India’s Most Critical Trade & Regulatory Compliance Digest

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India’s Most Critical Trade & Regulatory Compliance Digest

Lex Witness Bureau | May 2025

Lex Witness in association with the Trade & Regulatory Compliance Practice Desk at Saikrishna & Associates brings to you a detailed analysis on select updates and notifications.

BOMBAY HIGH COURT STRIKES DOWN THE AMENDMENT TO THE IT RULES PERTAINING TO THE FACT CHECK UNIT

In a landmark judgement, the Bombay High Court, on 26th September 2024, struck down the amendment to Rule 3(1)(b)(v) of the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules (“IT Rules 2021”) and declared it as unconstitutional. The amendment to Rule 3(1)(b)(v) was notified on 6th April 2023 as per which an intermediary would have to make reasonable efforts by itself or cause its users to not host, display, upload, modify, publish, transmit, store, update or share any information in respect of the business of the Central Government that would have been identified as fake/false/misleading by a fact check unit established by the Central Government. The final decision was pronounced pursuant to the opinion of the third judge to whom the matter was referred after the split decision of the Division Bench of the High Court.

By way of brief background, on 10th April 2023, a stand-up comedian, Kunal Kamra, filed a writ petition challenging the constitutionality of the amended Rule 3(1)(b)(v) of the IT Rules 2021. Thereafter, the Editors Guild of India and the Association of India Magazines also filed separate writ petitions challenging the amendment to Rule 3(1)(b)(v). As per the writ petitions, the amended Rule 3(1)(b)(v) violated the right to freedom of speech and expression granted under Article 19(1)(a), the right to practise any profession granted under Article 19(1)(g) and equality before law under Article 14 of the Indian Constitution and was ultra vires Section 79 of the Information Technology Act, 2000 (“IT Act”).

DECISION OF THE DIVISION BENCH

The matter was heard by the Division Bench of the Bombay High Court which delivered a split verdict regarding the constitutionality of the amended rule. Justice G.S. Patel held that the amended Rule 3(1)(b)(v) is unconstitutional under Articles 14, 19(1)(a), and 19(1)(g) of the Constitution of India, as well as ultra vires under Section 79 of the IT Act. On the other hand, the second judge, Justice Dr. Neela Gokhale upheld its validity. The observations of the two judges are briefly noted below:

As per Justice Patel, free speech on the Internet is an integral part of Article 19(1)(a) and any restriction on the same must conform to Article 19(2) of the Indian Constitution. However, restricting content based on falsity as proposed by the amended rule is not recognised in Article 19(2). Justice Gokhale opined that the impugned rule was framed to carry out the provisions of the IT Act and the guidelines to be observed by an intermediary. There was no automatic deprivation of safe harbour on grounds beyond Article 19(2) of the Constitution.
As regards Article 19(1)(g), Justice Patel opined that the amended rule only impacted the information regarding the business of the Central Government on digital platforms however, the information in print media was not subject to the same level of scrutiny. However, Justice Gokhale opined that the concern regarding the unreasonable and excessive curtailment of content being subject to manifestly arbitrary fact checks was sufficiently taken care of under the scheme of the amended Rule and accordingly, did not violate Article 19(1)(g).
Justice Patel also held that by constituting the FCU, the Government became the final arbiter in its own cause and concluded that the Central Government could not serve as a judge in its own cause as it would be violative of the principles of natural justice and Article 14 of the Constitution. However, Justice Gokhale was of the view that since a grievance redressal mechanism exists for both intermediaries and users, a court of law is the ultimate arbiter of grievances in this regard and accordingly the amended rule was not violative of Article 14.
As regards the IT Act, Justice Patel stated that there are safeguards available for blocking access by the public under the IT Act and the provision for the creation of FCU was in the nature of substantive law which could not be done through a rule making exercise. Accordingly, the amended rule went beyond the scope of the IT Act. However, Justice Gokhale disagreed with this view.

