IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 28TH DAY OF AUGUST 2019 BEFORE THE HON’BLE MR. JUSTICE SREENIVAS HARISH KUMAR MISCELLANEOUS FIRST APPEAL No.8411 OF 2018 (CPC) BETWEEN Amazon Seller Services Pvt. Ltd., Having its registered office at 8th floor, Brigade Gateway, No.26/1 Dr. Rajkumar Road, Bengaluru-560055. Represented by its Managing Director, Also at Ground Floor, Eros Corporate Centre, Nehru Place, New Delhi-110019.
(By Sri. K.Arunkumar, Sr. Advocate, for Sri. M.V.Sundararaman, Advocate) AND M/s. Indusviva Health Sciences Pvt. Ltd., World Trade Centre, 22nd Floor, Unit No.2201, Brigade Gateway, Malleshwaram, Bengaluru-560055. Represented by its Legal Manager and Authorized Signatory, Sri. Rasool Khan, aged about 28 years, S/o. Arifulla Khan (By Sri. Mohammed Mujassim, Advocate, for Sri. R.Vidyasagar, Advocate for C/R) …Appellant …Respondent This MFA is filed under Section 43 Rule 1(r) of CPC against the order dated 15.09.2018 passed on I.A.No.I in O.S.No.5291/2018, on the file of the XVI Additional City Civil and Sessions Judge, Bengaluru City (CCH-12) allowing the I.A.No.I filed under Order 39 Rules 1 and 2 read with Section 151 of CPC.
This MFA coming on for admission this day, the court delivered the following:
JUDGMENT The defendant in O.S.5291/2018 on the file of Additional City Civil and Sessions Judge (CH.12), Bengaluru, has filed this appeal aggrieved by the order passed on an application filed under Order 39 Rules 1 and 2 CPC by the plaintiff.
2. The respondent being the plaintiff in the suit has pleaded that it is a direct selling entity. It is marketing four products by name I-Coffee, I-Pulse, I- Slim and I-Charge manufactured by M/s Olive Life Sciences Private Limited. It came to know that the defendant without its consent was soliciting/advertising/exhibiting/offering/endorsing its products below maximum retail price and thus causing loss to it. Immediately the plaintiff contacted the defendant through E-mails and lodged complaints. It requested the defendant to stop selling its products. Since the defendant did not stop, the plaintiff caused a legal notice issued to the defendant on 19.6.2018 and sought removal of its products from the defendant’s web site. The defendant did not stop and failed to comply with the demand of the plaintiff and hence the plaintiff brought a suit against the defendant seeking the relief of permanent injunction restraining the defendant from soliciting/advertising/exhibiting/offering /endorsing for sale or trade, release of its products. Along with the plaint, the plaintiff also made an application for temporary injunction. The said application stood allowed on 15.9.2018. Hence, this appeal.
3. The stand of the defendant is that it is a intermediary as defined under section 2 (1)(w) of the Information Technology Act, 2000. It only provides a platform for the buyers and the sellers and it does not actively participate in the transactions that take place on its platform. It does not manufacture, procure, list, price or sell the products made available on its on-line market price. Section 79 of the Information Technology creates a safe harbour for intermediaries from liability for the illegal and/or infringing activities carried out by third parties on its websites. It is not aware that the products I-Coffee, I-Pulse, I-Slim or I-Charge belong to the plaintiff company. An intermediary is only obligated to act against illegal and/or infringing contents once it receives actual knowledge that such content is illegal or infringing. ‘Actual knowledge’ means knowledge by means of a court order and therefore it was not obligated to act on plaintiff’s e-mails and notices dated 19.6.2018. Thus, there cannot be an order of injunction against it.
4. For granting an order of temporary injunction against the defendant/appellant, the trial court has recorded the following findings : -
(a) It is admitted that the plaintiff’s products are registered in the defendant’s website for sale. The defendant has not obtained consent from the plaintiff.
(b) Despite request made by the plaintiff and even after issuance of legal notice, the defendant did not remove the plaintiff’s products from its website and it failed to take necessary action.
