Chapter IX

Penalties and Adjudication

Section 43: Penalty for damage to computer, computer system, etc.
If any person without permission of the owner or any other person who is in charge of a
computer, computer system or computer network,-
a) accesses or secures accesses to such computer, computer system or computer network;
b) downloads,copies or extracts any data,computer database or informationfrom such computer,
computer system or computer network including information or data held or stored in any
removable storage medium;
c) introduces or causes to be introduced any computer contaminant or computer virus into any
computer, computer system or computer network;
d) damages or causes to be damaged any computer,computer system or computer network, data,
computer database or any other programmes residing such computer, computer system or
computer network;
e) disrupts or causes disruption of any computer, computer system or computer network;
f) denies or causes the denial of access to any person authorised to access any computer,
computer system or computer network by any means;
g) 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;
h) charges the service availed of by a person to the account of another person by tampering with
or manipulating any computer, computer system or computer network,
(i) Destroying, deleting or altering information residing in the computer resource ​(Added in 2008
amendment)
(j) Stealing, concealing or destroying computer source code (​Added in 2008 amendment)
he shall be liable to pay damages by way of compensation not exceeding ten lakh rupees to the
person so affected. (OLD PROVISION FOR COMPENSATION)
Amount of Penalty or damages:
The most significant effect of The Information Technology (Amendment) Act, 2000 was on the
amount of compensation or penalty to be awarded in case of contraventions or acts committed
under Section 43 (a) to (j). When The Information Technology Act, 2000 came into force on
17th October, 2000, the compensation or penalty to be granted under Section 43 of The
Information Technology Act, 2000 was subjected to a cap up to Rupees Ten Lakh. Later, it was
enhanced up to Rupees One Crore in the Amendment in the year 2004. The Information
Technology (Amendment) Act, 2008 removed the cap over the penalty or compensation to be
awarded in case of any contravention under Section 43 (a) to (j). That means the victim can ask
for any amount of compensation depending on the amount of loss caused to him. ​This
Amendment in respect of compensation or penalty was a welcome change as the loss caused
to the computer, computer system or computer network may run in crores of rupees.

Another interesting aspect of these acts provided under Section 43 of The Information
Technology Act, 2000 is related to the jurisdiction of the courts. The Adjudicating Officer has
the jurisdiction to try the contraventions of the provisions under Chapter IX of The Information
Technology Act, 200019. Taking into consideration the technical aspects of the acts provided
under Section 43, the jurisdiction of civil courts is expressly barred under The Information
Technology Act, 2000. A special court in the form of an Adjudicating Officer is provided under
The Information Technology Act, 2000 to try the contraventions under Chapter IX related to
Penalties, Adjudication and Compensation. Whereas, there is no special court created for the
offences prescribed under Chapter XI consisting of Section 65 to 74 related to offences. The
regular criminal courts have the jurisdiction depending upon their respective power to adjudicate,
depending upon the quantum of the punishment which is prescribed in the Code for Criminal
Procedure, 1973

When the liability arises under Section 43 of The Information Technology Act, 2000?
Section 43, right at the outset provides for the pre-requisites to enforce the liability under this
Section. The two requirements which are discussed in the beginning of the Section 43 are:
I. The acts committed under this Section must have been committed without the permission of
the owner or any person who is in charge of a computer, computer system or computer network.
II. There must be some kind of damage caused to the person affected by such acts.

The reference can also be given to Section 47 of The Information Technology Act, 2000 which
provides for the factors to be taken into account by the Adjudicating Officer while adjudicating
the quantum of compensation under Section 43. Section 47 provides for three different factors
and they are:
a) the amount of gain of unfair advantage, whenever quantifiable, made as a result of the default
b) the amount of loss caused to any person as a result of the default
c) the repetitive nature of the default.

Section 43 requires that, the act of default must have been committed without the permission of
the person who is an owner or a person in charge of the computer, computer system or computer
network. Secondly, the act of the defendant must have caused some damage or loss to the person
so affected.

Adjudication of Contraventions
I. ​Power to adjudicate:
Chapter IX of The Information Technology Act, 2000 provides for the contraventions or acts
which are prohibited in Section 43 and the adjudication of such acts or contraventions is
provided under the same chapter under Section 46.
Section 46 (1) provides that for the purpose of adjudging under Chapter IX, any contravention
under this Act, Rules and Regulations there under, the Central Government shall appoint an
Adjudicating Officer. Section 46 (3) provides that, the officer to be appointed as an Adjudicating
Officer shall not be below the rank of a Director to the Government of India or an equivalent
officer of a State Government to hold the inquiry under Chapter IX in case of any contravention
of any provision of the Act, Rules, Regulation under it. Such an inquiry shall be conducted by an
Adjudicating Officer in the manner which is provided by the Central Government through the
notification in the Official Gazette. In Indian National Congress (I) v. Institute of Social Welfare,
the Supreme Court held that:

“... ​where law requires that an authority before arriving at a decision must make an enquiry,
such a requirement of law makes the authority a quasi-judicial authority​.”