OPINION OF THE THIRD JUDGE:

Justice A.S. Chandurkar, serving as the reference judge, confined his opinion to the points of divergence between the Division Bench judges’ verdicts. He agreed with Justice Patel’s ruling and affirmed that the right to freedom of speech does not encompass a right to truth, nor does it impose a duty on the State to guarantee that citizens receive information deemed non-fake, false, or misleading as determined by the Fact Check Unit. Since the restrictions pertaining to falsity were not recognised under Article 19(2), the amended rule placed unreasonable restrictions on the fundamental right guaranteed under Article 19(1)(a). As regards the violation of Articles 14 and 19(1)(g), Justice Chandurkar sided with the view taken by Justice Patel noted above. Justice Chandurkar further opined that the amended Rule 3(1)(b)(v) was ultra vires the IT Act because it was not presented to Parliament in accordance with the requirements outlined in Section 87 of the IT Act. Further, the amended rule creates a substantive law that exceeds the authority of the parent statute.

In addition to the above, the decisions also discussed the contours of the expression “knowingly and intentionally” and “fake or false or misleading” in the context of the amended Rule 3(1)(b)(v). Justice Chandurkar also held that the amended Rule cannot be saved either by reading it down or on the basis of any concession made in that regard.

Given the totality of the observations, the amended Rule 3(1)(b)(v) also results in a chilling effect in respect of an intermediary.

After considering the opinion from the third judge, the Division Bench of the Bombay High Court delivered its final judgment on 26th September 2024 wherein it declared the amendment dated 6th April 2023 to Rule 3(1)(b)(v) of the IT Rules 2021 as unconstitutional and struck the same down.

FIRM’S TAKE

This judgement to strike down the amendment to Rule 3(1)(b)(v) is monumental as it upholds the fundamental rights guaranteed under the Constitution. The IT Act allows the Government to take action against any information that is found to be inappropriate or unlawful. For instance, an intermediary is already required to take down content upon receiving actual knowledge, or on being notified by the Government or its agency that any information is being used to commit the unlawful act. Further, the Central Government can issue directions for blocking public access to any information if it is satisfied that it is necessary or expedient to do so, in the interest of inter alia the sovereignty and integrity of India, security of the State, public order or for preventing incitement to the commission of any cognizable offence etc. These measures vitiate the need for establishing an FCU for it to identify false information regarding the business of the Central Government, especially given the lack of an explanation from the government regarding what it means by the expression “business of the Central Government”.

Having said that, this decision is a setback for the Central Government and it may file an appeal before the Supreme Court challenging this decision of the Bombay High Court.

DELHI HIGH COURT DIRECTS THE GOVERNMENT TO NOMINATE MEMBERS TO COMMITTEES RELATING TO DEEPFAKE ISSUE

On 21st November 2024, the Delhi High Court issued an order directing the Central Government to nominate members to the committee constituted by the Government to address issues pertaining to deepfakes.

To provide context, the Delhi High Court has been hearing two petitions namely Chaitanya Rohilla v. Union of India [W.P.(C) 15596/2023] and Rajat Sharma v. Union of India [W.P.(C) 6560/2024], filed against the unregulated proliferation of deepfake technology. In these pleas, the petitioners had requested the Court to direct the Ministry of Electronics and Information Technology (“MeitY”) to identify and block platforms and mobile apps that facilitate the creation of deepfakes. In October 2024, the Delhi High Court asked the Government to furnish a status report providing the details of the Government’s efforts to tackle deepfakes and inform the Court about any committees formed to recommend solutions to this issue.

In compliance with the Court’s direction, the MeitY submitted a status report dated 21st November 2024 informing the Court that the MeitY, inter alia, in 2023, constituted an ‘Advisory Group on AI for India-Specific Regulator AI Framework’ and also constituted a sub-committee for the development of AI governance guidelines. Further, on 20th November 2024, the MeitY constituted a ‘Committee on matters related to the issue of deepfakes’.

The petitioners submitted that each day’s delay in the detection and removal of deepfakes causes significant hardship to the general public and also requested that their suggestions be considered by the Committee on deepfakes.

