The usage of the Internet has a lion’s share in our lives. The Last three decades witnessed shedloads of people shifting to digital platforms for commercial purposes. E-Commerce can be defined as buying or selling of goods or services including digital products over a digital or electronic network, according to Sec 2(16) of Consumer Protection Act, 2019. E-Commerce can be classified into three – business-to-business, business-to-consumer and consumer-to-consumer.
In Amway India Enterprises Pvt. Ltd v. 1 Mg Technologies Pvt. Ltd and Another(1) (decided on 08.07.2019), the Court held that “the continued sale of the plaintiff products on the e-commerce platforms, without the consent of the plaintiffs, results in inducement of breach of contract, and tortious interference with contractual relationships of the plaintiffs with their distributors.” The case was a compilation of seven suits filed by Direct Selling Entities against famous e-commerce platforms for selling, offering for sale or advertising the plaintiff’s branded products without consent/authorization.
The main concerns raised here in this case –
● Whether the 2016 guidelines are binding upon the e-commerce platforms?
● Whether the sale is valid or amounts to violation of trademark rights?
● Which platforms are ‘intermediaries’ and whether the safe harbor provision u/s.79 of the IT Act is entitled to the platforms?
● Whether the e-commerce platforms such as Amazon, Snapdeal, Flipkart, 1MG and Healthkart are guilty of tortious interference with the contractual relationship of the plaintiffs to the direct sellers?
Observations and Held
The Court observed that the plaintiff’s products were tampered. Expired products were sold by the defendant, after giving them fake re-manufacturing dates. The Court also laid down the eligibility criteria for being an intermediary. But aggrieved by the order passed, the defendants made an appeal(2). The Delhi High Court reversed the said order which restrained the e-commerce platforms to breach the third-party contracts and held that these e-commerce platforms like Amazon, Snapdeal, Flipkart, Healthkart and many other to sell, offer to sell, advertise, display products without the consent of the Direct Sellers/Direct Selling Entities.
The order passed by the Competition Commission of India(3) giving direction: to establish a committee and investigate the anti-competitive nature of the e-commerce platforms and the abuse by dominant positions in the marketplace. It is challenged before Karnataka High Court(4) to set aside the order and quash the direction to investigate the practices of the platforms. The acts that are directed to be investigated: deep discounting; preferred sellers on the marketplaces; preferential listing and promotion of private labels; and exclusive agreements in respect of launch of mobile phone brands on their platforms. The Court held the dismissal of all the writ petitions stating ‘it would be unwise to prejudge the issues raised by the petitioners in these writ petitions at this stage and scuttle the investigation.
The contention of the petitioner that there is no res judicata in this case and the order passed by the CCI as it appears that the Act looks after the competitive forces in the market. At variance, relying on how the Commission did not order an investigation in CCI’s AIOVA order, both of them should have been treated in a similar way. But later the court found that the AIOVA order is set aside and an investigation is ordered, also stated that Competition Act operates in ‘rem’ and not in ‘personam’, since it concerns public interest(5).
Oberdorf v. Amazon.com Inc, No.18-1041 (3d Circ. 2019)
The complainant to the case, Heather Oberdorf sued Amazon for the permanent injury caused to her because of the dog leash (the product bought through Amazon) claiming the strict liability and negligence. But the District Court found that the injury had nothing to do with Amazon as it is not liable under the Law of Pennsylvania. The DC ruled that, ‘Amazon is not subject to strict products liability claims because Amazon is not a seller under Pennsylvania law and that the claims are barred by the Communications Decency Act because she seeks to hold Amazon liable for its role as the online publisher of the third-party content.’ The product was directly shipped to Oberdorf.
The order of DC is rejected as the Francioni test is applied and the factor is supposed to explain the fact that the test guides if damages is caused by defects in the products supplied by a particular supplier, whether such supplier can be held liable.
The dispute regarding the case is very interesting though the SC of Pennsylvania issued 4 factors to justify the sellers in the matter of liability.
