Chapter 1

1.1 Introduction Electronic commerce, commonly known as e-comm. or e-commerce, is the buying and selling of products or services over electronic systems such as the Internet and other computer networks. Electronic commerce draws on such technologies as electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web at least at one point in the transaction's life-cycle, although it may encompass a wider range of technologies such as e-mail, mobile devices and telephones as well. Electronic commerce is generally considered to be the sales aspect of e-business. It also consists of the exchange of data to facilitate the financing and payment aspects of business transactions. E-commerce can be divided into:

E-tailing or "virtual storefronts" on Web sites with online catalogs, sometimes gathered into a "virtual mall"

The gathering and use of demographic data through Web contacts Electronic Data Interchange (EDI), the business-to-business exchange of data E-mail and fax and their use as media for reaching prospects and established customers (for example, with newsletters)

Business-to-business buying and selling The security of business transactions

Electronic commerce is presently an indispensable ingredient of Indias trade facilitation policy. Since 1991, after economic reforms explicitly took place in India as a result of opening of the economy with a view to integrate itself with the global economy, the need to facilitate international trade both through policy and procedure reforms has become the foundation stone

of Indias trade and fiscal policies. Resultantly, last few years have witnessed a technological revolution accompanied by the wide spread use of the Internet, web technologies and their applications. Electronic commerce (e-commerce) as part of the information technology revolution became widely used in the world trade in general and Indian economy in particular. As a symbol of globalization, e-commerce represents the cutting edge of success in this digital age and it has changed and is still changing the way business is conducted around the world. The commercialization of the Internet has driven electronic commerce to become one of the most capable channels for inter-organizational business processes. Consequently, Internet growth has led to a host of new developments, such as decreased margins for companies as consumers turn more and more to the internet to buy goods and demand the best prices. The internet augments the traditional businesses to be transformed because incumbents (in markets ) and large firms do not have the advantage just by virtue of being there first or by being of big. The implication of perfectly competitive market as the world will observe is that market will produce an efficient allocation of resources. Internet has accurately been an effective instrument in changing the straightforward ways of doing business. In any market with no entry barriers the Net is biggest of them, the continuous arrival of competition will, routinely, drive down the prices. In such a case, in long term all firms could only earn normal profits.

Electronic commerce (or e-commerce) encompasses all business conducted by means of computer networks. Advances in telecommunications and computer technologies in recent years have made computer networks an integral part of the economic infrastructure. More and more companies are facilitating transactions over web. There has been tremendous competition to target each and every computer owner who is connected to the Web. Although business-to-business transactions play an important part in e-commerce market, a share of ecommerce revenues in rapidly developing countries like India is generated from business to consumer transactions. E-commerce provides multiple benefits to the consumers in form of availability of goods at lower cost, wider choice and saves time. People can buy goods with a click of mouse button without moving out of their house or office. Similarly online services such as banking, ticketing (including airlines, bus, railways), bill payments, hotel booking etc. have been of tremendous benefit for the customers. Online businesses like financial services, travel, entertainment, and groceries are all likely to grow. E-commerce evolved in various means

of relationship within the business processes. It can be in the form of electronic advertising, electronic payment system, electronic marketing, electronic customer support service and electronic order and delivery. E-commerce stands for electronic commerce and pertains to trading in goods and services through the electronic medium, i.e. the Internet or phone. On the Internet, it pertains to a website, which sells products or services directly from the site using a shopping cart or shopping basket system and allows credit card payments. It involves conducting business with the help of the electronic media, making use of the information technology such as Electronic Data Interchange (EDI). In general connotation, Ecommerce involves paperless transactions and usage of EDI (Electronic Data Interchange), electronic mail, bulletin boards, fax transmissions, and electronic fund transfers. It refers to the process of trading goods and services through an electronic medium such as the internet. With advancements in technology, there have been changes in the methodology for business transactions. India, being a rapid adaptor of technology is a pace with the current scenario of electronic data exchanges and has taken to ECommerce. E-commerce is being used for purchase and sale of multiple products and there are multiple players using various portal sand websites for this purpose. The information technology industry might observe it as an electronic business application aimed at commercial transactions. It can involve electronic funds transfer, supply chain management, e-marketing, online marketing, online transaction processing, electronic data interchange (EDI), automated inventory management systems, and automated data collection systems. It typically uses electronic communications technology such as the Internet, extranets, e-mail, e-books, databases, and mobile phones. However, there exists no standard definition for the term and different organizations have defined it indifferent manner. E-commerce is understood to mean the production, distribution, marketing, sale or delivery of goods and services by electronic means. The Asia Pacific Economic Co-operation (APEC) has adopted a comprehensive definition of e-commerce to include all business activity conducted using a combination of electronic communications and information processing technology. The United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) have also defined e-commerce as the process of using electronic methods and procedures to conduct all forms of business activity.

1.2 Chronological order in the evolution of e-commerce: E-commerce can be traced back to the first electronic computers, which were built in the 1950s (Smith, K.T.2008). However, e-commerce did not gain extensive popularity until development of the World Wide Web in the 1990s. A chronological sequence of events concerning the Internet and e-commerce is provided below. Chronological order of events in the evolution of Web and E-Commerce1: 1946: The first electronic computer, ENIAC, is constructed at the University of Pennsylvania. 1957 : The Soviet Union launches Sputnik, the first artificial satellite 1958: To counter Soviet technological advances, the U.S. forms the Advanced Research Projects Agency (ARPA), with the Department of Defense, to develop U.S. leadership in science and technology applicable to the military. 1969: ARPANET, the forerunner of the Internet, established with four nodes: UCLA, Stanford, UC-Santa Barbara, and University of Utah. 1970: First applications of electronic data interchange (EDI). 1973: First international connection to ARPANET, University College of London. Initial work on a transmission protocol (later to be called TCP/IP) that allows diverse computer networks to interconnect and communicate with each other. 1974: BBN opens Telnet, the first commercial version of ARPANET. 1982: Transmission Control Protocol (TCP) and Internet Protocol (IP) established by ARPA. This leads to a definition of an "internet" as a connected set of networks, specifically those using TCP/IP, and "Internet" as connected TCP/IP internets. 1983: Internet Activities Board (IAB) is created. 1984: Science fiction author William Gibson coins the term "cyberspace" in his novel, Neuromancer .Internet host computers (computers with registered IP address) exceed 1,000.1987: Internet users exceed 10,000. 1988: Internet worm disables 6,000 of 60,000 Internet hosts. A Cornell University graduate student created the worm. Infected computers were connected through ARPA