The Delhi High Court agreed with the petitioners and directed the Government to nominate names to the Committee on deepfakes and that the Committee must examine and consider the suggestions of the petitioners, the regulations and the statutory framework in other countries, and also invite and hear the experiences and suggestions of a few stakeholders such as intermediary platforms, telecommunication service providers, victims of deepfakes and the websites that deploy deepfake technologies. The Court also directed MeitY to submit its report as expeditiously as possible and preferably by February 2025.

FIRM’S TAKE

There has been a global increase in the use of AI-generated deepfake content and India is no exception. In the past two years, India has witnessed a significant surge in deepfake cases. As per a McAfee survey, 75% of Indians present online and surveyed by them have viewed deepfake content between 2023 and 2024 and as per McAfee’s Global Festive Shopping Survey, 45% of Indian respondents have been subjected to deepfake shopping scams.

Various cases have been filed before the courts pertaining to the production of deepfake videos of celebrities. Even regulatory bodies have been targeted. Recently, the Reserve Bank of India issued a press release informing people about the fake videos, featuring its top officials, circulating on social media.

The Government has been cognisant of these instances and has been issuing advisories regularly, particularly to social media intermediaries, citing the provisions of the extant law that would be violated in the creation, dissemination, and hosting of such deepfake videos.

Interestingly, the Government had in 2023 taken steps towards specifically regulating the dissemination of deepfakes. As per a press release dated 23 November 2023, MeitY had held a meeting on deepfake where Minister Railways, Communications and Electronics & IT, Mr. Ashwini Vaishnaw, had interacted with representatives from academia, industry bodies and social media companies on the need to ensure an effective response to deepfake. During the meeting, MeitY and the stakeholders had identified 4 pillars on which action needs to be taken namely (i) ‘Detection’ of content before and after posting the content, (ii) ‘Prevention’ of propagation of deepfake content, (iii) making available effective and expeditious ‘Reporting’ and grievance redressal mechanism, and (iv) creating mass ‘Awareness’ on the issue of deepfake. Further, as per the press release, MeitY had also commenced the assessment and drafting of regulations needed to curb deepfakes, with immediate effect and sought to invite public comments on the MyGov portal.

While, in 2024, there were also reports of the Government’s plans to introduce the “Digital India Bill”, which would replace the Information Technology Act, 2000, to regulate AI-generated deepfake videos, the Bill or its draft has not seen the light of the day. Given the uncertainty around the introduction of the Bill, there is a need to examine the issue of deepfakes and curb the dissemination of misinformation. This need has been acknowledged by the Delhi High Court as well which has pushed the Government to take tangible steps to understand matters related to deepfakes and also involve all stakeholders including the intermediaries on whose platform the content would be published.

Given the involvement and the order of the Delhi High Court, it would be interesting to see how the Committee on deepfakes balances the suggestions of all the stakeholders while providing its recommendations on matters related to deepfakes and if the Government ultimately adopts and takes action on the recommendations of the Committee set up by the MeitY.

THE DEPARTMENT OF PHARMACEUTICALS NOTIFIES UNIFORM CODE FOR MARKETING PRACTICES IN MEDICAL DEVICES, 2024

Introduction

On 6th September 2024, the Department of Pharmaceuticals (“DoP”) issued the Uniform Code for Marketing Practices in Medical Devices, 2024 (“Code”). This Code mandates all Medical Device Associations (“MDAs”) to disseminate its provisions to their respective members, ensuring strict adherence.

Furthermore, the DoP directed MDAs to establish Ethics Committees for Marketing Practices in Medical Devices. These committees are tasked with uploading the Code onto the association’s websites, along with detailed procedures for filing complaints. These complaint mechanisms will be linked to the DoP’s Uniform Code for Pharmaceutical Marketing Practices (“UCPMP”) Portal. The Code is self-regulatory in nature and will be implemented via industry associations.

