Banning Chinese Apps - an opportunity for Indian start-ups
Published: Jul 06, 2020
By Prashanth Shivadass & Priyanka Yavagal
THE Ministry of Electronics and Information Technology, Government of India, by way of a Press release dated June 29, 2020, banned 59 Chinese-owned Applications including some popular applications i.e., TikTok, Cam Scanner, Shien, UC browser etc. 1 The move incidentally, comes after severe clashes across the borders between India and China, not to mention several cries to boycott Chinese products. Earlier in the year, several other countries decided to boycott Chinese products and call off trade with the Chinese Government and Companies, owing to the pandemic.
This article has been penned down merely to understand the legal basis of this press release and to throw light on the powers of the Central Government to take such a drastic step. The press release maintains that the Applications banned are engaged in activities that are "prejudicial to the sovereignty and integrity of India, defence of India, security of state and public order". The press release also states that Government has received several complaints with mobile applications for "stealing and surreptitiously transmitting users' data in an unauthorised manner to servers which have locations outside India"
The reasoning, therefore, of the Government under the powers conferred to it under Section 69A of the Information Technology Act ('Act') read with relevant provisions of the Information Technology (Procedure and Safeguards for Blocking of Access of Information by Public) ('Blocking Rules'), seems to revolve around cyber security, data security and privacy and data theft related issues. While these issues have plagued the Country for a while and the Government has taken steps towards addressing some of these concerns (with proposed amendments to IT Act, a new Data Protection Law in the pipeline and a proposed e-commerce policy), this could possibly be a game-changer, in terms of both opportunity and legal advancements in the Country.
However, some may argue that while this is an opportunity for Indian investors (to fund such start-ups emerging in India), many feel that while such application companies were struggling to find Indian investors, it was infact the Chinese investment companies, that believed in such companies and gave them many rounds of funding.
To put things in perspective, the relevant extract of Section 69A of the Act is as under:
"(1) Where the Central Government or any of its officer specially authorised by it in this behalf is satisfied that it is necessary or expedient so to do, in the interest of sovereignty and integrity of India, defence of India, security of the State , friendly relations with foreign States or public order or for preventing incitement to the commission of any cognizable offence relating to above, it may subject to the provisions of sub-section (2) for reasons to be recorded in writing, by order, direct any agency of the Government or intermediary to block for access by the public or cause to be blocked for access by the public any information generated, transmitted, received, stored or hosted in any computer resource.
(2) The procedure and safeguards subject to which such blocking for access by the public may be carried out, shall be such as may be prescribed.
(3) The intermediary who fails to comply with the direction issued under sub-section (1) shall be punished with an imprisonment for a term which may extend to seven years and shall also be liable to fine."
The Supreme Court in Shreya Singal Vs. Union of India 2, took a view that blocking can be imposed only when the Central Government is satisfied that it is necessary or expedient and that the restrictions sought to be imposed fall squarely within the reasonable restrictions to freedom of speech and expression as envisaged under Article 19(2) of the Constitution of India. 3 The procedural safeguards that ought to be followed by the Central Government for blocking access are more fully set out under Rules 5, 7, 8 and 9 of Blocking Rules.
The power to block access by the public of any information generated, transmitted, stored or hosted in any computer resource can be exercised only by an officer of the Central Government not below the rank of a Joint Secretary (Designated Officer 4) and only upon a request from either the Nodal Officer, or through an order of a competent court 5.
The press release does not specifically indicate if the decision of the Central Government was made upon the request of any Nodal Officer as mandated under Rule 5 of the Blocking Rules.
Further, Rule 7 of the Blocking Rules requires a Committee consisting of Designated Officer as its Chairperson and representatives not below the rank of Joint Secretary in the Ministry of Law and Justice, Home Affairs, Information and Broadcasting and the Indian Computer Emergency Response Team to examine the blocking request of the Nodal Officer.
Rule 8 thereafter mandates the Designated officer to issue a notice to such persons or intermediary in control of such computer resource to appear and submit their reply and clarifications, if any. Subsequent thereto, the Committee referred to in Rule 7 shall examine the request and consider if the same is covered within the scope of Sub Section (1) of Section 69 A of the IT Act and that it is justifiable to block such information or part thereof.
In light of the above, it is quite evident that the press release is silent on whether processes have been followed under the Blocking Rules. However, the press release does state the following:
"(1) The Indian Cyber Crime Coordination Centre, Ministry of Home Affairs, has sent an 'exhaustive recommendation' for blocking these 'malicious apps';
(2) The release also states that 'the Ministry has received many representations raising concerns from citizens regarding security of data and risk to privacy relating to operation of certain apps';
(3) The Computer Emergency Response Team (CERT-IN) has also received many representations from citizens regarding security of data and breach of privacy impacting upon public order issues."
