Tag Archives: sensitive personal data

Personal Data Protection Bill, 2018 – An overview with brief analysis

Justice BN Srikrishna Committee (“Committee”) which was formed with an intent to have a highly effective data protection law in India has finally submitted the draft bill to the Ministry of Electronic and Information Technology (“Ministry”) on 27 July 2018. The draft bill namely Personal Data Protection Bill, 2018 (“Draft Bill”) is a great expectation particularly after the European Union’s General Data Protection Regulation (“GDPR”) came into force on 25 May 2018. The Draft Bill is introduced at very important juncture, especially after recent judicial orders and judgments in the Aadhar case and in Justice Puttaswamy (Retd.) V. Union of India and Others.

Trust: The Draft Bill introduces concepts of ‘Data Fiduciary’, ‘Data Principal’ and ‘Data Processors’ are akin to concepts of ‘data controller’ and ‘data subjects’ in GDPR. The underpinnings as per Chapter 1, Part C, of the Committee report is of “trust” between a Data Fiduciary and a Data Principal.

data protection

Extra- territorial: Like GDPR, the Draft Bill provides for protection extending beyond India. Section 2(2) states that the legislation shall apply to the processing of personal data by data fiduciaries or data processors not present with in the territory of India, if they process data in connection with business in India, goods or services offered in India, profiling of data principals in India. This may not be applicable for processing anonymised data.

It is interesting to note that State as well as the private and public private sector, come within the ambit of the legislation.

Data: Data under the Draft Bill has been defined broadly to include information, facts, concepts, opinion or instructions whether processed by humans or automated means. It is not just personally identifiable information. The Draft Bill covers issues and matters relating to data protection, collection of data, storage, purpose of collection. Section 8 of the Draft Bill lays out procedure for collection of data, notice / intimation to be provided to the Data Principal (ie., the natural person’s data) while collecting any and all kinds of data.

Disclosures: Under Section 8, there are mandatory disclosures that the Data Fiduciary (ie, any person such as State, juristic entity, individual who determine the purpose and means of processing personal data), has to provide to the Data Principal for collecting the Data. Some of them are (i) the purpose for which the Data is being collected, (ii) categories, (iii) identity and contact information of Data Fiduciary, (iv) the Data Fiduciary will have to compulsorily inform the Data Controller about the right to withdraw consent, (v) Period for which the Personal Data will be retained. It is in this regard that the Data Fiduciary while collecting such Data, shall provide the information in a clear and concise manner, and this would include giving such information to the Data Principals in “multiple languages” where necessary and practicable. The use of multiple languages to provide information would aid such Data Principals who are only familiar with their vernacular language.

Storage: Section 10 has laid down that the Data Fiduciary shall retain the Personal Data only as may be reasonably necessary to satisfy the purpose for which it is processed.  Some of the fintech companies have raised a concern that they use the data collected on regular intervals to keep a track of their customers, even after the purpose is fulfilled, as part of their business offerings itself. Data storage should be read in conjunction with various legislations which provide for data retention, for example, records supporting financial statements of a company has to be retained for 8 years.

Kinds of data:

  • Personal Data;
  • Sensitive Personal Data (“SPD”);
  • Biometric Data;
  • Financial Data;
  • Genetic Data; and
  • Health data.

Section 3 (35) defines religious and political beliefs, caste or tribe, intersex status, transgender status as SPD. Even passwords, financial data and health data fall under SPD. Certain sections of the society have opined that passwords should not be part of SPD and that it is a stretch. What perhaps should be included is a higher level of protection to the Data Principal from instances of profiling, discrimination, and infliction of harm that is identity driven.

Consent: Consent forms the basis for processing Personal Data or SPD. Section 12 details the way to obtain consent from the Data Principal, no later than prior to processing. Shouldn’t it be prior to collection? Collection and processing of SPD has a higher rigour, including explicit consent to be obtained by Data Fiduciary for processing

The consent should be free, informed, specific, clear, and capable of being withdrawn.  It is crucial to note that when the Data Principal withdraws her consent, which was necessary for the performance of the contract to which the Data Principal is a party, then all the legal consequences for the effects of such withdrawal shall be borne by the Data Principal. Wouldn’t this be a burden on the Data Principal? Opinions are also raised that such consent should not be unilaterally withdrawn by the Data Principal and such withdrawal should only be permitted in the context of the Personal Data.

