Key Highlights of The Digital Personal Data Protection Act, 2023

The Digital Personal Data Protection Act, 2023 was passed by both the houses and received President’s assent on 11.08.2023. The Act provides for the processing of digital personal data in a manner that recognises both the right of individuals to protect their personal data and the need to process such personal data for lawful purposes and for matters connected therewith or incidental thereto.

Data - Data has been defined as a representation of information, facts, concepts, opinions or instructions in a manner suitable for communication, interpretation or processing by human beings or by automated means. It includes data is collected in digital form or in non-digital form and digitised subsequently.

Applicability - The Act applies to the processing of digital personal data within the territory of India where the personal data is collected in digital form or in non-digital form and digitised subsequently. It also applies to processing of digital personal data outside the territory of India, if such processing is in connection with any activity related to offering of goods or services within the territory of India.

Consent and Notice - A person may process the personal data only in accordance with the provisions of this Act and for a lawful purpose for which the consent has been given or for certain legitimate uses. A notice must be given before seeking consent which should contain details about data being collected and its purpose of processing and the manner in which a complaint can be made. Consent may be withdrawn at any point in time.  Consent will not be required for ‘legitimate uses’ including: (i) specified purpose for which data has been provided by an individual voluntarily, (ii) provision of benefit or service by the government, (iii) medical emergency, and (iv) employment.   For individuals below 18 years of age, consent will be provided by the parent or the legal guardian.

Rights of Data Principal - The Data Principal means the individual to whom the personal data relates. She shall have the right to obtain a summary of personal data which is being processed and the processing activities undertaken with respect to such personal data. Also, the identities of all other Data Fiduciaries and Data Processors with whom the personal data has been shared by such Data Fiduciary, along with a description of the personal data so shared. Data Principal also has the right to correction and erasure of personal data.

Duties of Data Principal - Duties of Data Principal is to ensure not to impersonate another person while providing her personal data for a specified purpose, not to suppress any material information while providing her personal data for any document, unique identifier, proof of identity or proof of address issued by the State or any of its instrumentalities and to ensure not to register a false or frivolous grievance or complaint with a Data Fiduciary or the Board.

Consent Manager - The Act also provides for appointment of Consent Manager who will be a person registered with the Board, who acts as a single point of contact to enable a Data Principal to give, manage, review and withdraw her consent through an accessible, transparent and interoperable platform. A Data Principal shall have the right to have readily available means of grievance redressal provided by a Data Fiduciary or Consent Manager in respect of any act or omission of such Data Fiduciary or Consent Manager regarding the performance of its obligations in relation to the personal data of such Data Principal or the exercise of her rights under the provisions of this Act and the rules made thereunder.

Transfer of personal data outside India:  The Bill allows transfer of personal data outside India, except to countries restricted by the central government through notification. 

State Exemptions - Personal data processing by the State has been given several exemptions under the Bill. The Central Government also retains the provision to exempt certain fiduciaries or classes of data fiduciaries from particular provisions, specifically including start-ups.

Data Protection Board of India: The central government will establish the Data Protection Board of India.  Functions of the Board will include monitoring compliance and imposing penalties, directing data fiduciaries to take necessary measures in the event of a data breach, and hearing grievances made by affected persons.  Board members will be appointed for two years and will be eligible for re-appointment. The central government will prescribe details such as the number of members of the Board and the selection process. Appeals against the decisions of the Board will lie with TDSAT.

Penalties: The Act specifies penalties in the Schedule for various offences such as up to: (i) Rs 200 crore for non-fulfilment of obligations for children, and (ii) Rs 250 crore for failure to take security measures to prevent data breaches.  Penalties will be imposed by the Board after conducting an inquiry.  

In the event of any conflict between a provision of the Act and a provision of any other law for the time being in force, the provision of the Act shall prevail to the extent of such conflict.

