B.N. Firos vs State Of Kerala

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 79 OF 2008

B.N. FIROS ...APPELLANT(S)

VERSUS

STATE OF KERALA & ORS. ...RESPONDENT(S)

JUDGMENT

RANJAN GOGOI, J.

1. The appellant–B.N. Firos –

proprietor of Comtech IT Solutions,

Thiruvananthapuram had filed a Writ

Petition challenging a Notification dated

27th December, 2002 issued under Section

70(1) of the Information Technology Act,

2000 (hereinafter referred to as “I.T.

Act”) declaring the computer, computer

system and computer network specified in

the Schedule to the Notification to be 2

“protected systems” under the I.T. Act.

The vires of Section 70 of the I.T. Act

itself was also challenged. The Writ

Petition was dismissed. The said order of

dismissal has been affirmed in writ appeal

by a Division Bench of the High Court and

the review filed there against has also

been dismissed. Aggrieved, this appeal(s)

has been filed.

2. The brief facts that will be

required to be noticed are as follows:

In the writ/original petition

filed by the appellant before the High

Court it is stated that the appellant is

the proprietor of Comtech IT Solutions, an

Information Technology concern which is a

member of Microsoft Developer Forum, a

professional group of developers

technically supported and guided by the

Microsoft Corporation (India) Pvt. Ltd. 3

3. In the year 1999, the 1st

respondent – State of Kerala through the

4th respondent – Centre for Development of

Imaging Technology (C-DIT),

Thiruvanthapuram, a Total Solution

Provider (TSP), had conceptualized a

single window multiple agency bill

collection system. The project was called

“FRIENDS” (i.e. Fast, Reliable Instant,

Efficient, Network for Disbursement of

Services). According to the appellant –

writ petitioner, Microsoft Corporation of

India (Pvt.) ltd. (hereinafter referred to

as “Microsoft”) had offered to provide the

Application Software and System Software

free of cost for the pilot project. The

appellant – writ petitioner, being a

member of the Microsoft Developer’s Forum,

was required by Microsoft to carry out the

system study and to develop the pilot 4

project for the “FRIENDS” project.

4. After completion of the

preliminary work, Microsoft placed orders

with the appellant on 23rd May, 2000

pursuant to which the Software developed

by the appellant was handed over to the 4th

respondent and the Software was

implemented as a pilot project at the

first FRIENDS Centre at Palayam,

Thiruvanthapuram in June 2000. As the

said project was a success, the 1st

respondent decided to extend the same to

its 13 District Centres.

5. By a communication dated 31st

January, 2001, the 4th respondent informed

the appellant that the FRIENDS project,

for which the appellant had developed the

Application Software free of cost as part

of the developers forum agreement with

Microsoft, has been successful and the 5

Government has decided to establish

FRIENDS Integrated Citizens Service

Centres in all the other 13 districts of

the State for which the respondent No.4

would like to associate with the appellant

for customization of the FRIENDS

application software. Pursuant thereto an

Agreement cum Memorandum of Understanding

dated 19th February, 2001 was entered into

between the appellant and the 4th

respondent.

6. According to the appellant as the

4th respondent was attempting to transfer

some of the essentials of the FRIENDS

application software to another concern,

namely, M/s Stanhop Technology, a criminal

proceeding was instituted by the appellant

against said M/s Stanhop Technology.

Apprehending further attempts, an

application for registration of his 6

copyright in the FRIENDS application

software was also filed by the appellant

before the Registrar of Copyrights, New

Delhi.

7. On the other hand, the 4th

respondent had filed a suit i.e. O.S. No.8

of 2002 before the District Court,

Thiruvananthapuram seeking a declaration

that the 4th respondent is the exclusive

owner of the copyright and the sole owner

of the Intellectual Property Rights of the

FRIENDS application software. In view of

the aforesaid suit for infringement filed

by the 4th respondent, the Registrar of

Copyright rejected the appellant’s

application for registration of copyright

in the “FRIENDS” software leaving the

matter to be agitated after the decision

in the civil suit.

7

8. The 4th respondent had also

instituted a criminal case against the

appellant for infringement of the

application software.

9. While the said proceedings were

pending, the State Government had issued a

Notification dated 27th December, 2002

under Section 70(1) of the I.T. Act

leading to the writ proceedings in

question wherein the impugned orders have

been passed by the High Court.

10. Before the High Court the

appellant had founded his claim to the

reliefs sought primarily on the ground

that the copyright in FRIENDS application

software had vested in the appellant under

Section 17 of the Copyright Act, 1957 and

the Notification dated 27th December, 2002 8

issued under Section 70(1) of the I.T. Act

was an infringement of the said right.

The challenge to the vires of Section 70

of the I.T. Act was founded on the basis

of excessive delegation of the legislative

power inasmuch as, according to the

appellant, the power of declaration as a

“protected system” was unbridled, unguided

and uncanalized.

