Chapters XII-XV

PUBLISHED

Chapter XII: APPEAL AND ALTERNATIVE DISPUTE RESOLUTION

Section 26 – Appeal to Appellate Tribunal

(1) The Appellate Tribunal established under the Telecom Regulatory Authority of India Act, 1997, shall also serve as the Appellate Tribunal for the purposes of this Act.

(2) Any person aggrieved by any direction, decision, or order of the IAIC under this Act may prefer an appeal to the Appellate Tribunal within a period of 60 days from the date on which a copy of the direction, decision, or order is received by the person.

(3) The Appellate Tribunal may entertain an appeal after the expiry of the said period of 60 days if it is satisfied that there was sufficient cause for not filing it within that period.

(4) On receipt of an appeal, the Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying, or setting aside the direction, decision, or order appealed against.

(5) The Appellate Tribunal shall send a copy of every order made by it to the parties to the appeal and to the IAIC.

(6) The appeal filed before the Appellate Tribunal shall be dealt with by it as expeditiously as possible, and endeavour shall be made by it to dispose of the appeal finally within 6 months from the date of receipt of the appeal.

(7) The Appellate Tribunal may, for the purpose of examining the legality, propriety, or correctness of any direction, decision, or order of the IAIC, on its own motion or otherwise, call for the records relevant to disposing of such appeal and make such orders as it thinks fit.

(8) The provisions of sections 14-I to 14K of the Telecom Regulatory Authority of India Act, 1997, shall, mutatis mutandis, apply to the Appellate Tribunal in the discharge of its functions under this Act, as they apply to it in the discharge of its functions under that Act.

(9) Any person aggrieved by any decision or order of the Appellate Tribunal may file an appeal to the Supreme Court within a period of 60 days from the date of communication of the decision or order of the Appellate Tribunal.

(10) The Appellate Tribunal shall endeavour to function as a digital office to the extent practicable, with the filing of appeals, hearings, and pronouncement of orders being conducted through digital means.

Section 27 – Orders passed by Appellate Tribunal to be executable as decree

(1) An order passed by the Appellate Tribunal under this Act shall be executable by it as a decree of civil court, and for this purpose, the Appellate Tribunal shall have all the powers of a civil court.

(2) Notwithstanding anything contained in sub-section (1), the Appellate Tribunal may transmit any order made by it to a civil court having local jurisdiction and such civil court shall execute the order as if it were a decree made by that court.

Section 28 – Alternate Dispute Resolution

If the IAIC is of the opinion that any complaint may be resolved by mediation, it may direct the parties concerned to attempt resolution of the dispute through such mediation by such mediator as the parties may mutually agree upon, or as provided for under any law for the time being in force in India.

We have provided a list of suggested provisions, which may be expected in the draft Act, but do not have any substantive necessity to be drafted.

Miscellaneous Provisions

CHAPTER XIII: MISCELLANEOUS

Section 29 - Power to Make Rules

(1) The Central Government may, by notification, make rules to carry out the provisions of this Act.

(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:—

(a) The manner of appointment, qualifications, terms and conditions of service of the Chairperson and Members of the IAIC under sub-section (6) of Section 10;

(b) The form, manner, and fee for filing an appeal before the Appellate Tribunal under Section sub-section (2) of Section 26;

(c) The procedure to be followed by the Appellate Tribunal while dealing with an appeal under the sub-section (8) of Section 26;

(d) Any other matter which is required to be, or may be, prescribed, or in respect of which provision is to be made by rules.

(3) Every rule made under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or both Houses agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule.

Section 30 - Power to Make Regulations

(1) The IAIC may, by notification, make regulations consistent with this Act and the rules made thereunder to carry out the provisions of this Act.

