Arbitration is an alternative dispute resolution mechanism provided by a stock exchange to resolve disputes between the trading members and between trading members & constituents (i.e. clients of trading members), in respect of trades done on the Exchange. This process of resolving a dispute is faster than other means of redressal by civil courts. Arbitration comes under the Arbitration and Conciliation Act 1996. The Act allows two options— conciliation and arbitration. Conciliation is similar to an out-of-court settlement where the parties find acceptable resolution and a stamp of legal finality is marked on the case. Arbitration, on the other hand, is a quasi-judicial mechanism where arbitrators decide on a case (like a judge or a bench) and pass an order which is called an arbitration award. However, the byelaws of the exchange provide the procedure for Arbitration. The investor can procure a form for filing arbitration from the concerned stock exchange. All the cases have to be filed within 6 months of the dispute arising.

In the recent judgment of Delhi High court in SMT BIBA SETHI Vs DYNA SECURITIES LTD, OMP NO. 63/2007 decided on 17^th March, 2009 Hon’ble Judge, RAJIV SAHAI ENDLAW held that “the part of Byelaw 3 of Chapter XI of NSE Byelaws, to the  extend prescribing limitation of six months for reference of disputes/claims to arbitration is void. The time therefore will be governed by the limitation act.”

The Judgment shall provide a relief to the thousand of investors who has to file the suits in the civil courts on expiry of six Months time for filing the claim with the arbitration. Normally, the broker uses delay/dilatory tactics with the client resulting into loss of opportunity of clients to invoke the arbitration clause. The clients are left with no option but to file suit in the civil court where the adjudication process takes a couple of year. Now, the clients can invoke the arbitration clause within three years i.e. the time prescribed by the law of limitations. The decision of the High Court would also result into substantial reduction in the number of cases filed in the civil court in last two years as these cases can now be adjudicated/referred to the summery proceedings of the arbitral mechanism of the   stock exchanges.

Any Quarry Please Send the mail neeraj@hazenlegal.com

The arrest of famous store room owner at Ghaziabad for allegedly planting secret camera to make clippings of the female customer while using the trial room has shown adverse impact upon our concept of privacy. The peeping cameras are becoming technologically advanced, tiny and easily available at cheaper prices. They can be planted secretly with ease and its pervasive application has contributed to the growing fascination for younger generation obsession with voyeurism. The Ghaziabad incident is not an unprecedented act and various newspapers have reported similar incidents of surreptitiously concealed peeping toms prying into locker rooms, changing rooms of malls, swimming pools in prurient attempts to film unsuspecting victims while in various state of undress.  The said newspaper reports are alarming being a very invasive and intimidating crime which also poses a fundamental challenge to individual privacy.

What is Video Voyeurism?    

A new phenomenon of video voyeurism also known as “cyber peeping” has emerged in recent times where images of private area of subject mostly females are captured without her knowledge and then transmitted widely without her consent thus violating privacy rights. Video Voyeurism is the act of secretly or discreetly photographing certain parts of the body mostly unclothed without the person’s consent. Video voyeurism typically refers to “up-skirt” or “down-blouse” images taken of women without their consent. We have seen the rise in the cases of video voyeurism, where the victims have been clicked without ever knowing that they have been clicked revealing their private parts. The phenomenal growth of the internet and its user, mostly of the younger age has given rise to this “up-skirt and down-blouse photography” which one can view easily at host of video voyeurism websites. The voyeurs who are psychopath to satisfy their lust see surreptitious video surveillance as a form of high-tech hunting and take pride in showcasing their talent in various video voyeurism Web sites which has mushroomed at the World Wide Web and mostly go free taking shelter under the current gap in the law. The Acts of video voyeurism are not only an invasion of a person’s privacy, but are also a serious threat to the liberties of a free society as we know and also against our high moral & cultural values or ethos. These criminal activities undermine the most basic levels of privacy to which every citizen is entitled.

Do we have law to deal with menace of Video Voyeurism?

Realizing the ever growing menace of the Video Voyeurism, the USA, passed federal legislation known as the Video Voyeurism Prevention Act of 2004, which prohibits knowingly capturing an image of private area of an individual by video tape, photograph, film, or any means or broadcast without that individual’s consent and under circumstances in which the individual has a reasonable expectation of privacy. (See relevant Section 1801 of Video Voyeurism Prevention Act of 2004) Thus the said law, make it a crime to secretly record or distribute images of people in places where they have a reasonable expectation of privacy, such as bathrooms, dressing rooms, locker rooms, hotel rooms and mall etc. The law defines a “private area” as the naked or undergarment clad genitals, pubic area, buttocks, or female breast of an individual. The law however makes an exception and does not apply to people engaged in lawful law enforcement or intelligence activities.