The Digital Personal Data Protection Act, 2023 is a welcome change in how the digital data will be processed. The Act keeps a check on the limited use of data by Data Fiduciaries and highlights the importance of consent. By limiting the grounds for processing, the Act provides safeguard to Data Principals and upholds their right to privacy. Now after this Act the Data Fiduciaries will have to revisit their privacy policy, terms of use and contracts to make the necessary changes. The few drawbacks of the Act are exemption given to the State and creation of Boards which may slower down the implementation of the Act. However, the strong penalty clauses will help in prevention of data breaches which had become common due to lack of comprehensive legal framework. Many details and rules of the Act are still left to be formulated by the new Data Protection Board of India which is yet to be set up. The Act will bring in a new era of data security, privacy and accountability in India’ digital landscape.

This Article has been Compiled by Ayushi Misra (Senior Associate) and Arun Gupta (Managing Partner). 

You can direct your queries or comments to the author at info@factumlegal.com

Disclaimer-

The contents of this article should not be construed as legal opinion. This article is            intended to provide a general guide to the subject matter. Specialist advice should be    sought about your specific circumstances. We expressly disclaim any financial or other  responsibility arising due to any action taken by any person on the basis of this article.

  

 

 

 

Online Resolution of Disputes in the Indian Securities Market

The Securities and Exchange Board of India issued a circular dated July 31, 2023, providing the guidelines for online resolution of disputes in the Indian Market.

The SEBI ODR Circular introduces a comprehensive and all-encompassing framework designed to effectively tackle a diverse array of potential conflicts that are anticipated to arise within the dynamic landscape of the securities market. The primary goal of this circular, as envisioned by the Securities and Exchange Board of India (SEBI), is to elevate the efficacy of the dispute resolution process within the established structure of Stock Exchanges and Depositories, which are collectively known as Market Infrastructure Institutions (MIIs).

In line with this objective, the circular seeks to achieve a twofold enhancement: firstly, by streamlining the mechanisms employed for the resolution of disputes, and secondly, by expanding the scope of responsibilities vested in these vital MIIs. By entrusting these institutions with a broader mandate, the SEBI ODR Circular envisions a more proactive and influential role for Stock Exchanges and Depositories in the overarching governance of the securities market.

The Circular encompasses the complete procedure for resolving disputes, encompassing guidelines for commencing the online dispute resolution process, the operations of the ODR platform, and the diverse range of dispute resolution mechanisms accessible to investors and other participants in the market.

As per the circular, a Common Online Dispute Resolution Portal has been introduced. The MIIs shall establish and develop a common Online Dispute Resolution Portal. The MIIs will enter into an agreement amongst themselves outlining the nature of their responsibilities amongst themselves, the cost of development, operating, upgradation and maintenance. The SEBI is entitled to undertake an inspection of the ODR Platform from time to time in order to ensure the orderly functioning of the ODR Portal.

Every Market Infrastructure Institution (MII) must identify and establish a selection of independent Online Dispute Resolution (ODR) organizations. These entities should possess the capacity to conduct prompt online conciliation and/or arbitration processes in accordance with the stipulations outlined in the Arbitration and Conciliation Act of 1996, along with relevant legal statutes.

INITIATION OF DISPUTE THROUGH ODR PORTAL

The investors or clients shall first take up their grievances with the Market Participant by lodging their complaints directly with the concerned market participant. If the grievance raised with the market Participant is not redressed satisfactorily, then the grievance may further be escalated on the SCORES Portal. In case the investors are still not satisfied with the outcome, then they can further initiate with the dispute resolution on the ODR Portal.

 Additionally, the concerned Market Participants also have the power to initiate dispute resolution through the ODR Portal after having given due notice of 15 calendar days to the investors or clients for resolution of disputes which have not been satisfactorily resolved between them.

Any complaint or dispute initiated through the ODR Portal will be referred to an ODR Institution empanelled by a MII, and the allocation of cases would be done on the market-wise basis on a round robin system.

