Advocate Dr Mahendra Limaye’s take on Reliance Gio’s stake purchase by Facebook.

The much notable news in Indian corporate circle in this gloomy situation of COVID19 is of Facebook’s $5.7 billion investment in Reliance Jio. The Indian stock market celebrated it with much fanfare and Reliance’s shares closing was almost 10% higher than the previous day closing.

It reminds me of one of the unusual incident of 12 July 2019, wherein when US Federal Trade Commission imposed a fine of roughly $5 Billion on Facebook, the stock of Facebook zoomed rather than sinking. It is normal trend in stock market that when a company is penalised, its share price slides.

But wherever there is involvement of this world tech giant known as Facebook, the unimaginable happens. Otherwise who would have thought that penalty of $5 Billion could be news for celebration? Obviously the market was expecting a more stringent penalty including criminal action, which was not imposed on Facebook by FTC.

Now what’s logic of the comparison of these two stock market incidents with our present discussion?

Indian corporate are believing that this stake sale will impose confidence in foreign corporate investors to invest in India and Indian stock market will witness huge foreign investment in other Indian Companies. Many have came to the conclusion that now Indian companies are commanding respect from global investors and this is first step in that direction.

I do not endorse these perceptions of the people for the views expressed hereafter;

The Jio-Facebook deal is the largest investment for a minority stake by a technology company, Facebook, anywhere in the world and the largest FDI in the technology sector in India. A somewhat distant second is Softbank’s $2.5 billion investment in online retailer Flipkart. This also marks Facebook’s third direct investment in India, after it backed social commerce firm Meesho and online learning firm Unacademy in the past year, although in much smaller deal sizes of between $20-30 million. The fate of both these investments in Meesho and Unacademy is not known yet since these are very initial days of both the investments.

Why Facebook has decided to invest in Reliance Gio and what could be strategic angle behind its investments in India and particularly in Gio needs careful scrutiny.

1)      Few years ago, Facebook was eager to roll out free internet service in India. Facebook pretended to be doing social work by providing a low-bandwidth connectivity to maximum population of India residing in even distant locations and the most popularised philosophy of Marc Zuckerberg being “ CONNECTING THE PEOPLE”. But many people and fortunately the Indian government read the intentions correctly and the proposal never received the nod by government. The so-called Free Basics service never seen a light of the day and this incident has taught Marc Zuckerberg a lot many things and one of which could be he needs a strong Indian helping hand if he wants to implement his projects in India.

Many of us still remember that Facebook has called on Indian people and government to allow free flow of data across borders to discover its true value, urging against “hoarding” it.

“There are many in India and around the world who thinks of data as the new oil, and that, like oil, having a great reserve of it held within your national boundaries will lead to sure fire prosperity. But this analogy is mistaken,” were the words of Nick Clegg, Facebook’s global head for public policy, at one of the event in India. “Data isn’t oil — a finite  ... Commodity — to be owned and traded, pumped from the ground and burned in cars and factories. Of course, no analogy is perfect, but a better liquid to liken it to is water, with the global internet like a great borderless ocean of currents and tides,” Clegg added.

His views were in contrast to those of Reliance Industries chairman Mukesh Ambani, who has repeatedly described data as the new oil and it should not flow out of National boundaries. What will happen now? Whose thoughts have changed? If Mr Ambani is convinced that Data is not new oil and it could flow out of National boundaries then it is more dangerous situation because for saving his empire from debt trap he must have agreed to compromise with his previous nationalist views of need of Data Localisation. A close scrutiny is needed.