In India also, we have seen increasing incidents of video voyeurism due to advance technology that has made today’s hidden cameras tiny, sleek and adapted for WiFi connections to make transfer of the captured film or movie clip to the web easier and faster. Internet is a product of US Technology, so issues relating to Internet are heavily flavoured by US Constitutional and Legal doctrines. The legislature was aware of this problem and there was no stringent law to specifically deal with the menace of video voyeurism which was rampant due to modern technology. The amendment proposed to the IT Act, inserted a new Section 66E which specifically addresses video voyeurism which is inspired by the Video Voyeurism Prevention Act of 2004 of US. The wordings of proposed Section 66E which makes this sort of “cyber peeping” a felony is as under:

“66E  Punishment for violation of privacy”

Whoever, intentionally or knowingly captures, publishes or transmits the image of a private area of any person without his or her consent, under circumstances violating the privacy of that person, shall be punished with  imprisonment which may extend to three years or with fine not exceeding two lakh rupees, or with both

Explanation.- For the purposes of this section–

(a) “transmit” means to electronically send a visual image with the intent that it be viewed by a person or persons;

(b) “capture”, with respect to an image, means to videotape, photograph, film or record by any means;

(c) “private area” means the naked or undergarment clad genitals, pubic area, buttocks or female breast;

(d) “publishes” means reproduction in the printed or electronic form and making it available for public;

(e) “under circumstances violating privacy” means circumstances in which a person can have a reasonable expectation that–

(i)  he or she could disrobe in privacy, without being concerned that an image of his private area was being captured; or

(ii) any part of his or her private area would not be visible to the public, regardless of whether that person is in a public or private place.

Why the Ghaziabad Police have invoked the Indian Penal Code and not the aforesaid provision of IT Amendment Act?

In the reported cases of similar nature the police have invoked Section 294 IPC (obscene acts) and Section 509 IPC (insult to modesty of Women) both of which are bailable as per the 1^st Schedule to the Code of Criminal Procedure, 1973. The 1^st Schedule to the Cr.P.C. categorizes the offences as Cognizable/non cognizable or Bailable/non-bailable. The IT Amendment Act has yet not been notified by the Government and therefore, the offender cannot be booked under newly inserted Section 66E of the IT Amendment, in view of the clear mandate of Article20 (1) of the Constitution of India which says that,  “No person shall be convicted of any offence except for violation of the law in force at the time of the commission of the act charged as an offence….”. However, it would be pertinent to mention here that aforesaid Section 66E is bailable offence as per the scheme of the yet to be notified Act and if it would have been invoked had the amendment act been notified, would not have much difference for it would not have any deterrent effect on the offender as he can walk out freely, the offence being bailable.

Nevertheless, the police should have invoked the provisions of Section 67 IT Act, 2000 (which deals with publication or transmission of obscene information in electronic form) which is stringent penal provision of the IT Act, 2000 as the same is cognizable and non-bailable offence and attracts imprisonment of upto five years and fine upto one lakh rupees in case of first conviction. However, it has been seen that the police in similar cases including the present one have not resorted to Section 67 IT Act, 2000 for the reasons best known to them only. The provisions of Section 67 IT Act, 2000 is clearly attracted as there has been publication or transmission of clippings of female client in various state of undress and same has been transmitted, generated or received stored in electronic/computer equipment which is magnetic, optical or similar device. Thus, the offence is complete in view of Section 67 IT Act read with Section 2 (r) IT Act(defines “Electronic Form”). The provision of Section 67 IT Act, 2000 and Section 2 (r) IT Act is reproduced below:

“67. Publishing of information which is obscene in electronic form.

Whoever publishes or transmits or causes to be published in the electronic form, any material which is lascivious or appeals to the prurient interest or if its effect is such as to tend to deprave and corrupt persons who are likely, having regard to all relevant circumstances, to read, see or hear the matter contained or embodied in it, shall be punished on first conviction with imprisonment of either description for a term which may extend to five years and with fine which may extend to one lakh rupees and in the event of a second or subsequent conviction with imprisonment of either description for a term which may extend to ten years and also with fine which may extend to two lakh rupees.”

