SC allows NGO to make RBI party in WhatsApp payment service matter

The Supreme Court on Monday allowed an NGO to make the Reserve Bank of India (RBI) a party in a plea seeking direction to messaging application WhatsApp for complying with data localisation norms with regard to its payment services.

The plea filed by NGO Centre for Accountability and Systemic Change (CASC) said Whatsapp has not fully complied with the circular of the RBI which prescribed data localisation norms.

The NGO has also sought direction to restrain the messaging platform from proceeding with its payment service unless it fully complied with the provisions of the RBI.

A bench of Justices R F Nariman and Vineet Saran asked advocate Virag Gupta, appearing for the NGO, to file an application seeking to make RBI as a party to the plea in a week's time.

At the outset, Solicitor General Tushar Mehta appearing for the Centre said that RBI needs to be made as party in the petition as the issue pertains to data localisation.

The bench also allowed the NGO to file an rejoinder affidavit within two weeks.

In their counter-affidavits filed by WhatsApp and the Central government, they have stated a grievance officer for India has been appointed by the instant messaging service company.

The NGO has referred IT (Intermediary) Rules of 2011 and IT (reasonable security practices and procedures and sensitive personal data or information) Rules 2011 wherein provision is made for appointment of grievance officer.

The NGO further said in its affidavit that it will be a paradox if data localisation norms are prescribed in India but companies are allowed to keep data officers in USA.

On August 27 last year, the apex court had agreed to examine a plea alleging that WhatsApp does not comply with the Indian laws including the provision for appointing a grievance officer.

WhatsApp reportedly has over 200 million users in India and almost one million people are "testing" its payments service. India is one of the largest bases for the Facebook-owned company that has over 1.5 billion users globally.

In its plea, the CASC said that to open a bank account, a customer needs to comply with KYC norms laid down by the RBI and various other formalities. "WhatsApp is a foreign company with no office or servers in India. To run Payments Service in India, WhatsApp is obligated to have its office and payments in India.

"Moreover, it is also required to have a Grievance Officer for users in India. Yet, it is being allowed to continue with its payments and other services, without any check," the plea claimed.

The petition also alleged that the social media giant does not comply with tax and other laws of India, but its reach was such that it is used by everyone, be it a commoner or even the judges of the apex court.

The plea, filed through advocate Virag Gupta, said that every user has a number on WhatsApp but the messaging platform has no number through which its user can contact it for any grievance redressal.

Pointing to alleged cases of internet-based crimes, it claimed that the growth of such incidents was directly proportional to the growth of the user base of messaging services like WhatsApp.