The Allahabad High Court while quashing an FIR lodged against Flipkart, observed that the company is exempted from any liability under Section 79 of the IT Act, 2000, no violation can ever be attributed or made out against the directors or officers of the intermediary, as the same would be only vicarious, and such proceedings as initiated against them would be unjust and bad in law.
The Division Bench of Justice Suneet Kumar and Justice Syed Waiz Mian passed this order, while hearing a petition filed by Flipkart Internet Private Limited.
By the writ petition, the petitioner is seeking quashing of the First Information Report dated January 26, 2019, bearing Case under Sections 406, 420, 467, 468, 471, 474 and 474-A IPC, registered at Police Station Kavi Nagar, District Ghaziabad.
The Petitioner is a Company incorporated under the Companies Act, 1956, having its registered office at Bengaluru.
The fourth respondent, claims to be a practising lawyer at Ghaziabad, filed an application under Section 156(3) Code of Criminal Procedure, 1973 on which the Magistrate vide order dated 14 January 2019, directed the concerned police station to register a case in terms of the application and investigate into it, wherein, it is alleged that complainant regularly purchases products from the sellers on the website of the petitioner-Company knowing to be of quality goods provided by the Company.
The fourth respondent on October 12, 2018, placed an order for purchase of a Laptop and accordingly, made payment at Rs 17,990/- through online payment for the product.
Grievance of the fourth respondent is that the Laptop delivered on 22 October 2018, was having processor of brand ‘A.M.D’ instead of brand ‘Intel’, thus, according to the fourth respondent, delivery of the product was not as per the specifications for which order was placed.
Aggrieved, complainant-fourth respondent registered a complaint with the petitioner-Company regarding the alleged discrepancy of the product.
The complaint was taken up by the Company as per their Dispute Redressal Policy, with the Seller i.e Tech Connect Retail Private Limited, but Seller declined to replace or refund the consideration of the product, stating that the product was dispatched as per specifications purchased by the fourth respondent.
Thereafter, the fourth respondent lodged a criminal complaint against the petitioner-Company directly with the Senior Superintendent of Police, Ghaziabad.
The Court noted that nothing was done on the complaint, accordingly, the fourth respondent filed an application under Section 156(3), CrPC before the Chief Judicial Magistrate, Ghaziabad.
On the said complaint the Magistrate passed an order dated January 14, 2019, in terms of the application directing the concerned police station to register a case for the offence disclosed in the application.
In the impugned FIR the fourth respondent reiterated that he is a long time user of the Company’s website and had placed order on down payment for the purchase of HP Laptop from the marketplace Seller (petitioner-Company).
It is alleged that the product received by the fourth respondent was not as per the specification for which the order was placed. The matter was raised by a complaint with the petitioner-Company, but the Seller declined to replace the product and refund the consideration stating that the product is as per the specifications for which the order was placed.
It is further alleged that the product delivered to the fourth respondent was having brand ‘A.M.D’ processor as against brand ‘Intel’ for which order was placed as per the specification of the product displayed by the Seller on the Company’s website on the date of purchase.
The petitioner-Company has raised challenge to the impugned FIR seeking its quashing, inter alia, on the ground that petitioner-Company is an e-commerce Marketplace/Platform that provides access to Buyers and Sellers through their website www.flipkart.com. Buyers and Sellers meet and interact to execute purchase and sale transactions, subject to terms and conditions as set out in the Buyers/Sellers Terms of Use (Flipkart Terms of Use).
In this backdrop, it is submitted by the counsel for the petitioner-Company that in terms of functionality, the petitioner-Company is an ‘intermediary’ as defined under Section 2(1)(w) of The Information Technology Act, 20004 providing an online platform. The transactions between the Buyers and Sellers on the platform are completely independent. No criminal offence whatsoever is made out against the petitioner-Company, the fourth respondent being an aware citizen was fully aware of the marketplace model and had voluntarily signed the Buyers Terms of Use; the fourth respondent has ex-facie made contradictory averments that the Laptop was purchased from the petitioner-Company and that petitioner-Company hatched a criminal conspiracy with the marketplace Seller.
It is further submitted that expressions like ‘conspiracy’, ‘cheating’ and ‘forgery’ has been employed in the impugned FIR but the ingredients thereof has not been asserted or detailed in the impugned FIR.
It is also submitted that the impugned FIR has been lodged maliciously to extract money from the petitioner-Company and to damage its goodwill, reputation and customer base. The Company claims protection under Section 79 of the IT Act, 2000. In this backdrop, it is submitted that the FIR be quashed.
State Counsel on specific query submitted that the State does not intend to file a counter affidavit to the writ petition. As per their instructions, a police report (closure) under Section 173(2) of CrPC has been filed by the Investigating Officer, hence, it is submitted that nothing remains for the State to submit.
In the case, the petitioner-Company has complied with the requirements of sub-sections (2) and (3) of Section 79, as well as, the Information Technology (Intermediaries Guidelines) Rules, 2011.
The Court considered Company has exercised ‘due diligence’ under Section 79(2)(c) of the Information Technology Act, 2000, read in conjunction with the Information Technology (Intermediaries Guidelines) Rules, 2011.
The Court said, The petitioner-Company is exempted from any liability under Section 79 of the IT Act, 2000, no violation can ever be attributed or made out against the directors or officers of the intermediary, as the same would be only vicarious, and such proceedings as initiated against them would be unjust and bad in law.
The only liability of an intermediary under Section 79(3)(b) of the IT Act, 2000, is to take down third-party content upon receipt of either a court order or a notice by an appropriate government authority and not otherwise. As per complaint filed by the complainant indicates that the petitioner-Company, raised the grievance of the complainant with the Seller.
“In terms of Section 79 of the IT Act, 2000, there does not appear to be any distinction between passive and active intermediaries in so far as the availability of the safe harbour provisions are concerned. An intermediary is not liable for any third-party (Seller) information, data or communication link made available or posted by it, as long as it complies with Sections 79(2) or (3) of the IT Act, 2000. The exemption under Section 79(1) from liability applies when the intermediaries fulfil the criteria laid down in either Section 79(2)(a) or Section 79(2)(b), and Section 79(2)(c). Where the intermediary merely provides access, it has to comply with Section 79(2)(a), whereas, in instances where it provides services in addition to access, it has to comply with Section 79(2)(b). The case of petitioner-Company is that they fulfil these conditions to qualify as intermediaries”
-the Court observed while allowing the petition.
The impugned FIR and the consequent police report is set aside and quashed, the Court ordered.