E-Commerce Legal Landscape

(Session- XIII)

Rubaina Shrivastava
UNCITRAL Model Law on e-commerce
 Adopted on 30 January 1997
 Inadequate legislation at the national level created obstacles to international trade
 Many countries lacked in legislations for dealing with E-commerce as a whole results in
uncertainty as to the legal nature and validity of information
 Many countries the existing legislation governing communication and storage of information
were inadequate or outdated
 Recommends all States give favorable consideration to the Model law when they enact or revise
their laws in view of the need for uniformity of the law

2
 Objectives of Model Law
 To facilitate rather than regulate electronic commerce

 To adapt existing legal requirements

 To provide basic legal validity and raise legal certainty

3
Information Technology Act, 2000
 Following the United Nations Commission on International Trade Law (UNCITRAL) Model
Law with an objective of promoting efficient delivery of government services by means of
reliable electronic records on E-Commerce, the Government of India enacted the Information
Technology Act in June 2000; Amended in 2008

 Provides legal recognition for E-commerce transactions, Digital Signatures and facilitate
Electronic Governance

 The Act facilitates E-commerce and E-Governance in the country. The Act also establishes a
regulatory framework and lays down punishment regimes for cyber crimes and offenses

4
Data Protection
 Sec 43A: Compensation for failure to protect data
 To follow ‘reasonable security practices and procedures’
 Contractually agreed
 IT (reasonable security practices and procedures and sensitive personal
information) rules 2011
 Personal information- directly or indirectly identifies a person
 Rule3: Sensitive personal information
 Password, Financial information, Physical, Biological, Mental Health Condition, Sexual
Orientation, Medical records, Biometrics, any relating information for providing services, or
processed, stored under lawful contract or otherwise
 Civil Offence

5
 In addition to civil liability, negligent disclosure of personal information a criminal
offence under Sec 72 A of IT Act: Imprisonment upto 3 years or fine upto 5 lakhs
or both
 Sec 72: Breach of Confidentiality and privacy
 Disclosure of e-records without the consent of the person – imprisonment upto 2 years or fine
upto 1 lakhs or both
 Sec 69: Provides power to central government to intercept and monitor data in the
interest of security of the country and for prevention of crime
 Sovereignty or integrity of India
 Defense, security of India
 Friendly relations with foreign states
 Public order
 Intermediary to extend all facilities and technical assistance; failure to do so imprisonment upto
7 years and fine. IT Rules (Procedures & Safeguards for Interception, Monitoring and Decryption
of
6 Information) 2009
Offences and Penalty
 Sec 43 IT Act: Any person without permission of owner
 Accesses or secures access to computer, computer system, computer network, computer
resource
 Downloads, copies, extracts any data
 Introduces or causes to be introduced any computer contaminant
 Damages or causes to be damaged…
 Disrupts or causes to be disrupted…
 Denies or causes to denial of access; deletes, alters, manipulates, destroys…
 Charges services availed by a person to another person
 Provides assistance or facilitates access contravention to the provisions of this Act

7
Offences and Penalty
 Sec 66: Computer Related Offences
 Any person dishonestly, fraudulently any act under sec 43- punishable imprisonment upto
3 years or fine 5 lakhs or both
 Sec 66A: Struck Down by Supreme Court Shreya Singhal v Union of India
 Sec 66B: Punishment for dishonestly receiving stolen computer resources or
communication devices imprisonment upto 3 years or fine 1 lakhs or both
 Sec 66C: Punishment for Identity Theft imprisonment upto 3 years and fine 1 lakhs
 Sec 66D: Punishment for Cheating by personation by using computer resources
imprisonment upto 3 years and fine 1 lakhs
 Sec 66E: Penalty for violation of privacy or other persons imprisonment upto 3 years or
fine 2 lakhs or both

8
 Introduction – E-Commerce
Definition
 E-commerce means buying and selling of goods and services including digital products over digital & electronic
network.
 E-commerce entity- means a company incorporated under the Companies Act 1956 or the Companies Act 2013
or a foreign company covered under section 2 (42) of the Companies Act, 2013 or an office, branch or agency in
India as provided in section 2 (v) of FEMA1999, owned or controlled by a person resident outside India and
conducting the e-commerce business
Models
 Inventory Based Model of E-Commerce
 Marketplace Model of E-Commerce

9
Challenges
 Consumer protection issues/unfair terms in e-commerce
 Intermediary Liabilities
 Intellectual Property rights issues;
 Data Protection and Privacy Rights issues;
 Jurisdiction/choice of law issues;
 Admissibility/Evidence issues;
 Cybercrime etc.