2) Zuckerberg is additionally looking at the Indian market for his crypto-currency project called Libra which is to be unveiled by Facebook soon, but will not be available in India, as current Indian regulations do not permit use of the banking network for block chain currency transactions. The social network’s digital wallet, Calibra, also won’t be available in Indian markets where “crypto currencies are banned. It is also in public domain that Reliance Jio is planning crypto currency 'JioCoin' and also invested heavily in the project. So both the companies’ motive is to enter crypto currency market and for which both the companies have already made huge preparations and this move could be a win-win situation. But as per my understanding the Indian government has not framed its policy on crypto currency yet. Recently Apex court has delivered a landmark judgement wherein it was evident that Indian governments stand on allowing crypto currency in India has always remained shaky and government has not firmly decided on the fate of same. Crypto currency is still a grey area. Could the strategic investment in Reliance Gio be one of the angles for this Facebook’s move to introduce crypto currency in India? Can they together be able to give finality to India’s response to crypto currency? RBI has made it amply clear that it is not in favour of allowing crypto currency in India. Will RBI’s views honoured?

3) Personal Data Protection Bill 2019 is before Indian Parliament and is in its final stage of becoming a law. Facebook till recently contended that “Data isn’t oil — a finite  ... commodity — to be owned and traded, pumped from the ground and burned in cars and factories. Of course, no analogy is perfect, but a better liquid to liken it to is water, with the global internet like a great borderless ocean of currents and tides”. This proposed Personal Data Protection (PDP) Bill will mandate companies collecting data of Indian citizens to store certain ‘critical’ data only within the country. Foreign companies and more particularly Internet giants like Facebook and Google have opposed the move thinking that it would hurt their planned investments by raising costs related to setting up new local data centres on Indian lands. The present move will give Facebook much needed access to Gio’s infrastructure in India and will help in minimising its future costs. Facebook always believed that the true value of data comes from allowing it to flow freely and encouraging the innovation that stems from it which without any doubt gives more profit to Facebook. The global internet is built on this principle of cross-border data flows just as global economy relies on capital, human resources and technological innovation to cross borders in order to flourish, is what Facebook believes in. Can this strategic investment be one such small step by Facebook in controlling Indian user’s data in much authorative and legalised manner? Will the Personal Data Protection Bill 2019 be ever reality now? As Facebook has openly opposed to PDPB, whether joining hands with Gio will give much needed boost to that opposition? If this happens then the one of the fundamental right i.e. Right to Privacy will be in danger and this aspect also needs to be debated.

4) Facebook’s this partnership with Gio, India’s largest telecom operator will also be a key to Zuckerberg’s proposed business plans, particularly in domains of virtual reality and Internet of Things. All these future plans need access to 5G which Jio has, reportedly, developed. With Reliance Gio’s customer base of approximately 400 million Indian users and Facebook’s customer base of about 350 million and whatsapp’s customer base of approximately 400 million users, there will be absolute control over Data of maximum Indian population by this Gio-Fb combination and this is most frightening situation. What challenges could be posed by the absolute control over Data and also on financial markets through potential entry of crypto currency before Indian Citizen as well as Indian Government needs to be studied.

The answers for the above 4 questions are key to the fate of Indian digital users. Every Indian digital user has Fundamental Right to know How his Data is being handled and for which purpose it is used. When the social media Data Handler will also be your telecom service provider as well as your financial service provider, the scenario looks more worrisome. With weak regime of enforcement and investigation of Technology laws based crimes and absolutely non-functional judicial wing dealing in matters related to technology crimes, the situation is currently pathetic. This combined power of Gio-FB will make the privacy of digital users more vulnerable because FB survives wholly on Data Trading.

We need to find the ways for protection of millions of Digital Illiterates using digital mediums without knowing the inherent risks and future traps of crypto currency and AI being laid by this Gio-FB deal.

Immediate Passage of Personal Data Protection Bill 2019 and formation and functioning of DPAI mechanism seem to be the need of hour.

I am certain that many readers will find these views absurd and illogical. Let me remind them that it took India’s Apex Court almost 60 years to reverse the views on Right to Privacy previously held in matters of Kharak Singh and M.P.Sharma, in recently decided Puttaswamy’s case. I only hope that my above views should not remain in isolation for that long 60 years. The Internet technology is most dynamic thing which has happened in these recent years and our response to the activities in internet and their effects on fundamental rights of citizen should be equally dynamic. I conclude by some unknown writers’ words, “It’s not a sin to think ahead of time but its sin to remain silent about what perils you think of in future”.

