'Intermediary Not Liable For Actions Of Vendors': Karnataka High Court Quashes Criminal Case Against 'Snapdeal' For Sale Of Drugs Without License

Justice MG Uma said,

"Intermediary as defined under Section 2(w) of IT Act or its Directors/Officers would not be liable for any action or inaction on the part of the vendor/seller making use of the facilities provided by the intermediary in terms of a website or a market place and that the Snapdeal/accused No.2 could not be responsible and/or liable for sale of any item not complying with the requirements under the Act on its platform by accused No.1 since the essential ingredients of Section 18(1)(c) of the Act not having been fulfilled neither Snapdeal nor its Directors can be prosecuted for the offence under Section 27(b)(ii) of the Act."

The Drugs Inspector had filed a complaint against Snapdeal Section 18(c) and Section 27(b)(ii) of the 1940 Act over sale of the above said drug without valid licenses. The Trial Court issued summons in August 2021. The petitioners thus approached the High Court questioning the summons and praying for quashing the complaint.

Section 18 places a prohibition of manufacture and sale of certain drugs and cosmetics. 

Petitioners arguments

Senior Advocate CV Nagesh and Senior Advocate S S Poovayya appearing for the petitioners pointed out that the Petitioners are not residents of Karnataka. Hence as per Section 202 CrPC, when a complaint is received by the Magistrate and the accused is residing at a place beyond the area in which he exercise his jurisdiction, it is mandatory for the Magistrate to postpone issuance of process against the accused and hold an inquiry into the case either by himself or direct an investigation to be made by the Presiding Officer, for the purpose of deciding whether or not there is sufficient ground for proceeding.

It was claimed that the said mandatory requirement of law was not followed by the Magistrate before issuance of summons and therefore, the entire criminal proceedings initiated against the petitioners gets vitiated.

Further it was said that an intermediary, as defined under Section 2(w) of the Information Technology Act, 2000, its Directors/Officers would not be liable for any action or inaction on part of a vendor/seller, making use of the facilities provided by the intermediary in terms of a website or a marketplace.

Prosecution opposed the plea:

Advocate Praveen Uppar for the state argued that the inquiry contemplated under Section 202 of Cr.P.C when the accused resides beyond the area over which the Magistrate concerned exercise jurisdiction is limited to ascertain the truth or otherwise of the allegations made in the complaint.

The object of amending Section 202 (1) of Cr.P.C is to avoid false and frivolous complaints that are being filed and being entertained by the learned Magistrate, without there being any inquiry about the truth or otherwise of the allegations made therein.

It was said that summoning order was passed following complete application of mind regarding and fully satisfying the averments made by the complainant in his official capacity.

It was also contended that accused No.1 being the Company, accused Nos.2 and 3 being the Directors-cum-Promoters are responsible for its day to day affairs and they were dealing with drugs in question without there being any licence and thereby contravened the provisions of the Act.

Findings:

At the outset, the Court noted that the alleged offence was first committed in the year 2014 but the complaint was filed only in August 2021, i.e., after a lapse of more than 6 years.

It observed,

"As per Section 468 of Cr.P.C, there is a bar for taking cognizance of the offence after lapse of period of limitation provided therein. Since the offence alleged is punishable under Section 27(b)(ii) and the prescribed imprisonment shall not be less than 3 years, the period of limitation as per Section 468(2)(c) is within three years from the date of commission of the offence."

The Court stated that there is neither an explanation for the delay nor there is prayer for condonation of the same, if the same is permissible under law. Thus, it was held that the Magistrate had proceeded to take cognizance of the offence mechanically.

"Even though the learned Magistrate has referred to the complaint in brief before taking cognizance of the offence, it has to be concluded that there is no application of mind before passing the impugned order against these petitioners," the Court said.

The court also relied on the coordinate bench judgement in the case of Kunal Bahl and Others Vs State of Karnataka 2021(2) KLJ 254, wherein it was held that that intermediary as defined under Section 2(w) of IT Act or its Directors/Officers would not be liable for any action or inaction on the part of the vendor/seller making use of the facilities provided by the intermediary in terms of a website or a market place and that the Snapdeal/accused No.2 could not be responsible and/or liable for sale of any item not complying with the requirements under the Act on its platform by accused No.1.

Then the court held, 

"It is not in dispute that accused No.1 is an intermediary as defined under Section 2(w) of IT Act. Under such circumstances, I do not find any reason to form a different opinion. Therefore, I am of the opinion that the petitioners have made out grounds for allowing the petitions."

Case Title: SNAPDEAL PVT. LTD v STATE OF KARNATAKA

Case No: CRL.P.No.102191/2021

Citation: 2022 LiveLaw (Kar) 76.

Date of Order: 4TH DAY OF MARCH, 2022

Appearance: Senior Advocate C.V. NAGESH for petitioners

Advocate Praveen Uppar for respondents

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