Smith et al.(2010) and Internet World Stats (2011)

net and other E-mail networks in the Internet loop. Some of the US's top science and research centers were affected. 1989:Internet users exceed 100,000. 1990 :The ARPANET is shut down. 1991: Sir Tim Berners-Lee, working at CERN in Geneva, develops a hypertext system to provide efficient information access. He posts the first computer code of the World Wide Web in a relatively innocuous newsgroup, "alt.hypertext." Later, people refer to the Internet itself as the Web. 1992: World Wide Web released by CERN. 1994: Pizza Hut sells pizza on its website. First Virtual, the first cyber bank, opens. 1997: Inception of business-to-business (B2B) e-commerce.US Postal Service

issues electronic postal stamps.2000: Internet users exceed 360 million. 2011: Internet users tally almost 2 billion. Users in over 200 countries are connected.

Chapter 2
2.1 E-commerce in India The cutting edge for business today is e-commerce. Most people think e-commerce means online shopping. But web shopping is only a small part of the picture. The term also refers to online stock, bond transactions, buying and downloading software without ever going to a store. In addition, e-commerce includes business to business connections that make purchasing easier for big corporations. E-commerce is generally described as a method of buying and selling products and services electronically. The main vehicle of e-commerce remains the Internet and the World Wide Web, but use of e-mail, fax and telephone orders is also prevalent. Electronic commerce is the application communication and information sharing technology among trading partners to the pursuit of business objectives. E-commerce can be defined as modern business methodologies that address the needs of the organization, merchants and consumers to cut costs while improving the quality of goods and services and speed of service delivery. E-commerce is associated with the buying and selling of information, products, and services via computer networks. A key element of e-commerce is information processing. The effects of e-commerce are already appearing in all areas of business, from customer service to new product design. It facilitates new types of information based business processes for reaching and interacting with customers-online advertising and marketing, online, order taking and online customer service etc. It can also reduce costs in managing orders and interacting with a wide range of suppliers and trading and trading partners, areas that typically add significant overheads to the cost of products and services. Gartner Group predicted in April 2001 that the B2B e-commerce in the Asian and Pacific region will reach US$ 220 billion this year, which will be 24 per cent of the worldwide total. In the year 2000, this figure was US$ 96.8 billion or 22 per cent of the worldwide total. In the year 2005, the Asian and Pacific region will account for 28 per cent of the worldwide B2B ecommerce transactions, which itself will grow to US$ 2.4 trillion (Peoples Daily Online, 7 April 2001). A recent report of eMarketer released in May, 2001 says that the number of Internet users in the Asian and Pacific region will increase dramatically from 48.7 million in the year 2000 to 173 million in the year 2004. It will then comprise more than 27 per cent of the global

Internet user community compared with 21 per cent in the year 2000. The same report estimates the number of Internet users in India will be about 5.8 per cent of the total number in the Asia-Pacific region2. It is against this backdrop of the world at large and Asia-Pacific in particular that we have to examine the developments in India. The Government of India has long recognized the need for development of IT industry and information infrastructure as these are twin engines for growth of the economy.

2.2 Benefits of E-Commerce Deeper penetration of IT applications in the economy, and in the society as a whole can help boost the economy. E-commerce applications can make it easier for the country to better integrate with the global markets, the e-marketplace. This has led the government, over the last few years to formulate liberal policies for the development and growth of the IT industry. The IT sector as a whole has grown at a compounded annual growth rate of about 30 per cent every year for the last few years. The total production during the current year, i.e. 2001-2002 was Rs 809 billion (US$ 17.3 billion), out of which software exports account for Rs 3,655 billion (US$7.8 billion).NASSCOM (National Association of Software and Service Companies) had recently released findings of its survey to evaluate the e-commerce scenario in India. As per preliminary findings of the survey, the total volume of e-commerce transactions in India was about Rs 450 Crores in the year.

(eMarketer, 10 May 2001)

Chapter 3
INFORMATION TECHNOLOGY ACT, 2000 The law relating to information technology is contained in the Information Technology (IT) Act, 2000 which came into force on 17th October, 2000. It is the first Cyber Law in India. It is mainly based on the UNCITRAL Model Law. The United Nations Commission on International Trade Law (UNCITRAL) adopted the Model Law on Electronic Commerce in 1996. This Model Law provides for equal legal treatment of users of electronic communication and paper based communication. 3.1 OBJECTS OF THE ACT The Information Technology Act, 2000 seeks to achieve the following objects. 1. To grant legal recognition to electronic records. 2. To grant legal recognition to Digital Signature for authentication of lie information or matters requiring authentication under any law of the country 3. To permit retention of information, documents and records in electronic form where any law requires such retention for a specific period. 4. To foster use and acceptance of electronic records and digital Signatures in the Government offices and its agencies 5. To prevent the possible misuse arising out of transactions and oilier dealings concluded over the electronic medium. 6. To prevent and arrest offences as well as deter abuse of Information Technology. 7. To deal with civil and criminal liabilities arising out of contravention of the provisions of the law. 8. To provide for necessary changes in the various provisions, which deal with offences relating to documents and paper-based transactions. 9. To facilitate electronic fund transfers between the financial institutions and banks. 10. To give legal sanctity for books of account maintained in the electronic form by the banks.