CONCILIATION

Upon receiving the reference of complaint or dispute, the ODR Institution shall appoint a sole independent and neutral conciliator from its panel of conciliators. The conciliator upon being appointed, shall conduct one or more meetings for the disputing parties so that the disputing parties can reach an amicable and consensual resolution within 21 calendar days, unless the time is extended by a maximum period of 10 calendar days. The ODR institution is required to appoint the conciliator within a period of 5 days of receipt of the complaint or dispute.

It is the duty of Conciliator so appointed to facilitate a consensual resolution of the complaint/dispute. Additionally, it is also the duty of the Conciliator to advice the Market Participants to render the required service in case of service-related complaints or disputes.

On successful resolution through the conciliation process, the process shall be concluded by a duly executed settlement agreement between the disputing parties.

ARBITRATION

In case any dispute is pursued by an investor or client through the process of online arbitration, then the ODR Institution is required to appoint a sole, independent, and neutral arbitrator within a period of 5 calendar days from the date of receipt of reference.

The Arbitration proceedings are dependent upon the value of claim or counterclaim. If the aggregate of the claim and/or counter claim exceeds Rs. 30,00,000 or such amount as may be specified by SEBI, then the matter will be referred to an Arbitral Tribunal consisting of three Arbitrators within a period of 5 calendar days of receipt of reference. In case the value of claim or counterclaim is more than Rs. 1,00,000, the Sole Arbitrator is required to conduct one or more hearings and pass the arbitral award within a period of 30 calendar days. On the other hand, if the value of claim or counter claim is less than or equal to Rs.1,00,000, then the Sole Arbitrator is required to conduct document-only arbitration and pass the arbitral award within a period of 30 calendar days of appointment in the matter.

Upon the issuance of arbitral award, in case the party against whom the order has been passed intends to challenge the award so granted, then the concerned party will be required to submit such an intention within 7 calendar days. However, in the course of such a challenge, in case a stay on the said award is not granted within a period of 3 months from the date of receipt of such award, then complete adherence to the terms of the arbitral award is required to be done. Further, if the Market Participant wishes to challenge the arbitral award, then the Market Participant is first required to deposit 75% of the amounts payable in terms of the arbitral award.

The ODR Institutions are required to conduct the arbitration and conciliation through online mode which enables the investors or clients to participate through online or audio-video means.

ROLE PLAYED BY MARKET PARTICIPANTS

The Market Participants shall play a very important in the entire Online Dispute Resolution process. All agreements, contractual frameworks or relationships entered by the Market Participants with the Investors or clients in the Indian Securities Market which are presently existing, or which will be entered after the introduction of ODR mechanism shall be deemed to be amended and include the provisions of online conciliation or online arbitration.

It is also the responsibility of the Market Participants to duly train their staff in attending to the complaints or disputes raised and further handling the references arising from the SCOREs portal or the ODR Portal.

The ODR Institutions are required to conduct conciliation and arbitration in the online mode, which enables the investors or clients to participate through online or audio-video mode. The investors or clients may also participate in the online conciliation and arbitration by accessing or utilizing the facilities of Investor Service Centers (ISCs) operated by the MIIs.

For online proceedings, the venue and seat of the online proceedings shall be deemed to be the place where the relevant MIIs have their registered office.

Moreover, the MIIs (Market Intermediaries) and the Online Dispute Resolution (ODR) organizations authorized by the MIIs have the responsibility to maintain a balanced ratio between the count of conciliators and arbitrators within the ODR organization's panel, relative to the volume of complaints or disputes received. This approach aims to handle a reasonable quantity of complaints effectively at the same time, ultimately leading to prompt resolution within the designated timeframe. The conciliators and arbitrators who are instituted on the panel of ODR institutions are required to undergo training and certification programs or they should possess sufficient experience so that such an arbitrator or conciliator can be regarded as qualified or expert in online dispute resolution.

