Information

Technology Semester 10

Laws
 • Section A
• Concept of Information Technology
• Evolution of Cyber Law
• Jurisdiction in Cyber Space
• Advantages and Disadvantages of Internet Technology
• Aims and Objectives of Information Technology Act
•
Syllabus •
Definitions: Computer, Computer Network, Computer Resource,
Computer System, Asymmetric Crypto System, Virus
Concept of e-commerce and fintech law: Digital banking, electronic
contracts and its types,
• Concept of blockchain and Cryptocurrency
• Judgments
• Diebold Systems Pvt. Ltd. vs The Commissioner, ILR 2005 KAR 2210
• Banyan Tree Holding (P) Ltd Vs Murali Krishna Reddy & Anr. 2008
(38) PTC 288 (Del)
 • Section B
• Digital Signature and Electronic Signature (Section 3-
3A)
• Electronic Governance (Section 4-10A)
• Attribution, Acknowledgement and dispatch of
Electronic records (Section 11-13)
Syllabus • Regulation of Certifying Authorities (Section 17-34)
• Electronic Signature Certificates (Section 35-39)
• Judgments
• P R Transport Agency v. Union of India (AIR 2006 All
23)
• Justice K.S. Puttaswamy v. Union of India (2017) 10
SCC 1
 • Section C
• Duties of Subscribers (Section 40-42)
• Penalties, Compensation and Adjudication
(Section 43-47)
• Cyber Appellate Tribunal (Section 48-64)
• Offences (Section 65-77)
Syllabus • Intermediaries not to be liable in certain cases
(Section 2(w), and 79)
• Judgments
• Shreya Singhal v. Union of India AIR 2015 SC
1523
• Avnish Bajaj vs State (N.C.T.) Of Delhi (2005) 3
CompLJ 364 Del, 116 (2005) DLT 427
 • Section D
• Investigation and procedure of Search and
Seizure (78&80)
• Legal recognition of Electronic Evidence
• Grey Area of Information Technology Act
• Copyright Issues in Cyber Space
• Trademarks and Domain names Issues in Cyber
Syllabus Space
• Judgments
• A&M Records Inc vs Napster Inc 239 F 3d 1004
(9th Cir 2001)
• Shafhi Mohammad vs The State Of Himachal
Pradesh (2018) 5 SCC 311
 • The technology relating to computer systems,
their hardware, software and networks,
internet and various applications running on the
internet is called as Information Technology.
• It is the study or use of computers,
Concept of telecommunication systems and other devices
for storing retrieving and transmitting
Information information or data
• Information means a collection of facts
Technology gathered by various means or communication
to draw a conclusion. It is the representation of
knowledge such as facts, data or opinions in any
form like text, graphic, audio, video etc.
Technology is the specific information and
knowledge required for the practical purposes.
 • IT refers to scientific, technological and engineering
disciplines as well as management technologies
used in handling information, communication,
processing applications and associated software etc.
so it include hardware, software, people and data.
Concept of • Information Technology and Computer Science are
almost used interchangeably but technically these
are different. Computer science deals with the
Information design and use of computers for solving different
types of problems whereas information technology
Technology deals with the practical application of computer
science in business industry.
• Eg study and develop a data structure is a part of
computer science whereas to use that data
structure in some application is a part of
information technology.
 • Cyberspace is a virtual space in which all of
IT mediated communication and actions are
taking place is referred to as cyberspace. It
is a global village having no geographical
boundaries. It is made up of intangible
objects such as website, blog, social
Concept of networks, email accounts, etc.
Cyberspace • The word cyber’ is synonymous with
computer, computer system or computer
network or internet. ‘cyberspace’ is a
notional environment in which
communication over computer network
occurs. It is a borderless environment. It is a
virtual space where internet works.
 • The word ‘cyberspace’ was used for the first
time by William Gibson in his science fiction
‘Necromancer’ in 1982. It deals with
communication over the internet connected
by some kind of technology. It has no
Concept of physical foundation which can be seen,
touched, felt or sensed in real world, but
Cyberspace still one has to accept that transactions in
cyberspace do take place in the real world
and do have real world effect. Cyberspace is
connected to physical environment by what
is technically known as portals, which allow
people to see what is inside it.
 • Cyberspace is the electronic medium of
computer networks in which online
communication takes place and where
individuals can interact, exchange ideas,
share information, provide social support,
conduct business, direct actions, play
games, engage in political discussion and so
Concept of on.
• Persons in cyberspace are called netizens
Cyberspace i.e. anyone who is associated with
computers, information technology and the
Internet. A netizens is a person who
becomes part of and participates in the
larger internet society. This word comes
from the combination of two words internet
and citizens.
 • Salient features of cyberspace
• Just like the real world cyberspace consists of the
entire virtual world i.e. the world where people are
connected through computer and internet and
where computer programmes work and data is
processed.
Concept of • The ICTs, computers and internet technology are
expanding the boundaries of cyberspace day by day.
Cyberspace • It is very easy to roam around in the cyberspace on
‘information superhighways’
• The speed is tremendous and the reach is unlimited.
It is very easy to enter and exit in cyberspace.
• It is easy to disguise one’s identity in cyberspace.
• Cyberspace and real world impact each other.
 There are various reasons why it is extremely difficult
for conventional law to cope with cyberspace.
Cyberspace is an intangible dimension that is
Limitations of impossible to govern and regulate by using
conventional laws.
Traditional Jurisdictional Issues: Cyberspace has no geographic
boundaries. A cybercrime may be committed by a
Law and need person in any other country or it may be committed
using a computer system or network located in
for a Separate another country. While the IPC, provides for both
territorial and extra territorial jurisdiction. Its extra-
territorial jurisdiction is limited to offences committed
law by Indian citizens. This leaves ambiguity in the
applicability of the penal code to cyber offences that
may be committed by foreign nationals overseas, but
in a way their impact is felt in India.
 For eg A person in USA could break into bank’s
electronic vault hosted on a computer in India
and transfer millions of rupees to another bank in
Limitations of Switzerland all within minutes. All he would need
is a laptop computer and a cell phone. It means
Traditional cyberspace has complete disrespect for
jurisdictional boundaries.
Law and need This transnational element of cybercrime also
for a Separate requires greater international cooperation.
Investigation of offences in other countries and
law arrest of cybercriminals of other nationalities will
require established extradition treaties and
bilateral and multilateral agreement and special
permissions.
 Inapplicability of conventional definitions: Most
crimes in cyberspace involve intangible objects. This
creates problems where conventional definitions of
crimes are involved. Eg the definition of trespass
Limitations of requires actual physical entry for conviction.
Constructive entry upon the property is not within the
Traditional meaning of this section. In the case of cyber trespass
or hacking where there is no actual entry into the
Law and need physical territory where the computer is located this
definition fails. Similarly, the offence of theft is made
for a Separate out when there exist an intent to remove from
possession. Therefore, for data to be stolen it would
have to be removed from the possession of the owner.
law If the offender were to simply copy the data onto a
pen drive without erasing or modifying the original
data in any way, then it may not constitute theft under
the traditional definition.
 Limitations of Theft of corporeal information (books, papers, CD
Traditional ROM, floppy disks) is easily covered by traditional
penal provisions. However, the problem begins
Law and need when electronic records are copied quickly via
telecommunication facilities. Here the original
for a Separate information remains in the ‘possession’ of the
owner and yet information gets stolen.
law
 Creation of New Crimes: Cyberspace
has given birth to several new crimes
which are not recognized by
Limitations of conventional laws. Eg a website can
handle only fixed number of viewers or
Traditional requests at a given point of time. A
Law and need cyber criminal can prevent the website
from functioning by overloading it with
for a Separate requests (Denial of service attack). This
kind of attack can cause huge losses to
law an online business but there would be
no clear remedy under ordinary law.
 Issues with gathering evidence: The intangible
nature of cyberspace and cybercrime makes
traditional methods of gathering evidence
Limitations of inadequate. The scene of the crime in cyberspace
is completely virtual and so is the object of the
Traditional crime like data or information. This type of
evidences can be modified very easily. Eg A
Law and need criminal may setup a program which erases all
for a Separate evidence from the computer if it is accessed by
someone other than himself. In this case, mere
law access to the computer may erase the evidence.
Therefore, specific rules are required for
extraction of evidence and maintaining its
authenticity.
 Anonymity of Netizens: A
cybercriminals can easily guard his
identity. A cybercriminal can use fake
Limitations of identities or create identity clone. This
Traditional makes gathering of evidence difficult.
Cyberspace offers enormous potential
Law and need for anonymity to its members. Readily
available encryption software and
for a Separate steganographic tools that seamlessly
hide information within image and
law sound file and ensure the
confidentiality of information between
netizens.
 Monitoring of crime: Cyberspace handles gigantic
traffic volumes every second. Billions of emails are
crossing the globe, millions of websites are being
Limitations of accessed every minutes and billions of dollars are
electronically transferred around the world every day.
The sheer volume of information involved and being
Traditional processed every second makes monitoring and
tracking of crime very difficult.
Law and need USA and India have put in place extensive internet
surveillance programmes to deal with this issue. But
for a Separate such programmes can also extremely invasive in the
personal lives of individuals, raising questions
regarding the protection of privacy. Eg CMS (Central
law Monitoring System) of India like American’s PRISM is a
mass electronic surveillance data mining programs
which gives India’s security agencies and IT officials to
access network or online data.
 Like tracking the location of individuals,
read SMS, emails, monitor social media
such as face book, twitter, Google history
Limitations of search etc without any order from court.
The intercepted data may be subject to
Traditional pattern recognition by machine learning or
Law and need by AI.
One of the primary concern raised by civil
for a Separate society is privacy issues. There is no official
word from the government about how
law government bodies or agencies will use
this information, what percentage of
population will be under surveillance, etc.
 There is no legal recourse for a citizen
Limitations of whose personal details are being misused
Traditional or leaked from the central or government
database. Unlike, America’s PRISM project
Law and need under surveillance orders are approved by
for a Separate courts. But not in case of CMS. So, there is
a need for extensive legislation on
law surveillance.
 Evidentiary value of Electronic
Information: The extensive use of IT for
communication and documentation
Limitations of raised new question on the
admissibility of electronic evidence. If a
Traditional person was being stalked online, can
copies of emails or screenshots of chat
Law and need room messages by the stalker be
admissible as evidence? The per
for a Separate amended Indian Evidence Act 1872
law recognized only two types of evidences:
Documentary evidences (paper-based
evidence) and oral evidence
(testimonials of witnesses).
 Validity of online
transactions: Traditional law
Limitations of does not deal with the
Traditional validity of e-contracts, digital
Law and need signatures, e-commerce etc.
for a Separate Eg Is a contract entered into
law through emails legally valid?
Can it be enforced in a court
of Law?
 Early Cyber Laws: The Computer Misuse Act
1990 of Great Britain: In the case of R v Gold &
Schifreen (1988) the defendants had gained
unauthorized access to a computer network. The
defendants were charged under Forgery and
counterfeiting Act 1981 for defrauding by
manufacturing a false instrument. It was held by
Evolution of House of Lords that “ We have accordingly come
to the conclusion that the language of the Act
Cyber Law was not intended to apply to the situation which
was shown to exist in this case…”
This judgment brought the possibilities of cyber
crime and inadequacy of existing laws to deal
with them to the notice of the legislature of Great
Britain. It led to the enactment of the Computer
Misuse Act 1990.
 This was among the first cyber laws
to be enacted. It recognized the
offences like,
Unauthorized access to
computer material
Evolution of Unauthorized access with
Cyber Law intent to commit or facilitate
commission of further offences
Unauthorized acts with intent
to impair or with recklessness as to
impairing the operation of
computer.
 UNCITRAL Model Law on electronic
Commerce, 1996: With the globalization
of business, the international community
felt a need for a law which would set
uniform standards for electronic
commerce. This led to the adoption of the
UNCITAL Modal Law on electronic
Evolution of commerce by the UN General Assembly on
31st Jan 1997.
Cyber Law With a desire to promote standard and
uniformity of laws the UNCITRAL has
drafted a Model law that supports the
international contracts in electronic
commerce.
 This laid down the fundamental principles
of e-commerce law:
1) Non-discrimination: This principle
requires the removal of any
discrimination between a physical
document and an electronic one. It
Evolution of ensures that a document will not be
denied its validity or enforceability
Cyber Law solely on the grounds of it being in an
electronic form.
Article 5 of the Model Law states that
the legality of information shall not
be denied merely because it is
contained in an electronic document.
 2) Technological Neutrality: This principle
mandates that the provisions adopted in a
law should be neutral with respect to the
technology involved. This ensures that the
rapid pace of development of technology
does not lead to the law becoming
Evolution of redundant in no time.
Article 7 of the Model law which lays
Cyber Law down rules regarding a valid signature of
an electronic document prescribes a
reliable method which is used to indicate
that person’s approval. Since the method
has not been specified the law would
continue to apply regardless of any new
developments.
 3) Functional Equivalence: Terms like
‘writing’, original’, ‘signed’ etc are specific to
paper based documents. This principle set
out the corresponding criteria for electronic
communication.
Eg the law of evidence generally required that
Evolution of the original document should be presented as
evidence. For a paper-based document, it
Cyber Law would mean a document that was actually
issues, or with original signatures or which is
not a photocopy or fax of another document.
Article 8 describes an original electronic
document to be one where the information it
contains is the same as that when it was first
generated in its final form.
 Information Technology Act 2000:
India is a signatory to the Model law and is
under an obligation to revise its laws as per the
said Model law.
In view of the international recognition of
electronic transactions and its growing use within
Evolution of India, the Indian legislature felt the need for
providing a legal framework for e-commerce e-
governance and digital signatures and suitable
Cyber Law amendment in the existing laws which led to the
enactment of India’s first cyber legislation: the
Information Technology Act, 2000 on 17.10.2000
The Act not only transforms the Model law into
domestic legislation but also brings in a
procedural infrastructure seeking to regulate this
electronic marketplace.
 National Reasons for enactment of Information
Technology Act 2000:
•Increasing use of ICTs in conducting business
transactions and entering into contracts because
it was easier, faster and cheaper to store, transact
and communicate electronic information than
Reason for traditional paper documents.
•Business people were aware of these advantages
enactment of but were reluctant to interact electronically
because there was no legal protection under the
IT Act 2000 existing laws. They mainly concerned with
enforceability of the contract, security and
confidentiality of message and transactions. It
need assurance about the confidentiality
authenticity and integrity of communication
based transaction which paper based
documentation assures.
 International Reasons for enactment of
Information Technology Act 2000:
•International trade through electronic means
was growing tremendously and many countries
had switched over from traditional paper based
commerce to e-commerce.
Reason for •UNCITRAL had adopted a Model Law on
Electronic commerce in 1996 so as to bring
enactment of uniformity in laws governing e-commerce across
the globe.
IT Act 2000 •India being a signatory to UNCITRAL had to
revise its national laws as per the said model
laws.
•The WTO was also likely to conduct its
transactions only in electronic medium in future
 The purpose of the Act is to foster an
environment in which laws are simple,
transparent and predictable and in which the
advantages of new technologies can be trapped.
The main Objectives of the IT Act are:
Aim and -To give effect to the UN General Assembly’s
Resolution on the Model Law
Objective of IT -To provide legal recognition to e-commerce
transactions carried out by means of electronic
Act 2000 communication
-To facilitate electronic filings of documents with
government agencies
-To amend the Indian Penal Code, Indian evidence
Act, Banker Books Evidence Act and Reserve Bank
of India Act
 -To permit authentication of electronic records
and digital signatures
-To facilitate e-governance and recognize filing of
forms, issue of licences, receipt of payment etc
through electronic means by the government
make the citizen-government interaction hassle
Aim and free.
-To provide legal recognition to the transactions
Objective of IT carried out by means of EDI and other means of
electronic communication.
Act 2000 -- to provide legal recognition to business
contracts and creation of rights and obligation
through electronic media.
-To lay down rules in relation to electronic
records-receipt, time of dispatch, etc.
 -To provide for a Controller of Certifying
Authorities in relation to issue of
digital/electronic signature certificates.
Aim and -To define Offences and prescribes
penalties
Objective of IT
-To establish a Cyber Appellate Tribunal
Act 2000 -To lay down liability of Intermediaries
-To prescribe extra territorial jurisdiction
for cyber offences
 The provision of this Act are not applicable to
following instruments:
A negotiable instrument
A power of attorney
Act not A trust
applicable to A will including any other testamentary
disposition
following Any contract for the sale or conveyance of
immovable property or any interest in such
instruments property
Any such class of documents or transactions
as may be notified by the Central Government
in the official Gazette.
 UNCITRAL Modal Law gives mandate to States to
exclude any transaction from the operation of the
Act. This may be based on the fact that there are
a number of special contracts or instruments so
familiar to the public, such as a Will, or have
Act not become such well establish figures of mercantile
customs such as bill of lading that their
applicable to manifestation in paper form has become an
integral part of their character. The Indian
following Parliament being alive to the ground realities such
as lack of infrastructure for new technology,
computer literacy and fundamental equivalents
instruments thus decided to limit the scope of the IT Act and
did not cover above transactions. Eg in case of
real estate written documents are commonly
required in almost throughout the common law
world.
 Indian Penal Code 1860: The
definition of term electronic
record was inserted. ‘Document
were amended to include
Legislations ‘electronic record’. The extra
Amended by territorial jurisdiction of the IPC
the IT Act expanded to include all offences
targeting computer resources in
India. ‘False Document’
amended to “false Electronic
document’
 Banker’s Book Evidence Act,
1891: The definitions of
‘bankers books’ and ‘certified
Legislations copies’ were amended to
include data stored in electronic
Amended by devices and printouts of such
the IT Act data. To give legal sanctity for
books of accounts maintained in
the electronic form by the
banks.
 Indian Evidence Act 1872:
The definition of ‘evidence’
was amended to include
Legislations electronic record. Section
Amended by inserted on admissibility of
the IT Act electronic records, proof and
verification of digital
signatures and presumption
as to electronic evidence.
 Reserve Bank of India Act
1934: The powers to make
regulations were amended to
Legislations include regulations on fund
transfer through electronic
Amended by means. To amend the Act so
the IT Act as to facilitate electronic fund
transfers between the
financial institutions
 The provisions of the Act are to
have notwithstanding anything
inconsistent therewith contained in
any other law (Section 81)
Overriding It means that the provisions of this
effect of the Act override any existing principles
of law that are inconsistent to
Act them. However the provisions of
this Act shall not restrict any
person from exercising any right
conferred under the Copyright Act
or the Patents Act.
 The term computer is derived from the
word compute, which means to
calculate. A computer is an electronic
machine devised for performing
calculations and controlling operations
that can be expressed either in logical
or numerical terms. It performs various
Computer operations with the help of instructions
to process the information in order to
achieve desired results.
Communication has become cheaper,
faster and easier. Huge data can be
stored without any space problem.
Endless complex calculations can be
done in mere fraction of the time.
 In ancient times, people used either fingers or pebbles for
counting and adding. Then a counting device called abacus
was built having a system of sliding beads arranged on rack.
In 1642. Blaise Pascal invented first automatic calculator
called Pascaline
In 1694, Gottfried Wilhem extended Pascal’s design to
perform multiplications and division.
Evolution of Charles Babbage is the father of modern computer in 1822
proposed a machine called Difference Engine.

