A.F.R.

Reserved on 15.09.2022

Delivered on 17.10.2022

Court No. - 48

Case :- CRIMINAL MISC. WRIT PETITION No. - 3487 of 2019

Petitioner :- Flipkart Internet Private Limited

Respondent :- State Of U.P. And 3 Others

Counsel for Petitioner :- Kartikeya Saran

Counsel for Respondent :- G.A.,Samarth Sinha

Hon'ble Suneet Kumar,J.

Hon'ble Syed Waiz Mian,J.

Suneet Kumar,J.

1.Heard Sri Anurag Khanna, learned Senior Advocate, assisted

by Sri Kartikeya Saran and Ms. Suchita Mehrotra, learned

counsels appearing for the petitioner and Mrs. Manju Thakur,

learned A.G.A. for the State.

2.By the instant writ petition, petitioner is seeking quashing

of the First Information Report

1

dated 26 January 2019, bearing

Case Crime No. 0208 under Sections 406, 420, 467, 468, 471,

474 and 474-A IPC, registered at Police Station Kavi Nagar,

District Ghaziabad.

3.Petitioner is a Company incorporated under the Companies

Act, 1956

2

, having its registered office at Bengaluru (hereinafter

referred to as “Company”).

4.The fourth respondent, claims to be a practising lawyer at

Ghaziabad, filed an application under Section 156(3) Code of

1. for short ‘FIR’

2. for short “Act, 1956”

Criminal Procedure, 1973

3

on which the learned 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 12 October 2018,

placed an order for purchase of a Laptop being H.P. 15 A.P.U.,

Dual Core, A-6 (4GB/I TB HDD/Windows 10 Home) 15” B.W.

Model, accordingly, made payment at Rs. 17,990/- through online

payment for the product. The booking ID generated for the said

purchase being OD 113621553490664000.

5.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.

6.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.

7.Thereafter, fourth respondent lodged a criminal complaint

against the petitioner-Company directly with the Senior

Superintendent of Police, Ghaziabad. It appears that nothing was

3. for short ‘Cr.P.C.’

2

done on the complaint, accordingly, fourth respondent filed an

application under Section 156(3), Cr.P.C. before the Chief Judicial

Magistrate, Ghaziabad, being Application No. 6474 of 2018. On

the said complaint the Magistrate passed an order dated 14

January 2019, in terms of the application directing the concerned

police station to register a case for the offence disclosed in the

application.

8.In the impugned F.I.R. 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 H.P. Laptop from the

market place 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.

9.The petitioner-Company has raised challenge to the

impugned F.I.R. 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 transaction, subject to terms and

condition as set out in the Buyers/Sellers Terms of Use (Flipkart

Terms of Use). The relevant conditions of the Terms of Use, inter

alia, includes:

3

a. The website of the petitioner-Company is a platform that

users, i.e. buyers, and/or, sellers, utilize to meet and interact

with one another for their transactions. As such, the Company

merely provides a platform for the transactions of its users and

petitioner-Company is not a party to or in control of any such

transaction between its users.

b. All commercial/contractual terms (including the price, shipping

costs, payment methods, payment terms, date, period and mode

of delivery, warranties related to products and services and after

sales services related to the products and services are offered by

and agreed to between the Buyers and Sellers alone, as such, the

petitioner-Company does not have any control or does not

determine or advise or in any way involve itself in the offering

or acceptance of such commercial/contractual terms between the

Buyers and Sellers.

c. All discounts and offers on the website are provided by the

sellers/brands and not by the petitioner-Company.

d. The petitioner-Company does not make any representation or

warranty as to specifics of the products or services (such as

quality, value, salability) proposed to be sold or offered to be

sold or purchased on the website, as such, the petitioner-

Company does not explicitly or even impliedly support or endorse

the sale or purchase of any products or services on the website.

e. The website is only a platform that can be utilized by users to

reach a larger base to buy and sell products or services and the

petitioner-Company is only providing a platform for

communication; the actual contract for sale of any of the

products or services is strictly between the Seller and the Buyer

of such product.

4

f. The product offered for sale and the related content including

the product description, prices, images, texts, graphics, user

interfaces, visual interfaces, photographs, trademarks, logos,

sounds, music and artwork on the website of the petitioner is a

third party user generated content and the petitioner-Company

has no control over such third party user generated content.

Therefore, the website of the petitioner-Company operates as a

neutral e-commerce platform which serves as a mere conduit for

Buyers and Sellers to conduct their business.

10.In this backdrop, it is submitted by the learned 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, 2000

4

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 F.I.R. but the ingredients thereof

has not been asserted or detailed in the impugned F.I.R. It is

further submitted that the impugned F.I.R. 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 I.T. Act, 2000. In this

backdrop, it is submitted that the F.I.R. be quashed.

