THE RESERVE BANK OF INDIA BANS ALL DEALINGS IN CRYPTOCURRENCIES IN INDIA

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In the recent times, there has been a huge uproar about the ban, issued by the Reserve Bank of India (RBI), on the use of virtual currencies (VCs) and cryptocurrencies such as bitcoins, etc in India. Post demonetization in 2016, it was observed that there was a steep rise in the use of such virtual currencies for making payments of transactions instead of using safer modes of payments such as cash, debit/credit card, online banking, digital wallets, etc in India.

Cryptocurrencies generally mean virtual currencies that are secured using cryptography, i.e., techniques of encryption to secure and verify the transfer of transactions. All such transactions are recorded and verified chronologically in a public ledger known as blockchain. According to RBI, virtual currencies which are in digital form are stored in digital/electronic media that are called e-wallets.

RBI has issued circulars stating that entities using or trading in virtual currencies in India have not taken any approval/license/authorization from RBI or any other governmental authority to operate such schemes or deal with virtual currencies. Thus, the RBI has been cautioning the users, holders, traders and/or investors of the virtual currencies about the following risks:

Virtual currencies may be lost owing to hacking, loss of password, compromise of access credentials, malware attack

As virtual currencies are not created or traded through any central/authorized agency/registry, once the e-wallet is lost, all virtual currencies are also permanently lost and further, there is no framework/mechanism to address and resolve consumer disputes.

Trading of virtual currencies at the international platform exposes greater risk to the use of virtual currencies for illegal or terrorist activities, etc, as there is no genuine information available about the counterparts.

Owing to the rise in use of virtual currencies in India, RBI had issued a circular dated 06.04.2018 thereby prohibiting all entities that are regulated by RBI from dealing in virtual currencies, or from providing services to any person or entity dealing in virtual currencies. Such services include maintaining accounts, registering, trading, settling, clearing, giving loans against virtual tokens, accepting them as collateral, opening accounts of exchanges dealing with them and transfer / receipt of money in accounts relating to purchase/ sale of VCs. Further, RBI has also directed the entities regulated by RBI, which already provide such services, to exit the relationship within three months from the date of this circular, i.e. by 06.07.2018.

A number of cryptocurrency trading platforms and entities have moved the Supreme Court seeking a stay on the RBI Circular dated 06.04.2018 that has banned the use or trade of cryptocurrencies. But a few days ago, the Supreme Court has reportedly refused to provide interim relief of stay on the operation of the RBI Circular dated 06.04.2018. The case is still pending in the Supreme Court for its final orders.

 

 

Harini Daliparthy

Senior Legal Associate

TEACHER NOT LIABLE FOR ABETMENT OF SUICIDE OF STUDENT

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The High Court of Madhya Pradesh at Jabalpur has, in a case decided by it on 20th June, 2018, taken a protectionist view towards the teachers imparting education in schools. A petition was filed by the real uncle of the deceased, a minor girl of 15 years, against the Principal of the Government Excellence Higher Secondary School, Kotma, Annuppur, Madhya Pradesh, alleging that humiliation was caused to the deceased due to the scolding and slapping by the Principal, leading the deceased to commit suicide.

The question that came up before the Court was whether the act of slapping and scolding of the deceased by the Principal in front of her friends can prima facie be appreciated as being an abetment to commit suicide.

The counsel for the Petitioner placed reliance on section 107 (Abetment of a thing) of the Indian Penal Code, 1860 to call the act of the Principal as falling under the category of abetment by incitement. However, the Court held a different view and observed that “An act which constitutes a distinct offence by itself (an offence u/s. 323 (Punishment for voluntarily causing hurt) in this case, if at all), cannot be construed as an act inciting another offence, which was never contemplated by the person to whom the original act is attributed to. Only such acts would be deemed to be an incitement, which by their very nature, whether by way of words spoken or otherwise, convey a clear and unambiguous direction to the person so incited, to act in a particular manner. Incitement, in the facts and circumstances of a case, may also mean the creation of such an environment around the person so abetted, that he is compelled to act in a particular manner and no other, which the person so inciting/abetting intended or had the knowledge that the person so incited/abetted would act in that particular manner.”