Computers In 1946 John Eckert and John Mauchly developed ENIAC.

In 1949 at Cambridge University Wilkes developed EDSAC
In 1951 UNIVAC manufactured by Eckert Mauchly and
marked the real beginning of the computer era.
In 1980 VLSI design in which thousand of transistors were
placed on a single clip called PC comes.
Then microprocessor and IC chip comes. The computer
technology continues to experience huge growth.
 First Generation (1940-56):
The Vacuum Tubes were used in circuits of the
computers
The input and output operations were done
using punched card technology
Generations of For external storage magnetic tapes were
used
Computers The machine doing one job at a time
Language are machine and assembly
languages
Computers are UNIVAC-I ENIAC and IBM 650
 Second Generation (1956-63):
The transistors were used in circuits of the
computers
The input operations were performed by using
punched cards and magnetic tapes and for output
operations were done using punched card
Generations of technology and paper printout also
Computers For external storage magnetic tapes were used
The machine doing multitasking job
High level Language are FORTRAN COBOL and
BASIC languages
Computers are IBM1400, GE 635
 Third Generation (1964-71):
The Integrated Circuits replaces transistors.
The input operations were performed by
using keyboards and for output operations
monitors were used instead of punched cards
Generations of For external storage magnetic disks were used
Computers The machine doing several multitasking job
More advanced High level Language- PASCAL
were used
Computers are IBM360
 Fourth Generation (1971-90):
The Microprocessor were used instead of
Integrated Circuits.
The input and output devices were the same
monitors, keyboard, printer etc
Generations of Microcomputer have evolved
Computers For external storage magnetic disks were used
The application software for microcomputer
become popular.
Computers are IBM370
 Fifth Generation (Late1990- till
date)
Fifth generation computing devices
based on Artificial Intelligence,
machine learning, Game playing,
Generations of expert system, Neural network,
robotics, Internet of things, Cloud
Computers Computing etc.
As we move from first generation to
fifth generation of computers
speed, accuracy, versatility and
reliability increases whereas cost
and size decreases.
 Internet is derived from the two words,
Interconnection and network. Internet is a
worldwide system of computer network or
network of network which allows the users to
share information on those linked computers.
It consists of thousand of separately
administrated networks which comprises
Internet number of computers. LAN (Local Area
network) are connected by using public
switch network to create WAN (Wide Area
network) and when number of WANs and
other interconnected networks such as
intranet and extranet are connected, it result
in Internet.
 Therefore internet is a world wide
computer network. All computers
connected to the internet
communicate to each other only by
using a common set of rules which
Internet are commonly known as protocol.
For this communication each
computer should have its own
address. Such address is called IP
Address. ISP’s are the entities which
provide connection to internet.
 Internet started in 1960 when an
experiment was conducted by US
Department of Defense. They wanted
to create a computer network that
could continue to function in the event
of a disaster, such as nuclear war. Even
Evolution of if a part of the network was damaged
or destroyed the rest of the system
Internet would continue to work. That network
was known as ARPANNET (Advanced
Research projects Agency Network),
which linked US scientific and academic
researchers. It was forerunner of
todays internet.
 By 1970 ARPA helped in the development of a new
protocol known as TCP/IP (Transmission Control
Protocol/ Internet Protocol) for transferring data
between the networks. The TCP/IP is the core of the
internet.
In 1980, Newgroups and email came into picture.
Internet became popular in the 1990 after the
Evolution of development of WWW.

