Widening the Applicability of The Information Technology Act, 2000: Solution to Identity Verification and Challenges
Dr. Swapnil Sudhir Bangali Asst. Professor, Symbiosis Law School, Pune
State: Maharashtra, India
Dr. Harita Swapnil Bangali
Independent Practitioner and Consultant Pune (State: Maharashtra), India
Abstract:
The Information Technology Act, 2000 came into existence in 2000 in India. The major challenge for the effective implementation of this Act is the Schedule-I. The Schedule-I provides for five different documents and transactions to which The Information Technology Act, 2000 is not applicable. The present Article is an analysis of the challenge for implementing The Information Technology Act, 2000 with the limitation of Schedule-I and looking at the possibility of providing solutions in case of total implementation of The Information Technology Act, 2000 without any exception.
Key Words:
Schedule-I, Applicability of Information Technology Act, 2000, Section 1(4), Documents and transactions, solutions
Introduction:
The Information Technology Act, 2000 was passed in India with the objective to give legal recognition to any electronic transaction. The objective was also to incorporate the provision to legally recognize the Digital Signature as a mechanism of authentication of electronic record. The Information Technology Act, 2000 is based on the UNICTRAL Model Law on E-commerce1. There were many expectations from the progressive legislation such as The Information Technology Act, 2000.
But there is an inherent limitation in the form of Schedule-I2 read together with Section 1(4) of The Information Technology Act, 2000.
Section 1(4)3 of The Information Technology Act, 2000 provides that; “Nothing in this Act shall apply to documents or transactions specified in the First Schedule by way of addition or deletion of entries thereto.”
That means, the Schedule-I contains certain subject matters in the form of documents and transactions to which The Information Technology Act, 2000 is not applicable.
Prior to 2008, there was no separate Schedule-I for the transactions and documents to which The Information Technology Act, 2000 was not applicable. In fact, all the entries in the Schedule-I were present in Section 1(4) itself. The Central Government was allowed to make decision regarding the inclusion and exclusion of any matter in Section 1(4) of The Information Technology Act, 2000. Now with the Amendment in 2008, the subject matters under Section 1(4) are shifted to Schedule-I of The Information Technology Act, 2000.
Section 1(5) was also inserted in The Information Technology Act, 2000 to provide that the Notification in the Official Gazette is required to make any inclusion and exclusion in the Schedule-I. It means that, the Parliament has to pass the bill regarding the changes to be made in the entries of the Schedule-I in both the Houses of Parliament. This is a democratic change that was brought into force by the Amendment in 2008. Earlier, the Central Government and in turn, the Ministry of Information Technology used to take every decision regarding the entries under Section 1(4).
The Subject-matter:
Now with Section 1(4), it is clear that the transactions and documents to which the Information Technology Act, 2000 is not applicable is provided under Schedule-I.
Schedule-I of The Information Technology Act, 2000 has following entries: “Nothing in this Act shall apply to;
a) a Negotiable Instrument other than cheques, as defined in Section 13 of The Negotiable Instrument Act,
1881
b) a Power of Attorney as defined in Section 1A of The Power of Attorney Act, 1882
c) a Trust as defined in Section 3 of The Indian Trusts Act, 1882
d) a Will as defined in Clause (h) of Section 2 of The Indian Succession Act, 1925
e) any contract for sale or conveyance of the immoveable property or any interest therein;”
The need of an hour is to remove the inapplicability of all the subject matters under Schedule-I of The Information Technology Act, 2000 because all these areas occupy a huge chunk of civil law and civil law enforcement. The majority of these transactions and documents are involved in voluminous civil litigations in the civil courts in a country like India and abroad. It can be easily understood from the analysis of the entries in the Schedule I of The Information Technology Act, 2000 that majority of the subject matters under civil litigation is kept out of the purview of the Information Technology Act, 2000. The reasons for non-applicability of The Information Technology Act, 2000 to those subject matters in Schedule I are as follows:
a) Negotiable Instrument other than cheques
The Negotiable Instruments in India involve majorly, the cheques, demand drafts, promissory notes and bills of exchange. These are the documents created by the individual parties for the purpose of avoiding the carriage of cash or currency which is too inconvenient and risky.
Demand drafts are treated as hot cash. It is prepared on demand. The deposit or submission of cash is already ensured by the bank. The receiver of the demand draft only has to deposit the demand draft to the banker to get the cash or currency or the procurement of amount directly credited in the account. The person who wants demand draft need not be having any bank account. The bank also does not require any specific details of the person demanding the demand draft. The Reserve Bank of India only mandates that the person preparing the demand draft has to submit the photocopy of the PAN Card if he or she wants the demand draft for more value than that of Rupees Fifty Thousand.
There is no question of identification of the party seeking the demand draft or in whose favour the demand draft is issued. The banker simply takes the commission and prints the demand draft. Signature and authentication has less importance as the cash is already deposited with the banker. The holder or maker of the demand draft just has to deliver the demand draft to the other party. The banker issuing the demand draft may not even know who the parties are involved in the transaction.
In case of bills of exchange and promissory note, the document is issued in case of a credit transaction. One party issues these instruments to the other. There is no bank or authenticating agency involved in such documents. The instrument is always anticipating a transaction for payment in favour of some party for a credit and then it could be used against the party to receive and payments against the other.
Cheques are different.
Cheques are different league of instruments. As per the first entry in the Schedule-I, The Information Technology Act, 2000 is not applicable to negotiable instruments other than cheques. That means, to cheques the Act is applicable.