4. for short ‘I.T. Act, 2000’

5

11.Learned State Counsel on specific query submits that the

State does not intend to file counter affidavit to the writ petition.

As per their instructions police report (closure) under Section

173(2) of Cr.P.C. has been filed by the Investigating Officer,

hence, it is submitted that nothing remains for the State to

submit.

12.Learned counsel for the fourth respondent despite putting in

appearance has not filed counter affidavit to the averments made

in the writ petition.

13.The petitioner-Company is governed by the provisions of the

I.T. Act, 2000, petitioner-Company is an ‘intermediary’ and the

role being that of a facilitator or a conduit. It is an e-commerce

platform where Sellers and Buyers can interact and select and

purchase products and items offered by the seller. The facts, inter

se, parties are not in dispute that petitioner-Company is an e-

commerce intermediary where the platform does not take title to

the goods being sold on their marketplace platform. Intermediary

stands on a different footing being only facilitator of exchange of

information or sales under the I.T. Act, 2000. Intermediaries are

not liable for the goods put up for sale by the Seller on the

platform. Such e-commerce networks are exempted from liability

under the I.T. Act, 2000, Rules or Regulations made thereunder

concerning any third party. As per the impugned F.I.R. the date

of alleged offence is 22 October 2018 i.e. on the date when the

defective laptop purchased by the fourth respondent was received.

14."Intermediary" is defined under Section 2(1)(w) of the I.T.

Act, 2000, which reads as follows:

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

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providers, internet service providers, web-hosting service providers,

search engines, online payment sites, online- auction sites, online-

market places and cyber cafes.

15.In other words, the obligation of the intermediary is to

observe due diligence and follow the guidelines that may be

prescribed by the Government in this behalf. Therefore, reference

will have to be made to the Information Technology

(Intermediaries Guidelines) Rules, 2011

5

. The I.T. Guidelines was

enacted under Section 87 of I.T. Act, 2000, and came to force in

2011. What is due diligence to be observed by the intermediary

has been provided under Rule 3(1), which, inter alia, reads as

follows:

3. Due diligence to be observed by intermediary -- The intermediary

shall observe following due diligence while discharging his duties,

namely: --

(1) The intermediary shall publish the rules and regulations, privacy

policy and user agreement for access-or usage of the intermediary's

computer resource by any person.

(2) xxx xxx xxx

(d) infringes any patent, trademark, copyright or other proprietary

rights;

(e) to (i) xxx xxx (3) The intermediary shall not knowingly host or

publish any information or shall not initiate the transmission, select

the receiver of transmission, and select or modify the information

contained in the transmission as specified in sub-rule (2):

provided that the following actions by an intermediary shall not

amount to hosing, publishing, editing or storing of any such

information as specified in sub-rule: (2) --

(a) xxx xxx

(b) removal of access to any information, data or communication link

by an intermediary after such information, data or communication link

comes to the actual knowledge of a person authorised by the

intermediary pursuant to any order or direction as per the provisions

of the Act;

(4) The intermediary, on whose computer system information is stored

or hosted or published, upon obtaining knowledge by itself or been

brought to actual knowledge by an affected person in writing or

5. for short ‘I.T. Guidelines Rules - 2011’

7

through email signed with electronic signature about any such

information as mentioned in sub-rule (2) above, shall act within thirty

six hours and where applicable, work with user or owner of such

information to disable such information that is in contravention of

sub-rule (2). Further the intermediary shall preserve such information

and associated records for at least ninety days for investigation

purposes;

(5) The Intermediary shall inform its users that in case of non-

compliance with rules and regulations, user agreement and privacy

policy for access or usage of intermediary computer resource, the

Intermediary has the right to immediately terminate the access or

usage lights of the users to the computer resource of Intermediary and

remove non-compliant information.

(6) to (11) xxx xxx xxx

‖

16.I.T. Guidelines Rules, 2011, has since been superseded by

the Information Technology (Intermediaries Guidelines and Digital

Media Ethics Code) Rules, 2021. The subsequent Guidelines does

not apply to the facts of the instant case, having regard to the

fact that the offence is alleged to have been committed on 22

October 2018 i.e. the date of purchase of the defective product.

17.Intermediary is obliged to publish the Guidelines, Rules,

Regulations, Privacy Policy, and User/Buyer Agreement. However,

non-compliance of these Guidelines/Rules have not been declared

to be an offence under the I.T. Act, 2000. Chapter-XII of I.T.

Act, 2000, provides for Offences, Penalties and Procedures.