Internet In 1991, CERN released WWW which is based on

hypertext(HTTP) that makes it possible to connect
content on the web with hyperlinks. WWW permitted
access to information across the network by using GUI
(Graphical User Interface).
With the use and growth of internet the quality and
variety of information also grew.
 Internet provides various services:
-Communication Services like email,
Internet relay Chat, Internet telephony,
telnet, newsgroup, mailing lists, Instant
messaging etc
Services of -Information retrieval services by the
Internet use of File transfer protocol, Archie,
Veronica, Gopher etc.
-Web services for accessing linked
documents spread over thousands of
servers all over the internet
 Internet and IT has played very
important role in our life. Today the
physical boundaries are
disappearing and due to ICT
Advantages of revolution, entire world has been
Information converted into a global village. The
way people live and work is
Technology changing like never before. Today
there is hardly any area where ICT is
not used. The main advantages of
Internet Technology are:
 - 24X 7 Access
- Cheaper and faster communication like chatting
video conferencing, internet telephony, emails etc.
- Paperless environment
Advantages of - Easy to use, make copies, change contents,
- Mode of sharing and collecting information with
Information others on network
- Online survey
Technology - Online discussion
- Online banking and online payment like paytm,
Phonepay etc
- Online auction
 - Online jobs
- Online reservation, ticketing, traffic schedules
of airlines and rails
- Online business or e-commerce like amazon
Advantages of - Cloud computing storing data online like iclouds
Information - Online entertainment like Gaana, spotify
- Online education like virtual classes, online test
Technology web-based test, online examination and results
- Online library like e-books and e-journals
- Online research and development projects
 -Internet and health industry- advice
from doctors
-Internet and Air traffic control
-E-governance
Advantages of -Internet and Defense services
Information -Internet and media like print media,
online newspaper
Technology -E-courts
-Artificial Intelligence- robotics, game
playing, Neural networking etc
 Internet act as a double edge weapon. It had
many disadvantages as well
-Face book and social networking sites
(spoiling young children)
-Breaking and weakening of emotional
Disadvantages bonding and social relationship- it increase
the gap between children and elders at home
of Information -personal information not fully protected
Technology -security problems as no computer is 100%
safe from hacking
-Main source of virus
-Easy infringement of IPRs
 Cybercrimes-Internet is acting as a double
edge technological weapon. On one hand
it is providing so many benefits in the form
of different services whereas on the other
Disadvantages hand it is also an extremely powerful tool
of Information in the hands of bad elements for
committing cyber crimes. The misuse of
Technology internet is growing everyday. Cybercrime is
pretty easy to commit with very little
resources or say by click of a mouse but
the damage caused could be very huge.
 According to Jurist Lalitha Sridhar, “our
understanding of the virtual world is slim
and of cybercrimes even less. But as law
enforcer are finding out, their effect on
Disadvantages the real world is devastating”.
-Porno websites -serious concern
of Information especially for children
Technology -Spamming-sending unsolicited emails in
bulk having no purpose but clog the
system
-spoofing-hacker gain access by posing
authorized user
 -wastage of time –in chatting
playing games
-problem of accuracy of
Disadvantages information-huge information
of Information but not updated
Technology -health problem-obesity, eyes
issues, behavioral problems,
wrong posture, lack of patience,
concentration problem etc
 Jurisdiction of the court was
traditionally decided on two
grounds- where the cause of
action arises or on the grounds
Jurisdiction of territory and the nationality of
the parties involved. This
prevents the chaos which can
result from there being no
specified forum for any matter.
 Extra-territorial jurisdiction
Principles of or jurisdiction of the state
extra- beyond its normal
territorial territorial boundaries under
Jurisdiction modern international law is
based on certain principles.
 Territorial Principle: Under this principle,
jurisdiction is exercise by the state on the basis of any
events that take place either wholly or partially on the
Principles of state territory. This applies even against the foreign
national present on its territory. When the events takes
place only in part within the state territory, jurisdiction
extra- may be applied on the basis of either of the two
principle, objective principle of territorialty ie. Where
territorial the act commenced elsewhere but the effect were felt
within its territory. The second is the subjective
Jurisdiction principle of terrioriality ie. Where the act commenced
within its territory but the effects were felt elsewhere.
Eg SS Lotus case.
For example, this jurisdiction is exercised in the case
of the genocide in Rwanda. Special jurisdiction has
been granted to the UN member states to prosecute
persons accused of genocide which these states refuse
to extradite in their own courts.
 Nationality Principle: Under this principle,
jurisdiction is applied to an act of an
individual committed outside a state’s
Principles of territory, if the individual is a national of the
state. Each state determines whether or not an
extra- individual is the national of a state as per its
own law. For example, the jurisdiction
territorial exercised by states over offences on ships
which fly their flags. Section 4 of IPC is based
Jurisdiction on this principle. It extends the application of
IPC to any offence committed by a citizen of
India, whether within or outside India and to
any ship or aircraft which is registered in
India. Another eg the retention of jurisdiction
over armed forces stationed in a foreign
country through a ‘status of forces agreement’
between the countries.
 Passive Personality Principle: Under this
principle, jurisdiction is applied by the
Principles of state over a foreign national on the grounds
extra- that he has committed an offence against
its own national outside its territory. This
territorial principle is used by the US against issues
like terrorism. For example, this principle
Jurisdiction is used in the Benitez case, where a
Colombian national was tried for shooting
a US drug agent in Columbia. Or Yunis
Case where a lebanese national was tried
for hijacking a Jordanian aircraft on which
two US nationals were present
 Protective Principle: Under this
principle, jurisdiction is established by
Principles of the state where a criminal act is
derogatory to the security of the state or
extra- affects the national interest of the state.
Like drug trafficking, spying
territorial counterfeiting of currency etc. For
Jurisdiction example, Article 5.1 (c) of the
International Convention against the
Taking of Hostages, 1979, in which
jurisdiction may be exercised over an
offence if it was committed in order to
compel that state to do or abstain from
doing any act.
 Universality Principle: Under this principle,
jurisdiction is established by any state over any person
accused of committing international crime regardless
Principles of of the territory or the nationality of the person. Eg war
crimes, piracy, grave breaches of the Geneva
convention, crime against humanity etc. This is applied
extra- to cases where none of the grounds of jurisdiction can
be applied or when the state within whose territory the
territorial crime was committed was unable to prosecute the
offenders. This is applied with respect to crimes which
Jurisdiction are so abhorrent that the entire international
community feels that there is a need to intervene. For
example, this principle applied in Eichmann case
where earlier the state of Israel claimed jurisdiction
over the Eichmann for the crimes committed during
the Holocaust based on protective principle but was
challenged on the ground of the Israel’s nonexistence
at the time of the Holocaust so later applied the
Universal Principle.
 Cyberspace has no geographical boundaries which lends a
“transnational” element to cybercrimes. Traditional national
and international law are not designed to adequately deal with
such a transnational nature of cybercrimes. A cybercrime may
be committed by a person in any other country or it may be
Jurisdiction in committed using a system or network which is presently
Cyberspace located in any other country. The main problem with the
cyberspace jurisdiction is that the parties are scattered in
different parts of the globe who are connected to each other
only with a virtual connection. And if an offence is committed
the problem arises with the plaintiff that if he wants to sue the
other party, where can he sue? Traditionally the concept of
jurisdiction invokes on the basis of where the defendant
resides, or where the cause of action has arisen.
 But with respect to Internet it’s very difficult to
establish the jurisdiction. Because of lack of
geographical boundaries can it be possible to try
the case against the person in cyberspace?
Cyberspace or internet creates a complete
Jurisdiction in confusion and contradictions with respect to
jurisdictional issues of the state.
Cyberspace In CyberSell, Inc. v. CyberSell, Inc , The dispute
was between corporation from Orlando and
Arizona. The issue was whether the mere use of a
website by Florida Corporation granted Orlando
court, the jurisdiction? The Court held that if
there is some act by which the opposite party
firmly avails itself of the privilege of conducting
activities within the forum state, thus bringing
himself within the sphere of its laws
 Tests for Personal Jurisdiction in Cyberspace
The established tests for personal jurisdiction,
such as minimum contact, effects test and general
Jurisdiction in and specific jurisdiction test, are applied in
determining jurisdiction in cyberspace as well. In
Cyberspace order to claim jurisdiction over the website by the
court, the first it has to prove that whether the
website is a passive website or active website
and also they have to consider the geographical
location of the owner of the website, the user of
the web server and finally they have to consider
the ‘jurisdiction clause’ or ‘forum selection clause’
under the online contracts. There are certain tests
for the jurisdiction claim
 Test of interactivity: This test is basically examining
the level of interaction that website is having with the
visitors of that website. There are two types of
Jurisdiction in websites: A passive website is mainly providing only
the information so it is usually outside the preview of
Cyberspace personal jurisdiction. But the Interactive website is not
only providing information but also interacting with
the visitors by exchanges the data files or by other
means so it is usually comes within the preview of
personal jurisdiction if once the interactivity of the
website established.
 In the case of Cody v. Ward held that the interaction
between plaintiff and defendant was sufficient ground
to establish ‘purposeful availment’ and ‘minimum
Jurisdiction in contacts test’. As plaintiff is a resident of Connecticut
Cyberspace and purchase the stocks on the advice of the defendant
who was the resident of California who posted the
information regarding the stocks on an online forum
and exchanges the data files like emails and certain
telephone calls even, which establish the personal
jurisdiction.
 Test of Sliding Scale: The sliding scale or Zippo test is the
most acceptable test for the determination of the level of
interactivity of a website. On this scale, a court’s right to
exercise its jurisdiction in entertaining a matter is dependent
Jurisdiction in upon the quantum of business that is transacted by an
Cyberspace individual or firm over the internet. In Zippo Manufacturing
Co. v. Zippo Dot Com Inc., court held that “it has
jurisdiction over parties that conduct substantial business in
its jurisdiction exclusively over the internet.”. The Court
recognized three types of websites:
 Commercial websites: These websites which
usually do business over the internet like the
e-commerce websites. In the case of
Jurisdiction in CompuServe, Inc. v. Patterson, Court held that
Cyberspace
if the defendant knowingly contracts with a
foreign resident, for the knowing and
continuous transfer of computer files over the
internet, “personal jurisdiction is proper”.
 Passive websites: These are websites that provide
information only so personal jurisdiction does not
apply to these websites. But if the nature of the
Jurisdiction in transaction between the plaintiff and defendant fulfils
Cyberspace the minimum contact test then the personal jurisdiction
will apply, even if website is passive one. But in the
case of Bensusan Restaurant Corp. v. King , the court
observed that websites that make some information
accessible to foreign users doesn’t confer personal
jurisdiction.
 Interactive websites: These are websites that provide
information to which personal jurisdiction may apply
depending on the commercial nature of the transaction.
In the case of Maritz, Inc. v. Cybergold, Inc., the Court
Jurisdiction in held that where the website is one of interactive nature,
Cyberspace i.e. there is exchange of information, the jurisdiction is
ascertained by identifying the level of interaction and
commercial nature of the exchange of information.
Although certain courts implicitly rejected the Zippo
test by criticizing the level of interactivity and
commercialism are sufficient for the minimum contact
test.
 In Burger King Corp. v. Rudezuitiz , the Supreme
Court of the United States of America assumed
jurisdiction by reason of accessibility of Internet.
In Yahoo! Inc. v. La Ligue Contre Le Racisme et L
‘Antisemitisme, in which Nazi souvenirs, the sale of
Jurisdiction in which is banned in France was being auctioned on the
U.S. based Yahoo! The French court applied the effect
Cyberspace test saying that the website has targeted the public at
large including those in France making two citizens
suffer and directed Yahoo to remove all links and
material pertaining to Neo Nazism on its website. The
order was challenged in the US on basis of violation of
the first amendment rights. The US Court while
recognizing the capacity and powers of the French
Court refused to enforce the order in the US.
 Given the transnational nature of cybercrimes,
international cooperation is the foremost requirement
for effective investigation and prosecution. An
international convention on cybercrime needs to deal
Global with several aspects- maintenance of sovereignty,
transnational jurisdiction, transnational investigation,
Jurisdiction in collection of evidence and transnational procedures.
The Budapest Convention was the first international
Cyberspace treaty to attempt the establishment of better
international cooperation for combating cybercrimes.
It is the only multilateral treaty in force. It was
adopted in 2001. India is not a signatory to this treaty.
The main achievement of this treaty since its adoption
has been to create minimum harmonization of cyber
laws globally and to initiate a series of reforms in
existing legislation.
 Mutual legal assistance treaties (MLATs) are
arrangements to facilitate investigation and
Global gathering of evidence. India has entered into
MLATs with about 34 countries but these
Jurisdiction in MLATs are however completely inadequate,
Cyberspace as cybercrime specific provisions such as
those in the Budapest Convention are missing
from these agreements. Due to the ease with
which cyber evidence can be tampered with,
the current MLATs are lacking specific time
limits for the investigation of cybercrimes.
 Extradition especially in transnational
cybercrimes is a key element for the
prosecution of criminals. For extradition,
Global several factors come into play in order to
acquire the consent of the country within
Jurisdiction in whose territory the offenders are present.
There are several issues which can crop up
Cyberspace with extradition like most extradition treaties
require that the act should be an offence in
both countries. Further, a person can be
prosecuted and punished only for the crime for
which he was extradited, which means that the
extradition treaty would have to specifically
cover the crime in question.
 Moreover, extradition is at the
discretion of the state where the
accused is. India has approximately
Global 45 extradition treaties and
Jurisdiction in arrangement with various countries.
Cyberspace Generally, these extradition treaties
include clauses which define
extraditable offences as those which
are punishable by both states by
deprivation of liberty for a period of
at least one year.
 Under IT Act,
Section 1 (2), “It shall extend to the whole of India and, save as otherwise
provided in this Act, it applies also to any offence or contravention
thereunder committed outside India by any person.”
Jurisdiction Section 75, “Act to apply for offence or contravention committed outside

under IT Act India.–(1) Subject to the provisions of sub-section (2), the provisions of
this Act shall apply also to any offence or contravention committed
outside India by any person irrespective of his nationality.
(2) For the purposes of sub-section (1), this Act shall apply to an offence
or contravention committed outside India by any person if the act or
conduct constituting the offence or contravention involves a computer,
computer system or computer network located in India.”
 Under IPC,
Section 4 (3), “[any person in any place without
and beyond India committing offence targeting a
computer resource located in India .] 10 [
Jurisdiction Explanation .—In this section- a) the word
“offence” includes every act committed outside
under IT Act India which, if committed in India, would be
punishable under this Code;
b) the expression “computer resource” shall
have the meaning assigned to it in clause (k) of
sub-section (1) of section 2 of the Information
Technology Act, 2000.]
 Jurisdiction under the Information Technology Act,
2000 is mentioned under Section 1(2) and Section 75.
The IT Act, 2000 is not only applicable to offences

Jurisdiction committed in India but also to the offences or

contraventions committed beyond India
under IT Act
notwithstanding the nationality of the offender in case
the offence involves the use of computer resource or
network which is situated in India. Section 4(3) of the
Indian Penal Code, 1860 also confers jurisdiction over
Indian courts to offences committed beyond India.
 It extends the jurisdiction of the IT Act to every person,
irrespective of nationality, who commits an offence on foreign
territory using computer within India. These sections grants
“long arm” jurisdiction to this Act. It extends the jurisdiction of
Jurisdiction the Act to cover any act by any person which involves a
under IT Act computer situated in India and leads to any offence/
contravention outside India. When read with section 4 of the
IPC, this section is applicable to any offence which affects a
computer located within India. It means it applies only if the
offence involves a computer system located in India, and that
this section is applicable irrespective of the nationality of the
person committing the offence.
 Though the prescribed extra-territorial jurisdiction
under the IT Act is quite extensive, it is rendered
ineffective due to the lack of sufficient powers of
enforcement. For example, despite an order being
Jurisdiction passed against a cyber-criminal in another state who
under IT Act committed a crime within India, there are no adequate
means of enforcement against him so long as he is
outside Indian Territory. The absence of adequate
extradition treaties and Mutual Legal Assistance
Treaties specific to cybercrimes is an additional
challenge to proper prosecution and investigation.
 JURISDICTION WITH RESPECT TO E-COMMERCE- USE OF
PERSONAL JURISDICTION TESTS
A webpage can be accessed by anyone sitting anywhere on
Jurisdiction the globe and therefore, theoretically, the publisher of the
webpage could be sued in any country where it was
under IT Act accessed. While the website may be legal in the original
place of publication it may not be so in the country where it
was accessed. The exposure to liability on such a global
scale can have a chilling effect on the use of the internet.
The courts, cognizant of such eventualities, consider
whether it has personal jurisdiction over the defendant.
 Traditional Personal Jurisdiction Tests
1. Long Arm Statute: ‘long arm statute’ are laws of
the state which prescribe grounds for exercising
Jurisdiction jurisdiction over a non- resident defendant. For
example, New York’s civil practice law establishes
under IT Act personal jurisdiction over a non –resident on the
following grounds:
(i) If he conducts business or enters into contract in
the state.
(ii) If he commits a tortuous act within the territory of
the state.
 2. Effects Test: Under this test, a court can
exercise jurisdiction over a party’s conduct in
another state if the conduct causes effects in the
Jurisdiction forum state. This usually involves conduct that is
under IT Act expressly aimed at the forum state. This test was
laid down in the case of Calder v Jones as a rule
for determining minimum contracts with in the
forum state. In this case, a resident of California
sued an author for libel with respect to an article
 that was circulated in a magazine in
California. Both the author and the editor
were residents of Florida. The US Supreme
Jurisdiction
Court found that the defendant knew that the
under IT Act article would have a potentially devastating
impact upon the plaintiff, especially since the
magazine had its largest circulation in
California. Therefore held liable for this
intentional and tortious act.
 3) Test of Minimum Contacts: the test of Minimum
Contacts is the traditional rule for personal jurisdiction
established in the US in the case of International

Jurisdiction Shoe Co v State of Washington, Office of

Unemployment Compensation and Placement et al
under IT Act 1945, the test lays down that a state court will have
personal jurisdiction over a non resident defendant if it
has ‘minimum contacts’ with the state. The rules for
the application of this test on non resident defendant
will have minimum contacts with the state if he has:
 1) Direct Contact with the state
2) Purposefully availed himself of the
Jurisdiction privilege of conducting activities
under IT Act within the forum state.
3) Entered into a contract which has
substantial connection with the state
4) An intention to serve residents of the
forum state
 Personal Jurisdiction test by Indian Courts
There are several cases related to IPR where
personal jurisdiction was established based on
Jurisdiction the application of section 20 of CPC along with
under IT Act the tests laid down under US and other laws.
1. Casino India case- Application of Dow Jones
Rule: In the case of Casino India Co. Ltd v
Ashita Telesystems Pvt. Ltd 2003, the High
Court of Delhi had to deal with a passing off
action in relation to a domain name dispute,
 where the issue of whether it had territorial
jurisdiction over a website which was owned by a
business run in Bombay arose. This was the first case
Jurisdiction where the issue of whether personal jurisdiction could
under IT Act be exercised over a website that could be accessed in
India arose. The Court while adopting the principle of
global jurisdiction under the Dow Jones case, held that
jurisdiction in matter pertaining to a website, which
could be accessed anywhere, is not restricted to the
place of residence of the defendant.
 Dow Jones & Co Inc v Gutnic 2002, Respondents
sued for defamation through an article published on
the internet by the appellant held that publication on
the internet takes place wherever the document is
Jurisdiction downloaded. Due to ubiquity universality and utility of
under IT Act feature of the internet and the WWW, any matter
associated with it, possesses global jurisdiction. Form
the foregoing judicial pronouncement, it would be seen
that once access to the impugned domain name
website, could be had from anywhere else, the
jurisdiction in such matters cannot be confined to the
territorial limits of the residence of the defendant.
 2) Indian TV Case- Application of test of Interactivity: In
the case of India TV Independent News Services Pvt
Ltd v India Broadcast Live Llc and Ors 2007, a dispute

