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

Mehta Analytics Pvt Ltd holds sensitive personal data of customers on its own servers. Because it was negligent in maintaining reasonable security practices, a breach caused wrongful loss to a customer. What is the consequence under Section 43A of the IT Act, 2000?

The company is liable to pay damages by way of compensation to the affected customer. Section 43A makes a body corporate liable when negligence in maintaining reasonable security practices over sensitive personal data causes wrongful loss or gain; intent need not be proved.

  1. AThe body corporate is liable to pay damages by way of compensation to the affected personCorrect
  2. BOnly the directors face imprisonment and no compensation is payable
  3. CThe customer must first prove that the company intended to cause the loss
  4. DThe company is liable only if the data was stored outside India

Explanation

Section 43A applies where a body corporate handling 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 gain. Such body corporate is liable to pay damages by way of compensation. Negligence, not intent, is the test, so the intent option is wrong.

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