18.The present matter relates to criminal liability and

petitioner-Company claims protection under Section 79, further, it

is submitted on behalf of petitioner-Company that the ingredients

of the offence, taking the allegations on face value as alleged in

the impugned FIR is not made out.

19.Section 79 of I.T. Act, 2000, as it earlier stood, came to be

amended by the Information Technology (Amendment Act 2008),

it came into force on 27 October 2009. In the given facts the

amended Section 79 would be applicable and not the provisions

8

as it stood prior to the date of amendment. Section 79 as it

stands after amendment reads thus:

“79 Exemption from liability of intermediary in certain cases:

(1) Notwithstanding anything contained in any law for the time being

in force but subject to the provisions of sub-sections (2) and (3), an

intermediary shall not be liable for any third party information, data,

or communication link hosted by him.

(2) The provisions of sub-section (1) shall apply if-

(a) the function of the intermediary is limited to providing access to a

communication system over which information made available by third

parties is transmitted or temporarily stored; or

(b) the intermediary does not-

(i) initiate the transmission,

(ii) select the receiver of the transmission, and

(iii) select or modify the information contained in the transmission

(c) the intermediary observes due diligence while discharging his

duties under this Act and also observes such other guidelines as the

Central Government may prescribe in this behalf (Inserted Vide ITAA

2008)

(3) The provisions of sub-section (1) shall not apply if-

(a) the intermediary has conspired or abetted or aided or induced

whether by threats or promise or otherwise in the commission of the

unlawful act (ITAA 2008)

(b) 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.

Explanation:- For the purpose of this section, the expression "third

party information" means any information dealt with by an

intermediary in his capacity as an intermediary.”

20.Section 79 accordingly is a safe harbour provision. Internet

intermediaries give access to host, disseminate and index content,

products and services originated by third parties on the internet

which include e-commerce intermediaries where the platforms do

9

not take title of the goods being sold. Examples of such

intermediaries include Amazon India, Myntra, AJIO etc.

21.The I.T. Act, 2000, has an overriding effect. Section 81 of

I.T. Act, 2000, is extracted:

“81. Act to have overriding effect: The provisions of this Act

shall have effect notwithstanding anything inconsistent therewith

contained in any other law for the time being in force.”

22.Intermediaries stand on a different footing being only

facilitator of the exchange of information or sales. Prior to the

amendment the exemption provision under Section 79 did not

exist, therefore, an intermediary would have been liable for any

third party information or data made available by it. The 2008

amendment introduced Chapter XII to the I.T. Act, 2000. The

amendment purportedly was in the backdrop of the decision of

the Delhi High Court rendered in Avnish Bajaj vs. State (NCT of

Delhi)

6

. After the amendment, intermediary is not liable under

any Act if it satisfied certain requirements as detailed in Section

79 of I.T. Act, 2000.

23.Petitioner-Company does not follow inventory based model

of e-commerce, where inventory of goods and services is owned

by e-commerce entity and is sold to the consumers directly.

Petitioner-Company claims, it is an intermediary between Buyer

and Seller within the meaning of Section 2(1)(w) of the I.T. Act,

2000 and does not control the transaction between the two

parties. It only acts as a neutral platform to allow sellers to

interact with the buyers/customers, without exercising ownership

over any goods or indulging in the manufacture or dealing of any

goods. Petitioner-Company claims, it only receives and stores the

information on behalf of the seller/ buyer and acts as a

facilitator/ intermediary.

6. 2004 SCC OnLine Del 1160

10

24.The question is as to whether an intermediary as defined

under Section 2(1)(w) of the I.T. Act, 2000, would be liable for

any action or inaction by a party or a vendor/seller making use

of the facilities provided by the intermediary in terms of

Buyers/Sellers Terms of Use of the Company.

25.It is stated that petitioner-Company has established a

marketplace on the World Wide Web, more popularly known as

the internet, enabling a Seller to upload, sell or even 'offer for

sale' any product on the Company platform. For this purpose, a

Seller has to create an account with the Company and

contractually agree to Company’s Buyers/Seller Terms of Use,

Policies, Seller Agreement, which contains the basic terms and

conditions of selling products over Company marketplace which

every Seller/Buyer has to agree with.

26.Company being an intermediary cannot be disputed, it

comes with the meaning and definition of ‘intermediary’ under

Section 2(1)(w) of the I.T. Act, 2000, as amended by the

Information Technology (Amendment) Act, 2008. Company would

be entitled to the exemption from liability in terms of Section 79

I.T. Act, 2000, read with Section 81, if the requirements thereof

are met.

27.Company admittedly is not the Seller, it is the Sellers

registered with Company who are the sellers of products and

services on its platform, it is the Sellers who are solely

responsible to the purchaser/customer.