Jurisdiction arose regarding the domain name ‘IndiaTv’ raising a

question of whether Indian courts had jurisdiction over a
under IT Act website owned by a permanent resident of the US. The
plaintiff an Indian company, had a website
‘indiatvnews.com’ in line with its registered mark of ‘India
TV’. The defendant, a US company had a website
‘indiatvlive.com’ registered in California. In this case the
Delhi High Court based on a close study of the relevant
 rules for personal jurisdiction under US law, held that the
defendant was subject to the jurisdiction of Indian courts on
account of level of interactivity of the website with India. The
judgment laid down the following rules:
Jurisdiction 1) Mere access to the website, as held in the Casio India case

under IT Act 2)
is not sufficient to establish jurisdiction.
Limited interactivity of a website may not be sufficient to
established jurisdiction.
3) The defendant must have sufficient contact with the forum
state, for instance, if the defendant’s services can be
availed of within the forum state.
4) The claim of the plaintiff must arise on account of the
defendant’s contact with the forum state.
 3) Banyan Tree case- Application of Effect Test
and Sliding Scale Test: In the case of Banyan Tree
holding (P) limited v Murali Krishna Reddy & Anr
Jurisdiction
2008, a Singapore Banyan Tree Holdings, which
under IT Act used the mark ‘Banyan Tree’ sued an Indian
Company based in Hyderabad for the use of the
term ‘Banyan Tree retreat’ for one of its projects,
Neither party was within the territorial limits of
the jurisdiction of the Delhi High court.
 After assessing the application of personal
jurisdiction tests by Indian courts in previous
decisions, the High Court held that a
Jurisdiction
combination of the sliding scale test and the
under IT Act effects test required to be applied. The high
court of Delhi clarified that mere accessibility
of the website in the forum state is not
sufficient to invoke jurisdiction of the forum
court.
 The court holds that jurisdiction of the
forum court does not get attracted merely on
Jurisdiction the basis of interactivity of the website
under IT Act which is accessible in the forum state. The
degree of the interactivity apart, the nature
of the activity permissible and whether it
results in a commercial transaction has to be
examined.
 For the ‘effects’ test to be apply, the
plaintiff must necessarily plead and
Jurisdiction show prima facie that the specific
under IT Act
targeting of the forum state by the
Defendant resulted in an injury or
harm to the plaintiff within the forum
state.
 For the purpose of a passing off or an
infringement action (as plaintiff is not
Jurisdiction located within the jurisdiction of the court),
under IT Act the injurious effect on the plaintiff’s
business, goodwill or reputation within the
forum state as a result of the defendant’s
website being accessed in the forum state
would have to be shown.
 So this would require the presence of the plaintiff in
the forum state and not merely the possibility of such
presence in the future. And an injurious effect has been
Jurisdiction felt by the plaintiff it would have to be shown that
under IT Act viewers in the forum state were specifically targeted.
Therefore, the ‘effect test’ would have to be applied in
conjunction with the ‘sliding scale test’ to determine if
the forum court has jurisdiction to try a suit concerning
internet-based disputes
 Section 2(1)(f), “asymmetric
crypto system means a system
Definitions of a secure key pair consisting
under IT Act
of a private key for creating a
asymmetric
crypto system digital signature and a public
key to verify the digital
signature;”
 Schedule V of the Information Technology (Certifying
Authorities) Rules, 2000, defines encryption as- “The
process of transforming plaintext data into an
unintelligible form (cipher text) such that the original
asymmetric data either cannot be recovered (one-way encryption)

crypto system or cannot be recovered without using an inverse

decryption process (two-way encryption).”
Cryptographic techniques are generally used to control
access to critical and sensitive data/information in
transit and storage on the internet.
 SSL is a standard security technology for establishing
an encrypted links between a server and a client—
typically a web server (website) and a browser

asymmetric (Mozilla, Chrome, etc.); or a mail server and a mail

client. It allows personal and sensitive information
crypto system (credit/debit card numbers, social security numbers,
passwords, etc.) to be transmitted securely. Usually,
data/information sent between browsers and web
servers is sent in the form of plain text which makes
such data/information quite vulnerable to unauthorized
interception.
 If a hacker is somehow able to intercept the data being
sent between a browser and a web server, he may be
able to see and use such information being passed
between the website and the browser. The reason why
asymmetric it is so important is that it creates a trusted
crypto system environment where user can feel secure about the
personal and sensitive information they pass on the
internet while making online purchase, sending
confidential data, etc. It should, however, be noted that
SSL does not provide end-to-end encryption security at
the application layer but is only designed to encrypt
data in transit at the network transport layer.
 Types of Encryptions:
Asymmetric encryption (public-key
cryptography) uses separate keys for
asymmetric encryption and decryption. Although,
crypto system encryption key (public key) can be used by
anyone to encrypt a message, decryption
keys (private keys) are kept secret to ensure
that it is only the intended receiver who can
decrypt the message.
 Schedule V of the Information Technology (Certifying
Authorities) Rules, 2000 defined public key
cryptography as- “A type of cryptography that uses a

asymmetric key pair of mathematically related cryptographic keys.

The public key can be made available to anyone who
crypto system wishes to use it and can encrypt information or verify a
digital signature; the private key is kept secret by its
holder and can decrypt information or generate a
digital signature.” Asymmetric keys are typically 1024
or 2048 bits. However, keys smaller than 2048 bits are
no longer considered safe to use.
 asymmetric
crypto system
 • Symmetric Encryption (or pre-
shared key encryption): Such
encryption uses a single key for both
encryption and decryption of data.
asymmetric Here, both the sender and the
recipient need the same key to make
crypto system a communication. Symmetric keys,
being smaller in size, pose lesser
computational burden.
• These key sizes are generally in the
range of 128 or 256 bits.
 asymmetric
crypto system
 It is also to be noted that the
larger the key size, the harder it is
to crack the key. Since
asymmetric
crypto system asymmetric keys are bigger than
symmetric keys, data that is
encrypted asymmetrically is
tougher to crack than data that is
encrypted symmetrically.
 As per Rule 5.2(6) of the Information
Technology (Certifying Authorities)