(c) The defendant has contended that it is an intermediary and section 79 of the Information Technology Act provides a safe harbour from liability arising due to illegal and infringing activities carried on by the third parties. This stand cannot be accepted because after coming to know about hosting of infringing information, the defendant should have removed it. It is held by the High Court of Delhi in the case of Kent RO Systems Limited and Another vs Amit Kotak and Others [2017 SCC Online Delhi 7201] that the intermediaries have to be vigilant and should declare to all its users, its policies and advice them not to host any infringing information on the website of the intermediary. Therefore, the defendant should have been diligent before sale of the infringing products and only in that event protection under section 79 of the Act will be available. Even Rule 3 of the Information Technology (Intermediaries Guidelines) Rules, 2011 requires the intermediary to be diligent while discharging its duties to host the information on its website. It is not the case of the defendant that it has adhered to Rule 3 of the Rules.
(d) Even clause 7(6) of the model guidelines issued by the Ministry of Consumer Affairs, Government of India, specifies that a person who sells or offers for sale including on e- commerce platform/market place, any product or service of a direct selling entry must have prior written consent from the respective direct selling entity in order to undertake or solicit such sale or offer. Though such guidelines cannot be called in strict sense a law, it is advisory in nature and therefore the defendants should have followed it.
(e) The defendant having failed to comply with these requirements cannot sell the plaintiffs products and therefore the plaintiff is justified in complaining against the defendant and thus the plaintiff becomes entitled to an order of temporary injunction.
5. The learned counsel for the appellant argues that it cannot sit in judgment with regard to transactions being made on its platform. The defendant cannot say whether those transactions are legal or illegal. There are seventeen million users on its platform and it is impossible for the appellant to identify as to who is selling the plaintiff’s products through its platform. Appellant is just an intermediary. Section 79 of the Act gives protection to it. Person who is actually using the appellant’s platform for selling the plaintiff’s product must be a party to the suit. If the plaintiff obtains an injunction against that person, the appellant will remove the plaintiff’s products from its website. It may be true that the plaintiff sent communication to the appellant to stop hosting its products, but according to judgment of the Supreme Court in the case of Shreya Singhal vs Union of India [[Manu/SC/0329/SC-2015], knowledge means only knowledge through a court order and therefore any communication made by the plaintiff to the appellant cannot be considered as knowledge on the part of appellant to hold it liable if at all plaintiff’s products are being sold on its platform.
5.1. It is his further argument that the guidelines that the trial court has referred to has no force of law. They need not be followed. In this context he refers to the judgment of the Supreme Court in the case of G.J.Fernandez Vs. State of Mysore & others [(1967) 3 SCC 636] and Syndicate Bank Vs. Ramachandran Pillai and others [(2011) 15 SCC 398]. Therefore, it is his argument that the trial court should not have granted an order of temporary injunction against the appellant. The plaintiff has not made out prima facie case.
6. The counsel for the respondent/plaintiff has argued that the appellant cannot take a defiant stand having admitted the sale of the plaintiff’s products through its platform. The appellant is not an intermediary to seek protection under section 79 of the Act. Actually the defendant is selling the plaintiff’s products as its own. The appellant raises the bills in its name. It uses its own packing and giving logistic support. The appellant is answerable to the end user. Therefore, the appellant cannot call itself an intermediary.
6.1. The respondent/plaintiff issued notice to the appellant to stop hosting its products on its web site. At that point of time nothing prevented the appellant from disclosing the name of the person or the agency using its platform for sale of the plaintiff’s products. The appellant cannot say that it cannot identify the seller of plaintiff products. The appellant has taken an adamant stand that it need not filter the contents of its users. There is a clear violation of the guidelines. The appellant has not taken consent from the plaintiff. He refers to the judgment of the High Court of Delhi in Amway India Enterprises Private Limited vs IMG Technologies Private Limited and Another [CS (OS) 410/2018 decided on 8.7.2019] to argue that in a circumstance pleaded by the plaintiff, the High Court of Delhi rejected the stand of an intermediary. He argues that the trial court is justified in granting an order of injunction. When the discretion is properly exercised by the trial court, there is no ground for interfering with that order and therefore appeal should be dismissed.
7. Before dealing with the points of arguments, it needs to be mentioned here that in an appeal preferred challenging an order passed on application under Order 39 Rules 1 & 2 of Civil Procedure Code, what is required to be examined is whether the court has exercised the discretion properly or not either for granting or refusing to grant an order of temporary injunction. If it appears that discretion is exercised properly by considering the materials placed before the court, there cannot be any interference with the order challenged. If on the basis of the materials, two views are possible to be taken and if the appellate court finds that the trial court could have taken, another view, there cannot be interference with the order under challenge.