KEY FEATURES

Promotion of medical devices: A medical device can only be promoted after acquiring necessary approvals (wherever applicable) by the regulatory authority and such promotion should be consistent with the terms of documents submitted for obtaining product registration/ license. Product information must be up-to-date, accurate, balanced, and must not mislead either directly/impliedly, and must be capable of substantiation within a reasonable time when sought by Healthcare Professionals (“HCPs”).
Claims and Comparisons: All marketing claims related to the usefulness of medical devices should be accurate and substantiated by evidence. There is a prohibition on the unqualified use of words like ‘safe’ or ‘safety’ or a claim of no adverse consequences. Comparison of the Medical Devices must be factual, fair, and capable of substantiation by way of available data and the brand names of products of other companies can only be used with prior consent. There’s also a prohibition on disparaging other companies, their products, services, or promotions and clinical or scientific opinions of HCPs.
Textual and Audio-Visual Promotion: In case the medical device company provides promotional materials to HCPs who may prescribe the use of their medical devices, it also has to mandatorily supply information such as the generic name/brand name, warnings and precautions, etc. All paid publishing of promotional material in journals will have to comply with the Code, irrespective of editorial control of the material published. The Code strictly prohibits the use of names/photographs of HCPs. Wherever applicable, the Code requires the date of printing or of the last review of promotional material to be stated and any audio-visual material must be supported by all relevant printed material to comply with this Code.
Obligations regarding personnel engaged by Medical Device companies: Any personnel (such as marketing/sales executives) employed by the medical device companies in connection with promoting the sale of medical devices are required to maintain a high standard of ethical conduct and must not pay, under any guise, for access to an HCP. The medical device companies will be responsible for any third parties working for or on their behalf.
Regulation of brand reminders, evaluation samples, and demonstration products: Free samples of medical devices can be provided to HCPs for evaluation along with a user manual and are to be marked as ‘Evaluation Sample-Not For Sale’. Medical device companies have to maintain traceability information (such as HCP’s name, quantity and value of evaluation samples, etc.) of these samples for at least 5 years. The monetary value of such samples should not exceed 2% of the domestic sales of the company per year. Similarly, demonstration products (i.e. products to explain the functioning/features of the medical device to HCPs) should be taken back by the company after the demonstration period is over and traceability information (such as HCP’s name, date of supply to HCPs, etc.) should be maintained for a minimum period of 5 years. Further, any receipt of evaluation samples, demonstration products and, brand reminders (such as books, calendars, diaries, journals, etc. for professional use in healthcare settings which are below Rs 1000 per item) by the HCPs would not amount to an endorsement as long as the HCPs do not actively recommend or issue statements promoting the use of the brand.
Conferences, seminars, and workshops: Any engagement by the medical device companies with HCPs for continuing medical education/professional development, training or otherwise for conferences, seminars or workshops can be done only through a well-defined, transparent and, verifiable set of procedures. The Code prohibits the conduct of such events in foreign locations except with the specific approval of the DoP. Further, all medical device companies are mandated to share details of such events including the expenses undertaken on their website which may be subject to independent, random or, risk-based audit for this purpose. Organisers of such events are also required to spell out the procedure followed in the selection of participants and speakers and display a statement of their funding sources and expenditures on their website, which may be subject to a special audit.
Industry-Academia Collaboration: The code requires approval for any medical device industry-funded research/study from the authorities such as ICMR, Ethics Committee, etc. and at a recognised site/location, where applicable. Engagement of HCPs in a consultant-advisory capacity for bonafide research services is allowed subject to the same being conducted under an agreement stipulating the fee/honorarium. Such engagement shall ensure that patient interest is not compromised, and integrity of HCP is maintained in line with National Medical Commission regulations.
Relationship with HCPs: It prohibits medical device companies from offering any gift, pecuniary benefit in kind, travel facilities inside or outside the country, hospitality like hotel stay, etc., cash or monetary grant for personal benefit of any HCPs or family members (both immediate and extended). However, medical device companies can provide hospitality and travel expenses for HCPs participating in DoP-approved conferences, seminars or workshops. For all other matters, the Indian Medical Council (Professional Conduct, Etiquettes and Ethics) Regulations, 2002 (as amended) will prevail.