asymmetric Rules, 2000 (“Rules”), electronic

crypto system communication systems used for
transmission of sensitive information
can be equipped or installed with
suitable encryptor or encryption
software.
 Similarly, Rule 5.3(1) of these Rules provides that any
highly sensitive information or data should be in an
encrypted format to avoid compromise by unauthorized
asymmetric persons. The Government has the power to determine
crypto system the manner of encrypting sensitive electronic records
requiring confidentiality. Amendment to the Information
Technology Act, 2000 in the year 2008 provides that
the Government can prescribe the modes or methods
for encryption for secure use of the electronic medium
and for promotion of e-governance and e-commerce.
 As per RBI, for all banking
transactions, normally, a minimum
of 128-bit SSL (Secure Socket
asymmetric Layers) encryption is expected.
crypto system SEBI prescribes a 64-bit/128-bit
encryption for standard network
security and mandates the use of
encryption technology for security,
reliability and confidentiality of
data.
 DoT requires an ISP to restrict the
level of such encryption for
individuals, groups or
organizations to a key length of
asymmetric only 40 bits in symmetric key
crypto system algorithms or equivalents.
Information Technology (Certifying
Authorities) Rules, 2000 requires
‘internationally proven encryption
techniques’ to be used for storing
passwords.
 An ISP (“Licensee”), is required to
enter into a License Agreement with
the Govt. of India through DoT
(“Licensor”). Some of the mandatory
conditions that ISP, as a Licensee, is
asymmetric required to abide by, under this
crypto system License Agreement are –
1.The Licensee shall ensure that bulk
encryption is not deployed by them at
any point. Further, Individuals/
Groups/ Organizations are permitted
to use encryption up to 40 bit key
length in the symmetric key
algorithms or its equivalent in other
algorithms without obtaining
permission from the Licensor.
 However, if encryption equipment's higher
than this limit are to be deployed,
individuals/groups/organizations shall obtain
prior written permission of the Licensor
(Government of India through DoT) and
asymmetric deposit the decryption key, split into two
parts, with the Licensor.
crypto system 2.The Licensee shall not employ bulk
encryption equipment in its network.
However, the Licensee shall have the
responsibility to ensure protection of privacy
of communication and to ensure that
unauthorized interception of message does
not take place.
 • Section 2(1)(i),"computer" means any
electronic, magnetic, optical or other
high-speed data processing device or
system which performs logical,
Definitions arithmetic and memory functions by
under IT Act manipulations of electronic, magnetic
or optical impulses, and includes all
input, output, processing, storage,
Computer computer software or communication
facilities which are connected or
related to the computer in a computer
system or computer network;”
 • The key elements of the computer as
derived by the definition is :
• Any electronic, magnetic, optical or
other device or system;
Computer • Having high speed data processing
capability and
• Performing logical, arithmetic and
memory functions by manipulation of
electronic, magnetic or optical
impulses.
 The first two elements relates to
the nature of the device or
system, whereas the last element
deals with the functionality of the
device or system. All input,
Computer output, processing, storage,
computer software and
communication facilities which are
connected or related to the
computer in a computer system or
computer network form part of
computer.
 For examples;
-Input devices such as keyboard,
mouse, joystick, camera microphone
-Output devices such as monitor,
printer, speakers
Computer -Storage devices such as hard disk or
USB drive
-Software such as operating system or
application software
-Communication facilities such as
modem, Bluetooth.
 A smartphones falls within the definition of
computer. Smartphones are devices
combining the communication facilities of a
cellphone with the computing capabilities of a
computer. A smartphone comprises of an
input facility (keyboard or touchscreen), an
output facilities (screen), memory storage(
Is Smartphone memory card as well as internal storage) and
a Computer? central processing unit. So smartphone
perform all the functions of a computer. So
smartphone can be used for committing the
same offence which can be committed using
the computer like hacking or contamination of
virus.
 Section 2(1)(ha), “communication device
means cell phones, personal digital
assistance or combination of both or any
other device used to communicate, send
Is Smartphone a or transmit any text, video, audio or
Computer? image;”
Under This inserted through the ITAA, 2008.
Communication devices such as
Communication smartphones possess the capability of and
device qualify as a computer. Thus all
contraventions and offences that apply only
to a computer, will apply to smartphones after
2008 but not to an ordinary phones. Eg
Section 66B, 66D.
 Manoj Oswal v The State of Maharashtra
and Sakal Papers PLtd 2013, Bombay HC
held that an offence could not be made
Is Smartphone a punishable under section 66A unless the
device used to commit the offence was
Computer? identified.
Under On the other hand section 66C, 66E, 67, 67A,
Communication 67B are device neutral.
device Section 43 and 66 deals with computer
related offences so apply only to a computer,
computer system and computer resources
and not refers to communication device.
 Section 2(1)(l), “computer system means
a device or collection of devices,
including input and output support
devices and excluding calculators which
Definitions under are not programmable and capable of
IT Act being used in conjunction with external
files, which contain computer
Computer System programmes, electronic instructions,
input data and output data, that
performs logic, arithmetic, data storage
and retrieval, communication control and
other functions;”
 The key element of computer system are:
-A device or collection of devices
-Including input and output support devices
but excluding calculators which are not
programmable and capable of being used in
Computer System conjunction with external files;
-Which contain computer programmes,
electronic instructions, input data and output
data and
-which perform logic, arithmetic, data storage
and retrieval communication control and other
functions.
 A definition of computer
system is more extensive than
that of a computer. As
Computer System
compare to computer network,
computer system is a narrow
term. Initially computer and its
accessories constitute
computer system.
 Diebold Systems Pvt Ltd v Comm of
Commercial Taxes 2006,
An ATM (Automatic Teller Machine) is a
machine which disburses cash and issues
statement of account without the need for a
human teller. It consist of
Is an ATM a 1) computer (mother board with processor),
Computer/ 2) computer peripherals(RAM, drives,
Computer System keyboard, monitor, mouse and software,
3) a communication facility to connect with
the bank server and
4) other apparatus for counting, collecting
and dispensing cash and performing teller
related functions.
 The question whether an ATM is a computer
has been considered by court in tax litigation.
The Karnataka High Court while considering
this question held that an ATM is not
computer by itself, but instead is connected to
Is an ATM a a computer that performs the tasks requested
Computer/ by the person using ATM. It further held that
Computer System the computer is connected electronically to
too many ATMs that may be located at some
distance from the computer. In the end held
that ATM is understood to be an electronic
device and therefore taxed as electronic
device and not as a computer.
 BPL Ltd v State of AP, 2001, High
end washing machine contain
computing devices which evaluate the
Is a washing weight of wash load, type of fabric and
machine with other parameters etc then select the
fuzzy logic mode automatically like water
Computer/ temperature, spin speed, water
consumption, wash time etc.
Computer System
The nature of washing machine with
fuzzy logic feature come before SC in
this case.
 The Sales Tax appellate Tribunal has
rejected the contention of the BPL
company who manufacture these
Is a washing washing machines which must be
machine with taxed as ‘electronic goods’.
fuzzy logic Than issue went to AP High court
Computer/ which held that as control panel of
Computer System such machines was electronic in sense
that it involved silicon chips and semi-
conductors, the washing machines
themselves did not operate on the
 principle of electronic. And held that these
machines operated on the principle of
centrifugal force, which is electro-mechanical
Is a washing in nature but not on electronic. Merely
machine with installing microcomputer control panel could
not make it electronic in nature.
fuzzy logic But Supreme Court rejected it in appeal and
Computer/ held that data is fed into the machine and
Computer System then microprocessors control and direct the
various functions of machine so it is an
electronic goods but again it is debatable
whether it is a computer system or not.
 Printer and Scanner are not merely external
devices which use a computer to function.
Their usage by a computer enables the
computer to perform input or output functions.
They are not devices that can be used
independently without a computer. Printer is a
Other Devices like necessary adjunct to the computer, delivering
Printer, Scanner and its output on paper and scanner enables input
of large volumes of data to the computer for
UPS further processing and as such is again
integral to its functioning. They are held to be
an integral part of a computer system as held
in the case of ITO v Samiran Majumdar
2006
 UPS system have not been held to be an
integral part of a computer system but have
instead been held to form a part of the ‘power
supply system’. The computer system can
Other Devices like function independently without the UPS and
even the UPS generally can be used to
Printer, Scanner and ensure uninterrupted power supply to other
UPS equipments besides computer. Thus it is not
the integral part of the computer system like
printer and scanner, which being output
devices are integral part of computer under
section 2(l)(i).
 Section 2(1)(j), “computer network
means the inter-connection of one
or more computers or computer
systems or communication device
Definitions under through– (i) the use of satellite,
IT Act microwave, terrestrial line, wire,
wireless or other communication
Computer media; and (ii) terminals or a
Network complex consisting of two or more
interconnected computers or
communication device whether or
not the inter-connection is
continuously maintained;”
 Computer network means
interconnection of one or more
computers or computer system and
communication devices by various
Definitions under means such as satellite, microwave,
terrestrial line, wire, wireless or other
IT Act communication media, terminals or a
complex consisting of two or more
Computer inter-connected computers or
Network communication device. A computer
network facilitates exchange of data or
resources between the connected
computers and related devices.
Definitions under Section 2(1)(j), “computer
IT Act resource means computer,
computer system, computer
Computer network, data, computer
Resources data base or software;”
 Computer resource basically includes
everything which is used or required to
communicate in cyberspace.
In the end, when one or more
Definitions under computers or computer systems or
IT Act communication devices are
interconnected through various means
such as satellite, microwaves,
communication device and so on, then
it constitutes computer network.
Further computer, computer system,
computer network, data, database etc
constitute computer resource
 Full form of virus is Vital
Information Resource under Siege.
It is a program written for destructive
purpose. It is written in such a way
Definitions under that it can enter the computer without
IT Act the knowledge of the user. Viruses are
very dangerous; they are spreading
faster than they are being stopped, and
Virus even the least harmful of viruses could
be fatal. For example, a virus that stops
a computer and displays a message, in
the context of a hospital life-support
computer, could be fatal. Even the
creator of a virus cannot stop it once it
is "in the wild“.
 It enters the machine through CD,
DVD, pen drive or any other
Definitions under storage device or through network
IT Act and may spread to all the
computers connected over the
Virus network. Internet is the major
source of virus. Once it enters the
machine, it replicates itself and
cause the abnormal functioning of
the machine.
 Types of viruses
File infectors
Boot record infectors
Definitions under Macro virus
IT Act Network virus
Time bombs and logic bombs
Virus Companion virus
Boot sector virus
Stealth virus
Self modifying virus
Multipartite virus
Email virus
Trojan Horse
 Section 43(C), and its explanations deal
with it.
Section 43 (c), “introduces or causes to be
Definitions under introduced any computer contaminant or
IT Act computer virus into any computer,
computer system or computer network;”
Virus Explanation (i) of section 43, “(i) computer
contaminant means any set of computer
Section 43 (c) and instructions that are designed
Explanation (i) (a) to modify, destroy, record, transmit
and (iii) data or programme residing within a
computer, computer system or
computer network; or
(b) by any means to usurp the normal
operation of the computer, computer
system, or computer network;
 Explanation (iii) of Section 43,
Definitions under “computer virus means any
IT Act computer instruction, information,
data or programme that destroys,
Virus damages, degrades or adversely
affects the performance of a
Section 43 (c) and computer resource or attaches itself
Explanation (i) to another computer resource and
and (iii) operates when a programme, data
or instruction is executed or some
other event takes place in that
computer resource;”
 This clause deals with the introduction of a
Definitions under computer contaminant or virus in a computer
IT Act without the owner consent. A contaminant or
virus refers to any computer program, data or
set of instructions which produce an
Virus undesirable effect when executed on a
Section 43 (c) and computer. The effect produced can be in any
Explanation (i) form such as, by denying access to the
owner, using a computer resources for other
and (iii) criminal purposes, extracting sensitive and
confidential information, corrupting files,
causing system crashes etc. it produces
many effects in a computer:
 1) By a computer contaminant
Definitions under -modification, destruction, recording of
transmission of data or a programme
IT Act
-taking over a computer’s normal
operation
Virus
Section 43 (c) and 2) By a virus
Explanation (i) -destruction, damage, degradation or
and (iii) adverse effect produced on the
performance of a computer resource
-attaches itself to another computer
resource and operates on the
happening of a certain event.
 Examples are
Definitions under -Ransomware is a form of malware that prevents
IT Act access of the computer by the owner and demands a
ransom for its removal
-spyware is software that collects information about a
Virus person or company by internet activities. ‘keyloggers is
Section 43 (c) and a spyware which is a progrmme which records what is
typed into a keyboard.
Explanation (i) -A Trojan horse is a form of malware that appears to
and (iii) perform an authorized function but in fact performs
unauthorized functions such as data theft and system
harm. ‘Rogue-AV is a trojan horse that claims to
remove malware but in fact installs malware into the
computer.
 -Rootkit is a software that gains continued access to a
Definitions under computer by attacking the root or administrator access
and exploit the computer resources.
IT Act -Botnet malware is a used to infect and take over a
large number of computers for the commission of
large-scale cyber crime such as Distributed denial of
Virus service attack.
Section 43 (c) and -Smartphone malware can affect a smartphone eg
‘Antammi is android phone trojan horse it appears to
Explanation (i) be a ringtone application but once installed collects
and (iii) information like contact list, GPS coordinates SMS
archives etc.
-Industrial Malware like Duqu which collect information
that can be used for attacks of industrial control
systems such as stealing of public and private keys.
 Difference between virus and worm
Virus is a genus and a contaminant is a
Definitions under species. Worm is designed to alter or destroy
IT Act data but it lacks the ability to replicate itself
whereas virus is a program which has the
ability to attach itself to legitimate program
Virus and worm and to replicate and to attach itself to other
computer programs.
Spyware is a contaminant since it transmit
data but trojan horse is a virus since it attach
itself to another computer resource and
operate on the happening of a certain event.
 Traditional communication devices like post,
telegraph including telephone played very
important role in formation of contract and
hence in spreading commerce all over the
globe. Then came instant communication
system but there was no uniformity in that
system. Everyone using different trading
Concept of E- methods like Purchase order PO, invoices
commerce shipping notices fund transfer form etc.
This drawback was removed by a software
called Electronic Data Interchange EDI which
replaced human readable paper with machine
readable documents. EDI resulted in
paperless environment. EDI was beginning of
e-commerce.
 EDI
EDI is the system where data is transferred
electronically in machine readable form. Any
message is sent through EDI then it would be
immediately processed by computer without
Concept of E- any human intervention.
commerce EDI is used
1) To electronically transfer documents such
as PO, invoices, shipping notices etc.
2) To transmit financial information and
payment in electronic form. And called as
financial EDI or electronic funds transfer.
 Benefits of EDI
1) The use of EDI eliminated many problems associated with
traditional information flow such as the delay associated with
making of documents.
2) As data is not repeatedly typed therefore the chances of error
are reduced.
3) Time required to re-enter data is saved. So labour cost also
reduced
Concept of E- 4) As time delays are reduced so more certainty in information
flow
commerce 5) EDI generates acknowledgement receipt that EDI message has
been received by the recipient and is electronically transferred
to sender.
Drawback of EDI
Initially EDI was very costly and only big business houses could
adopt it. But Internet removed this drawback by adopting different
versions of EDI so that is could be used by middle or small business
houses.
 E-commerce
EDI was beginning of e-commerce but
actually the e-commerce came into force in
1990’s. Presently it referred as Internet
Concept of E- enabled EDI. DOT.com has played very
commerce important role in e-commerce because it has
given way to revenue model and has made e-
commerce a household phenomenon
globally.
E-commerce is the commercial transaction of
services in an electronic format.
 E-commerce or e-business consist of the buying or
selling of products or services over electronic systems
such as the internet and other computer networks. The
amount of trade conducted electronically has grown
extraordinarily with widespread internet usage.
Main goals of e-commerce
It helps in achieving following goals
Concept of E-
1)Reach new markets
commerce
2) Create new products or services
3) Build customer loyalty
4) Enrich human capital
5) Make the best use of existing and emerging
technologies
6) Achieve market leadership and competitive
advantage
 Main reasons for the spread of e-
commerce
Digital convergence i.e. it means that due to
digital revolution almost all digital devices can