10
 Case Law: Kunal Bahl vs State of Karnataka Jan 7, 2021
 Snapadeal started an online marketplace in February 2010
 An ‘intermediary’ under the Information Technology Act, 2000, includes an
online-market place.
 Section 2(1) (w) “intermediary, with respect to any particular electronic records, means any
person who on behalf of another person receives, stores or transmits that record or provides
any service with respect to that record and includes telecom service providers, network service
providers, internet service providers, web-hosting service providers, search engines, online
payment sites, online auction sites, online-market places and cyber cafes”

 TRIAL COURT ORDER

 Pursuant to which Cognisance is taken as against accused for the offence Sec
27(b)(ii) of Drugs & Cosmetics Act. Office is hereby directed to register same and
Issuance summons to accused. Await & call on by 01/09/2020
11
 In the High Court of Karnataka
 Petitioners – Kunal Bahl and Rohit Bansal Snapdeal Pvt Ltd
 Respondents – State of Karnataka represented by Drug Inspector
 Files a criminal petition in the High Court of Karnataka Under Section 482 Crpc praying
to:
 Quash the Complaint the Complaint dated 5.6.2020 pending before the Trial Court
(Mysuru)
 Quash the Trial Court Order dated 8.6.2020 and further proceedings pending before the
Trial Court (Mysuru) taking Cognisance of the offences punishable under Section
27(a)(ii), 27(b)(ii) of the Drugs and Cosmetics Act, 1940 and issuing Summons to the
petitioners

12
 Allegations made in complaint
 October 2014, Adept Biocare, a proprietary concern of one Mr. Amandeep Chawla
(Panchkula) (Accused No.1 in the Impugned Complaint), created a seller account on
Accused No. 2s’ online marketplace www.snapdeal.com for listing and selling his own
products
 Adept Biocare confirmed having sold Tablets, during the period between 13.10.2014 and
16.12.2014. Possessed a wholesale license.
 On 10/11/2014, one Mr. Manjunath placed an online order through the Snapdeal Website,
for Tablets; Same was delivered to him on 20/11/2014 and payment of Rs.390/
 Snapdeal has exhibited Tablets for sale and provided platform to Seller and purchaser

13
 Snapdeal response
 Snapdeal is an intermediary as defined under Section 2(1)(w) of the Information Technology Act, 2000, as
amended by the Information Technology (Amendment) Act, 2008, and is therefore entitled to the exemption
from liability in terms of Section 79 Information Technology Act, 2000, for the following reasons:
 Snapdeal had no role in the said transaction;
 Snapdeal warned Accused No.1 not to sell the said tablets on the Website
 Merely provides access to a communication system
 As an intermediary has no control on what users may post on its platform
 Exercised ‘due diligence’ under Section 79(2)(c) of the IT ACT, 2000
 The only liability of an intermediary under Section 79(3)(b) of the IT Act 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
 Shall not apply if-
 the intermediary has conspired or abetted or aided or induced, whether by threats or promise or othorise in
the commission of the unlawful Act;
 upon receiving actual knowledge, or on being notified by the appropriate Government or its agency that any
information, data or communication link residing in or connected to a computer resource, controlled by the
intermediary is being used to commit the unlawful Act, the intermediary fails to expeditiously remove or
disable access to that material on that resource without vitiating the evidence in any manner
14
…
 An intermediary cannot be responsible for the listing and sale of allegedly
products by independent third-party sellers on its marketplace*
 Magistrate failed to consider “market place model of e-commerce”
 All of the Accused, including the Petitioners, reside beyond the jurisdiction of
the Learned Trial Court.
 Therefore, the Impugned Order is ex facie illegal and is liable to be set aside
since the same has been passed without conducting the mandatory inquiry as
per Section 202 of the CRPC

15 *by relying on the decision of the Apex Court Shreya Singhal vs Union of India (2015)
 Counter Response from State of Karnataka
 Whether the Petitioner is a manufacturer or not, the fact that the Petitioner owns market place
‘Snapdeal’ is sufficient to prosecute the Petitioner for any offence or violation committed by any
seller on the platform
 Order of cognisance dated 8.6.2020 passed by the Magistrate is proper and correct
 e-commerce transaction since the transaction occurs across the country, it cannot be expected for a
purchaser of a product in one part of the country to proceed against the e-commerce website only
where it is registered and therefore, the Mysore Court where the item was ordered and delivered
could exercise jurisdiction
 It is not relevant for the reason that the transaction has occurred within the jurisdiction of the
Magistrate at Mysore
 being the entity which provided a platform and permitted advertisement for sale of the said
prohibited item (under Drugs and Cosmetics Act), accused No.2 and in turn accused Nos.3 and 4
being its directors are liable to be prosecuted
 On these basis, he submits that the petitions as filed are liable to be dismissed

16
Questions before the Honorable Court
 Q1- Which Court could exercise Jurisdiction as regards an offence relating to
an e- commerce transaction?

 Q2- Whether an e-commerce intermediary as defined under Section 2(w) of

the Information Technology Act would be liable for any action or inaction on
party of a vendor/seller making use of the facilities provided by the
intermediary in terms of a website or a market place?

 Q3- Whether Snapdeal/accused No.2 would be responsible and/or liable for

sale of any item not complying with the requirements under the Drugs and
Cosmetics Act, 1949 on its platform - accused No.2 being an intermediary?

17
 THANK YOU

18