28.The Seller Agreement as per Terms of Use, details out the

terms and conditions relevant to the transaction, which has been

brought on record. (Flipkart Terms of Use)

11

29.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.

30.The manner in which the documents (Buyer/Seller Terms of

Use) have been executed, contents thereof, as also the obligation

of the parties stated therein establishes the due diligence

exercised by the petitioner-Company, to be in accordance with

and compliance of Section 79(2)(c) of the I.T. Act, 2000, read in

conjunction with the Information Technology (Intermediaries

Guidelines) Rules, 2011, in ensuring that Vendors/Sellers who

register on its Website conduct themselves in accordance with

and in compliance with the applicable laws.

31.The Consumer Protection (E-Commerce) Rules, 2020, makes

a distinction between marketplace e-commerce websites and

inventory e-commerce websites. As such the petitioner-Company

would come within the meaning of a marketplace e-commerce

website, thereby, affording the above exemption to the Company

so long as the requirements under Section 79 are followed by the

petitioner-Company.

32.In the present case, as detailed above, 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.

12

33.In our considered opinion 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.

34.The petitioner-Company is exempted from any liability

under Section 79 of the I.T. 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.

35.The only liability of an intermediary under Section 79(3)(b)

of the I.T. 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.

36.In terms of Section 79 of the I.T. 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 I.T. 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.

13

The factum that the petitioner-Company is an intermediary

providing merely access to Sellers/Buyers is not under challenge

nor disputed. The ingredients of the offence under Section 406,

467, 468, 471, 474 and 474-A IPC, in sofar, it relates to the

petitioner-Company is not made out taking the allegations made

in the impugned FIR on face value.

37.In State of Haryana and Ors. v. Bhajan Lal and Ors.

7

,

Supreme Court has set out the categories of cases in which the

inherent power can be exercised. Para 102 of the judgment reads

as follows: -

“102. In the backdrop of the interpretation of the various relevant

provisions of the Code under Chapter XIV and of the principles of law

enunciated by this Court in a series of decisions relating to the

exercise of the extraordinary power under Article 226 or the inherent

powers under Section 482 of the Code which we have extracted and

reproduced above, we give the following categories of cases by way of

illustration wherein such power could be exercised either to prevent

abuse of the process of any court or otherwise to secure the ends of

justice, though it may not be possible to lay down any precise, clearly

defined and sufficiently channelised and inflexible guidelines or rigid

formulae and to give an exhaustive list of myriad kinds of cases

wherein such power should be exercised.

(1) Where the allegations made in the first information report or

the complaint, even if they are taken at their face value and

accepted in their entirety do not prima facie constitute any

offence or make out a case against the accused.

(2) ……….

(3) ……….

(4) ……….

(5) ……….

(6) Where there is an express legal bar engrafted in any of the

provisions of the Code or the concerned Act (under which a

criminal proceeding is instituted) to the institution and

continuance of the proceedings and/or where there is a specific

provision in the Code or the concerned Act, providing

efficacious redress for the grievance of the aggrieved party.

7. 2006 (6) SCC 736

14

(7) Where a criminal proceeding is manifestly attended with

mala fide and/or where the proceeding is maliciously instituted

with an ulterior motive for wreaking vengeance on the accused

and with a view to spite him due to private and personal

grudge.”

38.Earlier the Supreme Court in State of Karnataka v. L.

Muniswamy and others

8

held as follows: -

“7. …..In the exercise of this wholesome power, the High Court is

entitled to quash a proceeding if it comes to the conclusion that

allowing the proceeding to continue would be an abuse of the process

of the Court or that the ends of justice require that the proceeding

ought to be quashed. The saving of the High Court's inherent powers,

both in civil and criminal matters, is designed to achieve a salutary

public purpose which is that a court proceeding ought not to be

permitted to degenerate into a weapon of harassment or persecution.

In a criminal case, the veiled object behind a lame prosecution, the

very nature of the material on which the structure of the prosecution

rests and the like would justify the High Court in quashing the

proceeding in the interest of justice…..”

(Principle reiterated in Anand Kumar Mohatta and another

vs. State (NCT of Delhi), Department of Home and

another

9

.)

39.Having regard to the law enunciated herein above and the

facts and circumstances of the case, the writ petition is liable to

succeed. Accordingly, the writ petition stands allowed. The

impugned FIR and the consequent police report is set aside and

quashed.

Order Date :- 17.10.2022

S.Prakash

(Syed Waiz Mian,J.) (Suneet Kumar,J.)

8. (1977) 2 SCC 699

9. (2019) 11 SCC 706

15