(2) In particular, and without prejudice to the generality of the foregoing power, such regulations may provide for all or any of the following matters, namely —

(a) The criteria and process for the classification of AI systems based on their conceptual, technical, commercial, and risk-based factors, as specified in Sections 4, 5, 6, and 7;

(b) The standards, guidelines, and best practices for the development, deployment, and use of AI systems, including those related to transparency, explainability, fairness, safety, security, and human oversight, as outlined in Section 13;

(c) The procedures and requirements for the registration and certification of AI systems, including the criteria for exemptions and the maintenance of the National Registry of Artificial Intelligence Use Cases, as specified in Sections 11 and 12;

(d) The guidelines and mechanisms for post-deployment monitoring of high-risk AI systems, as outlined in Section 17;

(e) The procedures and protocols for third-party vulnerability reporting, incident reporting, and responsible information sharing, as mentioned in Sections 18, 19, and 20;

(f) The guidelines and requirements for content provenance and identification in AI-generated content, as specified in Section 23;

(g) The insurance coverage requirements and risk assessment procedures for entities developing or deploying high-risk AI systems, as outlined in Section 25;

(h) Any other matter which is required to be, or may be, prescribed, or in respect of which provision is to be made by regulations.

(3) Every regulation made under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the regulation or both Houses agree that the regulation should not be made, the regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that regulation.

Section 31 - Protection of Action Taken in Good Faith

No suit, prosecution, or other legal proceedings shall lie against the Central Government, the Indian Artificial Intelligence Council (IAIC), the Indian Artificial Intelligence Safety Institute (AISI), their respective Chairpersons, Members, officers, or employees for anything which is done or intended to be done in good faith under the provisions of this Act or the rules made thereunder.

Section 32 – Offenses and Penalties

(1) Any person who contravenes or fails to comply with any provision of this Act, or the rules or regulations made thereunder, shall be liable to penalties as specified in this Section.

(2) Systemically Significant Digital Enterprises (SSDEs) under the Digital Competition Act, 2024, that employ high-risk AI systems and fail to comply with the provisions of this Act shall be liable to the following penalties:

(a) For the first offense, a fine of up to 5% of the SSDE’s total worldwide turnover in the preceding financial year or INR 50 crores, whichever is higher;

(b) For subsequent offenses, a fine of up to 10% of the SSDE’s total worldwide turnover in the preceding financial year or INR 100 crores, whichever is higher.

(3) Significant Data Fiduciaries (SDFs) under the Digital Personal Data Protection Act, 2023, that employ high-risk AI systems and fail to comply with the provisions of this Act shall be liable to the following penalties:

(a) For the first offense, a fine of up to 4% of the SDF’s total worldwide turnover in the preceding financial year or INR 25 crores, whichever is higher;

(b) For subsequent offenses, a fine of up to 8% of the SDF’s total worldwide turnover in the preceding financial year or INR 50 crores, whichever is higher.

(4) Entities developing, deploying, or operating high-risk AI systems, other than those covered under sub-sections (2) and (3), that fail to comply with the provisions of this Act shall be liable to the following penalties:

(a) For the first offense, a fine of up to INR 10 crores;

(b) For subsequent offenses, a fine of up to INR 25 crores.

(5) In addition to the financial penalties specified in sub-sections (2), (3), and (4), the IAIC may take the following actions against non-compliant entities:

(a) Issuing warnings and directions for remedial measures;

(b) Suspending or revoking the certification of the AI system;

(d) Mandating independent audits of the entity’s processes at their own cost;

(e) Recommending the temporary or permanent suspension of the entity’s AI-related operations in cases of persistent or egregious non-compliance.

(6) Entities developing, deploying, or operating AI systems exempted from certification under Section 11(3) shall be encouraged to voluntarily comply with the provisions of this Act. Non-compliance by such entities shall not attract any penalties, provided that:

(a) The AI system remains within the scope of the exemption criteria specified in Section 11(3);

(b) The entity maintains the incident reporting and response protocols as required under Section 11(4);

(7) The IAIC shall establish clear guidelines for the determination and imposition of penalties, ensuring transparency, proportionality, and due process. Factors such as the nature, severity, and duration of the non-compliance, the entity’s willingness to cooperate and take remedial measures, and the potential harm caused by the non-compliance shall be considered while deciding the quantum of penalties.

(8) Any penalty imposed under this Section shall not prevent the initiation of criminal proceedings against the offender if the same act or omission constitutes an offense under any other law for the time being in force.

(9) All sums realized by way of penalties under this Act shall be credited to the Consolidated Fund of India.

CHAPTER XIV: REPEAL AND SAVINGS

Section 33 - Savings Clause

(1) The provisions of this Act shall be in addition to, and not in derogation of, the provisions of any other law for the time being in force.

