TaxTMI 
TaxTMI 
2021 (2) TMI 44
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.... 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 unde....
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....m/ 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....
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....plicate, 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: Advertising, exhibiting, Hazardous ....
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....No. 1 and the same was delivered to him on 20/11/2014 and payment of Rs. 390/ was made under Cash on Delivery (COD) in the presence of Investigations Officers and Panch witnesses. 4.17.5. It is alleged that Snapdeal has exhibited SUHAGRA-100 mg Tablets for sale and provided platform to Seller and purchaser. 4.17.6. On 10.08.2017, the Respondent addressed a letter to the Assistant Drugs Controller - 02, Belgaum Circle, to furnish certified copies of the Constitution details and other documents of Snapdeal. 4.17.7. On 21.05.2017, Snapdeal addressed a letter to the Assistant Drugs Controller-02, Belgaum Circle furnishing all the required documents as requested. 4.17.8. On 22.08.2017 and 29.05.2017, the Deputy Drugs Controller, Mysuru sent emails to Snapdeal to ascertain whether the Constitution details of Snapdeal were the same as before. 4.17.9. Sri. Krishna Mohan Chaudary, Authorized Signatory of Snapdeal replied to the email and furnished the list of Directors of Snapdeal and on subsequent dates, the same exercise was repeated. On 15.01.2020, Snapdeal replied to the Respondent. 4.17.10. On the basis of the above it is alleged th....
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....n offence by the Petitioner. Order of Cognisance to be Speaking 5.2. An order taking Cognisance is required to be done by way of a speaking order and the said order requires to be passed after due application of mind. 5.3. The sine qua non for taking Cognisance of an offence is the application of mind by the Magistrate and his satisfaction that the allegations, if proved, would constitute an offence, in the present case, a mere perusal of the Impugned Order makes it abundantly clear that the same does not disclose application of mind. 5.4. He relied on the decision of the Apex Court in GHCL Employees Stock Option Trust v. India Infoline Limited (2013) 4 SCC 505 more particularly para 19 thereof which is reproduced hereunder for easy reference. 19. In the order issuing Summons, the learned Magistrate has not recorded his satisfaction about the prima facie case as against Respondents 2 to 7 and the role played by them in the capacity of Managing Director, Company Secretary or Directors which is sine qua non for initiating criminal action against them. Recently, in Thermax Ltd. v. K.M. Johny while dealing with a similar case, this Court hel....
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....gone through the Complaint, documents and heard the complainant is not sufficient. What weighed in the mind of the Magistrate while passing such an order must be reflected in his order. 5.7. That Section 204 of the Code contains the words "sufficient grounds for proceedings" which are of immense importance. It is these words which amply suggest that an opinion is to be formed only after due application of mind that there is sufficient basis for proceeding against the said accused and formation of such an opinion is to be stated in the order itself, though the order need not contain detailed reasons. In the present case, a mere perusal of the Impugned Order, makes it apparent that the same does not disclose any application of mind for the purpose of coming to the conclusion as to why each of the accused including the Petitioner herein, are required to be proceeded against. When there are multiple accused, the order is required to disclose the application of mind by the Magistrate as regards each accused. Role of an Intermediary under the Act 5.8. That the need for on independent inquiry as per the requirements of Section 202(1) Cr.P.C. is borne out by the ....
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....ade available or 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 hosted; 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. (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 othorise in the commission of the unlawful Act; (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 t....
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.... permitted in inventory-based model of e-commerce. Other Conditions: i. Digital & electronic network will include network of computers, television channels and any other internet application used in automated manner such as web pages, extranets, mobiles etc. ii. Marketplace e-commerce entity will be permitted to enter into transactions with sellers registered on its platform on B2B basis. iii. E-commerce marketplace may provide support services to sellers in respect of warehousing, logistics, order fulfilment, call centre, payment collection and other services. iv. E-commerce entity providing a marketplace will not exercise ownership over the inventory i.e., goods purported to be sold. Such an ownership over the inventory will render the business into inventory based model. v. An e-commerce entity will not permit more than 25% of the sales affected through its marketplace from one vendor or their group companies. vi. In marketplace model goods/services made available for sale electronically on Website should clearly provide name, address and other contact details of the Seller. Post sales, delivery of goods to the custo....