3.2 Documents (or Transactions) excluded from the scope of Information Technology Act a. A negotiable instrument as defined in section 13 of the Negotiable Instrument Act, 1881. b. A power-of-attorney as defined in Section 1 A of the Powers of Attorney Act, 1882 c. A trust as defined in section 3 of the Indian Trusts Act, 1882 d. A will as defined in section 2 (h) of the Indian Succession Act 1925 e. Any contract for the sale or conveyance of immovable property or any interest in such property f. Any such class of documents or transactions as may be notified by the Central Government in the Official Gazette. 3.3 DEFINITIONS 3.3.1 Access [Sec. 2 (1) (a)] Access means gaining entry into, instructing or communicating with the logical, arithmetical, or memory functions resources of a computer, computer system or computer network. 3.3.2 Affixing digital signature [Sec. (1) (d)] Affixing digital signature means adoption of any methodology or procedure by a person for the purpose of authenticating an electronic record by means of digital signature. 3.3.3 Asymmetric Crypto System [Sec. 2(1) (f)] Asymmetric crypto system means a system of a secure key pair consisting of a private key for creating a digital signature and a public key to verify the digital signature. 3.3.4 Computer [Sec. 2(1) (i)1] Computer means by electronic magnetic, optical or other high speed data processing device or system which performs logical, arithmetic and memory functions by manipulations of

electronic, magnetic, or optical impulses, and includes all input, outpost, processing, storage,

computer software, or communications facilities which are connected related to the computer in a computer system or computer network. 3.3.5 Computer System [Sec. 2(1) (h)i] Computer system means a device or collection of devices, including input and output support devices and excluding calculators which are not programmable and capable of being used in conjunction with external files, which contain computer programmes, electronic

instructions, input data, and output data, that performs logic, arithmetic, data storage and retrieval, communication control and other functions 3.3.6 Data [Sec. 2(1) (o)J] Data means a representation of information, knowledge, facts, concepts or instructions which are being prepared or have been prepared in a formalised manner and it is intended to be processed, is being processed or has been processed in computer system or computer network, and may be in any form (including computer printouts magnetic or optical storage media, punched cards, punched tapes) or stored Internally in the memory of the computer. 3.3.7 Digital Signature [Sec. 2(1) (p)J] Digital signature means authentication of any electronic record by a subscriber by means of an electronic method or procedure in accordance with the provisions of section 3. 3.3.8 Electronic Form (Sec. 2(1) (r)J) Electronic form with reference to information means any information generated, sent, received or stored in media, magnetic, optical, computer, memory, micro film, computer generated micro fiche or similar device. 3.3.9 Electronic Record [Sec. 2(1) (t)J] Electronic record means data, record or data generated, image or sound stored, received or sent in an electronic form or microfilm or Computer generated micro fiche-,

3.3.10 Information [Sec. (1) (v)] Information includes data, text, images, sound voice codes computer programmes, software and databases or micro film or computer ci1crated microfiche. Originator means a person who sends, generates, stores or transmits any electronic message or cause any electronic message to be sent, generated stored or transmitted to any other person, but does not include an intermediary. [Section 2 (1) (za)] Key pair: In an asymmetric crypto system, key pair means a private key and its mathematically-related public key, which are so related that the public key can verify a digital signature created by the private key. [Sec. 2(l)(x)]. Private key: It means the key of a key pair used to create a digital signature. [Sec. 2(l)(zc)]. Public key: It means the key of a key pair used to verify a digital signature and listed in the Digital Signature Certificate. [Sec. 2(l)(zd)J]. Subscriber: It means a person in whose name the Digital Signature Certificate is issued, [Sec. 2(l)(zg)]. 3.3.11 Secure System [Sec. 2(l) (ze)1] Secure system means computer hardware, software, and procedure that a. are reasonably secure from unauthorised access and misuse; b. provide a reasonable level of reliability and correct operation-, c. are reasonably suited to performing the intended functions, and

d. adhere to generally accepted security procedures; 3.3.12 Hash function [Sec. 3(2)1] Hash function means an algorithm mapping or translation of one sequence of bits into another generally smaller, set known as hash result such that an electronic record yields the same hash result every time the algorithm is executed with the same electronic record as its input making it computationally infeasible

to derive or reconstruct the original electronic record from the hash result produced by the, algorithm that two electronic records can produce the same hash result using the algorithm.

3.3.13 DIGITAL SIGNATURE Digital signature is authentication of an electronic record by a subscriber by means of an electronic method or procedure. Digital signature is created in two distinct steps: First, electronic record is converted into a message digest by using a mathematical function known as hash function which digitally freezes the electronic record thus ensuring the integrity of the content of the intended communication contained in the electronic record. Second, the identity of the person affixing the digital signature is authenticated through the use of a private key which attaches itself to the message digest and which can be verified by any person who has the public key corresponding to such private key. This will enable any person to verify whether the electronic record is retained intact or has been tampered with. Any subscriber may authenticate an electronic record by affixing his digital signature. The authentication of the electronic record shall be effected by the use of asymmetric crypto system and hash function which envelop and transform the initial electronic record into another electronic record. Any person by the use of a public key of the subscriber can verify the electronic record. The private key and the public key are unique to the subscriber and constitute a functioning key pair. 3.4 ELECTRONIC GOVERNANCE Legal recognition of electronic records [Sec. 41] Where any law provides that information or any other matter shall be in writing or in the typewritten or printed form, then such requirement shall be deemed to have been satisfied if such information or matter is:

(a) rendered or made available in an electronic form; and (b) accessible so as to be usable for a subsequent reference.

Legal recognition of digital signature [Sec. 51] Where any law provides that information or any other matter shall be authenticated by affixing the signature or any document shall be signed or bear the signature of any person then, such requirement shall be deemed to have been satisfied, if such information or matter is authenticated by means of digital signature affixed in such manner as may be prescribed by the Central Government. Use of electronic records and digital signatures in Government (Sec. 6) Where any law provides for o the filling of any form, application or any other document o the issue or grant of any licence, permit, sanction or approval o the receipt or payment of money in a particular manner, such requirement shall be deemed to have been satisfied if such filling, issue, grant, receipt or payment, as the case may be, is effected by means of such electronic form as may be prescribed by the appropriate government. Retention of electronic records [Sec. 71] Where any law provides that documents, records or information shall be retained for any specific period, then, that requirement shall be deemed to have been satisfied if they are retained in the electronic form and if (a) the information contained therein remains accessible so as to be usable for a subsequent reference; (b) the electronic record is retained in the format in which it was originally generated, sent or received or in a format which can be demonstrated to represent accurately the information originally generated, sent or received;

(c) the details which will facilitate the identification of the origin, destination, date and time of dispatch or receipt of such electronic record are available in the electronic record.

