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

Sharma Traders, a sole proprietorship in Jaipur, stores customers' sensitive personal data on its own server. Negligent security allows a hacker to access it and a customer suffers wrongful loss. Which statement is correct under Section 43A?

Sharma Traders may be liable to compensate the customer. Section 43A defines body corporate to include a sole proprietorship engaged in commercial activities, and negligence in maintaining reasonable security practices that causes wrongful loss to a person triggers the duty to pay damages.

  1. ASection 43A cannot apply because Sharma Traders is not a company
  2. BSection 43A applies only if the customer is a company
  3. CSharma Traders may be liable to pay compensation, since a sole proprietorship engaged in commercial activity is a body corporate under the sectionCorrect
  4. DLiability arises even if the firm had implemented reasonable security practices

Explanation

A sole proprietorship engaged in commercial activity falls within 'body corporate' for Section 43A. Liability requires negligence in implementing and maintaining reasonable security practices causing wrongful loss or gain, which is present here. Hence the first option is wrong.

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