The Internet as we know it today owes its existence to a rule that was crystallized in the mid-90s, when bulletin boards ruled the roost. In 1994, an unidentified user of Prodigy Communication's ‘Money Talk' bulletin board wrote a post claiming Stratton Oakmont, a securities investment firm, had committed criminal and fraudulent acts in connection with an IPO. Prodigy was sued by Stratton Oakmont for defamation. The US court hearing the matter held in favour of Stratton Oakmont, and that Prodigy was liable for the content carried on its bulletin board.

(If these names sound a little familiar, Stratton Oakmont was the firm founded by Jordan Belfort, and featured in the Martin Scorsese film TheWolfof Wall Street.)

To a lawyer, or layman, reading this today, this appears to be an odd ruling – why hold the conduit liable for content it did not author or inspect? Over the past 26 years, online content regulations around the world have moved to protect online Intermediaries from liability for the third-party content they carry. This started, after and in response to the Prodigy ruling, with the US Congress enacting Section 230 of the Communications Decency Act, 1996, that prevents online intermediaries from being treated as the publisher of content from their users. This legal concept finds an echo in Section 79 of India's Information Technology Act, 2000 ("IT Act").

Under Indian IT laws, the immunity from third party content to intermediaries is granted with caveats - the intermediary has to fulfil certain conditions set out under Section 79(2) and Section 79(3) i.e., (a) not participating in the cycle of content generation (in any form) at any step, (b) follow prescribed due diligence requirements and (c) not aid, abet or conspire to commit an unlawful act. In addition, the protection lapses if an intermediary with “actual knowledge” of any content used to commit an unlawful act, or on being notified of such content, fails to remove, or disable access to it. Online intermediaries have to comply with the due diligences and obligations set out under Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (“IT Rules, 2021”).

Over the years, Indian court jurisprudence on Section 79 has developed significantly. The term “actual knowledge” was analysed by the Indian Supreme Court in Singhal vs Union of India ("Shreya Singhal Judgement")1. This ruling read down Section 79(3)(b) 2 to mean "upon receiving actual knowledge that a court order has been passed asking it to expeditiously remove or disable access to certain material must then fail to expeditiously remove or disable access to that material". In effect, the court reduced the burden on intermediaries by limiting their obligation to take down content to instances where it is required to do so by either (i) a court order, or (ii) a notification by an appropriate government.

Online intermediaries in India have continued to enjoy the benefit of intermediary safe harbor under the aegis of this ruling. The court's judgment has ensured that requiring an intermediary to take down content is not a trifling matter; it required application of mind and following prescribed procedures under law.

But there is a danger that this protection may be diluted.

On June 6, 2022, the Ministry of Electronics and Information Technology ("MEITY") issued a draft of the proposed amendments to the IT Rules 2021 ("Draft Amendment"). The Draft Amendment can be viewed here. There are certain elements of the Draft Amendment that may potentially deviate from the Shreya Singhal Judgement and principles of intermediary protection.

The Draft Amendment proposes the constitution of a Grievance Appellate Committee, under Rule 3(3) 3 by the Indian Central Government. Users of intermediary platforms can appeal decisions of an Intermediary's grievance redressal mechanism to the Grievance Appellate Committee. Most tellingly, the Intermediary is bound to comply with the decision of the Grievance Appellate Committee. At present, there is no clarity regarding the members who will serve on the Grievance Appellate Committee.

The proposed changes merit analysis from the perspective of the Shreya Singhal Judgement and Indian administrative law.

Negating Shreya Singhal? The mandate for intermediaries to comply with the decision of the Grievance Appellate Committee may effectively nullify the protection granted to them under Shreya Singhal. A blanket compulsion to abide by the ruling of the Grievance Appellate Committee disregards the interpretation of actual knowledge in the Shreya Singhal Judgement. Under that case law, actual knowledge is restricted to being informed in the form of a court order or appropriate government notification. It is not clear if the ruling/requirement to take down content pursuant to the decision of the Grievance Appellate Committee would fall within the set-out criteria.

Alternatively, if it is clarified that compliance is predicated solely upon actual knowledge per the Shreya Singhal Judgement, the obligation to comply under this Rule is nullified. That is to say, even after receiving an order from this Grievance Appellate Committee, online Intermediaries can safely wait for a civil court's order, or the notification by an appropriate Government, under the Shreya Singhal formulation. But is this the intention of these amendments, and then what is the point of constituting a whole new committee?

Separation of powers: The Constitution of India, 1950 separates the Indian democracy into three wings – legislative (i.e., formulation of law), executive (enforcement of law) and judiciary (i.e., interpretation of the law). By the current wording of the Rule, the Central Government (i.e., the executive) appears to don the role of the judiciary via the appellate procedure. While the constitution of a committee is (most likely) within the ambit of an executive, the committee is (in effect) acting as a quasi-judicial body. This may transgress the bifurcation of powers of the executive wing and the judicial wing, whereby the former is adjudicating matters reserved for the latter.

Substantive ultra vires: While Section 79 of the IT Act provides for the appropriate government the authority to direct an intermediary to take down content; it does not envisage setting up an independent body to regulate the activities of an Intermediary. As per Indian Supreme Court precedents, the exercise of power via subordinate legislation must be within the tenets of the parent enactment. Consequently, the constitution of the Grievance Appellate Committee may not be valid due to want of a statutory basis.

Principles of natural justice: The appellate procedure is seemingly unilateral where the decisions are formulated on the basis of the user's grievance, with no opportunity for an intermediary to present its rationale regarding the contested decision. This mechanism overlooks one of the principles of natural justice - audi alteram partem i.e., no one shall be condemned unheard. Or is the Grievance Appellate Committee intended to act as a parallel court, hearing arguments and pleadings, receiving and adducing evidence, and examining witnesses?

If the Draft Amendment is enforced in its current form, it will likely be subject to judicial challenges surrounding the extent of powers of the executive and free speech. Contrarily, due to the multiple loose ends in the Draft Amendment and news reports suggesting discontentment in stakeholders, it may undergo revision prior to its enforcement.

To be clear, this is not the first time the ‘death of safe harbour' has been pronounced; this has been a recurring theme in Indian jurisprudence for more than a decade. That said, a Grievance Appellate Committee that in effect bypasses the need for judicial review and/or duly issued executive orders does threaten the Shreya Singhal dictum. The concept of Intermediary safe harbour will likely survive, in one form or another – as it has for the past quarter century.

Footnotes

1 AIR 2015 SC 1523

2 The protection from liability for third party is rescinded if: 'upon receiving actual knowledge, or on being notified by the appropriate Government or its agency that any information, data or communication link residing in or connected to a computer resource controlled by the intermediary is being used to commit the unlawful act, the intermediary fails to expeditiously remove or disable access to that material on that resource without vitiating the evidence in any manner'.

3 The proposed Rule 3(3) reads "Appeal to Grievance Appellate Committee(s) :–(a) The Central Government shall constitute one or more Grievance Appellate Committees, which shall consist of a Chairperson and such other Members, as the Central Government may, by notification in the Official Gazette, appoint; (b) Any person aggrieved by an order made by the Grievance Officer under clause (a) and clause (b) of sub-rule (2) of rule 3 may prefer an appeal to the Grievance Appellate committee having jurisdiction in the matter within a period of 30 days of receipt of communication from the Grievance Officer; (c) The Grievance Appellate Committee shall deal with such appeal expeditiously and shall make an endeavour to dispose of the appeal finally within 30 calendar days from the date of receipt of the appeal; (d) Every order passed by the Grievance Appellate Committee shall be complied by the concerned Intermediary."

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