Publication of rules, regulation, etc., in Electronic Gazette [Sec. 8] Any rule, regulation; order, bye-law, notification or any other matter shall be published in the Official Gazette or Electronic Gazette, if it is so required by law and the date of publication shall be deemed to be the date of the Gazette in which it was first published. Power to make rules by Central Government in respect of digital signature (Sec. 10) The Central Government may by rules, prescribe (a) the type of digital signature; (b) the manner and format in which the digital signature shall be affixed, (c) the manner or procedure which facilitates identification of the person affixing the digital signature; (d) control processes and procedures to ensure adequate intergrity, security and confidentiality of electronic records or payments, and (e) any other matter which is necessary to give legal effect fo digital signatures. 3.5 ATTRIBUTION, ACKNOWLEDGEMENT AND DESPATCH OF ELECTRONIC RECORDS Attribution of electronic records (Sec. 11] An electronic record shall be attributed to the originator if it was sent by the originator himself by a person who had the authority to act on behalf of the originator in respect of that electronic record; or

by an information system programmed by or on behalf of the originator to operate automatically.

Acknowledgement of receipt [Sec. 121] Where the originator has not agreed with the addressee that the acknowledgement of receipt of electronic record be given in a particular form or by a particular method, an acknowledgement may be given by (a) any communication by the addressee, automated or otherwise; or (b) any conduct of the addressee, sufficient to indicate to the originator that the electronic record has been received. Where the originator has stipulated that the electronic record shall be binding only on receipt of an acknowledgement, then if acknowledgement has not been so received, the electronic record shall be deemed to have not been sent by the originator. Where the originator has not stipulated, such acknowledgement, and the acknowledgement has not been received, then the originator may give notice to the addressee specilring a reasonable time by which the acknowledgement must be received. If no acknowledgement is received within the aforesaid time he may after giving notice to the addressee, treat the electronic record as though it has never been sent Time and place of despatch and receipt of electronic record [Sec.131] (1) The despatch of an electronic record occurs when it enters a computer resource outside the control of the originator. (2) The time of receipt of an electronic record shall be determined as follows: (a) if the addressee has designated a computer resource for the purpose of receiving electronic records, (i) receipt occurs at the time when the electronic record enters the designated computer resource, or

(ii) if the electronic record is sent to a computer resource of the addressee that is not the designated computer resource, receipt occurs at the time when the electronic record is retrieved by the addressee; (b) if the addressee has not designated a computer resource along with specified timings, receipt occurs when the electronic record enters the computing resource of the addressee. (3) An electronic record is deemed to be despatched from the place of business of the originator. The electronic record is deemed to be received at the place where the addressee has his place of business. If the originator or the addressee has more than one place of business the principal place of business, shall be the place of business, if the originator or the addressee does not, have a place of business, his usual place of residence shall be deemed to be the place of business; 3.6 SECURITY OF ELECTRONIC RECORDS AND DIGITAL SIGNATURES Secure Electronic Record [Sec. 141] Where any security procedure has been applied to an electronic record at a specific point of time, then such record shall be deemed to be a secure electronic record from such point of time to the time of verification. Secure digital signature [Sec. 151] Digital signature shall be deemed to be a secure digital signature if at the time it was affixed, was (a) unique to the subscriber affixing it, (b) capable of identifying such subscriber; (c) created in a manner or using a means under the exclusive control of the subscriber (d) linked to the electronic record to which it relates in such a manner that if the electronic record was altered the digital signature would be invalidated.

Security procedure [Sec. 161] While prescribing rules for the security procedure, the Central Government shall have regard to commercial circumstances prevailing at the time when the procedure was used, including (a) the nature of the transaction; (b) the level of sophistication of the parties with reference to their technological capacity; (c) the volume of similar transactions engaged in by other parties; (d) the availability of alternatives offered to but rejected by any party; (e) the cost of alternative procedures; and (f) the procedures in general use for similar types of transactions or communications.

Chapter 4
REGULATION OF CERTIFYING AUTHORITIES Certifying Authority is a person who has been granted a licence to issue a digital signature. The certifying authorities are under the supervision of Controller of Certifying Authorities including Deputy Controllers and Assistant Controllers. 4.1 Appointment of Controller Certifying Authorities (Sec. 17) The Central Government may, by notification in the Official Gazette appoint a Controller of Certifying Authorities and such number of Deputy Controllers and Assistant Controllers as it deems fit. The Controller shall discharge his functions subject to the general control and directions of the Central Government while the Deputy Controllers and Assistant Controllers shall perform the functions assigned to them by the Controller. The Controller may, in writing, authorise the Deputy Controller, Assistant Controller or any officer to exercise any of his powers (Sec. 27) There shall be a seal of the Office of the Controller (Sec. 17 (b)J.

Power to investigate contravention and making access to computers The Controller or any officer authorised by him shall investigate any contravention of the provisions of this Act, rules or regulations made there under. Those officers in such cases, shall have access to any computer system, data or any other material connected with such system for the purpose of searching for obtaining any information or data contained in such computer system (Sec. 28). 4.2 Functions of Controller [Sec. 18] The Controller may perform all or any of the following functions exercising supervision over the activities of the Certifying Authorities; certifying public keys of the Certifying Authorities; laying down the standards to be maintained by the Certifying Authorities;

specifying the qualifications and experience which employees of the Certifying authorities should possess; specifying the conditions subject to which the Certifying Authorities shall conduct their business; specifying the contents of written, printed or visual materials and advertisements that may be distributed or used in respect of a Digital Signature Certificate and the public key specifying the form and content of a Digital Signature Certificate and the key; specifying the form and manner in which accounts shall be maintained by the Certifying Authorities; specifying the terms and conditions subject to which auditors may be appointed and the remuneration to be paid to them; facilitating the establishment of any electronic system by a Certifying Authority either solely or jointly with other Certifying Authorities and regulation of such systems; specifying the manner in which the certifying Authorities shall conduct their dealings with the subscribers; resolving any conflict of interests between the Certifying Authorities and the subscribers; laying down the duties of the Certifying Authorities, Maintaining a database containing the disclosure record of every Certifying Authority containing such particulars as may be specified by regulations, which shall be accessible to public.