“Section 2 (r)  “electronic form” with reference to information means any information generated, sent, received or stored in media, magnetic, optical, computer memory, micro film, computer generated micro fiche or similar device.”

Thus, not invoking the provisions of Section 67 IT Act, 2000 which has a deterrent effect on the offenders as well as which would deter the prospective offenders to commit the crime, in a way amounts to shielding the criminal from the criminal process of law and would encourage them to commit the crime with impunity without any fear of law as they know that they can walk out freely, in view of bailable sections slapped on them by the police.

If Any Query Send the mail in neeraj@hazenlegal.com

There is lack of security culture amongst the user of computer, computer system, and computer networks. The same is evident from the recent report of Anoushka Shankar (daughter of the legendary music maestro Pandit Ravi Shankar) email hacked into by an offender who took control of some very private photographs stored in the inbox of the email.

Pandit Ravi Shankar has made a complaint to Union Home Ministry that his daughter is blackmailed and threatened via email by some unknown person. Later the complaint was referred to the Delhi Police and the investigation of the case was taken up by Inspector Pawan Kumar under the supervision of ACP Sanjeev Yadav elite Special Cell of Delhi Police. The unknown accused person was allegedly blackmailed and threatened Anoushka via emails that he would make some of her photographs public found in her email inbox, if his demand of $ 100,000 is not paid by her. The unknown accused person apparently hacked the email account of Anoushka and took control of some of private photographs stored in the inbox.

The aforesaid officers of Elite Wing of the Delhi Police, the Special Cell, did a commendable job. Apparently, the accused person took control of the password of the email account of Anoushka by hacked into it. He found some very private photographs of her and thought to make some easy bucks out of it, by blackmailing Anoushka as it would cause great embarrassments to the father daughter duo who are internationally recognized musicians.

The special cell cops traced the internet protocol address (IP address) from which the Emails were sent. An IP address or “Internet Protocol” address is the unique number assigned to every device such as a computer on an internet network so that data can be routed to and from that device and no other. It is much similar to a postal mailing address that identifies the physical location of your post office and allows the mail carrier to know where to deliver the mail, a device’s IP address is what allows the internet to know where to send the data destined for the particular computer. It’s not an easy task to trace the physical location of the computer to which an internet IP address has been assigned and thereby identify the computer’s user as we are made to believe through some Hollywood movies. It’s not that just you located the IP address, you located a criminal. It’s nowhere that easy.

The IP address are assigned to a netuser not based on his location but from the Internet service provider (ISP) from where he gets the net connectivity, which may be different from user to user, if they avail the services of different ISPs.  Even, if the user avails the services of the same ISPs there are no hard & fast rules that the IP addresses necessarily appear “close” to one another in any sense, other than the convenience of the ISP.

The IP address can be tracked from the header of the Email IDs. There are various IP address locator available like http://www.whois-search.com from where one can get information about the ISP address to which the particular IP address belongs. Some additional information may be available that indicates the general area that an IP address might reside, i.e. the location of the country or city, if ever, but nothing more specific than that. Here the help of the ISP is required to pinpoint the location and identity of the user. The ISP that allots the IP address to particular computer knows where the user lives. But the ISP’s would not provide the information to the general public due to the strict privacy policy which they adhere to. Here the role of law enforcement machinery comes into picture. The Police and the courts can, with appropriate cause, direct the ISP that the requisite information with respect to the IP addresses be provided. The Section 91 of Code of Criminal Procedure, 1973 and Section 69 of the Information Technology Act, 2000 makes provision to this effect.

The extortive emails sent by the offender were found to be sent mostly from Gmail Account. However, the Gmail blocks the IP address of the sender and it is not visible to the recipient of the email.  However, one email was found to be from other email service provider and it was found that it had been sent from India; rest of the emails were found to be from Dubai, elsewhere in the UAE, and the USA. The police tracked down one of the IP address to a residential address located at MUMBAI and nabbed the accused person, whose name came to be known as Junaid Jameel Ahmed Khan who confessed to his crime.  The cops seized the hard disk of the computer from which the alleged emails were sent, prepared the mirror image of the same and the hard disk was sent to the Forensic Science Laboratory, Hyderabad for further analysis. The cops also seized the passport of the offender through which it was found that the offender was at Dubai on the same date when the extortive emails from Dubai were received by Anoushka, which clearly corroborates the offence committed by the offender.

The Special Cops did a commendable job in nabbing the accused person who was blackmailing Anoushka and giving her sleepless nights. The police have seized and preserved the crucial digital evidences and other documentary evidences which would prove the guilt of the accused person. Cyber technology is an extremely complicated field and the internet is being increasingly used as a place to commit crimes using personal computers, as well as network-based computers. It clearly shows that the Special Cell Cops know their job; they not only understand the criminal mindset but also Computers and networks, how they work, and how to track down information on them and know the basics of gathering evidence and bringing offenders to justice.

The Special Cell cops registered the case under Section 386 Indian Penal Code which deals with offence of extortion. The maximum punishment for such a crime, if proven guilty, is 10 years’ imprisonment. The offence is cognizable and non bailable. The accused hacked into the email of the Anoushka, however the police at the preliminary investigation stage did not invoked Section 66 IT Act, because the modus operandi of the offender was not known as how he took control of the private photographs of Anoushka, which during investigation and seizure of the computer become apparent that the same has been copied into his computer by hacking the email id of Anoushka. Now Section 66 IT Act has been added as the same is attracted to the offence. The material evidence seized by the cops proves the involvement of the offender as the IP address has been traced to his residence. Further, the examination and analysis of the seized hard disk of the computer of offender at the forensic laboratory would prove that the emails have been hacked into and photographed copied by the offender from the inbox of the email. If it is further revealed by the analysis of the hard disk that the photographs (read obscene or nude) found in the possession of the offender, have been transmitted by him electronically, say some of his friends, the same would amount to publication in electronic form which would be squarely covered and punishable under Section 67 of the IT Act, 2000 as well.

Thus, the excellent investigation done by Inspector Pawan Kumar under the supervision of ACP Sanjeev Yadav of the Special Cell, Delhi Police should be applauded which gives a warning to the prospective criminals that they are not anonymous in the virtual world. Their activity on the internet leaves a footprint through which they can be traced and brought to justice. However, at the same time the netizens need to be educated about the best security practices they should adopt and keep in mind while they use computers, computer systems, computer networks and should not fell into the trap of cyber criminals, like Anoushka. After all, prevention is better than cure.

Any Quarry Please Send the mail nkacyber@gmail.com

Non-compete clause as central theme and luring clause to cheat the buyer company

The Non-Compete clause in acquisition of high stake business forms a central and most important clause in which buyers insist that Sellers enter into an obligation not to compete with the Buyer, the acquired entity and its business for a given period. This type of a restrictive clause is termed “covenant not to compete”, “promise not to compete”, or “contract not to compete”.

A non-compete covenant may be aimed at preventing various events, which can occur after the entity is sold, e.g. a Seller may start operating a competing business or set up a new company that will compete with the acquired entity or any of its activities; solicit employees or contact former clients; take away the data base, confidential records, know-how, IPR’s or otherwise interfere with the business sold. All the above actions could impair the entity’s goodwill. A non-compete provision is often supplemented by a penalty clause. The aim of such a provision is to protect and preserve the value of the acquired entity and to obtain some sort of certainty that the Seller does not re-enter the market soon after the sale has been completed. Without the non-compete clause the sale of business agreements would be meaning less and the companies won’t spend billion of dollars for acquiring the entity for operational convenience, increased profitability, if they have to again face the stiff competition.

What if one lures a established business house to sell an entity with a covenant in the Purchase Agreement that bars the seller to take on competing business for a period of say 5 years and induces the established business house to enter into a contract and gets purchase consideration and later on through their proxies opens up a competing company with a similar line of business with the database, technical know-how, IPR they sold to the buyer along with the entity. Is it mere violation of the terms of contract when they from the very beginning at the time, when they induced the buyer to enter into contract, have malafide intention to set up a competing parallel business with poaching of key employees along with database, technical know how, trade secrets & IPR’s and the inclusion of non-compete clause was mere a farce to induce the buyer to cough up millions of dollars in acquiring the business set-up under the belief & false representation by the seller that he would not re-enter the market for a specified period of time after the sale has been completed. It is a well crafted design to cheat the innocent corporate house in the garb of commercial contract.

One such case of cheating came to notice recently where the directors of lesser known logistics company approached a renowned logistics company having its offices all over India to sell their entity. The management of renowned logistics company was led to believe that after the take over of the company, the promoters directors of the vendor company won’t re-enter the market scene & compete with the buyer company for a period of five years and the buyer company would have an competitive edge with the competitive state of art software developed by the vendor company through its IT department for inventory management solutions and databases comprising of business strategies, methodologies, client profile containing specific client profile, client inventory details, inventory cost data etc. The buyer logistics company with offices all over India induced by the vendor, seen it as a golden opportunity to acquire the company to get competitive edge in the market, expand its market share and attain near monopoly. The buyer company and the vendor company entered into a Share Purchase Agreement (SPA) for the purchase of 100 % shareholding from the existing shareholders/directors of the vendor company. There was one Non-Compete Clause of the SPA which barred the erstwhile directors (sellers) to take on competing business involving providing logistic services in relation to warehousing and transportation to third parties for a period of 5 years from the execution of the agreement. It seemed to be a smooth business takeover where the buyers spend around Rs. 60 Crores to take over the entity from the vendor. However, it was not the case; the crooked vendor directors have something else in mind. They have devised a meticulously planned well crafted strategy to cheat the well known logistics company and make them poorer by Rs. 60 Crores.

Facts of the case

• The Vendor Company lets say ABC company is a well known logistics company having its offices all over India engaged in the business of cargo handling including freight forwarding, custom clearance, transportation and material handling, warehousing and warehouse management. The company basically provides domestic logistics management services to leading telecom segment players like Bharti Airtel, Tata Teleservices, Reliance Telecom, Ericsson India, Motorola, Siemens, etc.
• The directors of lesser known vendor company say XYZ Ltd. approached the management of ABC Company and induced them to buy/takeover the XYZ Ltd. They represented that they have a pool of talented employees who are developing a state of art software which is basically inventory management software and provides complete warehousing solution applications for Telecom Industry. Further, the XYZ Ltd. in order to cater to the requirements of its esteemed clients maintained the huge database on its server containing inter-alia specific client profile, client inventory details, inventory cost data, business strategies and methodologies etc. The software was very crucial and important to provide effective warehouse support and other value added services to the clients and along with the valuable data base it can give the buyer company ABC Ltd. a competitive edge over other competitors, if it acquires, XYZ Ltd.
• The management of the ABC Ltd. entered into a Share Purchase Agreement (SPA) for the purchase of 100 % shareholding from the existing shareholders/directors of the XYZ Ltd. There was one Non-Compete Clause of the SPA which bars the erstwhile directors (sellers) to take on competing business involving providing logistic services in relation to warehousing and transportation to third parties for a period of 5 years from the execution of this agreement. The management of the ABC Ltd. were under belief that they were acquiring the XYZ Ltd. with its assets, human resources, IPRs consisting of copyrighted software and huge data bases.

Modus Operandi

• The Management of ABC Ltd after take-over of the XYZ Ltd. noticed that one recently launched logistics company hereinafter referred to as rival company (incorporated about 5 months after the take over of XYZ Ltd.) approached some of esteemed clients of the ABC Ltd. and made bids at slightly lower prices than the ABC Ltd. The Rival Company surprisingly, used same methodologies, strategies as that of ABC Ltd.; as if they knew beforehand what the management of ABC Ltd. are upto which looked quite weird. The management of ABC Ltd. was helpless as they could not do anything as there is nothing illegal in approaching or soliciting other clients even if it means huge loss to ABC Ltd. on the well established legal maxim “Damnum Sine Injuria”[i].
• The management of ABC Ltd. kept it fingers crossed until one day an ex-employee of the ABC Ltd. working at the Rival company informed the management of ABC Ltd. that the management of rival company Rival company has been using software which is nothing but exact replica of the customized software the ownership of which now vests with the ABC Ltd.. The said employee also send an e-mail to Head IT Development Team of the ABC Ltd., attaching the executive file of the said software for further analysis to find out the copying/duplicity of the copyrighted work.
• On analysis of the copyrighted software with the software purportedly developed by the rival company, it was revealed that the literal elements of copyrighted software i.e. source code, as well as its non literal elements i.e. the structure, sequence and organization, that is to say overall organization of a program, the structure of a program’s command system, the program’s flow charts, the screen presentation, graphical user interface etc. has been literally copied into the software purportedly developed by the Rival company
• The conduct of the rival company in approaching its customers, submitting quotations/bidding to its customers just below price quoted by ABC Ltd., using methodologies, operations similar to ABC Ltd., using its copyrighted software for a new company which has just come into operation could not have been possible without unauthorized accessing the huge proprietary database maintained in its server which was acquired by ABC Ltd. along with take over of XYZ Ltd.. Further, the developing such methodologies, operational procedures and development of such software can only be possible by spending resources, manpower, collection of data over a long period of time and the startling fact was that the rival company has just came into operation merely 5 months after the take over of XYZ Ltd. and it was highly improbable that it managed the impossible with its limited resources within such a short span of time.
• Later on it was revealed that one key employee of the development team who was having dominion and control over the database of the complainant and also part of the software development team has resigned in the suspicious circumstances and joined rival company along with few other key employees and shifted the acquired database of the ABC Ltd. to rival company. Later on it was revealed that the directors of rival companies are mere puppets whose strings are in the hand of erstwhile directors of XYZ Ltd. who have since resigned after the take over by the ABC Ltd.