About the author- Advocate Dr Mahendra Limaye is Cyber Legal Consultant and Cyber Law practitioner in India. He specifically practices in Information Technology Act based litigation before Civil as well as Criminal Courts in India. He has obtained his doctorate on topic Fundamental Rights and Cyberspace. He can be contacted on mahendralimaye@yahoo.com or + 919422109619.

Adv Dr. Mahendra Limaye’s ANALYSIS OF JUDGEMENT DELIVERD ON VIRTUAL CURRENCEY

On March 4, 2020 the Hon Supreme Court of India delivered a path-breaking judgment which is viewed or interpreted as apex court in India have allowed virtual currencies in India or Indian apex court has lifted ban on virtual currencies and hence trading in virtual currency is legal. But in my views above interpretation is totally wrong. The petitioners received benefit of doubt and lassitude from government’s part also played imperative role in tiling the balance in favour of petitioners.

It should be clearly understood that the order passed by Hon Supreme Court was for striking down circular issued by RBI dated April 6, 2018, stating in exercise of the powers conferred by Section 35A read with Section 36(1)(a) and Section 56 of the Banking Regulation Act, 1949 and Section 45JA and 45L of the Reserve Bank of India Act, 1934 (hereinafter, “RBI Act, 1934”) and Section 10(2) read with Section 18 of the Payment and Settlement Systems Act, 2007.

The brief facts of matter can be summarized as below.

Reserve Bank of India issued few advisory guidelines with reference to crypto currency activities in India and also a “Statement on Developmental and Regulatory Policies” on April 5, 2018, paragraph 13 of which directed the entities regulated by RBI (i) not to deal with or provide services to any individual or business entities dealing with or settling virtual currencies and (ii) to exit the relationship, if they already have one, with such individuals/ business entities, dealing with or settling virtual currencies (VCs).

As per RBI these various guidelines were in the public interest. This circular was challenged by several petitioners, one association working for free and fair use of internet and others were exchanges dealing in crypto currency trading activities, through this bunch of writ petitions.

Though the prayer for striking down the applicability of circular was upheld by the Hon. Supreme Court of India, the order pronounced by the bench consisted of Hon. Justice Rohinton Fali Nariman, Aniruddha Bose and V. Ramasubramanian needs vigilant evaluation for better and correct understanding about the judgement.

The Apex Court has observed that the consistent stand of RBI is that they have not banned VCs. It further observed that the Government of India is unable to take a tangible and decisive call despite several committees coming up with several proposals including two draft bills, both of which advocated exactly opposite positions that government is proposing to ban the mining, generation, holding, selling, dealing in, issuing, transferring, disposing of or using crypto currency in the territory of India.

Court have recognized in this order, the power of RBI to take a pre-emptive action by issuing such circulars, but while testing of the order on backdrop of the proportionality of such measure, for the determination of same RBI needs to show at least some semblance of any damage suffered by its regulated entities but it failed to do so.

In its judgement, Hon. Court observed, “It is no doubt true that RBI has very wide powers not only in view of the statutory scheme of the 3 enactments indicated earlier, but also in view of the special place and role that it has in the economy of the country. These powers can be exercised both in the form of preventive as well as curative measures. But the availability of power is different from the manner and extent to which it can be exercised.”  Court was convinced about wide powers of RBI and issuance of the circulars as preventive measures for betterment of Indian Financial scenario but as the circulars could not pass the test of proportionality, the circulars were smacked down.

So it should not be seen as Supreme Court has lifted the ban on crypto currency in India or now crypto currencies trading are official in India as many of us are construing this decision. In entire judgement Hon. Supreme has never uttered a single word about legitimacy or genuineness of virtual currencies or about exchanges trading such virtual currencies but only decided that the activities of petitioner exchanges, trading in virtual currency were not declared unlawful and hence their bank accounts could not be debit frozen by the banks citing the challenged RBI Circular.