communicate with one another.
It is available to anyone, anywhere anytime
Concept of E- It helps in bringing about positive changes in
commerce an organization
People are having a widespread access to IT
E-commerce helps in reducing operating
costs and increasing profit margins due to
global operations
Demand for customized products and
services is increasing
 Advantages of E-commerce
Business without the barriers of time or
distance
Lower cost of sale
Concept of E- Cheapest means of doing business
commerce Advantages to buyer
Less delivery time and labour cost etc
Price fixation
 Disadvantages of E-commerce
Few people are using e-commerce
Unable to personally examine the product
Special hardware and software
Concept of E- Maintenance of website
commerce Security issues
Not suitable for perishable commodities
Delivery time
Returning the product and getting a refund
Problems of e-records
 Different models of e-commerce
Business to Business B2B
Business to Customer B2C
Concept of E- Customer to Business C2B
commerce
Customer to Customer C2C
Business within Business
Peer to Peer P2P
Mobile commerce M-commerce
 Present trends in E-commerce
E-commerce has started a new revolution
that is changing the way business houses
buy and sell products and services. E-
commerce refers to the paperless exchange
Concept of E- of business information using electronic data
commerce interchange, e-mail, e-bulletin boards, e-
funds transfer and other network- based
technologies.
E-commerce has got a fillip with the US
Government’s announcement that all federal
purchases would be made paperless.
 Taxation difficulties in e-commerce
Tax is always an important area of concern in commerce.
Problem of Tax collection:
Problem of Sales Tax:
Problems of Tax Jurisdiction and Enforcement:
Whether web server or ISPs constitute Permanent
Concept of E- Establishment in the cross-border transaction?
commerce OECD Model Tax Treaty
United Nations Model tax Treaty
Whether web server can act as Permanent
Establishment?
Whether ISP can act as Permanent Establishment?
Problem of under reporting of online transactions
 Validity of Contracts formed through e-
form Section 10A
10A Validity of contracts formed through
electronic means. -Where in a contract
formation, the communication of proposals, the
Concept of E- acceptance of proposals, the revocation of
proposals and acceptances, as the case may be,
commerce are expressed in electronic form or by means of
an electronic record, such contract shall not be
deemed to be unenforceable solely on the
ground that such electronic form or means was
used for that purpose.
If contract is in e-form then it is valid under
ICA 1872
 Fintech is an integration of two components of
business– Finance and Technology. The
Concept of fintech combination of these two services of business has
law: Digital resulted in the emergence of one of the most
successful businesses in the industry. Additionally,
banking this particular sector aims to improvise the
financial sector services by incorporating
elements of technology to deliver hi-tech and
faster services to the customers.
 At its core, fintech is majorly used to help MNC’s,
small scale businesses, and consumers to manage
their financial operations in a better and
organised manner by using these specialised
Concept of fintech coding algorithms in their software network.
law: Digital Moreover, looking back at its evolution, the use of
technology in the financial sector was solely used
banking at the back office end to organise their day to day
transactions and sort of daily affairs of the
company. But, now, this sector has been a major
part of the financial business and the focus is
entirely shifted from business-oriented to
consumer-oriented services.
 Fintech now includes different sectors and
Concept of fintech industries such as education, retail banking,
law: Digital fundraising and nonprofit, and investment
management to name a few. Additionally, with
banking further development of cryptocurrency and
bitcoins-the industry has made its strong footing
in the market.
 • Initially, the FINTECH industry started its
Concept of fintech operation in the banking sector but over
time, it has witnessed tremendous
law: Digital growth and development by spreading
banking its operations in the insurance sector,
asset management sector, payment
gateway sector, and so on.
 With the development of the fintech sector, there
has been a huge wave of changes in the dealings
Concept of fintech of the business and the way monetary services
law: Digital are performed. Further, the journey of the
industry from Credit Cards in the 1950s to ATMs
banking in the 1960s and finally giving the market Net
Banking Facilities in the 1990s, the industry has
always aimed to simplify the financial
transactions.
 But the major evolution of this industry took
place after the 1990s with the introduction of
Concept of fintech software applications like Paypal which was
law: Digital established in 1998, then came the headlines of
the fintech industry- the bitcoin era which has
banking been all over the place. Likewise, the introduction
of Paytm, Google Wallets, UPI services, and the
establishment of Fintech Startups has geared up
the sector and is still growing.
 Role of the Fintech in the Financial Sector
• With the growth and development of
technology in the market, the role of Fintech
Concept of fintech companies has also expanded its horizons.
Additionally, the major role played by them are:
law: Digital
• Online lending offers
banking
• Wealth management advisory and support
• Insurance-based technological services
• Payment and remittance sector
 Services Offered By Fintech
• Mobile Payments: Mobile payment applications
and gateways are one of the most prevalent
Concept of fintech uses of fintech. Additionally, such applications
law: Digital allow users to carry out banking activities
banking without physically visiting a bank. For example,
companies like Paytm, paypal allow customers
to send and receive money through
smartphones at minimal transaction fees.
 • Blockchain uses encryption technology to create
cryptocurrencies, a promising new medium of
exchange that is more secure and better than
cash. In effect, blockchains offer vast
possibilities to disrupt and change conventional
business models.
Concept of fintech • A notable emerging blockchain application is
law: Digital that of smart contracts. These are digital, self-
executing contracts that can electronically
banking facilitate, verify, and implement agreements.
Experts say that these blockchain products are
likely to change how future deals will be
executed.
 • With advanced technology comes the advanced
responsibility of regulating the services offered
by the industry. It increases the issues and
number of financial crimes in the country. The
Concept of fintech major bodies governing the regulatory aspects
law: Digital of the industry are RBI, SEBI, IRDAI, Ministry of
banking Electronics And Informative Technology, and
Ministry of Corporate Affairs. However, the RBI
currently regulates the majority of fintech
companies dealing with account aggregation,
peer-to-peer (P2P) lending, crypto currencies,
payments, etc.
 • Digital banking is the perfect example of
how financial innovative technologies are
shaping the future of banking through
digitization. In Simple terms, digital
Concept of fintech banking is the digitization of all
law: Digital traditional banking activities, where
banking banking services can be availed online
without having to be physically present
at the bank. This is the reason we have
amended our laws like Banker books
Evidence Act and Reserve Bank of India
Act etc
 • Digital banking is a move from physical to
online, providing high-levels of automation and
web-based services via a web interface or
mobile application. It is the ability to access
your financial data through mobile and ATM
Concept of fintech services. The term ‘online’ emerged in the
law: Digital 1980s and originally referred to the use of a
banking terminal, keyboard and monitor to access the
banking system through a standard telephone
line. The culmination of financial innovations in
banking over the past few years has triggered a
paradigm shift away from
the conventional banking model to a modern-
day digital banking ecosystem.
 • The present era is known as a cyber and a
digital era. With the rapid technological
developments various industrial sectors are also
developing day by day. All the business want to
develop a consumer-friendly relationship with
Electronic their customers to extract maximum profits.
contracts and its • The relationship between the consumer and the
types businesses are mostly tied up with some legal
obligations and rights. These Rights and
obligations are based upon the contract
between the parties.
 • Agreements which are enforceable by law are
known as Contracts. To make an enforceable
agreement which falls under the ambit of
Contract Act following conditions mentioned
under Section 10 of the Indian Contract Act,
1872 must be satisfied:
• 1. Offer and acceptance: To make an
Electronic enforceable agreement it is essential conditions
contracts and its that a proposal/offer must be made by one
types party and the same proposal must be accepted
by the other party to a contract.
• 2. Competency: Competency is meant by the
ability to form a contract and the essential
element of competency under the Indian
Contract Act, 1872 are as follows;
 • a. The person forming a contract must
have attained the age of the majority,
that means the person must have
Electronic completed the age of 18 years.
contracts and its • b. The person forming a contract must be
types mentally fit at the time of signing the
contract.
• c. The person must not be barred by law
to form a contract.
 • 3. There must be a lawful consideration,
and consideration is meant by
“something in return” and the
consideration must not be illegal in
nature.
• 4. The must be a lawful object of the
Electronic contract.
contracts and its • 5. There must be free consent of the
types parties, that is to say the consent of the
parties should not be obtained by force,
coercion, undue influence.
• 6. The contracts which are made must
not expressly be barred by law.
 • E-Contracts:
• Traditionally the contracts are known as
the piece of papers having legal force,
but nowadays as the internet is
developing, now contracts are also
Electronic formed online. Contracts which are in
contracts and its electronic forms are known as E-
types Contracts. These contracts are
convenient to the companies, who have
to form contracts at large scale because
the E-Contracts are inexpensive and
time-saving.
 The Information Technology Act, 2000 has
made certain provisions for the validity
and the formation of online contracts that
Electronic is section 10A of the IT Act 2000 but no
contracts and its specific legislation has been incorporated
types for the validity of online contracts in India.
Even if no specific provision is made for
the validity of online contracts, it cannot
be challenged based on technical grounds.
 There are few processes available for forming an electronic
contract such as email by which offers and acceptances can
be exchanged. An online contract can be formed by
completing the website form provided for availing good or
services offered by the seller in the website for example air
tickets. The person who intends to avail the good or
Electronic services offered in the website can place an order on the
website by filling the concerned form and communicating
contracts and its such. The goods offered can be delivered directly through
electronic means for eg. E-tickets or may be later for eg.
types clothes . Another process available for the formation of an
online contract is through online agreements by clicking on
the button that says “I Accept” while connecting to a
software and by clicking on “I Agree” button while signing
up for an e-mail account.
 Online contract is formed through new modes of communication
such as e-mail, internet, fax and telephone. The requirement of
essential element such as offer and acceptance in online contract
formation is as much essential as it is for the formation of paper
based traditional contract. Contract formation over websites is
quite different from the earlier ways of contract formation. Online
contract formation mainly raises issues in relation to the
Electronic applicability of the offer and acceptance rule. It is the website
which acts as the retailer and responds as per the consumers
contracts and its action. When a consumer is interested in downloading songs,
videos or movies from a retailer website in lieu of payment, the
types consumer will have to agree to the standard terms of the retailer’s
website by clicking the particular option button. Once the terms
are agreed by the consumer and the acceptance is expressed, it is
the responsibility of the website to deliver the service to the
consumer. And lastly, on making the appropriate payment, the
contract is completed between the consumer and the retailer’s
website for the particular transaction.
 Validity of Online Contract
The Information Technology Act, 2000 provides various
procedural, administrative guidelines and regulates the provisions
relating to all kinds of electronic transactions. These include
computer data protection, authentication of documents by way of
digital or electronic signature. Though electronic contracts have
been given recognition by the IT Act, 2000, but majority feels it
less secured to get into any kind of online contracts as there are
Electronic no concrete judicial precedents for the validity and enforceability
of online contracts in India.
contracts and its In case of browse wrap contracts, we usually accept the terms and
types conditions of the contract by clicking the button that indicates “I
Agree” and in case of shrink wrap contract or purchase of a
software product, assent is given by the consumer or the
purchaser with tearing of the wrapper and using it. Many have the
tendency of not reading the terms and conditions carefully before
agreeing to such. But these actions should be taken consciously
and carefully only after reading the terms of the contract properly
as it leads to a valid contract and the terms can be strictly
enforced against them.
 However courts in other countries such as US, have dealt
with validity and enforceability of contracts such as shrink
wrap and click wrap contracts. It was held in the famous
case of ProCD. Inc. versus Zeidenburg, 1 ILRD 634 (7th Cir.
1996) held “that the very fact that purchaser after reading
Electronic the terms of the license featured outside the wrap license
opens the cover coupled with the fact that he accepts the
contracts and its whole terms of the license that appears on the screen by a
types key stroke, constitutes an acceptance of the terms by
conduct.” Thus it is confirmed that shrink wrap agreements
are valid contracts and are enforceable against the
purchaser of the software. But the enforceability of the
shrink wrap agreement is extended as far as the general
principles of contract are not violated.
 The validity of click wrap agreement was first considered
when the Court for northern district of California upheld in
the famous case of Hotmail Corporation that “the
defendant is bound by the terms of the license as he clicked
on the box containing “I agree” thereby indicating his
assent to be bound” [Hotmail Corporation v. Van $ Money
Electronic Pie Inc, et al]. It was also held by the Appellate Division of
contracts and its Superior Court of New Jersey, that by clicking the “I Agree”
option given in the dialogue box the plaintiff has entered
types into a valid and binding contract and can be made liable for
the terms and conditions laid down in the contract. Click
wrap agreements are thus valid and enforceable in US as
long as the offer and acceptance rule is taken into
consideration.
 In the year 2015, an initiative known as “Digital
India” was launched by Narendra D. Modi, Prime
Minister of India. This campaign was launched to
ensure that government services available to the
citizens of our country in any electronic way
Electronic which will lead to the improvement of online
infrastructure and internet connectivity in our
contracts and its country. The initiative of Digital India aims to
types connect rural areas with high speed internet
networks and consists of three components such
as the creation of digital infrastructure, Delivery
of services digitally and digital literacy. Its main
object is to make our country digitally
empowered in the field of technology.
 With the wide spread expansion and globalization
of technology, existence of online contract has
become regular in our life right from buying daily
groceries from the market to withdrawing money
from an ATM. Electronic contracts by use of
Electronic technology is much cost effective and delay can
contracts and be instantly removed in comparison to traditional
paper based contracts. There is less chance of
its types committing errors as it is much automated. It
provides an opportunity to the seller to reach
millions of consumers irrespective of distance and
most importantly without the involvement of
middlemen or any brokers.
 The Indian Contract Act, 1872 provides a basic contractual
rule that a contract is valid if it is made by competent
parties out of their free consent for a lawful object and
consideration. There is no specific way of communicating
offer and acceptance; it can be done verbally, in writing or
even by conduct. Thus oral contracts are as valid as written
Electronic contracts; the only condition is they should posses all the
essentials of a valid contract. It was held in the case of
contracts and its Bhagwandas Goverdhandas Kedia v. Girdharilal
types Parshottamdas, held that ordinarily, it is the acceptance of
offer and intimidation of that acceptance which results in a
contract. This intimation must be by some external
manifestation which the law regards as sufficient. Hence,
even in the absence of any specific legislation validating e-
contracts cannot be challenged because they are as much
valid as a traditional contract is.
 An online contract is simply a communication
between two parties in regard to transfer of
goods/services. And as per Indian Evidence Act
any e- mail communication and other
communication made electronically is recognized
as valid evidence in a Court of law. By considering
Electronic the points, it can be concluded that the contract
contracts and its that follows the communication is valid too and
types Indian law thus recognizes the validity of online
contracts. The citizens of India are encouraging
the concept of Digital India, but there are no
definite legislations relating to the transactions
done over computerized communication
networks. Several laws such as The Indian
Contract Act, 1872,
 Information Technology Act, 2000, Indian
Copyright Act, 1957 and the Consumer Protection
Act, 1986 to some extent are working and acting
on resolving issues that arise relating to the
formation and validation of online contracts. The
Electronic Information Technology Act, 2000 is the Act that
contracts and its governs the transactions conducted over internet
types and explains the considerable mode of
acceptance of the offer and provides the rules for
revocation of offer and acceptance in a vague or
indefinite manner. Hence, a separate law for
regulating contracts based on electronic devices is
highly recommended.
 Contracts entered into electronically are referred to as
electronic contracts. The Model Law recognizes electronic
contracts. This recognition comes in view of the increase in
e-commerce. E- commerce involves the use of alternatives
to paper based methods of communication and storage of
information.
The Model Law along with the UN Convention on the Use of
Electronic Electronic Communications in International Contracts 2005,
provide for uniform rules to be adopted by member countries
contracts and its to remove the obstacles and uncertainty created by the use
of electronic communications and creation of electronic
types contracts.