The cheques will not exist without the bank account. The person issuing the cheque has a bank account and the person receiving the cheque has to have a bank account, if the cheque is crossed cheque. Bank authenticates the transaction where the cheque payment is made. The banks earlier used to manually carry the cheque from one bank to the other to en-cash the cheque. With the modern technology and development of custom made software, the banks are sending the scanned e-cheques from one branch to the other for the clearing and en-cashing the cheques. The bank authenticates the cheques and there is a proper procedure for the identification and verification of the parties which happens at the banks level.
b) Power of Attorneys, Wills and Trust Deed:
Power of Attorneys, Wills and Trust Deed are the specific set of documents with a specific objective attached to it. In India, there are respective set of laws which are applicable to these set of documents. But all the three set of documents need registration with the competent authority for the execution of such document. The law expects these documents to be affixed with the signatures of the witnesses. And in each case, there is a minimum of one to two witnesses required.
The major difficulty is that, in India, the legally recognized digital signature with the recognized asymmetric crypto system used for the creation and verification, the maximum fees for the digital signature for every individual will be up to Rupees Twenty Five Thousand. With all these three set of documents involving minimum two parties and one or two witnesses attached to it. The expenditure for the executing of these documents through electronic means increases a lot. It becomes very expensive for the parties to continue with the electronic Power of Attorney or electronic Trust Deed or even an electronic Will. So to these transactions and documents, The Information Technology Act, 2000 is not applicable.
c) Sale or conveyance of Sale for immoveable Property or any interest therein:
As per The Transfer of Property Act, 1882 the sale or any transfer of immoveable property for more than Rupees One Hundred is necessarily registered. The conveyance of the transfer and the title is registered with Registrar and sub-registrars of the Revenue Department of the Government. These transfers involve the signatures of the parties and minimum two witnesses and the signature and seal of the Registrar of the Revenue Department. As there are number of parties who are signing the document, it is not feasible to spent money on the digital signatures. That is why, The Information Technology Act, 2000 is not applicable to the sale or conveyance of immoveable property or any interest therein.
Solutions:
The basic reason for non applicability of The Information Technology Act, 2000 in case of these documents or transactions is that each of the documents and transactions in the First Schedule requires attesting of witnesses and if we allow these documents and transactions to be in electronic form, the parties to the documents and transactions will have to affix the digital or electronic signature. The usual argument for not applying The Information Technology Act, 2000 to these areas is that it will be too difficult and costly4 to affix the digital or electronic signatures of the witnesses and identification of the parties.
The use of digital or electronic signature is recommended in the Act for the purpose of verification of electronic documents and identification of parties. The problem of verification and identification can be resolved by some practical solutions. The solution to this problem can be the Unique Identity Cards (UIDs) or the Permanent Account Number (PAN) Card as well as the Mobile Phones Portability Scheme. With all the herculean efforts, the Government is issuing the Unique Identity Cards (Aadhar Card) in different parts of the country. People have already started the use of these cards and schemes for the identification and authentication purposes. In the light of this development every single citizen of the
country has a Unique Identity Card or Permanent Account Number (PAN) which will be utilized for all the identification purposes. Even if the areas mentioned in the First Schedule of The Information Technology Act, 2000 can easily be dealt with by creating digital or electronic signature in the form of securing information with these kinds of Cards or schemes. The repository can be created with the Government Departments and they should be allowed to verify the identity in case of dispute.
The newly launched Mobile Phones Portability Scheme by TRAI5 is also one solution to the identity and verification crisis. Technically speaking, even a cell phone number in case of a post paid SIM card is a potential identity for an individual. The repository is already available with each single service provider in the telecom industry. Verification of identity of individuals can be done with the help of these service providers. An additional department under the regime of TRAI could work as Dispute Resolution Body in case of a dispute between service provider and the individual.
The Amendment6 of 2009 has widened the scope of The Information Technology Act, 2000 by adding the provision for “Electronic Signature”. The Information Technology Act, 2000 under Section 2 (1)(ta)7 defines “Electronic Signature” as ”electronic signature” means authentication of any electronic record by a subscriber by means of the electronic technique specified in the Second Schedule8 and includes digital signature.
The scope of the term “Electronic Signature” is so wide that it includes any authentication of electronic record by means of electronic technique. If we include Unique Identity Cards or Permanent Account Number (PAN) Cards and Cell Phone Numbers within the meaning of ‘any electronic technique’ even today we can sort out the problem of identity and verification of identity of the parties to the documents and transactions mentioned under the First Schedule of The Information Technology Act, 2000. Currently, nothing has been included in the Second Schedule of The Information Technology Act, 2000. The Act shall be amended to the effect that
the scanned copies of Unique Identity Cards, Permanent Account Number (PAN) Cards and Mobile phone numbers to be added in the Second Schedule of the Act.
One thing that should be taken into consideration is that Unique Identity Cards, Permanent Account Number (PAN) Cards, Mobile Phone Portability Scheme and the Electronic Signature if operated together, may resolve the problem of identification and verification of the identity of individuals entering into electronic contract. The Amendment in this regard in The Information Technology Act, 2000 is much awaited. It will definitely change the applicability into a widest area of information technology.
References
1. The General Assembly of the United Nations by resolution A/RES/51/162, dated the
30th January, 1997 has adopted the Model Law on Electronic Commerce adopted by the
United Nations Commission on International Trade Law.
2. Added by The Information Technology (Amendment) Act, 2008
3. Amended through The Information Technology (Amendment) Act, 2008
4. The Information Technology Act, 2000, Section 35(2) provides that every application for
the digital signature made by the subscriber shall be accompanied by such fees not
exceeding Rupees Twenty Five Thousand as may be prescribed by the Central
Government to be paid to the Certifying Authority.
5. Telecom Regulatory Authority of India
6. Information Technology (Amendment) Act, 2008
7. Inserted by Information Technology (Amendment) Act, 2009, Section 4(E)