Further, additional grounds have been laid down for the processing of Personal Data which includes: (i) processing for the functions of the State;(ii) processing in compliance with law or any order of the tribunal; (iii) processing which is necessary for prompt action; (iv) processing for the purpose related to employment; and (v) processing for reasonable purpose. Processing of Personal Data for the purpose for reasonable purpose, as mentioned in Section 17, is a bit wide and allows the data privacy authorities to specify the purposes on which such processing can take place. This includes a broad range of activities such as whistle blowing, mergers and acquisitions, recovery of debt, credit scoring, fraud, publicly available personal data, etc. This would need a balance of a very effective right for data erasure, which is not provided in the Draft Bill.

Data Principal Rights: Chapter VI contains the rights to the Data Principal such as (i) Right to confirmation and access; (ii) Right to correction; (iii) Right to Data Portability; and (iv) Right to be forgotten. These are similar to the rights under GDPR. However, the Right to be forgotten which is provided under Section 27 of the Draft Bill only entitles the Data Principal(s) to have the right to restrict or prevent continuous disclosure of Personal Data.  The Right to be forgotten does not include within its ambit the right of data erasure, which allows the Data Principal to erase his personal data as mentioned in GDPR. On one hand, we can interpret that a Data Principal does not have a right to erasure but on the other hand, a Data Fiduciary is mandated to retain the Personal Data only as may be reasonably necessary to satisfy the purpose for which it is processed.

Transparency and accountability measures:  Ample safeguards have been provided to ensure that the Data provided by the Data Principals should be processed in a transparent manner and the Data Fiduciary be held accountable for its action. Chapter VII of the Draft Bill provides for mechanisms to ensure transparency, security safeguards, Data protection impact assessment, Data audits, record keeping, Data protection officer, etc.

Section 32 makes it clear that the Data fiduciary shall notify the Authority of any Personal Data breach where such breach is “likely to cause harm” to any Data Principal. So, the burden of proof seems to be on the Data Fiduciary which is good, so that in a large nation like India where the Data Principal may or may not be aware of her rights, this is helpful. Should the Data Principal have this right as well, along with the Data Fiduciary included in section 32?

Significant Data Fiduciaries: Based on the factors such as volume, sensitivity, turnover, risk of harm, the Data Fiduciaries are classified as Significant Data Fiduciaries. Section 38 obligates data protection impact assessment, record-keeping, data audits and data protection officer on Significant Data Fiduciaries. Some of these obligations are necessary for other Data Fiduciaries as well.

Data localisation: Section 40 mandates that every Data Fiduciary shall store the data on a server or a data centre located in India. Some of them have opined that this may lead to State surveillance. But perhaps, this may help in better control over data breaches or emboldening the steps towards artificial intelligence.

Exceptions: One of the most talked about and discussed section of the Draft Bill is Chapter IX. It relates to many exceptions to the Data Privacy obligations for the State / Government in order to protect the national security of the State.

The argument of surveillance is not new. In the year 2007 Indian Telegraph Rules, 1951 were amended and Rule 419A was inserted in the Rules. Rule 491 A was inserted so as to provide the Government with powers under the Act and the Rules to do surveillance, intercept any message and such other powers so as to safeguard the sovereignty of our country. Then in the years 2009 and 2011 respectively, under the Information Technology Act, 2000, The Information Technology (Procedures and Safeguards for Interception, Monitoring and Decryption of Information) Rules 2009 and The Information Technology (Procedures and Safeguard for Monitoring and Collecting Traffic Data or Information) Rules, 2011 were added. These set of rules, deal in depth, with how the Government can intercept, monitor and decrypt computer systems, computer networks, internet messages basically any transmission made through Internet to safeguard our country. National security, is of-course one of the primary roles of the Government.

The Draft Bill also provides wide, discretionary and unfettered powers to the Government and the Data Privacy obligations is sub-servient to the Government’s obligations of security of the State and prevention, detection, investigation and prosecution for contravention of law.

Data Protection Authority of India: The independent regulatory body for data protection, has the power to issue directions, conduct inquiry, call for information, and conduct search and seizure, monitoring and enforcement; legal affairs, policy and standard setting; research and awareness; conducting inquiries, grievance handling and adjudication.

While this is “the” legislation for Data Protection, Section 67 envisages situations of concurrent jurisdiction and provides for a consultative approach in resolving such disputes. Therefore, the Authority has to take into considerations other laws and recommendations provided by other regulators, for example, Ministry of Information and Broadcasting or TRAI (for instance the recommendation published by TRAI on Privacy, Security and Ownership of the Data in the Telecom Sector- Dated 16 July, 2018).