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.... details about the sellers offering goods and services, including the name of their business, whether registered or not, their geographic address, customer care number, any rating or other aggregated feedback about such Seller, and any other information necessary for enabling consumers to make informed decisions at the pre-purchase stage: Provided that a marketplace e-commerce entity shall, on a request in writing made by a consumer after the purchase of any goods or services on its platform by such consumer, provide him with information regarding the Seller from which such consumer has made such purchase, including the principal geographic address of its headquarters and all branches, name and details of its Website, its email address and any other information necessary for communication with the Seller for effective dispute resolution; (b) a ticket number for each Complaint lodged through which the consumer can track the status of the Complaint; (c) information relating to return, refund, exchange, warranty and guarantee, delivery and shipment, modes of payment, and grievance redressal mechanism, and any other similar information which may be required b....
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....fered its products for sale on the Company. Hence neither Snapdeal nor its Directors the Petitioners can be made liable for offences punishable under Section 27(b)(ii) of the Act. The essential ingredients of Section 18 (1)(c) of the Act not having been fulfilled neither Snapdeal nor its Directors/Petitioners can be prosecuted for the offence under Section 27(b)(ii) of the Act. Vicarious Liability of Directors in Criminal Offences 5.22. Vicarious liability in criminal law is not automatic and that necessary averments ought to be contained in the Complaint before any person can be subjected to criminal process, in the instant case, there are no averments against the Petitioner. 5.23. The Petitioners are only Directors of the Company and are not involved in day to day affairs of the Company, like the sale of the products, which was done only by Accused No. 1, therefore no offence can be alleged against them since they have no personal knowledge as to the legality or otherwise of the products that are being sold by third-party sellers. 5.24. He relied upon the decision of the Apex court in in Maksud Saiyed vs. State of Gujurat, (2008) 5 SCC 668 more....
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....iding at far off places simply to harass them. In order to see that innocent persons are not harassed by unscrupulous persons, this clause seeks to amend sub- section (1) of Section 202 to make it obligatory upon the Magistrate that before summoning the accused residing beyond his jurisdiction he shall enquire into the case himself or direct investigation to be made by a police officer or by such other person as he thinks fit, for finding out whether or not there was sufficient ground for proceeding against the accused." The use of the expression "shall" prima facie makes the inquiry or the investigation, as the case may be, by the Magistrate mandatory. The word "shall" is ordinarily mandatory but sometimes, taking into account the context or the intention, it can be held to be directory. The use of the word "shall" in all circumstances is not decisive. Bearing in mind the aforesaid principle, when we look to the intention of the legislature, we find that it is aimed to prevent innocent persons from harassment by unscrupulous persons from false complaints. Hence, in our opinion, the use of the expression "shall" and the background and the purpose for which the amendment has been br....
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....ted item, accused No.2 and in turn accused Nos.3 and 4 being its directors are liable to be prosecuted. Neither accused No.2 nor accused Nos.3 and 4 can claim any benefit of being an intermediary as alleged or otherwise. 6.6. There is no delay in filing of the complaint. The government entities have processed the matter, have taken necessary approval which took some time, therefore even if there is any delay, the said delay would not materially or adversely affect the prosecution of the accused. 6.7. On these basis, he submits that the petitions as filed are liable to be dismissed. 7. Having heard Shri C V Nagesh the learned Senior counsel for the Petitioner and Shri Nageshwarappa learned HCGP, the points that would arise for determination by this Court are: (i) Whether the order of Cognisance dated 8.6.2020 complies with the requirement of Section 191(1)(a) of the Cr.P.C? (ii) Whether Summons could have been ordered without following the procedure under Section 204 of Cr.P.C ? (iii) Whether the Magistrate could have issued Summons to accused Nos. 2 who is stated to be not registered within the Jurisdiction of the Magisterate....