The order of Hon. Supreme Court has sumptuously discussed various grounds cited as below;

1)    Whether RBI has no power to prohibit the activity of trading in virtual currencies through VC exchanges?

2) Whether the power to issue directions “in the public interest” conferred under Section 35A(1)(a) of the Banking Regulation Act, 1949 and the power to caution or prohibit banking companies against entering into any particular transaction conferred under Section 36(1)(a) extend to the issue of blanket directions that would deny access by virtual currency exchanges, to the banking services of the country, as the expression “public interest” appearing in a particular provision in a statute should take its colour from the context of the statute.

3)  Whether the power conferred upon RBI under Section 10(2) of the Payment and Settlement Systems Act, 2007 to issue guidelines is also applicable to virtual currency exchanges, as the services rendered by them do not fall within the definition of the expression “payment system” under Section 2(1)(i) of the said Act.

4) While regulation of a trade or business through reasonable restrictions imposed under a law made in the interests of the general public is saved by Article 19(6) of the Constitution, whether a total prohibition, especially through a subordinate legislation such as a directive from RBI, of an activity not declared by law to be unlawful, is violative of Article 19(1) (g).

The petitioners argued mainly following grounds which were negated by the Hon Apex Court.

1)     No Power at all for RBI – The Hon. Apex Court observed that the RBI Act, 1934, the Banking Regulation Act, 1949 and the Payment and Settlement Systems Act, 2007 cumulatively recognize and also confer very wide powers upon RBI (i) to operate the currency and credit system of the country to its advantage (ii) to take over the management of the currency from central government (iii) to have the sole right to make and issue bank notes that would constitute legal tender at any place in India (iv) regulate the financial system of the country to its advantage (v) to have a say in the determination of inflation target in terms of the consumer price index (vi) to have complete control over banking companies (vii) to regulate and supervise the payment systems (viii) to prescribe standards and guidelines for the proper and efficient management of the payment systems (ix) to issue directions to a payment system or a system participant which in RBI’s opinion is engaging in any act that is likely to result in systemic risk being inadequately controlled or is likely to affect the payment system, the monetary policy or the credit policy of the country and (x) to issue directions to system providers or the system participants or any other person generally, to regulate the payment systems or in the interest of management or operation of any of the payment systems or in public interest.

Hon. Supreme Court held that Therefore, anything that may pose a threat to or have an impact on the financial system of the country, can be regulated or prohibited by RBI, despite the said activity not forming part of the credit system or payment system.

Additionally Hon Court held that, “If at all, the power is only to regulate, not prohibit.”

2)     RBI cannot issue instructions: Supreme court held that in the overall scheme of the Payment and Settlement Systems Act, 2007, it is impossible to say that RBI does not have the power to frame policies and issue directions to banks who are system participants, with respect to transactions that will fall under the category of payment obligation or payment instruction, if not a payment system. Hence, the argument revolving around Section 18 should fail.

3)     Whether exercise of power is proper and with application of mind and relevant considerations was made by the RBI?  Hon. Apex court could not hold RBI guilty of non-application of mind. As a matter of fact the issue as to how to deal with virtual currencies has been lingering with RBI from June 2013 onwards, when the Financial Stability Report took note of the challenges posed by virtual currencies in the form of regulatory, legal and operational risks. The Financial Stability Report of December 2015 also raised concerns about excessive volatility in the value of VCs and the anonymous nature which went against global money laundering rules rendering their very existence questionable. RBI also issued a press release on 01-02-2017 and once again cautioning the users, holders and traders of virtual currencies. Apex Court observed that all the above sequence of events from June 2013 up to 02-04-2018 would show that RBI had been brooding over the issue for almost five years, without taking the extreme step. Therefore, RBI can hardly be held guilty of non-application of mind.