11. The High Court negatived the

challenge made by holding that the

provisions of Section 2(k) of the

Copyright Act, 1957 which defines

“Government work” and Section 17(d) of the

same Act on one hand and Section 70 of the

I.T. Act has to be construed harmoniously.

According to the High Court, if the said

provisions are to be read and construed

harmoniously the power of declaration of

a “protected system” would be only in 9

respect of “Government work”, the

copyright in which of the Government is

acknowledged by Section 17(d) of the

Copyright Act, 1957. It is on the

aforesaid broad basis that the contention

of the appellant as regards invalidity of

Section 70 of the I.T. Act was repelled.

12. Insofar as the challenge to the

Notification dated 27/12/2002 under

Section 70(1) of the I.T. Act, based on a

claim of a copyright, is concerned the

High Court took into account the fact that

the registration of copyright sought by

the appellant had been negatived by the

Registrar of Copyright and that the civil

suit in this regard filed by the 4th

respondent was pending. The High Court

further took the view that if according to

the appellant he was the first owner of

the copyright, as claimed, nothing 10

prevented him from instituting a suit for

infringement under Sections 60 and 61 of

the Copyright Act, 1957 or from resorting

to arbitration which is contemplated by

clause 7 of the agreement dated 19th

February, 2001.

13. The High Court, however, went a

little further and took into account

clause 10 (under the head “Role of

Government of Kerala”) of the Memorandum

of Understanding between Total Solution

Providers for E-Governance and Government

of Kerala. The said clause 10 reads as

under:

“10. Departmental Task Force will monitor the actual implementation ofhte project vis a vis the milestones set by the TSP

Intellectual Property Rights of the system developed by all the TSPs and Departments shall vest in the Government of Kerala.

Government of Kerala will be 11

free to deploy the same system or with modification in any of the Government/Semi Government/Quasi Government Department/ Organization.”

The High Court held that the 4th

respondent was a government agency and the

Government had created the above agency as

a Total Solution provider for developing

software for the Government. The High

Court further held that the 4th respondent

was bound by the above clause and the

appellant who undertook technical support

by executing an agreement with the 4th

respondent was also bound by the above

clause 10. The IPR copyright in respect

of “FRIENDS” software therefore vests in

the government and there is no clause in

the agreement between the appellant and

the 4th respondent to show that the 4th

respondent has assigned the IPR right to

the appellant. The High Court, 12

accordingly, held that the Intellectual

Property Rights in the software vested in

the Government so as to entitle it to

declare the same as a “protected system”

under Section 70(1) of the I.T. Act.

14. We have heard the learned counsels

for the parties.

15. Shri R. Basant, learned Senior

Counsel appearing for the appellant has

basically reiterated the arguments

advanced before the High Court

additionally reinforced by the amendments

made to Section 70 of the I.T. Act which

enables the exercise of the power to

declare any computer resource as a

“protected system” only if the same

directly or indirectly affects the

facility of Critical Information

Infrastructure which has been defined by 13

the Explanation to Section 70(1) of the

I.T. Act as:

“Explanation: For the purposes of this section , “Critical Information Infrastructure” means the computer resource, the incapacitation or destruction of which, shall have debilitating impact on national security, economy, public health or safety.”

16. Shri Basant has submitted that in

clear distinction to what had been

introduced by the Amendment (Act No.10 of

2009) the power under the erstwhile

Section 70(1) of the I.T. Act to declare

any computer, computer system or computer

network to be a protected system was

uncanalized and unguided delegation of

legislative power. The learned counsel

has submitted that the Amendment brought

in by Act No. 10 of 2009 reinforces the

contention of the appellant and vindicates

the constitutional fragility of Section 14 70(1) of the I.T. Act as it then existed.

17. Shri Basant has further submitted

that from the materials on record there is

no manner of doubt that the appellant had

on its/his own developed the software and,

therefore, under the provisions of the

Copyright Act, 1957 the appellant must be

acknowledged to be the first owner of the

copyright. Incidentally, the computer

programmes, tables and compilations

including computer databases have been

included in the definition of “literary

work” under Section 2(o) of the Copyright

Act, 1957 with effect from 10th May, 1995.

18. Shri Pallav Sisodia, learned

Senior Counsel appearing for the

respondent – State has contested the

arguments advanced and has submitted that,

as rightly held by the High Court, Section 15 70 of the I.T. Act has to be read along

with Section 2(k) and Section 17 of the

Copyright Act, 1957 in which event the

power of declaration of “protected system”

would be available within clearly

circumscribed limits and would not suffer

from any excessive delegation. So far as

the claim of copyright is concerned, Shri

Sisodia has submitted that the appellant

had developed the software for Microsoft

which had undertaken to make available the

same to the first respondent through the

4th respondent free of cost. The invoice

raised by the appellant on Microsoft in

this regard shows payment of remuneration

by Microsoft to the appellant. Therefore,

under Section 17(a) of the Copyright Act,

1957 Microsoft is the first owner of the

copyright. In any event, according to

Shri Sisodia under clause 10 (under the

head “Role of Government of Kerala”) of 16

the Memorandum of Understanding between

Total Solution Providers for E-Governance

and Government of Kerala, the intellectual

property vests in the Government. The

claim of copyright by the appellant will,

therefore, not subsist.