The Court held that the act of the Principal in humiliating the deceased was not done with the intention of inciting the deceased to commit suicide. The Court hence ruled that at the most the act of the Principal would only amount to an offence under section 323 of the Indian Penal Code, 1860, which is a non-cognizable offence, and no case can be said to be made out under section 306 of the Indian Penal Code, 1860. On this count, the High Court dismissed the petition giving its reason for the same as below:

“The relief sought by the Petitioner has dangerous portents which could have wide ranging ramifications in the manner in which, education is imparted in this country. The Principal and teachers in a school don the mantle of a parent, during the time the child is in school. Like a parent, who would, and is expected to admonish and chastise the child when the child errs with the intention of correcting the child, so is a Principal and teachers at school expected to admonish and chastise students when they transgress the discipline of the school. Of course, it goes without saying that the days of “spare the rod and spoil the child” are long gone by, the same does not mean that the Principal and teachers at school, languidly watch and ignore the acts of indiscipline and indiscretions of a child. Correction by way of admonishment and chastisement, as and when required, still remains a sacred duty of those imparting education. Good education falls miserably short of meeting its avowed aims if the system of education fails to give back to the society, citizens of sterling quality who are law abiding in every manner and disciplined. Behind every person languishing in prison as a convict, are a man and woman who have failed as parents and a system of education that could not transcend the three “R’s”. Far more important than ensuring that students do well in the material world and arrive at important stations in life, is to ensure that contemporary mores and values are dinned into the students consistently. Brilliance without integrity and character is a social and national liability rather than an asset. It is this that schools must emphasize on and in doing so, admonishment and chastisement may form an integral part of that exercise. Yes, in the process, it may be natural for the child to feel a sense of embarrassment and perhaps humiliation, but it is these very emotions that would prevent the child from repeating its mistake. If upon such chastisement, a child is extra ordinarily sensitive and takes the drastic step of committing suicide and if the Principal is expected to be prosecuted for an offence under Section 306 of IPC, nothing can imperil education more. If students are expected to grow up in an environment, where they know that they shall not be chastised or spoken harshly to for any and every transgression of theirs, which has the propensity of breaking the discipline of the school, the society may wind up having young delinquents who ultimately grow up without having fear of the law on account of the free hand that they received during the schooling years.”

 

Surabhi Aggarwal

Senior Associate

The Indian Lawyer

ACCESS TO AADHAAR DATA FOR CRIME INVESTIGATIONS IS STRICTLY RESTRICTED IN INDIA

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The Unique Identification Authority of India (UIDAI) has recently reported that Aadhaar biometric data cannot be shared with third parties for any purpose other than for generating Aadhaar and for authentication of identity of the Aadhaar holders.

 

This comment of UIDAI had come in response to a proposal of Mr. Ish Kumar, the chief of the National Crime Records Bureau (NCRB) that stated that limited access to Aadhaar data is required for identifying and catching first time offenders and for identifying unidentified bodies. Mr. Ish Kumar further stated that firstly, most of the first time offenders, whose details are not available in the police records, leave their fingerprints at the crime scene and secondly, that every year thousands of unidentified bodies are recovered. Thus, with access to a limited extent to the Aadhaar data, they could be easily identified.

 

But the UIDAI has strictly restricted sharing and giving access to Aadhaar biometric data to the police department or the crime investigating agency for any reason whatsoever other than that mentioned in Section 29 of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act 2016 (the Act). Section 29 of the Act states that core biometric information, collected or created under this Act shall not be shared or used for any purpose other than for generation of Aadhaar numbers and authentication under this Act. Although Section 33 of the Act allows disclosure of biometric and identity information or authentication records in exceptional cases:

 

Pursuant to an order of a court (not inferior to that of a District Judge);

 

In the interest of national security in pursuance of a direction of an officer not below the rank of Joint Secretary to the Government of India specially authorized in this behalf by an order of the Central Government. But before such a direction can be brought into effect, it shall be reviewed by an Oversight Committee consisting of the Cabinet Secretary and the Secretaries to the Government of India in the Department of Legal Affairs and the Department of Electronics and Information Technology.

 

The UIDAI, in Unique Identification Auth. of India and Anr. v. Central Bureau of Investigation 2014 SCC OnLine Bom 4753, has sought to challenge the Order of the Magistrate dated 22.10.2013 before the Bombay High Court. The Magistrate’s Order provided for sharing certain data to the Central Bureau of Investigation (CBI) upon an application of the CBI for summoning to produce document or other things for the purposes of any investigation, or inquiry, etc under Section 91 of the Criminal Procedure Code 1973. But the Bombay High Court had reserved its order until any final orders are passed by the Supreme Court in this regard.

 

The Supreme Court had passed an interim order in Unique Identification Auth. of India and Anr. v. Central Bureau of Investigation dated 24.03.2014 and restrained the UIDAI from transferring any biometric information of any person who has been allotted the Aadhaar number to any other agency without his consent in writing. The matter is still pending before the Supreme Court for the final orders.

 

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer