Decriminalise ‘Frivolous Complaints’ Against Tech Companies To Improve EoDB: ADIF To Govt

The Alliance of Digital India Foundation (ADIF) has urged the law ministry to decriminalise “frivolous complaints” against the key managerial personnel (KMP) of companies to improve the ‘Ease of Doing Business’ in the country.

The think tank, which represents India’s digital startups, submitted its recommendations to the ministry on the issue.

The recommendations are based on an internal study conducted by the ADIF, which found that in most cases there is no direct relationship between the offence and the duties of the executives of the companies. However, such cases lead to unnecessary harassment and interference in business operations and also damage the company’s reputation, it said.

While ADIF has not made the study public, it has submitted it to the law ministry. 

Giving example, an ADIF spokesperson told Inc42 that FIRs registered against a financial services company for a user losing money by sharing OTP or against a video sharing company as some content hurt sentiments of some users are frivolous in nature and have no direct relationship with the executives of these companies.

The ADIF’s study also found that there has been an unintended increase in the number of such offences, and most of the cases against the executives of the companies are related to fraud, cheating, and content.

“In our recommendation, we have not said serious cases should not be heard of. Also, in such frivolous complaints, we are not saying that companies should not be answerable but rather than dragging the founders and the KMP, a nodal officer from the company should be the right representative,” the spokesperson added.

The development comes at a time when the number of complaints against financial services companies is on a rise for online frauds, while tech companies such as Amazon and Meta have also been at the receiving end of such complaints.

The ADIF said that Section 79 of the IT Act provides a safe harbour to intermediaries and courts have upheld this safe harbour protection in various cases. Despite this, there has been a marked increase in such complaints. 

“ADIF suggests that the relevant provisions of IPC and IT Act dealing in the offences of cheating, fraud, criminal conspiracy, etc. may be revisited from digital markets perspective,” the industry body said in a statement. 

Besides, to understand the issue better and avoid dragging KMPs into frivolous matters, the ADIF also called for a preliminary enquiry before registering FIRs. This would help determine the person/ people responsible for an alleged offence, specifically in relation to cases filed against companies, it said. 

It also called for providing training to law enforcement officials, especially at the ground level. 

The ADIF’s study found that most “frivolous cases” against KMP of the companies under the IT Act are registered in Tier 2, 3 and 4 cities as compared to metropolitan cities. 

“The plausible explanation may be that the officers posted in metropolitan areas understand the nature of the companies and the concept of intermediary liabilities,” said the industry body.

In one such major case, Amazon Prime Video’s top executive was questioned by the police in 2021 on a complaint against the OTT platform for its political drama series ‘Tandav’ hurting religious sentiments.