Constitution of an Ethics Committee: The Code requires all medical device associations to constitute an Ethics Committee for Marketing Practices in Medical Devices (“Ethics Committee”), chaired by its CEO and 3-5 members for handling complaints. The composition of the Ethics Committee will have to be approved by the Board of the medical device association and the same should be prominently placed on its website along with the detailed procedures for lodging complaints.
Grievance Redressal: All MDAs must upload the Code on their websites along with the detailed procedure for lodging complaints which will be linked to the UCMP Portal of the DoP. Disposed-off complaints should be shared by MDAs on their website with the details concerning the complaint (such as the company against whom the complaint was lodged, action taken on the complaint, etc.) for 5 years. Such details shall also be uploaded on the UCPMP portal.
Lodging of Complaints: All complaints relating to the breach of the Code need to be made to the Ethics Committee within 6 months (extendable up to 12 months) of the alleged breach. If it appears from media reports that a company may have breached the code, the Ethics Committee can treat such reports as a complaint and the source/correspondent as the complainant. The DoP retains the right to deal with the complaint directly.
Details of the Complaint: The Complaint should be in writing, identifying the complainant, the company allegedly in breach, and details of the activity amounting to the breach. Complaints cannot be filed pseudonymously or anonymously.
Handling of Complaints: The respondent company has to respond within 30 days to the notice received from the Ethics committee. The Ethics committee must render a decision (via a majority vote) within 90 days from the date of receipt of the complaint. Members of the Ethics Committee will have to recuse themselves in case of a conflict of interest.
Adjudication of Complaints: Where the Ethics Committee decides there is no breach, then the Complainant will be advised in writing of the same including about the appropriate forum to approach in such cases. In cases where the Ethics Committee decides that there is a breach, then it will advise the complainant and the respondent company in writing about the remedial steps that need to be taken.
Appellate Proceedings: An appeal against the decision of the Ethics Committee can be instituted before the Apex Committee for Marketing Practices in Medical Devices (“Apex Committee”) within 15 days (extendable up to 30 days).
Apex Committee: The Apex Committee consists of the Secretary, DoP (Chairman) with two members – a Joint Secretary and a Financial Adviser. The Apex Committee has to give a final decision within 6 months. The Apex Committee has the power to proceed by itself in case of an inordinate delay on the part of the Ethics Committee.
Penalties and Reference: Once a breach of the Code has been established, the Ethics Committee/Apex Committee can propose to suspend/expel the concerned company from MDA, reprimand the company, require the company to issue a corrective statement in the media as approved by the Ethics Committee, ask the company to recover money or items given in violation of the Code. It may give recommendations to such agency or authority through DoP where action can only be taken through them.
Responsibility of the CEO: The CEO of the company is required to give a self-declaration of compliance with the Code on the MDA’s website and the UCPMP portal within 2 months of the end of every financial year.

FIRM’S TAKE

By formulating and notifying the UCMP-MD, the DoP has recognised the need for regulating medical devices as a sui generis category that is distinct from pharmaceutical products.

From a consumer protection perspective, the Code is laudable since it inter alia mandates that medical devices can only be promoted after acquiring necessary approvals (wherever applicable) by the regulatory authority and imposes a duty on medical device companies to ensure that their marketing claims regarding the medical device are truthful and accurate. To promote consumer awareness, the Code requires MDAs to publish the Code, complaint details, and action taken on such complaints on their respective websites.

The Code seeks to promote transparency in the industry-HCP interactions by allowing MDAs to fund hospitality-related expenses for HCPs if they are going as a speaker for continued medical education, continued professional training, etc. Further, all MDAs are required to share details of such events including the expenses undertaken on their website which may be subject to an audit.

Institutionalization of the grievance redressal mechanism through the Ethics Committee and the Apex Committee is also noteworthy. However, the limited punitive powers of the Ethics Committee to enforce the Code is a drawback and would likely not discourage MDAs from violating the Code. It remains to be seen whether the Code is successful in inculcating a culture of compliance in the medical device industry.

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