4.3 Procedures which Certifying Authority has to follow [Sec. 30] Every Certifying authority shall make use of hardware, software, and procedures that are secure from intrusion and misuse; provide a reasonable level of reliability in its services which are reasonably suited to the performance of intended functions, adhere to security procedures to ensure that the secrecy and privacy of the digital signatures are assured; observe such other standards as may be specified by regulations.

4.4 Recognition of Foreign Certifying Authorities [Sec. 19] The controller may with the previous approval of the Central Government, and by notification in the Official Gazette, recognise any Foreign Certifying Authority as a Certifying Authority for the purposes of this Act. Where any such Certifying Authority is recognised, the Digital Signature Certificate issued by such Certifying Authority shall be valid for the purposes of this Act. 4.5 LICENCE TO ISSUE DIGITAL SIGNATURE CERTIFICATES [SEC. 21] Any person can make an application, to the Controller, for a licence to issue Digital Signature Certificates. No licence shall be issued to such applicants unless the applicants fulfil such requirements with respect to qualification, expertise, manpower, financial resources and other infrastructure facilities, which are necessary to issue Digital Signature Certificates as may be prescribed by the Central Government. A licence granted under this section shall (a) be valid for such period as may be prescribed by the Central Government; (b) not be transferable or heritable; (c) be subject to such terms and conditions as may be specified by the regulations. Application for licence [Sec. 221] Every application for the issue of a licence shall be in such form as maybe prescribed by the Central Government Every application for issue of a licence shall be accompanied by (a) a certification practice statement; (b) a statement including the procedures with respect to identification of the applicant; (c) payment of such fees, not exceeding twentyfive thousand rupees as may be prescribed by the Central Government; (d) such other documents, as may be prescribed by the Central Government. Renewal of licence [Sec. 231] An application for renewal of a licence shall be in such form and accompanied by such fees, not exceeding five thousand rupees, as may be prescribed by the Central Government and shall be made not less than forty-five days before the date of expiry of the period of validity of the licence.

Procedure for grant or rejection of licence [Sec. 24] The Controller may, on receipt of an application after considering the documents accompanying the application and such other factors, as he deems fit, grant the licence or reject the application; However, no application shall be rejected without giving the applicant a reasonable opportunity for presenting his case. Suspension of licence [Sec. 251] (i) The controller may revoke the licence, if he is satisfied after making such inquiry, as he may think fit, that a Certifying Authority has, made an incorrect or false statement in the application for the issue or renewal of the licence. failed to comply with the terms and conditions subject to which the licence was granted; failed to maintain the standards specified in Sec. 20 (2) (b). contravened any provisions of this Act, rule, regulation or order made there under.

However, no licence shall be revoked unless the Certifying Authority has been given a reasonable opportunity of showing cause against the proposed revocation. The controller may, if he has reasonable cause tc believe that there is any ground for revoking a licence, by order suspend such licence pending the completion of any inquiry ordered by him: However no licence shall be suspended for a period exceeding ten days unless the Certifying Authority has been given a reasonable opportunity of showing cause against the proposed suspension. No Certifying Authority whose licence has been suspended shall issue any Digital Signature Certificate during such suspension.

Notice of suspension or revocation of licence [Sec. 261] Where the licence of the Certifying Authority is suspended or revoked, the controller shall publish notice of such suspension or revocation, as the case may be, in the database maintained by him. However, that the database containing the notice of such suspension or revocation, as the case may be, shall be made available through web site which shall be accessible round the clock. Display of licence [Sec. 32] Every Certifying Authority shall display its licence at a conspicuous place of the premises in which it carries on its business. Surrender of licence [Sec. 33] Every Certifying Authority whose licence is suspended or revoked shall immediately after such suspension or revocation, surrender the licence to the Controller. If he fails to surrender the licence, he shall be guilty of an offence and shall be punishable. 4.6 Disclosure Every Certifying Authority shall disclose (Sec. 34) its Digital Signature Certificate which contains the public, key corresponding to the private key used by that Certifying Authority to digitally sign another Digital Signature Certificate notice of the revocation or suspension of its Certifying Authority Certificate, any other fact that materially and adversely affects the reliability of a Digital Signature Certificate. 4.7 DIGITAL SIGNATLURE CERTIFICATES Issue of Digital Signature Certificate [Sec. 35 and Sec. 361] Any person may make an application to the Certifying Authority for the issue of a Digital Signature Certificate in such form as may be prescribed. Every such application shall be accompanied. by such fee (not exceeding twenty-five thousand rupees) as may be prescribed by

the Central Government, to be paid to the Certifying Authority. However, different fees may be prescribed for different classes of applicants. Every such application shall be accompanied. by a certification practice statement or where there is no such statement, a statement containing such particulars, as may be specified by regulations. On receipt of an application, the Certifying Authority may, after consideration of the certification practice statement and after making such enquiries it may deem fit, (a) grant the Digital Signature Certificate or (b) for reasons to be recorded in writing reject the application: However, no Digital Signature Certificate shall be granted unless the Certifying Authority is satisfied that the applicant holds the private key corresponding, to the public key to be listed in the Digital Signature Certificate; the applicant holds a private key, which is capable of creating a digital signature, the public key to be listed in the certificate can be used to verify a digital signature affixed by the private key held by the applicant; However, no application shall be rejected unless the applicant has been given a reasonable opportunity of showing cause against the proposed rejection. Representation upon issuance of Digital Signature Certificate (Sec. 36) A certifying authority while issuing a Digital Signature Certificate shall certify that it has complied with the provisions of this Act and the rules and regulations made there under; it has published the Digital Signature Certificate or made it available to such person relying on it and the subscriber has accepted it. the subscriber holds the private key corresponding to the public key, listed in the Digital Signature Certificate; the subscribers public key and private key constitute a functioning key pair, the information contained in the Digital Signature Certificate is accurate, and

