Kunal Bahl Vs State of Karnataka (Karnataka High Court)
In E-commerce transactions the jurisdiction to try offences will lie with a Court where the accused has its Head Office, Branch Office or other offices.
1. The order of Cognisance dated 8.6.2020 is not in compliance with the requirement of Section 191(1)( a) of the Cr.P.C and further does not indicate the procedure under Section 204 of Cr.P.C having been followed. At the time of taking Cognisance and issuance of process, the Court taking Cognisance is required to pass a sufficiently detailed order to support the conclusion to take cognisance and issue process, in terms of the discussion above. The judicious application of mind to the law and facts of the matter, should be apparent on the ex-facie reading of the order of Cognisance.
2. When the accused is having an office, branch office, corporate office, sales office or the like within the Jurisdiction of the Magistrate where the offence has been committed and or continues to be committed, there would be no requirement for any enquiry under Section 202 of Cr.P.C. It would, however, be required for the Magistrate to in the order of issuance of summons/process record as to why the enquiry under Section 202 of Cr.P.C is not being held.
3. In the event of accused being an individual, if the said accused has a temporary residence within the Jurisdiction of the Magistrate, again merely because he does not have a permanent residence, there is no enquiry which is required to be conducted under Section 202 of Cr.P.C. It would, however, be required for the Magistrate to in the order of issuance of summons/process record as to why the enquiry under Section 202 of Cr.P.C is not being held.
4. When the accused has no presence within the Jurisdiction of the Magistrate where the offence has been committed, then it would be mandatory for an enquiry under Section 202 of the Cr.P.C to be held.
5. In the event of accused being aggrieved by the issuance of Summons, the said accused immediately on receipt of the Summons and/or on appearance before the Magistrate is required to make out his grievance before the Magistrate Court and/or by petition under Section 482 Cr.P.C. If there is any delay, in such challenge and/or if challenge has not made within reasonable time, the accused would not be entitled to raise the grievance that the procedure under Section 202 of Cr.P.C. has not been followed on account of delay and latches.
6. Only a Court in which the accused has a presence, like registered office, branch office, corporate office or the like could exercise Jurisdiction as regards an offence relating to an e-commerce transaction.
7. This of course would not apply to a Cyber Crime, which comes under global jurisdiction according to the IT Act, 2000. This means that any cyber-crime complaint can be registered with any of the cyber cells in India, irrespective of where the crime was originally committed.
8. An intermediary as defined under Section 2(w) of the Information Technology Act or 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 market place.
9. An intermediary would not 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 since the essential ingredients of Section 18 (1)(c) of the Act not having been fulfilled. Neither Snapde al nor its Directors can be prosecuted for the offence under Section 27(b)(ii) of the Act.
10. There being no acceptable explanation for the highly belated lodging of the Complaint, the delay is fatal to these proceedings.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
The Petitioners in Crl.P. No.4676/2020 are the Directors of Snapdeal Private Limited, accused No.2. They are before this Court seeking for the following reliefs:
a) Call for records in C.C.No.156/2020 pending before the Court of the Principal Senior Civil Judge and CJM, Mysuru;
b) Quash the Complaint the Complaint dated 5.6.2020 in C.C.No.156/2020 pending on the file of the Prl. Senior Civil Judge and CMM, Mysuru; and
c) Quash the order dated 8.6.2020 and further proceedings pending in C.C.No.156/2020 pending before the Prl. Senior Civil Judge and CMM, Mysuru taking Cognisance of the offences punishable under Section 27(a)(ii) of the Drugs and Cosmetics Act, 1940 and issuing Summons to the petitioners.
2. The Petitioner in Crl.P. No.4712/2020 is Snapdeal Private limited who is seeking for the following reliefs:
a) Call for records in C.C.No.156/2020 pending before the Court of the Principal Senior Civil Judge and CJM, Mysuru;
b) Quash the Complaint the Complaint dated 5.6.2020 in C.C.No.156/2020 pending on the file of the Prl. Senior Civil Judge and CMM, Mysuru; and
c) Quash the order dated 8.6.2020 and further proceedings pending in C.C.No.156/2020 pending before the Prl. Senior Civil Judge and CMM, Mysuru taking Cognisance of the offences punishable under Section 27(b)(ii) of the Drugs and Cosmetics Act, 1940 and issuing Summons to the petitioners.
3. Though there are two petitions filed, essentially the averments made in both the petitions are one and the same. Both the petitions arise out of the Criminal proceedings in C.C.No.156/2020 initiated against the petitioners in both the matters and certain others for alleged violation of Section 18(c) of the Drugs and Cosmetics Act, 1940 punishable under Section 27(b)(ii) of the Drugs and Cosmetics Act, 1940.
4. In the petitions it is contended as under:
Background of Snapdeal
4.1. Jasper Infotech Private Limited [ now Snapdeal Private Limited (Petitioner)], was incorporated in 2007 (hereinafter referred to as ‘Snapdeal‘), the said company started an online marketplace in February 2010, namely “Snapdeal.com” which is claimed to be India’s largest online marketplace, with the widest assortment of 60 million plus products across 800 categories from regional, national and international brands and retailers.