E-contract like all contracts are governed by the ICA 1872.
The IT Act 2000 merely recognize the process of contract
formation through electronic means and establishes
functional equivalence between e-contracts and paper based
contracts. These provisions in the IT Act were introduced to
give effects to the corresponding provisions under the Model
Law.
 Contracts entered into through E-mails: E-contracts may
be in the form of a contract that is entered into by way of
communication through an electronic medium like e-mails.
This involves the discussion of various stages of the
formation of the contract such as the communication of an
offer, acceptance, etc and other negotiations of the various
Electronic terms of the contract through the electronic medium. The
contract that is entered into is non-instantaneous and
contracts and its negotiable. The Model Law and the IT Act provide the rules
applicable to the formation of contracts in this manner.
types
Standard Form of E-contracts: Alternatively, e-contracts
can take the form of non negotiable and instantaneous
contracts of the following types:
 Shrink Wrap Contracts: Shrink wrap were found inside the sealed
packaging of tangible products, where one cannot see the
agreement until the product has been purchased or used. For
example, software CD came packaged in plastic with a notice that
Electronic by tearing the plastic, the user will be deemed to have assented to
the terms of use which are enclosed in the CD. The Plastic
contracts and its packaging usually contained some of the essential clauses of the
terms of use in brief so as to constitute adequate notice to the
types user. Such agreements are likely to be found unenforceable on
grounds of inadequate notice to the user unless constructive
notice can be established. It is from the term ‘shrink wrap’ that
the terms click wrap and browse wrap have been derived.
 These contracts are packed with the products and the usage of the
particular products is deemed as an acceptance of the terms and
conditions of the Contract. The user always has the option of
returning the software if the new terms are not to his liking for a
full refund. These contracts are generally containing in the CD Rom
or software, and using of the CD Rom is considered as an
acceptance of such terms and conditions.
Electronic A Shrink Wrap contract is the former license agreement required
upon the buyer when he buys software. Before he or she tears the
contracts and its pack to use it, he or she is made mindful by tearing the cover or
types the wrap that they are sure by the license agreement of the
manufacture. This is done as previous deliberated to protect the
interests of the manufacturer where the consumer cannot
replicate the package, copy it or sell it or donate it to others
moving the sale of the software. The license, which is contracted
and enfolded in the product, which becomes enforceable and
taken as consent before the buyer tears the package. The usual
sections that are part of the shrink-wrap license are that of
 • a) prohibiting illegal creation of copies
• b) prohibiting payments of the software
• c) prohibition of contrary engineering, de-compilation or
adjustment
• d) prohibition of usage in more than one computer definite for
that purpose
Electronic • e) disclaimer of contracts in respect of the product sold
contracts and its • f) limitations of responsibility
types • The reason and business sense is that to guard the
manufacturer of the package, as it is easy to copy, operates and
duplicate under other brand name. Critiques contend that
shrink-wrap license agreement is in contradiction of the basic
principle of contract of offer, consideration and acceptance as
the licensee is unsettled. Several cases to this effect have been
dispensed in US courts.
 Shrink wrap contracts are license agreements or other terms and
conditions which can only be read and accepted by the consumer
after opening the product. The term describes the shrink. wrap
plastic wrapping used to coat software boxes, though these
contracts are not limited to the software industry. Shrinkwrap
agreements operate slightly differently. For example, they are
Electronic used when one purchases off-the-shelf software. The agreement
contracts and its is imprinted on the software box, CD-Rom case, or other materials
included inside the package. “The license begins when the
types purchaser reads its terms and tears open the cellophane wrapping
or shrink-wrap that surrounds the package.” Buyers are supposed
to return the software package to the retailer if they elect not to
abide by the agreement. Courts are similarly concerned about
buyers actually receiving notice of the sale, consciously agreeing
to the sale, and conditioning the sale on acceptance of the license.
 Click Wrap Contracts: This is most common form of e-contracts
found online. It consists of a list of terms and conditions, to which
the party can either agree to by clicking on the “I Agree” icon or
disagree by clicking the Cancel/ I Disagree icon.
There is no scope for any negotiation in these contracts. The
party only has the option to reject or accept the terms of the
Electronic contracts in their entirety. A common example of these is
found in the disclaimers on websites where an internet user
contracts and its is allowed to access the website only on accepting the terms
and conditions found in it. This type of e-contract is also
types commonly used in software licenses, where the installation
of the software occurs only upon accepting the terms and
conditions. In case the terms and conditions are rejected, the
installation will abort. Such agreements have been
extensively challenged in the US Courts primarily on the
ground that such contracts do not provide adequate notice to
the internet users.
 A click wrap Contract is mostly found as a part of a software.
These agreements are rigid in nature and there is no chance of
negotiation in it. Because the user of such software has only two
options, that is to agree and use that particular software or to
disagree with terms and conditions and not to use that particular
Electronic software.
contracts and its A click wrap agreement is mostly found as part of the installation
process of software packages. It is also known as “click through”
types agreement or click wrap license. Click-wrap agreements allow “a
buyer to manifest assent to the terms of a contract by clicking on
an acceptance button that appears while the buyer obtains or
installs the product.”
 A buyer cannot start using the software until he or she has clicked
on the button accepting the terms and conditions of the
agreement. Click-wrap agreements require buyer action in order
to begin usage but do not guarantee cognizance of the agreement
terms. Buyers can assent to the contract without even reading it in
order to use the product. Buyers cannot negotiate and must,
therefore, accept the terms as they are. Most courts find these
agreements enforceable. Understandably, concern remains that
Electronic click-wrap agreements may be accepted without users actually
contracts and its reading or understanding contract terms when manifesting
assent.. Click-wrap agreements can be of the following types:
types Type and Click where the user must type “I accept” or other
specified words in an on screenbox and then click a “Submit” or
similar button. This displays acceptance of the terms of the
contract. A user cannot proceed to download or view the target
information without following these steps. Icon Clicking where the
user must click on an “OK” or “I agree” button on a dialog box or
pop-up window. A user indicates rejection by clicking “Cancel” or
closing the window.
 Forrest V Verizon Communications Inc., a forum selection
clause present in a click wrap agreement was enforced. It
was held that the fact that only a portion of the agreement
could be viewed in a scroll box did not imply that the notice
Electronic to the user was inadequate.
CoStar Realty Info Inc v Field and Segal v Amazon.com
contracts and its Inc, it was held that a click wrap agreement would be binding
types even if the user had failed to read the contract before
accepting it.
Fteja v Facebook Inc, the terms of service in the form of a
hyperlink below the sign up button was held to amount to
adequate notice to the user.
 Browse Wrap Contracts: A browse wrap agreements are generally
found in a website or a downloadable product, these contracts are
published on a particular webpage and user have to find these
terms and conditions by browsing to that particular web page.
Because generally these contracts are hidden.
Browser wrap agreements list out their contract / terms and
Electronic conditions (usually in the form of a hyperlink at the bottom of
the website) on the website being accessed or the product
contracts and its being downloaded. Unlike a click wrap agreement, where the
user must expressly accept the terms and conditions by
types clicking on an “I agree” box, a browse wrap agreement does
not require this type of express acceptance of the terms. The
mere use of the product, for instance, browsing through the
website or downloading the product will amount to the user’s
assent to the contract. The enforceability of these
agreements is however dependent on whether the user had
actual or constructive notice of the terms and conditions.
 Specht v Netscape Communication Corp , the Second
circuit Court of Appeals held that a browse wrap agreement
which was contained in a hyperlink that could not be viewed
unless the user scrolled down to the next screen did not
constitute adequate notice to the user and the clicking of the
download button did not amount to consent to the
agreement.
Electronic Ticketmaster v Tickets.com , It was held that knowledge of
the defendant of the terms and conditions to the website
contracts and its which were contained at the bottom of the home page in
types small print would have to be proved.
Hubbert v Dell Corp, the Illinois court of Appeal held that a
browse wrap agreement to which the consumers received
repeated exposure in the form of the words “All sales are
subject to Dell’s Term(s) and conditions of Sale” in a series of
pages which had to be accessed to complete a purchase
and a conspicuous blue hyperlink to the terms and conditions
was enforceable.
 • Source Code Escrow Agreements: In software
development many principal firms who participate in
development are keen to guard the source code of the
software, which is the most appreciated and cautious
part of the computer programme. Copyright owners of
such source code may have to disclose this to countless
Electronic developers who will be developing definite software
contracts and its based on the source code. In these conditions, the
copyright owner will credit the source code to specified
types source code escrow agents who will release the code on
the development of the product upon agreed terms. In
cyber contracts, such agreements and also the terms and
conditions to contract with the escrow agents becomes
vital.
 Thus, to ensure enforceability of the Standard form of
e-contracts, it is essential for websites to provide
adequate notice of the contract. A good example of
such notice is this caveat provided conspicuously on
the first page of the website:
“PLEASE READ THIS AGREEMENT
Electronic CAREFULLY TO ENSURE THAT YOU
UNDERSTAND EACH PROVISION. THIS
contracts and its AGREEMENT CONTAINS A MANDATORY
types INDIVIDUAL ARBITRATION”
Not only is the notice in large font, and in bold, Caps
and italics, it also specifically mentions a key provision
of the agreement (the mandatory arbitration
agreement) so that the user cannot deny notice later in
time by saying for example that she did not read the
agreement in entirety.
 LEGAL FRAMEWORK RELATING TO E-CONTRACT: With the
growing importance and value of e-contract in India and
across the world, the different stakeholders are
continuously identifying and evaluating the nuances of
legal outline relating to it. The participation of different
service providers in the transaction of e-contract, which
includes a payment gateway, the main website, the bank
Electronic or card verification website, the security authorisation
contracts and its website and the final service provider which can also
comprise the shipping agent has made the E-contract
types business more complex. Therefore, the need for
amendable it has augmented. In India, till date there are
no definite legislations or guidelines protecting the
buyers and sellers of goods and services over the
electronic medium. However, several laws acting in
unification are trying to regulate the business
transactions of E-contract. They are as follows:
 • Indian Contract Act,1872
• Consumer Protection Act,1986
• Information Technology Act,2000
• Indian Copyright Act,1957
Electronic • Like any other types of business, E-contract
business also works on the basis of contracts. It
contracts and its is therefore, structured by the Indian Contract
types Act, 1872. Any valid and legal E-contracts can be
designed, completed, and enforced as parties
replace paper documents with electronic
parallels. The contracts are move in between
the service providers or sellers and buyers.
 Earlier, there was no definite law to regulate the
intermediaries such as verification service
providers and shipping service providers to
safeguard that the product or service is actually
delivered. However, the government has recently
Electronic acquainted the Information Technology
contracts and its (Intermediaries Guidelines) Rules 2011. The
types actual scope of the security provided under these
regulations would only be known after judicial
interpretation of the provisions. However, now it
has been explained that even foreign
intermediaries delivered to provide service can be
sued in India.
 The authority of the transactions of E-contract is
established under the Information Technology
Act, 2000 (IT Act, 2000). It explains the
reasonable mode of acceptance of the offer. IT
Act, 2000 also rules the revocation of offer and
Electronic acceptance. However, definite provisions that
contracts and its regulate E-contract transactions conducted over
types the internet, mobile phones, etc. are vague. With
numerous cross border transactions also being
conducted over the internet, specific law
guarding the Indian customers and Indian
businesses are essential and Indian laws are
gravely insufficient on this issue.
 In a bid to safeguard security, the government has
made digital signatures necessary in several E-
contract transactions mainly in the government to
government (G2G) or government to business
(G2B) framework with a view to safeguarding the
identity of the transacting parties. E-contracts
Electronic transactions on these modes require digital
contracts and its signatures as essential parts. They are used for
types the verification of the electronic contracts. These
are controlled by the IT Act, 2000 which provides
the outline for digital signatures, their issues and
verification. The Act thus tries to safeguard that
trust between both the parties is maintained
through verification of identities and help prevent
cybercrimes and ensure cyber security practices.
 The Reserve Bank of India, however, has tried to
support the electronic payment mechanism
through various orders, but such orders can only
Electronic act as a stop-gap procedure. The most important
order in this regard was the application of second
contracts and its factor verification in all Indian Payment Gateways.
types Commonly recognised as Verified by Visa or
MasterCard Secure Code, this had made card
transactions on the internet moderately more
secure.
 The Contract Act requires meeting of minds and the
involvement of two parties negotiation is an underlying
presumption. But in case of e-contracts, the minds that
meet are minds of the programmed computer systems. The
Information Technology Act contains provisions regarding
attribution, acknowledgement, dispatch and receipt of
Electronic electronic records. The IT Act has tried to sufficiently take
care of the requirements of e-contracts. However, some of
contracts and its the legal challenges are yet to be resolved and the law is yet
types to address and plug certain glaring loopholes pertaining to
e-contracts. The law must raise a presumption that once
the e-contract is concluded, both parties must be presumed
to be competent to do so and then neither party must be
allowed to raise objection at a later stage that the contract
is unenforceable due to either of the parties not being
competent to contract.
 The law must provide for a presumption in favour of the
offeree such that a mistake of fact committed should not
place either of the contracting parties in unbargainable
position. The website offering goods or services should
consist of an e-contract and such contract must be carefully
Electronic drafted to protect the website owner from liability and
contracts and its must address the key terms & conditions for the provisions
of goods or services. The contract should clearly establish
types the exact time & manner of acceptance of the contract. In
the event of dispute or breach of contract, the liability of
the owner of the website would be limited only to the
extent of the terms of the contract.
 • The word “virtual currency” refers to a
completely intangible exchange medium which
is not a legal tender but can be replaced by legal
tender. Older types of “currency” that are not
“legal tender” include replacements for paper-
based currency such as army scripting and
Concept of depression scripting. The word “virtual
blockchain and currency” has recently created an additional
Cryptocurrency connotation that it only exists in an electronic
or digital form and is only used as a medium of
return between members of the internet or
virtual currency society. Virtual currencies can
be used to purchase virtual goods or redeem
awards for online games, social media, or
corporate loyalty programs.
 A virtual currency subset is “cryptocurrency,” meaning an
internet-based virtual currency in which cryptography
validates the ownership of a particular unit of value. Its
value differs with its market motion. In contrast to
commodity-based currencies that derive their intrinsic
value through the central authority, cryptocurrencies are
Concept of not legal tendering and therefore their use involves an
blockchain and agreement between parties for a transaction. Bitcoins, for
instance, have no physical existence and their ownership is
Cryptocurrency through entries in a comprehensive database known as the
“blockchain,” which is maintained over a peer-to-peer
network. A cryptocurrency is a digital asset designed to
function as a medium of exchange that uses cryptography
to secure its transactions, control the creation of additional
units, and verify the transfer of assets.”
 Bitcoin is a cryptocurrency which is a form of
payment that uses cryptography technique to
control its creation and management. It is a open-
source online payment system software. They
were launched in 2009 as a bit of software
written under the name Satoshi Nakamoto. He
Concept of termed it as “an electronic cash system” Each
blockchain and country has its own specific rule on dealing with
Cryptocurrency local and foreign currencies. Foreign currencies
are generally managed by enactment of special
legislation. Citizens can transact in any foreign
currency subject to rules. These rules are many
time linked with other legislations, for example,
investment caps, sectoral investment, and
corporate law.
 Bitcoin was the first decentralized cryptocurrency.
Several other cryptocurrencies have come to
realize since then. These are often referred to as
‘altcoins’ or ‘bitcoin alternative’. The
decentralized control is related to the use in the
Concept of Distributed Ledger Technology of the blockchain.
blockchain and The cryptocurrencies transaction took place
through a signed piece of data that is transmitted
Cryptocurrency to the network and, if valid, ends up in a block in
the blockchain in order to transfer ownership of a
cryptocurrency amount to a designated digital