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....urt. 9.4. The test that is required to be applied by the Court while taking Cognisance is as to whether on the basis of the allegations made in the Complaint or on a police report or on information furnished by a person other than a police officer, is there a case made out for initiation of criminal proceedings. 9.5. For the above purpose, there is an assessment of the allegations required to be made applying the law to the facts and thereby arriving at a conclusion by a process of reasoning that Cognisance is required to be taken. 9.6. An order of Cognisance cannot be abridged, formatted or formulaic. The said order has to make out that there is a judicial application of mind. Since without such application, the same may result in the initiation of criminal proceedings when it was not required to be so done. 9.7. The order of taking Cognisance is a safeguard inbuilt in the criminal justice system so as to avoid malicious prosecution and/or frivolous complaints. 9.8. When a complaint or a police report or information by a person other than police officer is placed before the Court, the judicial officer must apply judicious mind coupled w....
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....e committed the offence as regards which Cognisance is said to have been taken. 9.13. The same in my considered opinion would not satisfy the requirement of law. The Court taking Cognisance while taking Cognisance under Section 190 of Cr.P.C. is required to apply its mind follow the process and procedure prescribed under Section 204 of the Cr. P.C. and pass a sufficiently reasoned order indicating such application of mind, the reasons for coming to a conclusion that prima facie there exists material to indicate that the offence alleged against the Accused is indeed committed by such accused. 9.14. Mere reference to the provisions in respect of which offences are alleged to have been committed would not be in compliance with the aforesaid requirement of the statutes as also the various decisions of the Honb'le Apex Court extracted hereinabove. 9.15. It is the words used in the order, which would have to suggest that the opinion to take Cognisance is formed only after due application of mind that there is sufficient basis for proceeding against the said accused and formation of such an opinion is to be stated in the order itself, though the order need n....
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....r: 10.2. Section 202 of Cr.P.C. is extracted hereunder for easy reference: "202. Postponement of issue of process.- 1. Any Magistrate, on receipt of a complaint of an offence of which he is authorised to take Cognisance or which has been made over to him under section 192, may, if he thinks fit, postpone the issue of process against the accused, and either inquire into the case himself or direct an investigation to be made by a police officer or by such other person as he thinks fit, for the purpose of deciding whether or not there is sufficient ground for proceeding: Provided that no such direction for investigation shall be made,-- a. where it appears to the Magistrate that the offence complained of is triable exclusively by the Court of Session; or b. where the Complaint has not been made by a Court, unless the complainant and the witnesses present (if any) have been examined on oath under section 200. 2. In an inquiry under sub- section (1), the Magistrate may, if he thinks fit, take evidence of witnesses on oath: Provided that if it appears to the Magistrate that the offence complained of is triable exclusively by the Court of Sessi....
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....in the Jurisdiction of the Magistrate nor does it have a branch office, corporate office, sales office or the like. 10.9. Section 202 of Cr.P.C. extracted above provides for the safeguard in relation to persons not residing within the jurisdiction of the said Magistrate, not to be called or summoned by the said Court unless the Magistrate were to come to a conclusion that their presence is necessary and only thereafter issue process against the accused. 10.10. In the present case, as could be seen from the extract of the order dated 8.06.2020, the answer to point No.1 above, there is no such postponement made by the Magistrate, but as soon as the Magistrate received a complaint, he has issued process to accused No.2, who is registered outside the jurisdiction of the Magistrate and also does not have any office within the territorial Jurisdiction of the Magisterate. Accused Nos.3 and 4 are residing outside the jurisdiction of Magistrate and none of the accused Nos.2, 3 and 4 have any connection with any place within the jurisdiction of the Magistrate. 10.11. In view of the above, it was required for the Magisterate fo conduct a mandatory enquiry as per Sec....
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....saction? 11.1. Whenever an offence is committed or alleged to have been committed, the first question of importance which arises is that in whose jurisdiction the offence would fall. 11.2. The jurisdictional issue is for that reason the most important issue which needs to be resolved so that the proceedings can begin. Sections 177-189 of Cr. P.C deals with the concept of jurisdiction. Under normal circumstances, the case shall be inquired and tried by a court under whose jurisdiction the offence has been committed. 11.3. However, there are certain cases where more than one Court could have the power to inquire into and try the matter. Such issues have been explicitly dealt with by the provisions of the Code of Criminal Procedure. 11.4. In terms of Section 177 of the Cr. P.C, the Court under whose jurisdiction the offence has been committed only has the authority to inquire into and try such case. 11.5. It could be that an offence or a series of offences connected to the particular offence could be committed at different place. Situations where the offence has been committed in more than one place is dealt with by Section 178 of the Cr. P....
