Business News

WhatsApp's recent statement in the Delhi High Court regarding breaking message encryption has ignited a debate on the delicate balance between an individual's right to privacy and the government's imperative to uphold national security. This statement was made during a hearing of WhatsApp and Meta's petition challenging a specific rule within the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021.The Controversial RuleRule 4(2) of the IT Rules requires social media companies providing messaging services to disclose the sender of a message upon court or competent authority order. The rule specifies that this information should be disclosed for cases related to national security, public order, or offenses such as rape, sexually explicit material, or child sexual abuse material, which carry a minimum jail term of five years. Additionally, the rule states that such an order should not be issued if less intrusive methods can identify the message originator.WhatsApp's StandWhatsApp, in its petition, has argued against the rule's constitutionality and any potential criminal liability for non-compliance. The company contends that complying with the traceability requirement would necessitate breaking its end-to-end encryption, thereby violating the fundamental rights to privacy and free speech of its users.Advocate Tejas Karia, representing WhatsApp, emphasized the platform's commitment to privacy through end-to-end encryption. He stated that if WhatsApp is compelled to break encryption, the platform would cease to exist.Moreover, Karia highlighted the massive data storage implications of the rule, stating that WhatsApp would be required to store millions of messages for an extended period, without knowing which messages may eventually require decryption.The Court's StanceThe bench, led by Acting Chief Justice Manmohan and Justice Manmeet Pritam Singh Arora, expressed the need for a balanced approach, noting that privacy rights are not absolute. The Central government argued that the rule is necessary to trace message originators in cases involving communal violence.The government also pointed out that WhatsApp and Facebook monetize user information and, therefore, cannot claim absolute privacy protection. It highlighted global efforts to hold Facebook accountable for its data practices.Future ProceedingsThe bench is set to continue hearing the cases on August 14. The outcome of these proceedings could have significant implications for how messaging platforms handle encryption and user privacy in India.

The National Financial Reporting Authority (NFRA) has barred auditors of M/s Brightcom Group for up to ten years and imposed heavy monetary penalties on them, citing professional misconduct in auditing the company between FY20 and FY22.While the audit firm, M/s PCN & Associates, has been prohibited from taking up any audit work for two years, chartered accountant Gopala Krishna Kandula has been barred for ten years, according to a NFRA order on Friday.In addition, the regulator has imposed a penalty of Rs 50 lakh on the audit firm and another Rs 30 lakh on Kandula.NFRA flagged that the audit firm and the engagement partner (auditor) didn’t co-operate with it in its investigation, despite repeated calls for the submission of relevant documents and information and opportunities for personal hearing. Kandula, it said, submitted a false affidavit to avoid submitting information and attending personal hearings.“This order concludes that the failure of the audit firm and the EP (engagement partner, Kandula in this case) to cooperate with NFRA is a professional misconduct under section 132 (4) of the Companies Act, 2013, that is, failure to supply the information called for, failure to comply with the requirements asked for, failure to exercise due diligence and being grossly negligent in the conduct of professional duties,” the order said.CMIL auditors face ban, penaltyIn a separate order, NFRA has imposed a penalty of Rs 50 lakh on audit firm M/s Krishna Neeraj & Associates and another Rs 10 lakh on its partner citing professional misconduct in the audit of electrical company CMIL.The regulator also barred the partner, Krishna Neeraj, from taking up any audit work for two years.“The auditors failed to demonstrate sufficiency and appropriateness of audit work in several critical aspects of the audit of the Financial Statements, that is, determining materiality, evaluation of the going concern assumption, verification of inventories and trade receivables, verification of reported revenue and evaluating the audit results,” the NFRA said in the order.The auditors failed to report the non-recognition of liabilities of the interest accrued on loans classified as non-performing assets, which resulted in the understatement of the interest cost, current liabilities, and the reported loss by the company.The audit regulator said the auditors failed to analyse the going concern assumption despite the fact that CMIL had witnessed continuous drop in revenue to just Rs 201.70 crore in FY21 from Rs 637.30 crore in FY19. Similarly, its profit after tax declined from Rs 45.08 crore in FY19 to a loss of Rs 194.60 crore in FY21.In both the above cases, the audit regulator started investigations after capital markets watchdog Sebi informed it of suspected irregularities at these firms, according to the orders.NFRA has been cracking down on errant auditors in recent years, having already debarred and penalised several of them in connection with IL&FS and DHFL and other scams.

Nifty on Friday ended 150 points lower to form a dark cloud cover candlestick on the daily chart, while the weekly one saw a high wave type candle, suggesting consolidation in the near term.Nifty's short-term trend seems to have reversed down after a reasonable rise from the lows. Immediate support is placed at 22,300 and the weakness below this support could trigger more declines. Immediate resistance is at 22,625 levels, Nagaraj Shetti of HDFC Securities said.What should traders do? Here’s what analysts said:Rupak De, LKP SecuritiesNifty remained under selling pressure throughout the session as the index failed to sustain above the crucial level of 22,500. On the daily chart, a dark cloud cover pattern is observed, indicating a potential bearish reversal. Immediate support is at 22,300, below which the Nifty could extend its losses towards 22,000. On the other hand, the level of 22,500 might act as a technical resistance for the Nifty.Jatin Gedia, SharekhanThe Nifty witnessed selling pressure throughout the day and closed weak for the day down ~120 points. On the daily charts, we saw that Nifty faced selling pressure from the resistance zone of 22,560–22,625. Until this zone is not taken out decisively, we can expect the consolidation to continue. On the downside, crucial support is now placed at 22240 – 22200 where support parameters in the form of the 40-day moving average and the 50% Fibonacci retracement level of the rise from 21,777 – 22,626 is placed.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)