The press release also relies heavily on "emergent nature of threats" and "a matter of every deep and immediate concern which requires emergency measures", and from the looks of it, the Central Government seems to have relied only on Rule 9 of the Blocking Rules for them to justify this press release. Rule 9 of the Blocking Rules reads as follows:
"(1) Notwithstanding anything contained in rules 7 and 8 the Designated Officer, in any case of emergency nature, for which no delay is acceptable, shall examine the request and printed sample information and consider whether the request is within the scope of sub-section (1) of section 69A of the Act and it is necessary or expedient and justifiable to block such information or part thereof and submit the request with specified recommendation in writing to Secretary, Department of Information Technology.
(2) In case of emergency nature, the Secretary, Department of Information Technology may, if he satisfied that it is necessary or expedient and justifiable for blocking for public access of any information or part thereof through any computer resource and after recording reasons in writing, as an interim measure issue such directions as he may consider necessary to such identified or identifiable persons or intermediary in control of such computer resource hosting such information or part thereof without giving him an opportunity of hearing.
(3) The Designated Officer at the earliest but not later than forty-eight hours of issue of direction under sub-rule (2) shall bring the request before the committee referred to in rule 7 for its consideration and recommendation.
(4) On receipt of recommendations of committee, Secretary, Department of Information Technology, shall pass the final order as regard to approval of such request and in case the request for blocking its not approved by the Secretary, Department of Information Technology in his final order, the interim direction issued under sub-rule (2) shall be revoked and the person or intermediary in control of such information shall be accordingly directed to unblock the information for public access."
A cursory view of the above rule indicates that in case of emergency where no delay is acceptable, blocking may occur without any hearing, upon a request by the Designated Officer placed before the Secretary, Department of Information and Technology, to issue an interim direction to block access and for further request to be placed before to the Committee for its determination.
Rule 9 also states that after recording of reasons, by way of an interim measure - the Designated Officer may issue directions without giving an opportunity for hearing. However, the authority ultimately must pass a final order (if such an interim order is issued), after giving the parties an opportunity to be heard. One can assume given the current circumstances that this press release is only an interim measure and the companies will now be called for a hearing before a final order is passed. However, since the press release itself is silent on whether this is an interim or a final order, assumptions at this stage are meaningless. Several newspaper reports have claimed that the companies that have suffered a ban have been invited by the Government to present their case and to submit their clarifications.
As indicated above, data privacy has been on the forefront of issues due to the dependence on technology, the rise of the internet and the value of online data. Online data or any data today, is more valuable than money itself - data can make or break not just a business deal but also affect an individual's privacy. Multiple issues have surfaced in the past including the Facebook-Cambridge Analytica scandal or the Swadeshi Jagran Manch raising issues about TikTok in 2019, to name a few. Yet, such a drastic step has never been taken by the Government in the past. Infact, Indian Government's own app - 'Aarogya Setu' was embroiled in a controversy insofar as data privacy threats was concerned.
So what prompted the Government to take this step? Is it just a build-up of political actions across borders? Or is this pressure from other Countries looking to move from China to India for their manufacturing? Is this an opportunity for Indian business leaders to step up and promote technological advancements? Is it an opportunity for the Indian start-up community to harness local potential of investors in the days to come? So many questions arise for consideration.
From a legal standpoint though, blocking of applications must be reasonable and must fall within the ambit of Article 19(2) of the Constitution of India, as this affects the fundamental right of every citizen. A citizen's choice to download and use an application is his personal choice - just like how a citizen can express his free speech on an online platform, this too is an individual's choice. Like always however, these rights of an individual are surrounded by a thin line named 'reasonable restrictions'. A recent decision of the Supreme Court, on free speech arising out of yet another pressing issue of Article 370 and the blackout of communication in Jammu & Kashmir, in Anuradha Bhasin Vs. Union of India 6 , among other issues observed that any restrictions on fundament rights of an individual must be proportional to a justifiable aim and in the absence of an alternative to achieve the same, it must constitute only a least restrictive measure. 7
Separately, can a challenge be brought about by any of the companies that have faced the impact of this press release? While the press release per se may lack justification for banning (some would argue that national interest trumps any company's interest), as a legal entity, each company has a right to carry on trade and business as enshrined under the Constitution.
The moot point, therefore, is whether this ban would survive a legal challenge.
[The authors are Founder and Associate respectively at Shivadass & Shivadass (Law Chambers), Bangalore and the views expressed are strictly personal.]
1https://pib.gov.in/PressReleseDetailm.aspx?PRID=1635206
3See, para 109, 110 of the judgement
4 Rule 3 Information Technology (Procedure and Safeguards for Blocking for Access of Information by Public) Rules, 2009
5 Rule 5, Information Technology (Procedure and Safeguards for Blocking for Access of Information by Public) Rules, 2009
6 2019 SCC OnLine SC 1725
7See, para 70, 72 of the judgement above
