Page 89 - DCOM404_CORPORATE_LEGAL_FRAMEWORK

Corporate Legal Framework

Notes

Note Rules Framed under the Act

The Ministry of Information Technology has issued the following:
1. The Information Technology (Certifying Authorities) Rules, 2000. The Central
Government has made these rules regulating the application and other guidelines
for Certifying Authorities. These rules deal with (a) Manner of authentication by

Digital Signature (b) Creation of Digital Signature (c) Verification of Digital Signature

(d) Digital Signature Certificate Standard, (e) Eligibility Criteria for licensing of
Certifying Authorities. Only individuals with a capital of ` 5 crores or more and
companies with a net worth of not less than ` 50 crores can apply for licences. Foreign
equity cannot exceed 49% (f) Licence and fees obligations of Certifying Authorities
(g) Security procedures and guidelines for Certifying Authorities (h) Generation and
Issue of Digital Signature Certificate (i) Access to confi dential information.

2. The Cyber Regulations Appellate Tribunal (Procedure) Rules, 2000. These rules

provide for the procedure for filing applications, fees, pleadings, hearings and related
matters.

4.12 Shortcomings of the Information Technology Act, 2000

The Act does not cover certain aspects of e-commerce. These are:
1. The Act deals only with the commercial and criminal areas of law as affected by information
technology and do not deal with certain other issues, such as intellectual property rights,
(i.e., copyright, trade marks and patents). Thus infringement of copyright on e-commerce
will be governed by the Copyright Act, 1957.
2. The Act does not address itself to internet related issues such as domain names and
cyber squatting. Thus under IT Act, neither any protection for domain names nor action
against cybersquatting is available. There have arisen many disputes about domain names
globally, including infringement, concurrent claims and cybersquatting. In USA, these
issues are tackled by the US Anti-Cybersquatting Consumer Protection Act, 1999. This
Act is a powerful deterrent to cybersquatting, as it provides for the levy of damages upto
US$ 300,000 per mark against the guilty parties. In India, however, cybersquatting can be
opposed by relying on the provisions of the Trade Marks Act, 1999.

3. The Act is not applicable to negotiable instruments, power of attorney, trusts, testamentary
dispositions (wills), contracts for sale or conveyance of immovable property or any interest
in such property. The non-applicability of the Act to negotiable instruments would result in
e-commerce in India being limited to payment systems that are non-traditional or credit
card based. The banks cannot extend their services to the online medium of payments.

4. The IT Act, 2000 is silent as regards taxation of goods and services traded through
e-commerce.
5. The IT Act makes no provision for jurisdictional aspects of electronic contracts, i.e.,
jurisdiction of courts and tax authorities.
6. No provision has been made for payment of stamp duty on electronic documents.

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