4.2. Snapdeal is ‘intermediary’ as defined under Section 2(1)(w) of the Information Technology Act, 2000 (hereinafter referred to as the ‘IT Act‘). An `intermediary’ under the Information TechnoIogy Act, 2000, incIudes an onIine-market pIace. Section 2(1)(w) of the IT Act, is reproduced hereunder for easy reference.
“Section 2(1) in The Information Technology Act, 2000
(1) In this Act, unless the context otherwise requires,-
(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;]”
4.3. DIRECTORS:
The directors in CrI.P. No.4676/2020 are the directors of the Petitioner in CrI.P.No.4712/2020. They have been arraigned as accused Nos.3 and 4 in the Complaint.
Snapde al’s relationship with Seller and Seller obligations
4.4. In order to upload, sell or even ‘offer for sale’ any product on Snapdeal, a seller h as to create an account with Snapdeal and contractually agree to the terms of the following documents:-
4.4.1. Snapdeal’s Terms of Use, which contains the basic terms and conditions of using Snapdeal that every user (including every Seller) has to agree with. These terms are publicly available at https:/ /www.snapdea1.com/offers /terms-of-use.
4.4.2. Snapdeal’s Terms of Offer for Sale, which contains the basic terms and conditions pertaining to sale of products on Snapdeal which every user/ seller has to agree with. These terms are publicly available at https://www.snapdeal.com/
page/terms-of-sale.
4.4.3. Snapdeal’s Policies: which includes the policy relating to privacy and data collection of every user (“Privacy Policy“), the policy dealing with abuse of Snapdeal’s Terms of Service (“Abuse Policy“), the policy dealing with prohibited items on Snapdeal and the consequences of violation (“Prohibited Seller Activities and Consequences Policy“).
4.4.4. Seller Agreement: which contains the basic terms and conditions of selling products over Snapdeal which every Seller has to agree with.
4.5. Snapdeal’s business as per its ‘Terms of Offer for Sale’, is “a platform that facilitates the online sale and purchases of branded merchandise and services (“Services”) offered by Snapdeal’s various affiliate/ registered merchants/ vendors/ service providers (“Vendor/s”). The Vendors are the Sellers of products and services on the Website who are stated to be solely responsible to the purchaser/customer for the products sold or for redemption of any Voucher purchased by the purchaser/customer through the Website.”
4. 6. Snapdeal enters into seller agreements with various sellers, the seller agreements are accompanied by a Schedule of banned products, which categorically includes “21. Prescription Medicines and Drugs”.
4. 7. Under the Seller Agreement, the sellers are stated to have agreed to several conditions the relevant conditions for the present matter are as under:
4. 8. Seller shall upload the Product listings for the sale of the Products in the appropriate category, through the Seller Panel. Seller shall also be required to provide all details relevant to the sale / purchase of the Products, including the Selling Price, an informative description of each Product (including but not limited to the length, breadth and height of the Product) and its contents, by way of text descriptions, graphics, or pictures or videos. These Product listings and details shall be displayed on the Website, along with the Selling Price.
4. 9. Seller has represented that the Seller shall provide accurate Product information on the Seller Panel/Website. The Product description shall not be misleading and shall describe the actual condition of the Product. If the sold Product does not match the Product description displayed on the Website, Seller agrees to refund any amounts that Seller may have received from the Buyer.
4. 10. Seller shall not attempt to sell any products falling in the category of Snapdeal Banned Products” List on this Website. Snapdeal shall be entitled to block all such products and shall also have the right to suspend or terminate the Seller’s access to the Seller Panel and the Website or terminate this Agreement forthwith.
4.11. When a Buyer elects to purchase a Product through the Website, Snapdeal shall receive the order for the Product only in the capacity of an online marketplace. Seller also has agreed that the payment facility provided by Snapdeal is neither a banking service nor a financial service but is merely a facilitator/ facilitating the service of providing an automated online electronic payment system, using the existing authorised banking infrastructure and credit card payment gateway networks or payment through cash on delivery, for the transactions on the Website. Further, by providing the payment facility, Snapdeal is neither acting as a Trustee nor acting in a fiduciary capacity with respect to any transaction on the Website.
4. 12. Seller confirm and understand that selling and delivering fake, duplicate, spurious, counterfeit, refurbished or previously owned Products thronged the Website will cause great prejudice and harm to the reputation and goodwill of Snapdeal and may also cause harm and prejudice to the Buyers. Seller acknowledge and warrant that Seller shall not sell any Product which may cause prejudice or harm to the reputation and goodwill of Snapdeal. Further, if Snapdeal receives any complaint from any Buyer or if Seller sells or delivers fake, duplicate, spurious, counterfeit, refurbished or previously owned Products through the Website then Seller shall be debited with an amount of equivalent to total GMV(Gross Merchandise Value) of all products sold through Snapdeal’s Website or Rs 5,00,000, whichever is higher and will lead to immediate delisting of all of Seller’s products from Snapdeal. Snapdeal reserves the right to adjust the above amount from any amount accrued to Seller pursuant to this Agreement.
4. 13. Snapdeal has also published a document titled ‘Prohibited Seller Activities and consequences Policy Document’ where one of the Prohibited seller activities is clearly specified as:
