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CS Professional · Artificial Intelligence, Data Analytics and Cyber Security - Laws and Practice · Data Analytics and Law

A Mumbai analytics firm stores customer records on its own servers. Under the Information Technology Act, 2000, when does Section 43A make the firm liable to pay compensation?

Section 43A makes a body corporate liable to pay compensation when it handles sensitive personal data in a computer resource it owns, controls or operates, is negligent in maintaining reasonable security practices, and thereby causes wrongful loss or wrongful gain to someone.

  1. AWhen it handles sensitive personal data in a computer resource it owns, controls or operates, is negligent in maintaining reasonable security practices, and thereby causes wrongful loss or wrongful gain to a personCorrect
  2. BWhenever any personal data is processed, even if no loss or gain results and security was adequate
  3. COnly when the firm is a registered company; firms and sole proprietorships fall outside the section
  4. DOnly when the data is transferred outside India without the Central Government's permission

Explanation

Section 43A requires a body corporate handling sensitive personal data or information in a computer resource it owns, controls or operates, negligence in reasonable security practices, and resulting wrongful loss or gain. The Explanation defines body corporate to include firms and sole proprietorships, so the third option is wrong. Cross-border transfer is not a condition of the section.

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