4)     The argument that the invocation by RBI, of ‘public interest’ as a weapon, purportedly for the benefit of users, consumers or traders of virtual currencies is a colourable exercise of power also does not hold water. Once it is conceded that RBI has powers to issue directions in public interest, it is impossible to exclude users, consumers or traders of virtual currencies from the coverage. In fact, the repeated press releases issued by RBI from 2013 onwards indicate that RBI did not want the members of the public, which include users, consumers and traders of VCs, even to remotely think that virtual currencies have a legal tender status or are backed by a central authority.

The only arguments in support of petitioners were on Article 19(1) (g) challenge & Proportionality. It was argued that any restriction to the freedom guaranteed under Article 19(1) (g) should pass the test of reasonableness in terms of Article 19(6). It is contended by the petitioners that since access to banking is the equivalent of the supply of oxygen in any modern economy, the denial of such access to those who carry on a trade which is not prohibited by law, is not a reasonable restriction and that it is also extremely disproportionate. It is further contended that the right to access the banking system is actually integral to the right to carry on any trade or profession and that therefore legislation, subordinate or otherwise whose effect or impact severely impairs the right to carry on a trade or business, not prohibited by law, would be violative of Article 19(1) (g).

Reasoning of the Apex Court -- In order to test the validity of the impugned action on the touchstone of Article 19(1)(g), we may have to understand the fundamental distinction between (i) the purchase and sale of virtual currencies by and between two individuals or entities and (ii) the business of online exchanges that provide certain services such as the facility of buying and selling of virtual currencies, the storing or securing of the virtual currencies in what are known as wallets and the conversion of virtual currencies into fiat currency and vice versa.

The buying and selling of crypto currencies through VC Exchanges can be by way of hobby or as a trade/business. The distinction between the two is that there may or may not exist a profit motive in the former, while it would, in the latter. Persons who engage in buying and selling virtual currencies, just as a matter of hobby cannot pitch their claim on Article 19(1) (g), for what is covered therein are only profession, occupation, trade or business. Therefore hobbyists, who are one among the three categories of citizens (hobbyists, traders in VCs and VC Exchanges), straightaway go out of the challenge under Article 19(1)(g). The second and third categories of citizens namely, those who have made the purchase and sale of VCs as their occupation or trade, and those who are running online platforms and VC exchanges can certainly pitch their claim on the basis of Article 19(1)(g).

Technically speaking, the second category of citizens cannot claim that the impugned decision of RBI has the effect of completely shutting down their trade or occupation. Citizens who have taken up the trade of buying and selling virtual currencies are not prohibited by the impugned Circular (i) either from trading in crypto-to-crypto pairs (ii) or in using the currencies stored in their wallets, to make payments for purchase of goods and services to those who are prepared to accept them, within India or abroad.

In all cases where legislative/executive action infringing the right guaranteed under Article 19(1) (g) were set at naught by this court, this court was concerned with a ban/prohibition of an activity. The question of the prohibited/banned activities having the potential to destabilize an existing system did not arise in those cases.

If a central authority like RBI, on a conspectus of various factors perceive the trend as the growth of a parallel economy and severs the umbilical cord that virtual currency has with fiat currency, the same cannot be very lightly nullified as offending Article 19(1)(g). But nevertheless, the measure taken by RBI should pass the test of proportionality, since the impugned Circular has almost wiped the VC exchanges out of the industrial map of the country, thereby infringing Article 19(1) (g).

On the question of proportionality, the reliance was placed on four-pronged test summed up in the opinion of the majority in Modern Dental College and Research Centre v. State of Madhya Pradesh. These four tests are (i) that the measure is designated for a proper purpose (ii) that the measures are rationally connected to the fulfilment of the purpose (iii) that there are no alternative less invasive measures and (iv) that there is a proper relation between the importance of achieving the aim and the importance of limiting the right.