RESPONSIBILITIES AND ACCOUNTABILITY OF ODR INSTITUTIONS

 ·         MII shall ensure that ODR Institution abides by norms for furthering transparency.

·         MIIs shall inspect and/or audit the ODR Institution.

·         MIIs shall ensure that ODR Institutions abide by the SEBI regulations, circulars, and advisories.

·         Any complaints/grievances against the ODR Institutions w.r.t their services shall be resolved as per the agreements between ODR Institutions and MIIs.

     This Article has been Compiled by Akash Gupta (Principal Associate).

     You can direct your queries or comments to the author at info@factumlegal.com

     Disclaimer-

     The contents of this article should not be construed as legal opinion. This article is            intended to provide a general guide to the subject matter. Specialist advice should be    sought about your specific circumstances. We expressly disclaim any financial or other  responsibility arising due to any action taken by any person on the basis of this article.

 

 

 

 

The Jan Vishwas (Amendment of Provisions) Act, 2023: A Brief Primer

The Jan Vishwas (Amendment of Provisions) Act, 2023, was passed in Lok Sabha on 27th June 2023, Rajya Sabha on 2nd August 2023 and received President’s assent on 11^th August 2023. The Act amends a total of 183 amendments across 42 Acts administered by 19 Ministries to reduce the compliance burden on individuals and businesses with the twin objectives of ease of doing business and ease of living for the citizens. The Act proposes a number of changes to the existing laws, including but not limited to: (a) decriminalizing various offences; (b) revision of various fines and penalties; (c) appointment of Adjudicating Officers; (d) establishment of Appellate Authorities; and (e) increase in the fines and penalties periodically. The Act offers scope and horizon to identify areas for reforms and improve the local business environment as well as easing the lives of individuals simultaneously.

The necessity to introduce the Jan Vishwas (Amendment of Provisions) Bill as mentioned in the Report of the Joint Committee on the Jan Vishwas (Amendment Of Provisions) Bill 2022 is to reduce the compliance burden. As trust is a prerequisite and fundamental for democratic governance. The fear of imprisonment for minor offences is a major factor hampering the growth of the business ecosystem and shattering the confidence of entrepreneurs. The Jan Vishwas (Amendment of Provisions) Act, 2023, as introduced, has endeavoured to identify a large number of offences of minor nature and decriminalize them with monetary penalties. The endeavour is not only to make lives and businesses easier but also to reduce judicial burden.

Moreover, as per the Jan Vishwas (Amendment of Provisions) Act, 2023, the Government of India may appoint one or more adjudicating officers for the purpose of determining penalties. The adjudicating officers may summon individuals for evidence and conduct inquiries into violations of the respective Acts. For instance, the Agricultural Produce (Grading and Marking) Act, 1937, the Air (Prevention and Control of Pollution) Act, 1981, the Environment (Protection) Act, 1986, and the Public Liability Insurance Act, 1991 are the Acts among others which provide for the appointment of Adjudicating Officer.

The Jan Vishwas (Amendment of Provisions) Act, 2023 also specifies the appellate mechanisms for persons, aggrieved by an order passed by an adjudicating officer/authority. For instance, under the Cinematograph Act, 1952, the provision to prefer appeal has been provided. Similarly, under the Merchant Shipping Act, 1958, provision to prefer appeal before the Director General within 30 days has been provided. Under the Air (Prevention and Control of Pollution) Act, 1981 and the Environment (Protection) Act, 1986, appeals may be preferred to the National Green Tribunal within sixty days from the date of order.

This Article has been Compiled by Ayushi Misra (Senior Associate) and Arun Gupta (Managing Partner). 

You can direct your queries or comments to the author at info@factumlegal.com

Disclaimer-

The contents of this article should not be construed as legal opinion. This article is            intended to provide a general guide to the subject matter. Specialist advice should be    sought about your specific circumstances. We expressly disclaim any financial or other  responsibility arising due to any action taken by any person on the basis of this article.