CS Professional · Artificial Intelligence, Data Analytics and Cyber Security - Laws and Practice · Data Analytics and Law
A Pune-based fintech firm holds customers' financial details on its own servers. A hacker exploits an unpatched flaw, but no customer suffers any wrongful loss and no one gains wrongfully. The firm had no agreement or law specifying security standards. Which analysis best fits Section 43A?
Compensation under Section 43A requires both negligence in implementing and maintaining reasonable security practices and a resulting wrongful loss or wrongful gain to a person. If nobody suffers wrongful loss or obtains wrongful gain, the compensation liability does not arise, regardless of the breach itself.
- ACompensation liability does not arise under Section 43A because wrongful loss or wrongful gain to a person is a required element, even if negligence existedCorrect
- BLiability arises automatically because the firm is a body corporate holding sensitive data
- CLiability arises only if the Central Government has first convicted the firm
- DLiability arises because the hacker used the firm's computer resource
Explanation
Section 43A requires negligence in maintaining reasonable security practices and that this causes wrongful loss or wrongful gain to any person. Without such loss or gain, compensation under the section does not arise, even if negligence is arguable. The automatic liability option ignores the causation element.
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