Court articulated that we cannot lose sight of three important aspects namely, (i) that RBI has not so far found, in the past 5 years or more, the activities of VC exchanges to have actually impacted adversely, the way the entities regulated by RBI function (ii) that the consistent stand taken by RBI up to and including in their reply dated 04-09-2019 is that RBI has not prohibited VCs in the country and (iii) that even the Inter-Ministerial Committee constituted on 02-11-2017, which initially recommended a specific legal framework including the introduction of a new law namely, Crypto-token Regulation Bill 2018, was of the opinion that a ban might be an extreme tool and that the same objectives can be achieved through regulatory measures.

Surprisingly there was a volte-face and the final report of the very same Inter-Ministerial Committee, submitted in February 2019 recommended the imposition of a total ban on private crypto currencies through a legislation to be known as “Banning of Crypto currency and Regulation of Official Digital Currency Act.”

The draft of the bill contained a proposal to ban the mining, generation, holding, selling, dealing in, issuing, transferring, disposing of or using crypto currency in the territory of India. At the same time, the bill contemplated (i) the creation of a digital rupee as a legal tender, by the central government in consultation with RBI and (ii) the recognition of any official foreign digital currency, as foreign currency in India.

The position as on date is that VCs are not banned, but the trading in VCs and the functioning of VC exchanges are sent to comatose by the impugned Circular by disconnecting their lifeline namely, the interface with the regular banking sector. What is worse is that this has been done i) despite RBI not finding anything wrong about the way in which these exchanges function and (ii) despite the fact that VCs are not banned.

Court also pointed out that till date, RBI has not come out with a stand that any of the entities regulated by it namely, the nationalized banks/scheduled commercial banks/cooperative banks/NBFCs has suffered any loss or adverse effect directly or indirectly, on account of the interface that the VC exchanges had with any of them. As held by this court in State of Maharashtra v. Indian Hotel and Restaurants Association, there must have been at least some empirical data about the degree of harm suffered by the regulated entities (after establishing that they were harmed). It is not the case of RBI that any of the entities regulated by it has suffered on account of the provision of banking services to the online platforms running VC exchanges.

Court finally proclaimed that , “It is no doubt true that RBI has very wide powers not only in view of the statutory scheme of the 3 enactments indicated earlier, but also in view of the special place and role that it has in the economy of the country. These powers can be exercised both in the form of preventive as well as curative measures. But the availability of power is different from the manner and extent to which it can be exercised. While testing the proportionality of such measure, for the determination of which RBI needs to show at least some semblance of any damage suffered by its regulated entities. But there is none. When the consistent stand of RBI is that they have not banned VCs and when the Government of India is unable to take a call despite several committees coming up with several proposals including two contradictory suggestions, in finality in the light of the above discussion, the petitioners are entitled to succeed and the impugned Circular dated 06-04-2018 is liable to be set aside on the ground of proportionality.”

This elaborate analysis highlights that though Apex Court has accepted the powers of RBI to issue circulars in Public Interest but as there was no blanket order banning Virtual Currency and diametrically opposite views by Central government regarding virtual currencies let down the populous move of RBI banning VC exchanges from banking exposures.

It is understood that RBI is in process of challenging the impugned order by review petition but as government has not shown any clarity about its stand on virtual currencies it would be, in my view, a futile exercise. Rather RBI should convince the government about potential dangers of regulating the virtual currency and government should come up with a law or notification to ban the same.

Author Adv. Dr. Mahendra Limaye is a Cyber Legal Consultant based in Nagpur and heads Mahendra Limaye Associates a Pan India Cyber Law firm specialising in Cyber Litigation. The author is also part of Cyber Awareness Organisation, which is running Cyber Crime Helpline for free advisory of Cyber Crime victims and has imparted free Legal advice to more than 1,00,000 victims across India. He could be contacted at mahendralimaye@yahoo.com or 09422109619/8830139056.

Advocate Mahendra Limaye’s assessment of NCRB 2017 about Cyber Crimes

You can hide the hen but can’t stop the Sunrise, is old saying and it can be seen in 2017 report of NCRB about Cyber Crimes.