19. The contention with regard to

excessive delegation of legislative power

under Section 70(1) of the I.T. Act has

been sought to be fortified by Shri Basant

by relying upon several pronouncements of

this Court. It will hardly be necessary

to take specific notice of any of the said

decisions inasmuch as the proposition

sought to be canvassed is too well

established to raise any dispute or doubt.

However, while considering the said

question as raised before it the High

Court in the impugned order had, and in

our view correctly, held that the 17

provisions of Section 70(1) of the I.T.

Act has to be read conjointly with Section

2(k) and Section 17 of the Copyright Act,

1957 in order to give due effect to the

related provisions of two different

enactments made by the legislature.

Section 70(1) of the I.T. Act as in force

at the relevant point of time (at the time

when the matter was under consideration in

the High Court) or even after its

amendment in 2009 bars access to a person

to the system declared as a “protected

system” without authorization from the

Appropriate Government. Plainly read, the

power of declaration of a “protected

system” may invade a copyright which may

be vested in a private owner. However,

such a situation is taken care of by the

provisions contained in Section 2(k) of

the Copyright Act, 1957 which defines

“Government work” and Section 17(d) of the 18 Copyright Act, 1957 which vests in the

Government, copyright in a government work

as defined by Section 2(k). The balance

is struck by Section 17 between copyright

pertaining to any other person and

copyright vested in the Government in a

“government work”. Section 70 of the I.T.

Act, therefore, cannot be construed

independent of the provisions of the

Copyright Act; if Section 70 of the I.T.

Act has to be read in conjunction with

Section 2(k) and Section 17 of the

Copyright Act 1957 the rigours that would

control the operation of Section 70(1) of

the I.T. Act are clearly manifested.

20. The amendment to Section 70(1) of

the I.T. Act brought in by Act No. 10 of

2009, in our considered view, makes the

power of declaration of protected system

even more stringent by further 19

circumscribing the power of declaration of

protected system only in respect of a

computer resource which directly or

indirectly affects the facility of

Critical Information Infrastructure, which

is a defined expression in the I.T. Act

(already extracted). The amendment, in our

considered view is not a first time

introduction of parameters to govern the

exercise of power under Section 70(1) of

the I.T. Act. Rather, it is an attempt to

circumscribe the power even further than

what was prevailing under the pre-amended

law, by narrowing down the ambit of

“government work” so far as it is

relatable to the facility of Critical

Information Infrastructure, as defined

under the Act.

21. The challenge made by the

appellant before the High Court insofar as 20

the Notification dated 27th December, 2002

is concerned was founded on a claim of

copyright in the FRIENDS application

software. The said claim, ex facie, is

not tenable in the light of the proviisons

contained in Section 17(a) of the

Copyright Act and the admitted/pleaded

case of the appellant in the writ petition

to the effect that it was entrusted by

Microsoft to develop the software for

which it received due consideration from

Microsoft. If that be so, on the

appellant’s own pleadings in the writ

petition, it would not be entitled to

claim copyright in the FRIENDS application

software under Section 17(a) of the

Copyright Act. Whether under clause 10

(under the head “Role of Government of

Kerala”) of the Memorandum of

Understanding between Total Solution

Providers for E-Governance and Government 21

of Kerala, the State would have a claim of

copyright in view of Section 17(a) of the

Copyright Act is altogether a different

question which has no bearing on the claim

of the appellant to copyright in the

FRIENDS application software. In the

present proceedings, the issue of inter-

parties rights between Microsoft and 1st

respondent/4th respondent is not in dispute

to require any resolution. The only point

for adjudication is the claim of the

appellant, as the developer of the

application software, to be the first

author of the said work so as to vest in

him/it a copyright under the provisions of

Section 17 of the Copyright Act, 1957, a

claim which is palpably unfounded both on

the basis of the provisions of Section

17(a) of the Copyright Act and under

clause 10 (under the head “Role of

Government of Kerala”) of the Memorandum 22

of Understanding between Total Solution

Providers for E-Governance and Government

of Kerala.

22. For the aforesaid reasons, we do

not find any ground for interference with

the orders passed by the High Court.

Accordingly, while affirming the said

orders of the High Court we dismiss the

appeal(s) leaving the parties to bear

their own costs.

.....................,J.

(RANJAN GOGOI)

.....................,J.

(MOHAN M. SHANTANAGOUDAR) NEW DELHI MARCH 27, 2018