(2) Nothing in this Act shall affect the validity of any action taken or decision made by any entity in relation to the development, deployment, or use of AI systems prior to the commencement of this Act, provided such action or decision was in accordance with the laws in force at that time.

(3) Any investigation, legal proceeding, or remedy in respect of any right, privilege, obligation, liability, penalty, or punishment under any law, initiated or arising before the commencement of this Act, shall be continued, enforced, or imposed as if this Act had not been enacted.

(4) Nothing in this Act shall be construed as preventing the Central Government from making any rules or regulations, or taking any action, which it considers necessary for the purpose of removing any difficulty that may arise in giving effect to the provisions of this Act.

CHAPTER XV: FINAL PROVISIONS

Section 34 - Power to Remove Difficulties

(1) If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order published in the Official Gazette, make such provisions, not inconsistent with the provisions of this Act as may appear to it to be necessary for removing the difficulty.

(2) No such order shall be made under this Section after the expiry of a period of five years from the commencement of this Act.

(3) Every order made under this Section shall be laid, as soon as may after it is made before each House of Parliament.

Section 35 - Amendment of [Other Legislation]

(1) The Digital Personal Data Protection Act, 2023 shall be amended as follows:

(a) In Section 2, after the clause defining “Data Principal”, the following clause shall be inserted:

“‘Artificial Intelligence system’ shall have the same meaning as assigned to it under clause (a) of Section 2 of the Artificial Intelligence (Development & Regulation) Act, 2023.”

(b) In Section 7, after the sub-section on “Legitimate Uses”, the following sub-section shall be inserted:

“The processing of personal data by an Artificial Intelligence system shall be considered a legitimate purpose under this Act, subject to compliance with the provisions of the Artificial Intelligence (Development & Regulation) Act, 2023 and the rules and regulations made thereunder.”

(2) The Competition Act, 2002 shall be amended as follows:

(a) In Section 2, after the clause defining “Relevant Market”, the following clause shall be inserted:

“‘Artificial Intelligence system’ shall have the same meaning as assigned to it under clause (a) of Section 2 of the Artificial Intelligence (Development & Regulation) Act, 2023.”

(b) In Section 19, after sub-section (6), the following sub-section shall be inserted:

“(7) While determining whether an agreement has an appreciable adverse effect on competition under sub-section (1), the Commission shall also consider the impact of the use of Artificial Intelligence systems by the parties to the agreement, in accordance with the factors specified in Section 20(4) of the Artificial Intelligence (Development & Regulation) Act, 2023.”

(3) The Patents Act, 1970 shall be amended as follows:

(a) In Section 2, after clause (1)(j), the following clause shall be inserted:

“(ja) ‘Artificial Intelligence system’ shall have the same meaning as assigned to it under clause (a) of Section 2 of the Artificial Intelligence (Development & Regulation) Act, 2023.”

(b) In Section 3, after clause (k), the following clause shall be inserted:

“(l) a computer programme per se, including an Artificial Intelligence system, unless it is claimed in conjunction with a novel hardware.”

(4) The Copyright Act, 1957 shall be amended as follows:

(a) In Section 2, after clause (ffc), the following clause shall be inserted:

“(ffd) ‘Artificial Intelligence system’ shall have the same meaning as assigned to it under clause (a) of Section 2 of the Artificial Intelligence (Development & Regulation) Act, 2023.”

(b) In Section 13, after sub-section (3), the following sub-section shall be inserted:

“(3A) In the case of a work generated by an Artificial Intelligence system, the author shall be the person who causes the work to be created, unless otherwise provided by the Artificial Intelligence (Development & Regulation) Act, 2023 or the rules and regulations made thereunder.”

(5) The Consumer Protection Act, 2019 shall be amended as follows:

(a) In Section 2, after clause (1), the following clause shall be inserted:

“(1A) ‘Artificial Intelligence system’ shall have the same meaning as assigned to it under clause (a) of Section 2 of the Artificial Intelligence (Development & Regulation) Act, 2023.”

(b) In Section 2, after clause (47), the following clause shall be inserted:

“(47A) ‘Unfair trade practice’ includes the use of an Artificial Intelligence system in a manner that violates the provisions of the Artificial Intelligence (Development & Regulation) Act, 2023 or the rules and regulations made thereunder, and causes loss or injury to the consumer.”