Government maintains that cyber crimes are quite satisfactorily contained by existing law enforcement officers with available legal framework and judicial set-up. It has been only handful of people who make more clamours about growing pace of cyber crimes but actually situation is in control. Rate of cyber crimes is only 1.7 per lac of the total Indian population meaning that in a country of 12885 lac's population total cyber crimes registered in 2017 are meager 21796, as per recently published National Crimes Record Bureau report.

But the fact is that in 2017, total cyber crimes registered in India are 21,796 as compared to 12317 registered in 2016 shows surge of @75%. So it’s difference of perception about the way you look towards cyber crimes statistics. If you go by growth in terms of percentage its 75% growth as compared to previous year but report puts it at 1.7 per lac of the population and finds no significance in growth of crime.

A country where almost 70% population enjoys benefits of digitization (?) the argument that 1.7 per lac of the population is affected by cyber crimes genuinely holds no meaning.

Karnataka and Jharkhand witnessed @200% growth followed by Chattisgarh, Telangana, Uttarakhand which witnessed @ 100% growth; Uttar Pradesh witnessed 80% growth followed by Maharashtra which witnessed 50% growth. Out of 29 states and 7 Union territories Arunachal Pradesh, Goa, Nagaland and Tripura witnessed negative growth in cyber crimes.

As regards to share of states in total number of cyber crimes registered in entire India, UP witnessed maximum crimes i.e. 4971(22.1%) followed by 3604(16.5%) in Maharashtra, 3174 in Karnataka (14.6%), 1304(6%) in Rajasthan , 1204(5.5%) in Telangana and 1120(5.1%) in Assam. These six states collectively witnessed 15377 crimes i.e. almost 70% of the total crimes registered in India and suggests that there needs more focus on these states if we want to contain/curtail cyber crimes.

The cyber crimes registered under various sections of Information Technology Act are as below;

A-S 65 Tampering Computer source code – 233, B-S 66 Computer related offenses (a-e) – 10108, C-S 66f Cyber Terrorism-13 ,D-S 67 Publishing obscene info in electronic form -948, E-S 67A Continuity of Act – 401, F-S 67B- Child pornography – 46, G-S 67 c – Related to intermediaries – 11, H-S 67 Other sections  – 362

The cyber crimes registered/covered under IPC are as below;

I-IPC SECTIONS BUT UNDER CYBER CRIMES (Total 7976),J-354 D Cyber Stalking 542, K-379-381Data Theft – 307, L-420 r/w 465,468-471 Fraud – 3466, M-Credit card fraud- 395, N- ATM Fraud-1543,O- Online BANKING Fraud-804 and P- OTP Fraud-334

This break up is really strange and surprising. Sections of IPC are applied in about 8000 cases i.e. about in 30% cases registered by police in India. This shows that either police are not sure about the applicability of I T Act or are not properly trained to apply provisions of I T Act which is special act passed by parliament to deal with cyber crimes. There are various judgements of the court wherein courts have held that if provisions of I T Act are not maintainable then provisions of IPC can’t be applied in the crime owing to principle of dual jeopardy. This applicability of IPC sections also establishes that police are not comfortable with I T Act even after 19 years of its enactment.  

 The motive as per NCRB for crimes is analyzed as below

For personal revenge total 628 crimes were committed and Assam tops with 246 followed by Kerala 62 and Maharashtra 47. Fraud was motive in 12213 crimes wherein UP Tops with 3450 followed by Karnataka 2764 and Maharashtra 2171. Extortion was the motive in 906 crimes in which UP Again tops with 419 followed by Telangana 95 and Assam and AP with 65 each. Causing disrepute to someone was the motive in 1002 crimes and again UP tops with 366 followed by Maharashtra 135 and Karnataka 94. Motive of Sexual extortion was witnessed in 1460 crimes and Maharashtra topping with 462 followed by Assam 217 and UP with 117. Terrorist activities through cyber space was witnessed in 110 cases and Assam 44 followed by Rajasthan 20 and TN 13 were top three states. Hate against country was registered in 206 cases where Maharashtra tops with 57 followed by UP 51 and Karnataka with 21. Software Piracy was registered in 90 cases in which Odisha contributes almost 50% with 43 cases. Motive in category others was reported in 3756 cases in which Rajasthan has 819 cases followed by Maharashtra 619 cases , Haryana 382 cases, West Bengal 379 cases, Assam 322 cases and Telangana 304 cases.