Legal Propositions

The offence of Cheating

• It was now revealed that the intentions of the erstwhile directors from the very beginning of entering into contract with management of ABC Ltd. was malafide and the inclusion of non-compete clause was mere a farce to induce the management of ABC Ltd. to enter into Share Purchase Agreement and pay the huge purchase consideration of Rs. 60 crores. The erstwhile directors have dishonest intention from the very beginning to start a competing company with the misappropriated database and hacked software code with the help of their ex-employees whom they have induced to join the rival company after they sold XYZ Ltd. The Ex-employee acting under the instructions of accused erstwhile directors of XYZ Ltd. copied and took away databases consisting of specific client profile, client inventory details, inventory cost data, business strategies and methodologies etc. and other software containing the crucial clients information which has been used by rival company launched by erstwhile directors through their proxies with impunity to lure or solicit the clients of the ABC Ltd. to divert business from them causing major loss to them.
• The factual matrix of the case clearly discloses the offence of cheating which is defined under Section 415 IPC in following words:-

“415 CHEATING.

Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to “cheat”.

Explanation : A dishonest concealment of facts is a deception within the meaning of this section.”

• Clearly, the erstwhile directors of the XYZ Ltd. induced the management of the ABC Ltd. to enter into contract and pay huge purchase consideration on the false representation that they would not enter the market scene for the period of 5 years; the stipulation to this effect was also incorporated in the written agreement. Had they not incorporated this non-compete clause into written agreement, the deal of the take over of the company would not have materialized. But the intention of the erstwhile directors of the company was malafide from the very beginning. They hatched a criminal conspiracy with some of the key employees of XYZ Ltd. and sold the company XYZ Ltd. with the said non-compete clause and later on they through the ex-employees misappropriated the huge database and software source code and started new company with similar line of business with puppet directors on board. It’s a unique MO adopted by these corporate fraudsters, who again are establishing the company and will certainly look for other corporate prey and defraud them in same manner in the way, they defrauded the management of ABC Ltd.

Other penal provisions also attracted

• Section 66 IT Act, 2000: The illegal hacking of the computer source code from the computer resource of the ABC Ltd. by its Ex-employee and its misappropriation to make infringed software for rival company has diminished the value and utility of the information residing in the system of complainant company, as the same has fallen into the hands of rival who used the same along with other stolen secret trade information, computer database to lure the clients of complainant which caused it huge losses. Thus, the accused persons have committed the offence punishable under Section 66 of the Information Technology Act, 2000.
• Section 408/409 Indian Penal Code: Further, as the ex-employees and erstwhile directors were entrusted with the data of the XYZ Ltd. while they were in employment/directors of the company which they misappropriated for their illegal gain causing corresponding loss to the ABC Ltd., the offence u/s 408/409 Indian Penal Code is also attracted.
• Section 63/63 B Copyright Act: Further, the proprietary database along with source code of the software constitutes literary work within the meaning of Section 2 (o) of the Copyright Act, 1957 & therefore copyrightable work within the meaning of Section 13 of the Copyright Act, 1957. Therefore, any illegal copying, use of the misappropriated data attracts the offence U/s Section 63 of the Copyright Act. Further, as the copyrightable source code of the ownership of which now vests with ABC Ltd. has been copied to make the infringing software, it also attracts offence u/s 63 read with Section 63-B as there has been a knowing use of infringing software by the accused persons.
• A case has been registered by the Cyber Cell, CBI which constituted a team and conducted raid at the offices of the rival company situated at Delhi and NOIDA. During the raid, the CPU, hard disk, compact disk containing the infringed software/database and other incriminating documents were seized. Further, during the raid, the offices of the erstwhile directors of XYZ Ltd. was found at the corporate office of rival company. Further, the disclosure of few employees/officials of the rival company disclosed that the erstwhile directors were in the actual control of affairs of the rival company and directors of the said company are mere puppets in the hand of those erstwhile directors.

So, isn’t it a clear case of cheating. What do you think?