address.
 Bitcoin is a decentralized currency using
peer-to-peer technology that allows the
network to jointly perform all tasks such as
currency issuance, transaction processing
and verification. While this
Concept of decentralization makes Bitcoin free from
public manipulation or interference, the
blockchain and flipside is that there is no central authority
Cryptocurrency to make sure things are running smoothly
or back a bitcoin’s value. Bitcoins are
digitally developed through a method of
“mining,” which needs strong PCs to solve
complicated algorithms and crunch
numbers.
 These features make Bitcoin essentially different
from a currency supported by its government’s
full faith and credit. The issuance of government
currency is an extremely centralized activity
overseen by the central bank of a nation. While
the bank regulates the quantity of currency
Concept of issued in line with its monetary policy goals,
theoretically there is no upper limit to the
blockchain and quantity of such issuance. Moreover, local
Cryptocurrency currency deposits are usually insured by a
government body against bank failures. A
Bitcoin’s value depends entirely on what investors
are prepared to pay for it at a moment. Also, if a
Bitcoin exchange folds up, Bitcoin balance
customers don’t have any recourse to get them
back.
 Bitcoins uses a strong cryptography system
and codes so that the financial
transactions carry out in secure and easy
mode. Developers of the codes have
created it as a “peer-to-peer” network
eliminating any intermediaries in between.
Concept of The transactions of the bitcoins are
blockchain and verified by using cryptography by network
Cryptocurrency nodes. The record of all transactions is
kept in a “blockchain” which is a publicly
distributed ledger for bitcoin transactions.
All the transactions are recorded in a
public ledger using its own unit of account.
 • The various methods to obtain the Bitcoins are:
• bitcoin mining
• exchange of bitcoins for goods and services.
Bitcoin mining is a complex computing and
mathematical process using the cryptography
Concept of and coded techniques by which the bitcoin
blockchain and miners bring new bitcoins into the world. it is
also a process of verifying and adding bitcoin
Cryptocurrency transactions to the public ledger i.e. blockchain.
The bitcoin mining process involves assembling
a block of recent bitcoin transactions and
attempting to solve computationally tough
puzzles.
 Blockchain Technology
A blockchain is a digitized, decentralized,
public ledger of all cryptocurrency transcations.
A block is the ‘current’ part of a blockchain,
which records some or all of the recent
transactions. Once completed, a block goes into
the blockchain as a permanent database. Each
Concept of time a block gets completed, a new one is
blockchain and generated. There is a countless number of such
Cryptocurrency blocks in the blockchain, connected to each
other (like links in a chain) in proper linear,
chronological order. Every block contains a hash
of the previous block. The blockchain has
complete information about different user
addresses and their balances right from the
genesis block to the most recently completed
block.
 The blockchain is perhaps the main
technological innovation of Bitcoin.
Bitcoin isn’t regulated by a central
authority. Instead, its users dictate and
Concept of validate transactions when one person
pays another for goods or services,
blockchain and eliminating the need for a third party to
Cryptocurrency process or store payments. The
completed transaction is publicly
recorded into blocks and eventually into
the blockchain, where it’s verified and
relayed by other Bitcoin users.
 Based on the Bitcoin protocol, the blockchain
database is shared by all nodes participating in a
system. Upon joining the network, each
connected computer receives a copy of the
blockchain, which has records, and stands as
proof of, every transaction ever executed. It can
Concept of thus provide insight about facts like how much
value belonged a particular address at any point
blockchain and in the past. The first international bloackchain
Cryptocurrency transaction was completed on October 24, 2016.
Brokered by the Commonwealth Bank of Australia
and Wells Fargo & Co, the $35,000 deal
involved Australian cotton trader Brighann Cotton
Marketing, which purchased 88 bales cotton from
its U.S. division in Texas and sent it to Qingdao,
China.
 • Blockchain systems can seem complex; however, they can
be easily understood by examining each component
technology individually. At a high level, blockchains utilize
well-known computer science mechanisms (linked lists,
distributed networking) as well as cryptographic
primitives (hashing, digital signatures, public/private
Concept of keys) mixed with financial concepts (such as ledgers).
Blockchain technology is the use of cryptographic hash
blockchain and functions for many operations, such as hashing the
content of a block. Hashing is a method of calculating a
Cryptocurrency relatively unique fixed-size output (called a message
digest, or just digest) for an input of nearly any size (e.g.,
a file, some text, or an image). Even the smallest change
of input (e.g., a single bit) will result in a completely
different output digest.
 • Section 3 of Information Technology Act 2000 deals with
the concept of Asymmetric-Key Cryptography and Hash
Function
Private keys are used to digitally sign transactions.
Public keys are used to derive addresses, allowing for a
Concept of one-to-many approach for pseudonymity (one public key
pair can yield multiple addresses; in some cases, multiple
blockchain and public key pairs are utilized to create multiple addresses).
Cryptocurrency Public keys are used to verify signatures generated with
private keys.
Asymmetric-key cryptography provides the ability to verify
that the user transferring value to another user is in
possession of the private key capable of signing the value.
 Legal Issues
Virtual currencies, depending on the nation, have
different legal elements to consider. Some nations
classify them as cash and legal, some classify
them as assets and legal, while some nations like
India do not classify them as illegal or legal,
Concept of without legal frameworks. Bitcoin is produced
blockchain and illegally in nations like Bangladesh and Russia. Its
status is somewhat complex in other nations.
Cryptocurrency Cryptocurrencies are prohibited in some nations
due to existing legislation, such as Iceland.
However, cryptocurrencies in India, like many
other countries, currently have no legal
framework in place and are unregulated.
Cryptocurrencies related legal issues are as
follows,
 • Decentralized nature: Unlike government-issued currencies (i.e.
banknotes, coins, etc.) that are directly under the control of the
issuing authority and derive their value from the promise of the
issuing authority and stored gold, Cryptocurrencies are
decentralized in nature, making it difficult for them to be
regulated by the government.
• Absence of a well-defined legal framework: Most nations lack
Concept of an adequate legal framework to regulate the value and flow of
virtual currencies both inside and outside the nation, creating
blockchain and additional hurdles to regulate a decentralized currency.
Cryptocurrency • The volatility of Virtual Currencies: As can be seen from latest
modifications in the value of most renowned cryptocurrency
bitcoin, which in 2010 had a base value of $0.30 and in 2017
grew to nearly $4000, virtual currencies follow a volatile track of
ups and downs that further bring market and economy
instability.
 Independent Wallets: Wallets holding
cryptocurrencies and engaged in transactions are
established and managed by private companies
that have no control over any organization owing
Concept of to the lack of any binding international laws in
blockchain and place. They, therefore, have no liability for the
Cryptocurrency loss of the customer as well as for any form of
financial crime committed by and through the use
of these wallets.
 Taxation: Taxation issue is one of the major
cryptocurrencies issues. Because of their pseudo-
anonymity, if properly used, they can readily be used by
Concept of hiding the property for tax evasion purposes.
blockchain and Cryptocurrencies are often categorized as a taxable asset,
for example in the United States. While bringing big
Cryptocurrency amounts of foreign currency into a nation may de-stabilize
its economy and may cause taxation problems, it also
presents financial market volatility.
 Money Laundering: Due to the ease of their motion
between nations with little or no oversight, money
laundering is a main legal complication with such
currencies. While organizations can monitor virtual
currency purchased through banks, it becomes difficult
when purchasing or selling the coins using money or other
Concept of hard-to-trace techniques. One of the major enabling
blockchain and factors for money laundering is lack of uniform financial
jurisdiction across the globe. This is the reason why certain
Cryptocurrency areas are labelled as “tax havens”. Money laundering
contributes largely to the deteriorating state of economies
in the world.
 • Cyber Attacks and Hacking: Attacks by “cyber thieves”
are becoming frequent with the passing of time.
Especially the Bitcoin community has been hit by such
thefts quite repeatedly. This not only creates panic in the
Bitcoin community but also leads to a decline in the value
of the currency. Cyber security will be a constant concern,
Concept of mostly because the transactions are restricted only to the
blockchain and cyber environment.
Cryptocurrency • Price Fluctuation and Inflation: One of the major
reasons why today many businesses and merchants avoid
using Bitcoin is that it is new and volatility. Bitcoin value is
extremely high. This again leads to the uncertainty and
reduced confidence in the currency.
 • Fraud: When compared with the traditional currency
that not only has extensive regulatory oversight but also
offers very less privacy, Bitcoin does seem like the better
option for the fraudsters.
• Uncertainties in the Government Policies: Since most
Concept of jurisdictions have not made a decision regarding the
status and treatment of Bitcoin in the economy, the
blockchain and uncertainty is a deal breaker for many new prospective
users of Bitcoin. One of the major dangers here is that
Cryptocurrency any government might come around and declare it illegal,
leaving the investors without remedy and helpless.
Eg on april 16 2021 turkey bans bitcoin and other
cryptocoins for payment
 • Risks Related to Bitcoin: This arena of virtual transitions is
relatively novel and largely untested. This means that, just like
any new technology or innovation there is a high possibility that
many loopholes might exist in this system that have not been
detected yet. This only adds to the appeal of the Bitcoin for
financial criminals. Most prominent of these offences which are
already existent in the traditional financial world and which may
extend to Bitcoin are money laundering and terrorist financing.
Concept of
• Drug Trafficking: Silk Road, launched in June 2011, and only
blockchain and reachable by people using Tor, the software that lets one surf
the dark web anonymously. Silk Road was used by countless
Cryptocurrency people to get access to illegal merchandise, spanning from
drugs to assassins for hire. An estimate of $1.9 million dollars’
worth of Bitcoin transactions per month were done according to
a research. This came as a confirmation of the fact that Bitcoin
is fast becoming the first choice for drug dealers to shelter
themselves from the scrutiny of the law.
 • Tax Avoidance and Evasion: There are very few
nations who have released rules or guidelines
regarding the treatment of Bitcoin for the
purpose of taxation. While most countries have
not resolved the issue of taxation of Bitcoins
Concept of and transactions in relation to Bitcoins.
blockchain and • Terrorist Financing: The concepts of terrorist
Cryptocurrency financing and money laundering have been
distinguished by the International Compliance
Association. Terrorist Financing is concealment
of future application of financial resources that
may be illegal wherein such resources are
obtained from a legitimate source.
 • Indian Legal Framework
• The Indian government has been skeptical of
cryptocurrency, thinking between wanting to
regulate cryptocurrencies and banning. While
the government wishes to actively encourage
blockchain technology, it has been resisting
Concept of popular usage of cryptocurrency because once
the unit of account of one of these transactions
blockchain and changes from rupees to any cryptocurrencies,
Cryptocurrency then the possibility of recovery of tax would
become an issue. So, if the government wishes
to reap the revenues from blockchain
transactions, it will have to recognise
cryptocurrency, and not just INR, as a unit of
account.
 There is a lack of clarity over the status of cryptocurrencies
in India. The Supreme Court of India has in its ruling
pronounced on 25 February 2019 required the Government
to come up with Cryptocurrency regulation policies While
the Supreme Court struck down the RBI ban early in the
year, cryptocurrency regulation is still prohibitory, besides
Concept of being difficult to comprehend. Cryptocurrencies are not
legal tender in India, and while exchanges are legal, the
blockchain and government has made it very difficult for them to operate.
With an estimated 1.7 million Indians trading in digital
Cryptocurrency assets, it is time to finally appreciate its potential for the
economy and formulate appropriate legislation for its
regulation, provisioning for consumer protection and for
concerns about its usage in money laundering and terror
financing.
 • Without the backing of any sort of reasoning, such orders or
notification need to be quashed. The Court then applied the
doctrine of proportionality before finally deciding the issue in
favour of cryptocurrency. The doctrine of proportionality
includes the following:
• (1) whether the objective of the measure is sufficiently
important to justify the limitation of a protected right,
Concept of
• (2) whether the measure is rationally connected to the
blockchain and objective,
Cryptocurrency • (3) whether a less intrusive measure could have been used
without unacceptably compromising the achievement of the
objective, and
• (4) whether, balancing the severity of the measure’s effects on
the rights of the persons to whom it applies against the
importance of the objective, to the extent that the measure will
contribute to its achievement, the former outweighs the latter.
 • The court held that RBI needed to pass the above test
and to show at least some semblance of any damage
suffered by its regulated entities. But the RBI could not
show any. The Court finally held that 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
Concept of including two draft bills, both of which advocated exactly
opposite positions, the Court cannot hold that the
blockchain and impugned measure is proportionate.
Cryptocurrency • The impugned order by the RBI was hence quashed and,
the order seems well reasoned. It would be a welcome
move for cryptocurrencies, blockchain technology and
exchanges across the country, though the future of the
cryptocurrencies still seems to be shrouded in the mist
because of legislative uncertainty.
 • Precautionary Measures and Initiatives by Regulatory
Authorities and Government Agencies
• Virtual currencies ‘ legal status differs widely from nation
to nation, and many of them are still undefined or
undergoing modifications. While many nations do not
illegalize the use of cryptocurrencies, their status as cash
(or commodity) differs, with different legislative
Concept of consequences. While some nations have explicitly
blockchain and permitted their use and trade, others have in any way
limited or prohibited their use. Similarly, separate public
Cryptocurrency organizations, departments, and courts differ on
cryptocurrencies views. For instance, cryptocurrencies
are unregulated in India, UK, Brazil, etc. because there is
no legal framework yet in place, or their use has been
deregulated and is free to use with no or minor legal
constraints.
 While these are regulated in nations like France, Finland
and Germany, use is legal but specifically regulated for tax
or other purposes, and sometimes classified as cash. In
some nations, the use of cryptocurrency is limited but legal
in certain conditions, such as in China, people may be able
to transact, while corporations and banks are unable to do
Concept of so. It is illegal in Iceland to buy or sell bitcoins, but they can
blockchain and be mined. Nations like Russia, Bangladesh, have outright
banned bitcoins. Recently CME Group Inc. in the U.S. has
Cryptocurrency opened up a future exchange in bitcoins while SEBI, India
has established a Financial and Regulatory Technology
(CFRT) Committee to examine, deliberate and advise on
cryptocurrencies issues. Reserve Bank of India also issued
warnings about the volatile nature of cryptocurrencies to
customers engaged in bitcoin trading.
 • Always check the address of a Web wallet and prevent
following suspect connections to a Web bank or Web
wallet.
• Always double-check the address of the recipient, the
amount entered, details of the transaction fees and other
charges before the transaction.
• Recover expired account passwords and other details and
Concept of maintain them secure and personal.
blockchain and • Investment in cryptography is dangerous. Common
procedures must, therefore, be followed while investing
Cryptocurrency in unforeseen conditions such as diverse investment,
provider reliability and a powerful mindset.
• It is advisable to use cryptocurrency wallets and paper
wallets. Use excellent antivirus programs to safeguard pcs
and devices that are used to access crypto-wallets, as
well as other cryptocurrencies operations.
 • Like any other currency its value fluctuates. But
unlike most real life analogue its value swung
widely in a short period. When the unit first
came into existence.. It was worth a few US
Concept of cents. Now a single bitccoin is worth about
blockchain and $460. There are presently more than 15 million
Cryptocurrency units in circulation. Some economist point to
the fact that because it is limited its price will
increase over the long run making it less useful
as a currency and more a vehicle to store value
like gold.
 • But other point to Bitccoin’s volatility, security issues and
other weaknesses. Some point out that like many other
technological developments firstly it will face difficulties.
But it will make the way for the next crypto currency.
There is possibility of theft when Bitcoins are stored in
digital wallets. Bitcoin’s use on the underground Silk Road
Concept of website, where users could buy drugs and guns with it is
blockchain and a proof that it is a bad thing. Some governments including
Russia and china have heavily restricted how bitcoins can
Cryptocurrency be used. RBI has banned banks regulated by it, from
dealing with any individuals or companies that trade
cryptocurrencies. This means, it’s very difficult to buy and
sell crypto from well-known custodian wallets such as
Zebpay or Unocoin.
 • However, we don’t know if this ban is permanent. There
is a supreme court hearing some time in July where some
companies have challenged the legality of this ban. After
all, crypto currencies aren’t illegal themselves. So why
ban a legal activity?
• Crypto currencies are not legal tender. This means,
Concept of spending crypto is the equivalent of buying and selling
blockchain and them. You have to pay capital gains taxes on them. Crypto
currencies aren’t properly regulated. This makes them
Cryptocurrency extremely volatile and vulnerable to price-manipulation.
Crypto users like myself are okay with it, but some larger
investors are hesitant to enter because of it. They are
more accustomed to highly regulated markets such as
commodity trades, stocks, financial products etc.