8. Now in the present case the appellant claims protection under Section 79 of the Act. It claims to be an intermediary. It does not dispute plaintiff’s products being sold on its platform. It also does not dispute having received e-mail communication and legal notice from the plaintiff/respondent. But it takes a stand that such communication is not a knowledge attributable to it for stopping sale of plaintiff’s products. Reliance is placed on the decision of the Supreme Court in the case of Shreya Singhal (supra). I do not think that the appellant can take shelter under this decision. In Shreya Singhal (supra), the constitutional validity of Sections 66A and 79 of the Act in the touchstone or Article 19(2) of the constitution was examined. While holding that Section 66A is violative of Article 19(2), Section 79 is held to be valid subject to Section 79(3)(b) which has been read down to mean actual knowledge attributable to an intermediary as upon a court order or issuance of notification by appropriate government or its agency. The Hon’ble Supreme Court has taken this view in relation to transmission of matters that are being used for committing unlawful acts. Here is a case where the plaintiff complains of its products being sold by the defendant either directly or on its platform. The plaintiff’s case is that of infringement of its commercial right. Therefore the appellant cannot remain oblivious to plaintiff’s requests. No sooner it received communication from the plaintiff than it should have stopped trading plaintiff’s products or disclosed the name of the person or agency using its platform for trading plaintiff’s products. Probably, the plaintiff could have sued the actual person using the appellants’ platform had such person’s name been disclosed by the appellant. It’s stand that it cannot filter the contents of its users is difficult to be accepted when it is getting revenue by the user of its platform.
9. The appellant’s counsel has relied upon the judgment of the High Court of Delhi in the case of Myspace Inc Vs. Super Cassettes Industries Ltd.(2016 SCC Online Del. 6382). This judgment is of no avail to appellant. In this decision what is complained of is infringement of copy right by users of social media on the platform of an intermediary namely “My Space”. In fact in para 63 of the judgment, it is observed by the High Court of Delhi that if the host has specific knowledge that the transmitted content is unlawful, then no safe harbour can be urged. Therefore the appellant’s contention that it can claim protection under Section 79 of Act cannot be accepted.
10. The trial court has held that Rule 3 of the Information Technology (Intermediaries Guide Lines) Rules and Clause 7(6) of the model guidelines issued by the Ministry of Consumer Affairs, Government of India are applicable. It is argued by appellants counsel that so far the guidelines issued by the Ministry of Consumer Affairs are concerned, they do not have force of law and they need not be followed and in this context he has placed reliance on two judgments of the Supreme Court in the case of G.J. Fernandez Vs. State of Mysore & others (supra) and Syndicate Bank vs Ramachandra Pillai and others (supra). These decisions, in my opinion, do not render any help to appellant to contend that it is not bound by the guidelines. On the contrary, the respondent’s counsel has referred to the judgment of High Court of Delhi in the case of Amway India Enterprises Pvt Ltd Vs. 1MG Technologies Pvt. Ltd & another (supra). In this decision, it is held as below.
“304. The question as to how the platforms are providing the value-added services and whether they are performing an active role in the same, would have to be finally adjudicated at trial. However, the bare minimum that they would be required to do to avail the exemption under Section 79(2)(c), would be to observe due diligence required under Section 79(2)(c) of the IT Act.
305. Thus, in order for the platforms to continue to enjoy the status of intermediaries, subject to adjudication at trial, the due diligence requirements would have to be met and complied with, as per the Platforms7 own policies, and as per the Intermediary Guidelines, 2011. Non-compliance with the Platforms7 own policies would take them out of the ambit of the safe harbour”.
11. It is argued by the counsel for respondent that the appellant is not an intermediary as it issues bill for the products in its name besides providing logistic support etc., If this were to be the situation, the appellant cannot claim protection under Section 79 of the Act also. Therefore with the discussion, I come to conclusion that the impugned order does not require interference. I find discretionary power being exercised properly. Even if grounds urged by appellant can be said to tenable and another view being possible to be taken, it cannot be the reasons for upsetting the impugned order. Therefore appeal is dismissed.
SD/- JUDGE Ckl/sd