The factors being whether amazon –
● only member of the marketing chain available to the injured plaintiff for redress
● Imposition of strict liability upon Amazon would be an incentive to its safety.
● In a position to receive reports of defective products
● the actor can distribute the cost of compensating for injuries resulting from defects by charging for it in his business.
It is held that Amazon is a ‘seller’ and is liable for strict product liability. It rationalized with the following factors:
● The admission of the VP of Amazon that the precaution to ensure the third-party vendors and providing them with flexible legal procedure under the state laws is absent. Hence, Amazon now stands as the only member of the marketing chain available to the injured plaintiff for redress.
● The strife is that there is a lack of direct relationship with product manufacturers but the court found that there is an agreement between Amazon and the third-party vendor that gives Amazon the sole discretion to accept or reject the product that is considered unsafe. Hence, imposing strict liability upon Amazon would be an incentive to do so.
● The constant reports regarding the unsafe products to Amazon is one of the factors it can consider and remove the product from list and Amazon is in a better position as it has sole discretion to manage the listed products. Hence, this also favors imposing strict liability.
● Leaving the customers unguarded is the situation of every customer since they have no knowledge of the whereabouts and whatabouts of the third-party vendor. But Amazon having authority and tie-up with them can keep traces and this itself weighs in favor of imposing strict liability on Amazon.
SpiceJet Ltd v. Renju Aery(6)
The facts and circumstances of the case, is that the flight, which the complainants were supposed to board, got canceled, although all other flights from Kolkata airport were operational. The OP Airlines have not explained anywhere whether there were any genuine reasons for the cancellation of the flight. Merely taking the plea that there were technical and operational defects, The OP Airlines have also not explained anywhere whether they took any concrete steps to take care of the passengers of their canceled flight and to make arrangements for their travel by some alternative method. Contended that the E-ticket issued to the passenger was a concluded contract between the parties and hence, they were bound to follow the terms and conditions of the said contract.
The Revision Petition before the National Consumer Disputes Redressal Commission, filed u/s.21(b) of Consumer Protection Act. First, the consumer complaint filed seeking compensation is decreed ex-parte; the District Forum ordered the opposite party to settle the refund amount, charges for mental harassment and litigation when it made an appeal; aggrieved by the order the OP Airlines approached State Consumer Commission which dismissed the petition; hence, the revision petition. The question is Whether the ex-parte decree and the order passed against the OP Airlines in the District Forum is justifiable.
The NCDRC held there is no illegality, infirmity or jurisdictional error in the orders passed because the DF and the State Commission have settled the legal process with clear findings as such. The deficiency in service on the part of the OP Airlines is, therefore, writ large on the face of it, and they are liable to compensate the complainant on this score.
The same parties in 2017 had a jurisdictional issue, and it has been cleared by stating that the consumer making purchase or booking any ticket from online sites is disputed, they are free and have the right to sue the complaint and continue the legal procedure in the place of their choice. Both the Consumer Protection Act and the Information Technology Act are interpreted side by side to ensure the protection of the consumers. The only issue mattersis cause of action and the contract between them that is made online. If consumers face any kind of deficiency in the services of the e-commerce vendors, then the vendors can be sued.
2. Amazon Seller Services Pvt Ltd v. Amway India Enterprises Pvt. Ltd and Others, FAO (OS) 133/2019
3. Delhi Vyapar Mahasangh v. Flipkart and Amazon Seller Services, MANU/CO/0001/2020
4. Amazon Seller Services Pvt Ltd v. CCI & Ors., MANU/KA/2373/2021
5. Samir Agarwal v. Competition Commission of India, 2020 SCC OnLine SC 1024
6. NCDRC Order – MANU/CF/0084/2017 and SC SLP Order – MANU/SCOR/30743/2017
1. Ms. Roohi Babu, B.SC., B.L., (Hons), Advocate practicing at Madras High Court, with 5 years of experience in IPR and Family matters.
2. Angujanani. G, 4th Year student of BBA, LLB (Hons) at Saveetha School of Law, SIMATS, Chennai.