What Is The Liability Of E-Commerce Companies In Cheating Committed Through Their Website: SC Issues Notice On India Mart’s Plea [Read Order]

The Supreme Court has issued notice in a Special Leave Petition filed by Managing Director of India Mart, an e-commerce company, seeking to quash a complaint alleging cheating registered against the website.

The bench of Justice Kurian Joseph and Justice Sanjay Kishan Kaul has directed that no coercive steps against shall be taken against the e-commerce website and its officials in connection with the investigation in FIR.

This is after, Senior Advocate Mukul Rohtagi, appearing for Dinesh Agrawal, contended before the Court that, the website has only provided a platform and it has no control on that and that no commission was charged either from the seller or the buyer.

Before the Patna High court, a petition seeking to quash the complaint and FIR lodged in connection thereto, was preferred by the Managing director of the company. Complaint was lodged by one Ramjee Lal Sharma. According to him, he had registered with the website and had contacted with a person who offered to sell a ‘speaking parrot’. He was also made to deposit a sum of Rs. 15,000 and he did not receive parrots, as offered. Though India Mart provided him details about the ‘seller’, he was not satisfied and lodged complaint arraying the e-commerce company as accused.

The company, relied on Section-79 of the Information and Technology Act, 2000, and contended that it is exempted from liability.

However, the High court rejected this contention and observed that the exemption from liability has been granted to intermediaries in certain cases but such exemptions are subject to the condition that intermediaries observe due diligence while discharging his duty and also observe such other guidelines as the Central Government prescribes on this behalf. It also observed that, before allowing the seller to sell his product, India Mart was obliged to observe due diligence.

“I am of the considered opinion that the whole case of Mr. Singh is based on Section-79 of the Information and Technology Act, 2000 as according to him, it is in the nature of an exemption granted to his client from being prosecuted. I am unable to agree with the submissions of the learned counsel representing the petitioner as it is evident from a bare perusal of Section-79 that the exemption from the liability has been granted to the intermediary only to the extent that intermediary shall not be liable for any third party information, data or communication, link available or visited by him. Section79 no where talks of granting any exemption from prosecution for an act of fraud committed by a supplier using the Website of the intermediary. It also appears that subsection (1) of Section-79 is subject to the provisions of subsections (2) and (3). Sub section (2), clause (c) clearly provides that the provisions of sub section (1) shall apply if the intermediary inter alia observes due diligence while discharging his duties.”, the bench observed.

“No material has been brought on record even to prima facie satisfy this court that before allowing Mr. Nanda to sell his product from the platform of India Mart, any due diligence had been done. Again, in the opinion in this court, such due diligence whether done or not would be a matter of fact which will be revealed in course of the investigation. The case is one of the offence committed under Information & Technology Act and this being a cyber crime only investigation will reveal the truth through some scientific source of investigation. The case has a conspiracy angle also as is evident from the first information report.” the High Court had held.