Suspension of Digital Signature Certificate [Sec. 371] The Certifying Authority which has issued a Digital Signature Certificate may suspend such Certificate on receipt of a request to that effect from the subscriber or any person authorised by him. If it is of opinion that the Certificate should be suspendedin the public interest. The certifying Authority shall communicate the suspension to the subscriber. A digital Certificate shall not be suspended for a period exceeding fifteen days unless the subscriber has been given an opportunity of being heard in this matter. Revocation of Digital Signature Certificate [Sec. 381] A Certifying Authority may revoke a Digital Signature Certificate issued by it o where the subscriber or any other person authorised by him makes a request to that effect; or o upon the death of the subscriber, or o upon the dissolution of the firm or winding up of the company where the subscriber is a firm or a company. A Certifying Authority may revoke a Digital Signature certificate which has been issued by it at any time, if it is of opinion that a material fact represented in the Digital Signature Certificate is false or has been concealed; a requirement for issuance of the Digital Signature Certificate was not satisfied; the Certifying Authoritys private key or security system was compromised in a manner materially affecting the Digital Signature Certificates reliability; the subscriber has been declared insolvent or dead or where a subscriber is a firm or a company, which has been dissolved, wound up or otherwise ceased to exist. A Digital Signature Certificate shall not be revoked unless the subscriber has been given an opportunity of being heard in the matter. The Certifying authority shall communicate, the revocation to the subscriber.

Where a Digital Signature Certificate is suspended or revoked, the Certifying Authority shall publish a notice of such suspension or revocation [Sec. 39]. 4.8 DUTIES OF SUBSCRIBERS Where the public key of any Digital Signature Certificate corresponds to the private key of that subscriber which is to be listed in the Digital Signature Certificate has been accepted by the subscriber, then the subscriber shall generate the key pair by applying the security procedure3. While accepting a Digital Signature Certificate, a subscriber shall publish or authorise the publication of a Digital Signature Certificate By accepting a Digital Signature Certificate the subscriber certifies to all who reasonably rely on the information contained in the Digital Signature Certificate that: the subscriber holds the private key corresponding to the public key listed in the Digital Signature Certificate and is entitled to hold the same all representations made by the subscriber to the Certifying Authority and all material relevant to the information contained in the Digital Signature Certificate are true; all information in the Digital Signature Certificate that is within the knowledge of the subscriber is true [Sec. 41(2)]. Every subscriber shall exercise reasonable care to retain control of the private key corresponding to the public key and take all steps to prevent its disclosure to a person not authorised to affix the Digital Signature of the subscriber. If the key has been compromised, then the subscriber shall communicate the same without any delay to the Certifying Authority [Sec. 42] 4.9 PENALTIES AND ADJUDICATION Penalty for damage to computer, computer system etc [Sec. 31] If any person without permission of the owner or any other person who is in charge of a computer, computer system or computer network: accesses or secures access to such computer, computer system or computer network;

[Sec. 40]

 downloads, copies or extracts any data, computer database or information from such computer, computer system or computer network including information or data held or stored in any removable storage medium; introduces or causes to be introduced any computer contaminant br computer virus into any computer, computer system or computer network; damages or causes to be damaged any computer, computer system or computer network, data, computer data base or any other programmes residing in such computer, computer system or computer network; disrupts or causes disruption of any computer, computer system or computer network; denies or causes the denial of access to any person authorised to access any computer or computer system or computer network by any means; provides any assistance to any person to facilitate access to a computer, computer system or computer network in contravention of the provisions of this Act, rules or regulations made there under, charges the services availed of by a person to the account of another person by tampering with or manipulating any computer, computer system, or computer network, he shall be liable to pay damages by way of compensation not exceeding one crore rupees to the person so affected. Penalty for failure to furnish information, return, etc. [Sec. 441] If any person who is required under this Act or any rule or regulations made there under to furnish any document, return or report to the Controller or the Certifying Authority fails to furnish the same, he shall be liable to a penalty not exceeding one lakh and fifty thousand rupees for each such failure file an return or furnish any information, books or other documents, within the time specified therefore in the regulations fails to file return or furnish the same within the time specified therefore in the regulations, he shall be liable to a penalty not exceeding five thousand rupees for everyday during which such failure continues; Maintain books of account or records fails to maintain the same, he shall be liable to a penalty not exceeding ten thousand rupees for every day during which the failure continues.

Residuary penalty [Sec. 451] Whoever contravenes any rules or regulations made under this Act, for the contravention of which no penalty has been separately provided, shall be liable to pay a compensation not exceeding twenty five thousand rupees to the person affected by such contravention. Power to adjudication [Sec. 46] For the purpose of adjudication whether any person has conunitted a contravention, of any of the provisions of this Act, the Central Government shall appoint any officer not below the rank of a Director to the Government of India or an equivalent officer of a State Government to be an Adjudicating Officer for holding an inquiry in the manner prescribed by the Central Government. The adjudicating officer if on inquiry, satisfied that the person has committed the contravention, he may impose such penalty or award such compensation as he thinks fit No person shall be appointed as an adjudicating officer unless he possesses such experinece in the field of Information Technology and legal or judicial experience as may be prescribed by the Central Government. Every adjudicating officer shall have the powers of a civil court which are conferred on the Cyber Appellate Tribunal. While adjudicating the quantum of compensation, the adjudicating officer shall have due regard to the amount of gain of unfair advantage as well as the amount of loss caused to any person as a result of the default and the repetitive nature of the default [Sec. 47]

4.10 CYBER REGULATIONS APPELLATE TRIBUNAL Cyber Appellate Tribunal The Central government shall, by notification, establish one or more appellate tribunals to be known as the Cyber Regulations Appellate Tribunals and specify in the notification, the matters and places in relation to which the Cyber appellate Tribunal may exercise jurisdiction [Sec. 48]. A Cyber Appellate Tribunal shall consist of one person only referred to as the Presiding Officer, appointed by the Central Government [Sec. 49]