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....rs or messages have been sent or received; and under the local jurisdiction of the Court in which the property has been delivered by the person deceived or has been received by the accused person. 11.10. When a person commits an offence, during journey or against a person who is travelling, or the thing in respect of which, the offence has been committed is in due course of its journey or voyage, the offence has to be inquired into or tried by a Court through or into whose local jurisdiction that person or thing has passed, during the journey, in terms of Section 183 of Cr. P.C. 11.11. The State Government may in terms of Section 185 of the Cr. P.C direct that any cases or class of cases which have been committed for trial in any district, may be tried in a sessions court. 11.12. In the event of Cognisance of a particular offence has been taken by two or more courts and confusion arises as to which of the Courts shall inquire into or try that offence, in such a case, in terms of Section 186 of the Cr. P.C only the High Court has the authority to resolve the confusion. 11.13. A Magistrate can issue Summons or warrant for offences which have been c....
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....tion. 11.20. 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. 12. Point No. (vi): Whether an intermediary as defined under Section 2(w) of the Information Technology Act would be liable for any action or inaction on party of a vendor/seller making use of the facilities provided by the intermediary in terms of a website or a market place? 12.1. It is stated that Snapdeal has established a 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 Snapdeal. For this purpose, a seller h as to create an account with Snapdeal and contractually agree to Snapdeal's Terms of Use, Snapdeal's Terms of Offer for Sale, Snapdeal's Policies, Seller Agreement: which contains the basic terms and conditions of selling products over Snapdeal which every Seller has to agree with. 12.2. Snapdeal's business as per its 'Terms of Offer fo....
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....11, in ensuring that Vendors/Sellers who register on its Website conduct themselves in accordance with and in compliance with the applicable laws. 12.10. The Consumer Protection (E-Commerce) Rules, 2020, makes a distinction between marketplace e-commerce websites and inventory e-commerce websites. As such Snapdeal would come within the meaning of a marketplace e-commerce website, thereby affording the above exemption to Snapdeal so long as the requirements under section 79 are followed by Snapdeal. 12.11. In the present case as detailed above Snapdeal has complied with the requirements of sub-sections (2) and (3) of Section 79, as well as the Information Technology (Intermediaries Guidelines) Rules, 2011. 12.12. In my considered opinion Snapdeal 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. 12.13. When Snapdeal/Accused to. 2 Company is exempted from any liability under Section 79 of the Information Technology Act, 2000, no violation can ever be attributed or made out against the directors or officers....
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....1)(c) of the Act not having been fulfilled neither Snapdeal nor its Directors can be prosecuted for the offence under Section 27(b)(ii) of the Act. 14. Point No. (viii): Effect of delay in filing a Criminal Complaint? 14.1. The object and essence of prompt lodging of FIR had been explained by the Hon'ble Apex Court in State of Andhra Pradesh vs M. Madhusudhan Rao (2008) 15 SCC 582, observed as under: 14.1.1. That delay in lodging the FIR, more often than not, results in embellishment and exaggeration, which is a creature of an afterthought. 14.1.2. That a delayed report not only gets bereft of the advantage of spontaneity, the danger of the introduction of coloured version, exaggerated account of the incident or a concocted story as a result of deliberations and consultations, also creeps in, casting a serious doubt on its veracity. 14.1.3. Therefore, it is essential that the delay in lodging the report should be satisfactorily explained. Resultantly, when the substratum of the evidence given by the complainant is found to be unreliable, the prosecution case has to be rejected in its entirety. 14.2. It is in that background that t....
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....robably considered that there is no offence as such made out. 14.8. In the present case, I'am of the considered opinion that there being no acceptable explanation for the highly belated lodging of the Complaint, the delay is fatal to these proceedings. 15. What Order: 16. The answers to the above points formulated are summarised as under: 16.1. 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. 16.2. 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 n....