Grievance handling and adjudication:  The proposal of having Appellate Tribunal as a special court, is helpful in a speedy disposal of disputes. The proposal perhaps might have come by, since the Courts are already over-burdened. Every Data Fiduciary should have proper procedures and effective mechanisms to address the grievance of Data Principal which should be resolved in an expeditious manner within a period of 30 (thirty) days. It is heartening to see time-bound approach for resolving disputes.

Penalties and remedies

The Draft Bill provides for penalties which are in consonance with GDPR and the quantum of penalty acts as a deterrent to engage in wrongful acts. It should be seen over time if this deterrence is helpful in mitigating occurrences of breaches or would it increase litigation.  Penalties have been imposed on the following activities:

  • Penalty for failure to comply with Data Principal’s requests under chapter VI of the Draft Bill,
  • Penalty for failure to furnish report, information, etc.
  • Penalty for failure to comply with the directions or orders issued by the Authority
  • Penalty for contravention when no separate penalty has been provided.

Further Section 69 (1), also makes the Data Fiduciary liable if it fails to fulfil the obligations relating to taking prompt action related to data breach or undertaking a data protection impact assessment, or conducting a data audit by a significant data fiduciary or failing to register with the authority. The penalty for Data Fiduciary under this sub-section extends to Rs. 5,00,00,000/- (Rupees Five Crore Only) or 2 (two) per cent of the total worldwide turnover of the preceding financial year, whichever is higher.

Section 69 (2) makes the Data Fiduciary liable for a penalty when it contravenes of any of the requirements as mentioned under this sub-section. The penalty may extend to Rs. 15,00,00,000/- (Rupees Fifteen Crore only) or 4 (four) percent of the total worldwide turnover of the preceding financial year, whichever is higher.

Criminal liability: Not only penalties but imprisonment has also been prescribed. For instance, any person who obtains, transfers or sells personal data which is contrary to the provisions of the Draft Bill would be liable for an imprisonment of not exceeding 3 (three) years or shall be liable for a fine which may extend up to Rs 2,00,000/- ( Rupees Two Lakhs Only) or both.  Further any person who obtains, transfers or sells SPD, would be liable for an imprisonment not exceeding 5 (five) years or shall be liable for a fine which may extend up to Rs 3,00,000/- ( Rupees Three Lakhs Only) or both. There is imprisonment for a term not exceeding 3 (three) years or a fine which may extend to Rs 2,00,000 (Rupees Two Lakhs Only) or both, when any person re-identifies the Personal Data which has been de-identified by the Data Fiduciary or Data Processor or re-identifies and processes such Personal Data without the consent of the Data Fiduciary or Data Processor.

The Draft Bill has made suitable provisions whereby the company and its directors, officers, as well as Central or State Governments along with its head of departments, officers could be made liable for offences committed under this Draft Bill.

Compensation: The Data Principal also has a right to claim compensation from the Data Fiduciary and Data Processor if it contravenes with any provisions of the Draft Bill. Section 76 states that any compensation awarded or penalty imposed under this Draft Bill would not prevent the award of compensation or imposition of any other penalty or punishment under any law for the time being in force.

We have added our thoughts as we discuss the Draft Bill above. The dynamics of this digital economy are changing rapidly, people are using more and more innovative technologies to disrupt the industry and in all of this, the most crucial element is Data. It is rightly said that data is the new oil of this digital economy and therefore this much anticipated Draft Bill is, though late, a step towards regulating use of Data.

Authors: Mr. Manas Ingle and Mr. Anuj Maharana

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INDIA’S DATA PRIVACY LAWS – CURRENT SCENARIO

The recent Supreme Court judgement of JUSTICE K S PUTTASWAMY (RETD.) versus UNION OF INDIA (the “Judgement”) has established that the right to privacy is a fundamental right guaranteed to every citizen of India, under the Constitution. In analysing the issue, the bench delves into the various facets of an Indian citizen’ life, attempting to understand how privacy can be protected in each of them. One such facet is the digital world, wherein each citizen is spending more time on the internet, providing and exchanging information with one another and with service providers. This in turn has resulted in the Internet becoming a repository of personal information, with a large amount of personally identifiable information (the “PII”) of the various users being inputted, generated and stored on the Internet. Protecting every citizen’s privacy thus involves protecting the PII available on the internet against unauthorised access and/or use.