Appeal to Cyber Regulations Appellate Tribunal (Sec. 57) Any person aggrieved by an order made by Controller or an adjudicating officer under this Act may prefer an appeal to a Cyber Appellate Tribunal within a period of forty-five days from the date on which a copy of the order made by the Controller or the adjudicating officer is received by the person aggrieved and it shall be in such form and be accompanied by such fee as may be prescribed. On receipt of an appeal, Tribunal may after giving the parties an opportunity of being heard, pass such orders thereon as it thinks fit, confirming modifying or setting aside the order appealed against The Cyber Appellate Tribunal shall send a copy of every order made by it to the parties to the appeal and to the concerned Controller or adjudicating officer, The Cyber Appellate Tribunal shall be guided by the principles of natural justice and subject to the other provisions of this Act. The Tribunal shall have the same powers as are vested in a civil court under the Code of Civil Procedure4. The appellant may either appear in person or authorize one or more legal practitioners or any of its officers to present the case before the Cyber Appellate Tribunal (Sec. 59). The provisions of the Limitation Act, 1963 shall apply to an appeal made to the Cyber Appellate Tribunal5. No court have jurisdiction to entertain any suit or proceeding in respect of any matter which an adjudicating officer or the Cyber Appellate Tribunal is empowered by this Act to determine. No injunction shall be granted by any court in respect of these matters6. Any person aggrieved by any decision or order of the Cyber Appellate Tribunal may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Cyber Appellate Tribunal7.

(Sec. 58) (Sec. 60)

6 7

(Sec. 61) (Sec. 62)

Compounding of contraventions (Sec. 63) Any contravention may either before or after the institution of adjudication proceedings, be compounded by the Controller or such other officer as may be specially authorised by him in this behalf or by the adjudicating officer, as the case may be, subject to such Conditions as the Controller or such other officer or the adjudicating officer may specify: Provided that such sum shall not, in any case, exceed the maximum amount of the penalty which may be imposed under this Act for the contravention so compounded Nothing in above shall apply to a person who commits the same or similar contravention within a period of three years from the date on which the, first contravention, committed by him, was compounded. Where any contravention has been compounded under sub-section (1), no proceeding or further proceeding, as the case may be, shall be taken against the person guilty of such contravention in respect of the contravention so compounded Recovery of Penalty (Sec. 64) A penalty imposed under this Act, if it is not paid, shall be recovered as an arrear of land revenue and the licence or the Digital Signature Certificate, as the case may be, shall be suspended till the penalty is paid. 4.11 OFFENCES Tampering with computer source documents (Sec. 65) Whoever knowingly or intentionally conceals destroys or alters or intentionally or knowingly causes another to conceal, destroy or alter any computer source code used for a computer, computer programme, computer system or computer network, when the computer source code is required to be kept or maintained by law for the time being in force, shall be punishable with imprisonment up to three years, or with fine which may extend up to two lakh rupees, or with both.

Hacking with Computer System (Sec. 66) Whoever with the intent, to cause or knowing that he is likely to cause wrongful loss, or damage to the public or any person destroys or deletes or alters any information residing in a computer resource or diminishes its value or utility or affects it injuriously by any means, commits hacking. Whoever commits hacking shall be punished with Imprisonment up to three years or with fine which may extend upto two lakh rupees or with both. Publishing of information which is obscene in electronic form (Sec. 67) Whoever publishes or transmits or causes to be published in the electronic form, any material which is obscene or if its effect is to deprave and corrupt persons who are likely, having regard to all relevant circumstances, to read, see or hear the matter contained or embodied in it, shall be punished on first conviction with imprisonment of either description for a term which may extend to five years and with fine which may extend to one lakh rupees and in the event of a second or subsequent conviction with imprisonment of either description for a term which may extend to ten years and also with fine which may extend to two lakh rupees. Securing access to protected system contravened (Sec. 70) Any person who secures access to a protected computer system in contravention of the provisions of this section shall be punished with imprisonment for a term which may extend to ten years and shall also be liable to fine. Misrepresentation (Sec. 71) Whoever makes any misrepresentation to or suppresses any material fact from, the Controller or the Certifying Authority for obtaining any licence or Digital Signature Certificate shall be punished with imprisonment for a term which may extend to two years, or with fine which may extend to one lakh rupees, or with both (Sec. 71). Breach of confidentiality and privacy (Sec. 72) Any person commits breach of confidentiality and privacy of electronic information or documents shall be punished with imprisonment for a term which may extend to two years or with fine which may extend to one lakh rupees, or with both.

Publishing Digital Signature Certificate, false in certain particulars (Sec. 73) Any person who publishes a Digital Signature Certificate false in certain particulars shall be punished with imprisonment for a term which may extend to two years, or with fine which may extend to one lakh rupees, or with both. Publication for fraudulent purpose (Sec. 74) Whoever knowingly creates, publishes or otherwise makes available a Digital Signature Certificate for any fraudulent or unlawful purpose shall be punished with imprisonment for a term which may extend to two years, or with fine which may extend to one lakh rupees, or with both. Confiscation (Sec. 76) Any computer, computer system, floppies, compact disks, tape drives or any other accessories related thereto, in respect of which any provision of this Act, rules, or orders made there under has been contravened, shall be liable to confiscation. Network Service providers not to be liable in certain cases (Sec. 79) No person providing any services as a network service provider shall be liable under this Act, rules of regulations made there under for any third party information or data made available by him if he proves that the offence or contravention was committed without his knowledge or that he had exercised all due diligence to prevent the conmiission of such offence or contravention 4.12 MISCELLANEOUS Power to investigate offences (Sec. 78) A police officer not below the rank of Deputy Superintendent of Police shall investigate any offence under this Act. Power of police officer and other officers to enter, search, etc. (Sec. 80) Any police officer, not below the rank of a Deputy Superintendent of Police, or any other officer of the Central Government or a State Government authorised by the Central Government in this

