August 07, 2019

First Judgement by Appellate Tribunal on Data Theft under section 43 (b) of the Information Technology Act

[ by Legal Era News Network ]


The Telecom Disputes and Appellate Tribunal of New Delhi (“the Tribunal) on 31st May 2019 held that the illegal transfer of sensitive and confidential information from an existing entity to run a competing business leads to data theft under Section 43(b) of the Information Technology (IT) Act 2000.

The case revolves around Dr. Rishi Dixit and Smt. Vrushali Joshi (jointly the “Appellants”) who were employed in a company called Preventine Life Care Pvt. Ltd. (“the Respondent”) engaged in the business of providing diagnostic services related to genetic disorder for new born babies. Dr. Dixit was employed as Senior Manager in charge of business development activities and Smt. Joshi was working as a Senior Research Associate with the job profile as division head of diagnostic services.

The Appellants while working with the Respondent company collected data and sensitive information, replicated the business model of the company, and formed a new company called M/s Navigene Genetic Science Pvt. Ltd (“Appellant”).

The Appellants dishonestly and secretly stole sensitive and confidential information, algorithm, formulas, reports of life cell and data base of hospitals, client information and other analysis reports and sent them to their personal email addresses. The aforesaid employees later on resigned from the Respondent company.

The software developer Mehul Shah who was working with the Respondent company developed similar software for the Appellants for their new company.

In January 2013, the Respondent company filed a civil suit and criminal complaint against the Appellants alleging that, the latter without authorization and malafide intention, stole sensitive and confidential information to replicate the business model of the Respondent company. It was further alleged that such acts of the Appellants resulted in huge financial loss and damages to the Respondent.

Dr. Karnika Seth who appeared for the Respondents maintained that the Appellants were together in a conspiracy for dishonest gain through stealing of the Respondent’s software. Further, the retention of data by the Appellants post employment with the Respondent company, sharing the data with the rival company in an unauthorized manner resulted in the Appellants being held guilty under Section 43 read with Section 66 of the IT Act.

The Adjudicating Officer held that the fact that the appellants sent official documents and data to their personal emails and the slight modifications for their own use lead to stealing of data under Section 43 of the IT Act. The Appellants were thus held guilty of Data Theft under Section 43(b) of the IT Act, read with sections 43(i), 43(j) and 66 of the said act.

The Tribunal directed the Appellants Dr. Rishi Dixit and M/s Navigene Genetic Science Pvt. Ltd to jointly pay a compensation of Rs.15,00,000/- (15 lacs) alongwith a simple interest of 8% from the date of the impugned order i.e. 20-1-2014 till the date of payment.

Full View Judgement

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