The details state that Fraud is the most prominent motive in cyber crimes as in 12213 cases it was observed. Terrorist activities was the motive in 110 cases and Hate against country was motive in 206 cases but surprisingly cases registered under section 66F relating to cyber terrorism are only 13 indicating that something is missing in understanding the basics of cyber crimes and motives behind them.

Many times these crimes are committed by faceless criminals who are totally unknown to victims and located at different territorial locations even outside INDIA also and in the present policing system which is handicapped by jurisdictional issues in its investigation it is practically impossible to nab these criminals and hence we find very poor and pathetic report of police disposal in cyber crimes which is elaborated below.

Police disposal report

As per report 8877 cases were pending for investigation in previous year (2016) and 13635 new cases were added to investigations in the year 2017. Out of these cases 5457 cases were in the category Cases true but insufficient evidence or untraced or No clue. Total 730 cases were reported in category cases ended as Mistakes of Fact or of law or Civil dispute.

Total 3169 charge sheets were filed by the police in 2017. Total 9750 cases were disposed off by the police out of 22513 cases and most surprisingly in @ 6500 cases or 70% cases  which were disposed, investigation was never carried out meaning police investigated only 3250 cases successfully in the entire year 2017. At end of 2017 pending cases for investigation are 12750 with 32.5% charge sheeting rate and 56% pendency rate.

Judicial set-up for cyber crimes trials is also in equally pitiable condition.5712 cases were pending in courts under head Cyber crimes at start of 2017 and 3169 cases were added in 2017 making total 8881 cases before Courts in India. Out of which 44 cases were disposed off without actual trial. In 84 cases of previous year conviction was pronounced along with 31 cases of 2017. With 19 discharges and 323 acquittals conviction rate in cases of cyber crimes is merely 25%. Pendency rate is 94% and this situation is very alarming.

NCRB also published reports about 19 Metropolitan cities in India, where population is more than 2 Million. The interesting facts are as below.

Bengaluru with 2743 crimes tops the list followed by 1362 in Mumbai and 685 in Jaipur. Nagpur witnessed only 82 crimes as compared to 97 in 2016 and 102 in 2015 meaning actually there is decline in cyber crimes in Nagpur and ranks at 12’Th position.

Nagpur tops in pendency of cyber crimes are concerned with 91.9% followed by Patna with 87.7% and Delhi with 85.5%.

The overall pendency rate of 64.1% in all 19 major metropolitan cities suggest that our police machinery is inadequately trained and equipped to carry out cyber crime investigation. The crimes which are committed with use of technology can certainly be more effectively investigated by use of same technology but there seems to be lack of investigative skills on behalf of police personnel which needs to be sharpened.

Advocate Mahendra Limaye’s additional take----Whether to believe on the current report is million dollar question because it is observed that cyber crime is happening on every passing second but not reported to police or report is not taken by the police if victim goes to police station.

If our own assessment of cyber crime helpline is to be believed then we receive almost 60-70 calls per day and about 20-30 complaints through our FB page. Receiving about 100 complaints per day by an ordinary cyber crime helpline managed by CYBER AWARENESS ORGANISATION, without any SEO or promotion for past few years shows that more than 21796 CYBER CRIMES are committed in India. If premier agencies wish to undermine the supremacy of Cyber criminals and unwilling to accept the reality in cyberspace then it is misfortune of the citizen who are compelled to carry our most of the activities through online medium.