behalf may enter any public place and search and arrest without warrant any person found therein who is reasonably suspected or having committed or committing or of being about to commit any offence under this Act Offences by Companies (Sec. 85) Where a person, committing a contravention of any of the provisions of this Act or of any rule, direction or order made there under, is a company, every person who, at the time the contravention was Committed, was in charge of, and was responsible to, the company for the conduct of business of the company as well as the company, shall be guilty of the contravention and shall be liable to be proceeded against and punished accordingly, Provided that nothing contained in this sub-section shall render any such person liable to punishment if he proves that the contravention took place without his knowledge or that exercised all diligence to prevent such contravention. Where a contravention of any of the provisions of this Act or of any rule, direction or order made there under has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly. Power of Central Government to make rules (Sec. 87) The Central Government may, by notification in the Official Gazette and in the Electronic Gazette make rules to carry out the provisions of this Act. Such rules may provide for all or any of the following matters, the manner in which any information or matter may be authenticated by means of digital signature the electronic form in which filing, issue, grant or payment shall be effected the manner and format in which electronic records shall be flied, or issued the matters relating to the type of digital signature, manner and format in which it may be affixed

the security procedure for the purpose of creating secure electronic record and secure digital signature the qualifications, experience and terms and conditions of service of Controller, Deputy Controllers and Assistant Controllers other standards to be observed by the Controller the requirements which an applicant must fulfil the period of validity of licence granted the form in which an application for licence may be made the amount of fees payable under Sec. 22 (2) (c) such other documents which shall accompany an application for licence the form and the fee for renewal of a licence and the fee payable thereof V the amount of late fee payable under the provision to section 23; (0) the form in which application for issue of Digital signature Certificate maybe made the fee to be paid to the Certifying Authority for issue of a Digital Signature CertificateV the manner in which the adjudicating officer shall hold inquiry the qualification and experience which the adjudicating officer shall possess the salary, allowances and the other terms and conditions of service of the Presiding Officer the procedure for investigation of misbehaviour or incapacity of the Presiding officers the salary and allowances and other conditions of service of other officers and employees the form in which appeal may be filed and the fee (w) any other power of a civil court required to be prescribed (x) any other matter which is required to be, or may be, prescribed

Constitution of Advisory Committee (Sec. 88) The Central Government shall, as soon as maybe after the commencement of this Act, constitute a Committee called the Cyber Regulations Advisory Committee It shall advise: (a) the Central Government either generally as regards any rules or for any other purpose connected with this Act; (b) the Controller in framing the regulations under this Act.

Power of controller, to make regulations (Sec. 89) The controller may make regulations consistent with this Act and the rules made there under to carry out the purposes of this Act. Such regulations may provide for all or any of the following the particulars relating to maintenance of database containing the disclosure record of every Certifying Authority the conditions and restrictions subject to which the Controller may recognise any Foreign Certifying Authority the terms and conditions subject to which a licence may be granted other standards to be observed by a Certifying Authority the manner in which the Certifying Authority shall disclose V the matters specified in Sec. 34(1) the particulars of statement which shall accompany an application the manner by which the subscriber communicate the compromise of private key to the Certifying Authority.

Power of State Government to make rule (Sec. 90) The State Government may, by notification in the Official Gazette, make rules to carry out the provisions of this Act. Such rules may provide for all or any of the following matters (a) the electronic form in which filing, issue, grant receipt or payment shall be effected (b) for matters specified in Sec. 6(2) (c) any other matter which is required to be provided by rules by the State Government

Chapter 5
Conclusion

A developing country can become industrialized and modernized if it can extensively apply IT to enhance productivity and international competitiveness, develop e-commerce and e-governance applications. An information-based society or knowledge based society is composed of IT products, IT applications in society and economy as a whole. Many countries in Asia are taking advantage of e-commerce through opening of economies, which is essential for promoting competition and diffusion of Internet technologies. The Internet is boosting efficiency and enhancing market integration in developing countries. The developed world has had a long lead over the developing countries in the telecom infrastructure. The world average of teledensity is 15 per cent compared to the developed world average of 55 to 60 per cent. Same is true of PCs, Internet connections, and the number of Internet hosts. All these traditional indicators for India as seen above are still small. But the total numbers of Internet connections are large in absolute numbers. Large enough to have a critical mass of 10 to 20 million users to be able to make an impact on e-commerce and e-governance. In the next 3 to 5 years, India will have 30 to 70 million Internet users which will equal, if not surpass, many of the developed countries. Internet economy will then become more meaningful in India. The number of e-transactions will be large enough to sustain the Internet economy.

Bibliography

Bajaj, K.K., Country Report on E-Commerce (India, Ministry of Communications and Information Technology, Department of Information Technology, Office of the Controller of CertifyingAuthorities).

Business India, 14-27 May 2001. Money on cards. Business Today (India), September 2001. The second coming. CII, 2001. E-commerce in India: How to make it happen?, Report of the CII National Committee on E-Commerce 2000-2001 (Confederation of Indian Industry). Das, Sanchita, 2001. Cables in the deep, 2-15 April 2001. Department of Telecommunication, India, 2001. DOT Annual Report 2000-2001. e-commerce (India), October 2001. Redefining business parameters. e-commerce (India), February 2002. An e-fulfilment model and its application in the Indian context. e-commerce (India), April 2002. Dot-coms are the future. e-commerce (India), April 2002. The role of e-commerce in the new economy. eMarketer, 10 May 2001. eAsia. Available at http://www.eseenet.com> or <http://www.emarketer.com/products/report.php?easia/welcome.html>. Goldman Sachs, 2000. Report on IT Global Services (September 2000). Indian Express (Bombay), 7 June 2001. Statement of the Minister of Communication. NASSCOM, 2001. NASSCOM Survey (March 2001). NASSCON and BCG, 2001. E-Commerce Opportunities for India Inc. (study report prepared by NASSCOM and The Boston Consulting Group) (July 2001). Peoples Daily Online, 7 April 2001. Asian B2B e-commerce approaches quarter of worlds total. Varma, Yograj, 2001. Broadband: the brakes are on, Dataquest (India), 15 May 2001.