From the above decision and the provisions under Rule 4 of The Information Technology Rules,
2003, it can be construed that the Adjudicating Officer is a quasi-judicial authority. The wording
from the provision under Section 46, “for the purpose of this Chapter” makes it clear that the
Adjudicating Officer has the power to adjudicate the contraventions under Section 43, 43 A, 44
and 45 of the Act. It is significant to note that, in the light of the provisions under Section 46, the
Adjudicating Officer is the first and exclusive court in adjudication in cases of matters under
Section 43. Civil Court‟s jurisdiction is expressly barred under The Information Technology
Act, 2000.

II. ​Limitation on Adjudicating Officer:

Even though the Adjudicating Officer is appointed under the provisions of The Information
Technology Act, 2000 having exclusive power to adjudge the contraventions under Chapter IX
of The Information Technology Act, 2000 and the jurisdiction of the civil court is barred in such
cases, there is a limitation on the pecuniary jurisdiction of the Adjudicating Officer due to the
newly inserted provision of Section 46 (1A)48.
Section 46 (1A) of The Information Technology Act, 2000 provides that, the Adjudicating
Officer appointed under Section 46 (1) shall exercise jurisdiction
to adjudicate matters in which the claim of for inquiry or damage does not exceed Rupees Five
Crore. In addition, the proviso to Section 46 (1A) lays down that, if the claim for inquiry or
damage exceeds Rupees Five Crore the jurisdiction shall vest with the competent court.
This acts as a limitation on the pecuniary jurisdiction of the Adjudicating Officer. Even thought
the competent court is defined under this Act, it could be presumed to be the court with the
pecuniary jurisdiction of Rupees Five Crore as per the procedural law for the time being in force,
which could be The Code of Civil Procedure, 190849 or as may be provided by the Central
Government.
Section 61 of The Information Act, 2000 expressly bars the jurisdiction of the civil courts in the
matters related to Section 43 encompassing contraventions from clause (a) to (j). The jurisdiction
of such matters under Section 43 (a) to (j) is exclusively conferred up on the Adjudicating
Officer under Section 46 of The Information Technology Act, 2000.
Still, there are few judgments from different High Courts which sometimes create an ambiguity
in the jurisdiction of civil court. For instance, in Shashank Shekhar Mishra v. Ajay Gupta, Delhi
High Court held that;
“​Though Section43of the Information Technology Act, 2000 provides for payment of damages by
way of compensation in case of theft of a computer source Code used for a computer resource
with an intention to cause damage, for accessing or securing access to a computer or computer
resource as well as destroying, deleting or altering any information stored in a computer
resource, it does not provide for payment of damages for theft of data other than the computer
source Code used for a computer resource. Hence, the jurisdiction of a Civil Court is not
excluded under Section 61 of the Act.​”
In Mr. Abhinav Gupta v. JCB India Ltd. and others51, Delhi High Court held that;
Issue: The important issue in the present case was that of power of adjudication of Adjudicating
Officer under Section 46 of The Information Technology Act, 2000 and also the conflict of
jurisdiction between Adjudicating officer and civil court.
Reasoning: Under Section 46 (1A) of The Information Technology Act, 2000, the pecuniary
jurisdiction of Adjudicating Officer is restricted up to Rupees Five Crores. Any matter under
Section 43 with the compensation demanded by the victim if, it is beyond Rupees Five Crores,
the jurisdiction of the Adjudicating Officer is restricted and the competent civil court is given the
jurisdiction. But, under Section 61 of The Information Technology Act, 2000 the jurisdiction of
the civil court is expressly barred. This creates a conflict between two sections, that is, Section
46 and Section 61, one granting the jurisdiction and the other revoking the jurisdiction of the
Civil Court.
Analysis: In any legislation, the jurisdiction of the courts is a clear mandate. It is very final and
conclusive provision in the law. Conflict in jurisdiction is the last thing which anyone can
anticipate in any law. It is the biggest challenge and limitation under The Information
Technology Act, 2000.