Hindustan Infrastructure JV Pvt. Ltd. & Ors, was filed by M/s. R.S. Woods International & Ors (hereinafter referred to as ‘the Respondents’) in West District, Tis Hazari Courts, Delhi, against M/s. Hindustan Infrastructure Construction Corporation Limited (hereinafter referred to as ‘the Petitioners’) for recovery of the amount on account of dishonor of cheques. In the said suit, an application under Order VII Rule 11 of the Code of Civil Procedure, 1908 (hereinafter referred to as the ‘CPC’) was preferred by the Petitioners for rejection of the plaint on the ground that the suit was barred under Section 69 (2) of the Indian Partnership Act, 1932 (‘the Act’). The Learned Additional District Judge (hereinafter referred to as the ‘ADJ’) dismissed the said application. Aggrieved thereby, the revision petition was preferred by the Petitioners against the order dated October 09, 2017, passed by the Learned ADJ before the Delhi High Court.

Issues Raised:

  • Whether the Learned ADJ was correct in dismissing the application of the Petitioners under Order VII Rule 11 of the CPC in the Civil Suit No.613734/16 titled as
    M/s. R.S. Wood International vs. M/s. Bhayana Builders Hindustan Infrastructure JV Pvt. Ltd. & Ors.

Petitioners Contentions:

The Petitioners had filed an application before the Learned ADJ under Order VII Rule 11 CPC for rejection of the plaint on the ground that the suit was barred under Section 69 (2) of the Indian Partnership Act, 1932.

Respondents Contentions:

The Respondents contended that the Petitioners are liable under Section 30 and 37 of the Negotiable Instruments Act, 1881, as the cause of action for the plaint was based solely on the dishonor of cheques and on the basis of contract between the parties.

Court’s Decision:

The Court relied on the judgment passed by the Kerala High Court in the case ofAfsal Baker v. Maya Printers, 2016 SCC Online Ker 29914, whereby the Court held that “in the instant case, as noticed above, by virtue of Section 30 and 37 of the Negotiable Instruments Act, on the dishonor of a cheque, the statute creates a liability on the drawer, apart from the general law of contracts. The right to sue on the contract is available and open to the party. However, apart from that, the statute creates a liability as against the drawer of the instrument. If the suit is on the original cause of action based on the original contract between the parties, there is no doubt, the suit would be hit by Section 69 (2) of the Indian Partnership Act. But, in the instant case, what is sought to be enforced is the liability created under the Negotiable Instruments Act. It is not a case where suit is filed on the original cause of action by producing the cheques as a piece of evidence to prove the liability under the original contract. Here, the suit itself is laid on the instrument. A reading of the plaint leaves no room for doubt regarding that. The bar under Section 69(2)of the Indian Partnership Act would apply only where the suit is sought to be laid on a contract and not in a case where statutory right/liability is sought to be enforced. In the instant case, the suit being purely based on the liability under Section 30 and 37 of the Negotiable Instruments Act, it is a suit based on statutory liability dehors the contract between the parties. The suit cannot be held to be barred under Section 69(2) of the Indian Partnership Act.

The Court observed that since the suit was not based on any contract between the parties, the bar under Section 69 (2) of the Partnership Act would not apply. The suit between the parties were purely based on the liability created under the Act. Resultantly, the Revision Petition was dismissed, and the order passed by the Learned ADJ was upheld.

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