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The Legal Affair

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The Legal Affair

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Flipkart and other Online Marketplaces not Liable for product discrepancies by third party seller

Flipkart and other Online Marketplaces not Liable for product discrepancies by third party seller

Taking into account the requirement of Section 79 of the IT Act, 2000, the Allahabad High Court recently awarded relief to online marketplace Flipkart in connection with a case in which the seller listed on Flipkart delivered a laptop with a different firm processor to the buyer.

In this case, a First Information Report was filed against Flipkart Internet Private Limited and its officials after a practising lawyer filed an application before the concerned Magistrate, and the Magistrate ordered the filing of a FIR. In the complainant’s case, he purchased a laptop (with an ‘intel’ processor) from a seller advertised on Flipkart. However, the processor in the laptop he received was of the ‘A.M.D’ brand. As a result, the complaint stated that the FIR should be filed because the goods was not delivered according to the requirements for which the order was placed.

Now, the petitioner-Company has approached the High Court to challenge this FIR on the grounds that Flipkart is an e-commerce Marketplace/Platform that allows access to Buyers and Sellers through their website. Buyers and sellers meet and engage to execute purchase and sale transactions, with Flipkart playing only a minor role. Its argument was that the website is only a platform that users can use to reach a larger audience in order to buy and sell products or services, and that the company is only providing a platform for communication; the actual contract for the sale of any of the products or services is strictly between the Seller and the Buyer of such product.

Finally, it was argued that Flipkart is a ‘intermediary’ in terms of functioning 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 Flipkart.

The bench of Justice Suneet Kumar and Justice Syed Waiz Mian remarked at the outset that Section 79 is a safe harbour provision for online intermediaries who host, distribute, and index content, products, and services produced by third parties on the internet. The Court went on to say that it encompasses e-commerce intermediates where the platforms do not own the products being offered.

The Court also stated that Flipkart, as an intermediary and an online marketplace, merely serves as a neutral platform for sellers to interact with buyers/customers, without exercising ownership over any goods or engaging in the manufacture or dealing of any goods, as it only receives and stores information on behalf of the seller/ buyer and is only an intermediary.

Additionally, the Court stated that in this case, Flipkart is not the Seller; rather, it is the Sellers registered with the Company who sell products and services on its platform, and it is the Sellers who are fully responsible to the purchaser/customer.

“It cannot be expected that the provider or enabler of the online marketplace is aware of all the products sold on its website/marketplace. It is only required that such provider or enabler put in place a robust system to inform all Sellers on its platform of their responsibilities and obligations under applicable laws in order to discharge its role and obligation as an intermediary. If the same is violated by the Seller of goods or service such Seller can be proceeded against but not the intermediary.”

Secondly, the Court determined that Flipkart is immune from liability under Section 79 of the I.T. Act of 2000, no infringement may ever be attributed or made out against the intermediary’s directors or officers, as the same would be purely vicarious, and any proceedings commenced against them would be unjust and illegal in law.

The Court emphasised that an intermediary’s only liability under Section 79(3)(b) of the I.T. The Act of 2000 requires third-party content to be removed only upon receipt of a court order or a notice from an appropriate government entity.

The Court further stated that the complaint lodged by the complainant suggests that the petitioner-Company raised the complainant’s dissatisfaction with the Seller, fulfilling its duty under Section 79 of the IT Act.

As a result, the Plea was granted, and the contested FIR and police report were set aside and quashed.

Section 79 of the Information Technology Act of 2000

Section 79 of the Information Technology Act of 2000 exempts intermediaries (such as Flipkart) from liability in certain circumstances. According to the provision, an intermediary is not accountable for any third-party information, data, or communication link that it makes available or hosts. However, the rule does not apply if the intermediary plotted, assisted, helped, or induced the commission of the unlawful act, whether by threats, promises, or otherwise.

CASE: Flipkart Internet Private Limited v. State of Uttar Pradesh And 3 Others