However, the above requirement was recognised by the Government in 2011. At this time, the Government released the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011 (hereinafter the “RSP Rules”), under the Information Technology Act, 2000. These Rules defined the meaning and scope of sensitive personal information, regulated how such information can be collected and used by service providers/intermediaries, imposed limits of confidentiality on the holders of such data, and required the service providers/intermediaries to take the permission of its users/customers before collecting such information. Simultaneously with the Rules, the Government has been working on a more detailed and elaborate Data Privacy Law, with the most recent iteration of this proposed law being the Data (Privacy and Protection) Bill, 2017 (the “Bill”).

Thus, there currently exist 3 different sources of data privacy law in India – a legally binding 9-bench Supreme Court judgement, the existing Rules, and the proposed Bill. In such a situation, it is pertinent to analyse each of them to understand the requirements of each, and to determine if there is any interplay and/or overlap between these various sources.

The RSP Rules

The RSP Rules have wide applicability, affecting any kind of entity dealing in electronic information (whether for commercial purposes or not). The RSP Rules have their genesis in S. 43A of the IT Act. This section places explicit importance on data security and protection, by imposing a fine of up to INR 5,00,00,000/- (Rupees Five Crores only) on any entity that handles or stores sensitive personal information, but fails to implement reasonable security practices to protect that information. The RSP Rules lend clarity to the section, by detailing what sensitive personal information consists, and elaborating on the security practices and procedures to be followed by the holders of the PII.

Under the RSP Rules, sensitive personal information is any information that is personally identifiable, and may consist of data such as the person’s password, financial information, sexual orientation and medical history, among others. With respect to the security practices and procedures to be followed, the RSP Rules law down multiple guidelines and policies that form the basis of most of the Privacy Policies and Term of Use that we see on websites and applications in India today. This is to ensure that the customers and information providers are fully aware of every activity that the holders of the information carry out. As per the RSP Rules, the information holders are required to publish the exact details regarding what specific PII is being collected, why it is being collected, how the PII is going to be used, how long it is going to be held for, and which third parties are going to be given access to the PII. The information holders are also required to give the customers the option to opt out of the information sharing at any point, pursuant to which they must destroy the PII.

The RSP Rules also mandate the presence of a “Grievance Officer”, to address the discrepancies and grievances of the customers with respect to any PII that they have provided. The details of this Grievance Officer are required to be uploaded and available on the website/application, and the Grievance Officer is required to resolve disputes within one month from the date of receipt, ensuring quick redressal. However, no mechanism for escalating the matter further or appealing the decision of the Grievance Officer has been provided. This is strange considering the nature and importance of the information being dealt with, and that the Grievance Officer is often an employee of the company (and not an independent third party).

Finally, the RSP Rules require the information holder to document and implement detailed security practices and procedures in line with the International Standard IS/ISO/IEC 27001. These practices are geared towards maintaining the security and integrity of the information/data storage system against third party hacks or threats, and for informing the customers about the information holder’s reaction in the event of a security breach.

The Judgement

The Judgement deals with digital information and data privacy under Part S. While discussing the proliferation of digital data and the internet, the judges recognise the need for protecting every citizen’s right to privacy in this sphere as well. Since fundamental rights are inalienable rights available to citizens against the State, the initial discussion revolves around protecting citizens against unjust and undue State surveillance on digital platforms, which allows the State to access PII and keep track of every citizen’s digital footprint. In this context, the judges note that while protecting the right to privacy as a fundamental right is of paramount importance, like every other fundamental right, it too is subject to reasonable restrictions imposed by the State. Each such reasonable restriction is required to fulfil three criteria:

i. A law must permit such restriction, and prescribe the procedure to be followed by the State for imposing the same;

ii.A just cause – this can range from national security (cyber-terrorism) to ensuring the fulfilment of social welfare schemes; and

iii. The measures prescribed for achieving the cause must be proportionate.

After the above, the Judgement moves to discussing the protection of citizen’s privacy on digital platforms, against other citizens/third-parties. It is well-documented that the threats from hacks and/or viruses can be severe, and third-parties can use hacks to break into computer systems and steal the PII of other individuals. To add to the problem, hackers can enter and exit systems undetected, leaving the owner of the PII without any knowledge of the fact that his/her information has been stolen. Thus, in order to ensure the general security of digital platforms, and to ensure that PII is treated in a responsible manner, the judgement lays down nine principles/standards to be followed by every data controller/holder of third-party’s PII:

  1. Clear and complete notice regarding information practices, to be given to the customer;
  2. Opt-in and opt-out options for every customer, exercisable at any time;
  3. The PII should be collected only to the extent required to fulfil the purposes specified in the notice;
  4. The PII should be used, processed, disseminated etc. only in accordance with the purposes specified in the notice;
  5. Customers should be able to access, modify, and/or delete their PII at any time;
  6. Disclosure of PII to third-parties, will be only as provided in the notice, and after consent for the same has been received from the customers;
  7. Implementation of reasonable security safeguards against loss, unauthorised access, destruction, use, processing, storage, modification, deanonymization, unauthorized disclosure or other risks;
  8. Maintaining complete openness and transparency in implementing the above requirements/practices;
  9. Accountability for adherence to the above will be with the data controller;

On a comparison of the above principles with the requirements laid down under the RSP Rules, it is clear that there are no differences. The RSP Rules already cover each of these stipulations in detail, and the judgement does not seem to be adding anything new to the digital data privacy and protection regime in India.

The Bill

The Bill aims to create a separate Data protection and privacy law in India. It aims to define and protect the right to digital privacy in India, by providing for protective measures and penalties/legal recourse for non-compliance, in a manner that is more detailed than that already captured in the RSP Rules. The Bill applies to the whole of India, and like the IT Act, contains a specific provision for bringing offences committed outside India (but against a computer system located in India) under the jurisdiction of the Bill. This is an important requirement, as it takes into account the possibility of a hacker being present outside while performing any breaches under the Bill. Additionally, it is explicitly stated that the Bill shall apply to both State/Government and private agencies when it comes to dealing with personal information.

In general, the requirements regarding data collection from users, notice to users, usage of the data, transfer of data, necessity of consent, and the power of the users to request the deletion of any data, are the same as captured in the RSP Rules and the Judgement. The Bill also puts the responsibility and liability of adhering to the standards in a transparent manner, on the data controller/collector. Where the Bill differs from existing law, is in the creation of a Data Privacy Authority (“DPA”), and the stringent penalties and liabilities that may be imposed on any non-compliant individual and/or organisation. The DPA gets jurisdiction over any complaints made by users or data controllers with respect to any contravention under the Bill, if such complaint has not been addressed satisfactorily by the internal Data Protection Officer of the data controlling entity. The DPA can also initiate suo-motu investigations against any data controllers/processors, and all appeals against decisions of the DPA are to be referred to the Telecom Disputes Settlement Appellate Tribunal.

With respect to penalties and offences, the Bill stipulates that any person/organization handling PII, but not in compliance with the requirements of the Bill, will be punishable with imprisonment (up to 5 years) and fine (extendable up to INR 50,000/-). In cases of unauthorised disclosure, sharing and/or transfer of PII (in contravention to the notice provided to the users), the imprisonment is extendable up to 10 years, and the fine extendable up to INR 1,00,000/-. Additionally, if any customers have been subject to profiling or harassment of any kind, on the basis of the PII collected by them, then the data controllers will be required to compensate them for the financial and mental loss suffered in such a situation as well.

The Bill provides for one more stipulation, not present in any existing law. The Bill legally authorizes the Central Government to carry out surveillance activities and/or investigations by accesing and/or using the PII of internet users in India. Specific authorised officers are required to carry out the surveillance, and on discovering any information that may constitute a threat to the sovereignty or security of the nation, are required to forward the same to intelligence agencies in the Government. The time period of any such surveillance, along with the necessity of the same, and the kind of information that may be collected, are all required to be specified. Finally, such information cannot be stored for a period of one year from the date of collection, unless an extension is granted by the Central Government.

Conclusion

While the data privacy and protection law in India currently stands at that already stipulated under the RSP Rules, the passing of the Bill (or any updated version of the same) could bring significant changes to the same. The Bill is far more detailed and provides greater protection and privacy by way of its requirements for the creation of the DPA and the imposition of stringent penalties. Having a formal grievance redressal mechanism in place, along with the disincentive of imprisonment and hefty fines, will certainly add more teeth to a legislation that is growing in importance. What remains to be seen, is how long the parliament actually takes to enact and formalise this law.

Author: Madhav Rangrass is an Associate with NovoJuris Legal