TaxTMI 
TaxTMI 
2020 (1) TMI 1631
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.... Tripathi, Saksham Dhingra, Aman Singhal, Aditi Menon, Ketal Paul, Tushar Bhushan, Amartya Bhushan, Ayush Samaddar, Advocates, Parag P. Tripathi, Sr. Advocate, Saikrishna Rajagopal, Sidharth Chopra, Sneha Jain, Savni Dutt, Devvrat Joshi, Surabhi Pande, Nilofar Absar, Abhiti Vaccher, Vivek Ayyagari, Priya Adlakha, Tulip De, Ashish Sharma, Ruhee Passi and Tejas Chabra, Advocates JUDGMENT Dr. S. Muralidhar, J. 1. These are six appeals directed against the same impugned common judgment dated 8th July, 2019 passed by the learned Single Judge in interlocutory applications filed in the corresponding suits by the Respondents in these appeals. By the said judgment, the learned Single Judge has injuncted the Appellants from selling the goods of the Respondents, who claim to be Direct Selling Entities ('DSEs') in terms of the Model Framework for Guidelines on Direct Selling dated 26th October, 2016 i.e. Direct Selling Guidelines ('DSGs'), on the Appellants' e-commerce platforms. 2. Three of the present appeals i.e. FAO (OS) 133/2019, 134/2019 and 135/2019 are by Amazon Seller Services Private Limited ('Amazon') against Amway India Enterprises Private Li....
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....E in terms of its proposal, Amway came to be incorporated on 3rd August, 1995. On 4th August, 2004, GoI granted approval to Amway to set up its own manufacturing facilities for manufacture of personal care and cosmetic products and to also import fragrances, shampoos, lotions, body firming gels, scrubs etc. This was made subject to the conditions which inter-alia were that Amway would not undertake domestic retail trading in any form and that the imports would be in accordance with the prevailing Export-Import ('EXIM') policy. Amway obtained a licence from the Food Safety and Standards Authority of India (FSSAI) in terms of Food Safety and Standards Act, 2006 ('FSS Act') and the Food Safety and Standards Regulation, 2011 ('FSS Regulation'). 8. Amway Corporation is stated to be a member of the World Federation of Direct Selling Associations ('WFDSA') and is stated to operate in more than 100 countries and territories worldwide. Explaining the DSBM, Amway states that such a model offers an "unparalleled opportunity" to Indian customers "to own and operate their own business by enrolling themselves as a Direct Seller" with Amway and sell its "high-qu....
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....are sellers on Amazon's online platform, Cloudtail (Defendant No. 3) another seller on Amazon's platform and stated to be an "affiliate/associate company of Amazon", and Amazon (Defendant No. 4), was that Amway cannot sell its products through channels of e-commerce/online portals or mobile apps. According to Amway, sale of its products through any e-commerce or online portal in the absence of a written contract with Amway, is unauthorised both in terms of its "Code of Ethics" as well as clause 7 (6) of the DSGs. Amway claims that it has not provided any written consent to any of its Direct Sellers to undertake or solicit sale, or offer its products through third party e-commerce websites/mobile apps. Amway is unable to guarantee the authenticity and quality of such products which are purchased from unauthorised sources and its product refund policy does not apply to such unauthorised purchases. 13. Amway claims that it received complaints from its Direct Sellers that Amway products were being sold on various e-commerce/online portals or mobile apps and wholesale and retail shops illegally at unwarranted discounts resulting in a decline in the sales of the Amway's Di....
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.... spurious and counterfeit products under its name. According to Amway, Amazon's stand was contrary to Amazon's "exclusion policy" that did not allow on its online portal the sale of products by a person in the following situations: "who is not (a) the "authorized reseller" (as designated by the manufacturer or distributor; or (b) where the manufacturer's standard warranty is not being provided to the consumer; or (c) where the product is placed on the market without the consent of the relevant brand or trademark owner." 18. Amway sent another notice dated 6th November, 2017 to Amazon refuting the averments made by Amazon in their reply dated 11th October, 2017. Amway contended that Amazon was "actively involved" in the sale of its products and was "providing services such as helping sellers manage their accounts, increase visibility, discoverability and sale of products, listing of products etc". According to Amway, Amazon was also publishing advertisements in the print media offering Amway products on its online portal. 19. Amway states that Amazon and its affiliates were not acting merely as "intermediaries", but were actively involved in the sale of Am....
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....ctors, vendors, sellers, agents, affiliates, servants, licensees, franchisees, representatives and employees or any one claiming under them, directly or indirectly, from in any manner purchasing, possessing, selling, distributing, offering for sale, advertising/displaying Plaintiffs 'Amway products' from its website www.amazon.in and mobile application "Amazon Online Shopping" or any other platform, without the prior written consent of the Plaintiff." 24. The further incidental prayer was for a direction to the Defendants to "disclose the details of the distributors/dealers/Direct-Sellers of the Plaintiff from whom they are procuring the 'Amway products' or any other person or entity involved in such unauthorised transaction of 'Amway products'". The final prayer in the plaint was for a decree of damages in the sum of Rs. 2,00,01,000/- together with interest at 18% per annum thereon from the date of filing of the suit till its realisation apart from unquantified punitive damages. 25. At the first hearing of the suit i.e. CS (OS) 480/2018 on 26th September, 2018, the learned Single Judge passed an order granting an interim injunction restraining the Def....
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....6th September, 2018 in the Amway Suit [CS (OS) No. 480/2018] was passed. The suit of Oriflame was based entirely on the DSGs, claiming that the said guidelines have the force of law. 31. At this stage of the case, Ms. Maninder Acharya, learned Additional Solicitor General of India ('ASG') appeared and submitted that the Direct Selling Guidelines "have to be followed though they are advisory in nature". According to the ASG, guidelines of such nature had been issued "by various Ministries and have binding effect under Article 77 of the Constitution." It was noted by the learned Single Judge in the order dated 14th February, 2019 that an affidavit would be filed in that regard. An interim injunction of similar nature was issued. It may be noted here that Oriflame too claims that it is a DSE which is bound by the DSGs and that the sale of its products on Amazon's online platform without its consent, would be in violation of Clause 7 (6) of the DSGs. 32. The third appeal by Amazon, i.e. FAO (OS) 135/2019, arises from CS (OS) 75/2019 filed by Modicare which also claims to be a DSE governed by the DSGs. This suit was filed against Amazon (Defendant No. 1) and two other ....
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....At this stage, it requires to be noticed that the impugned judgment of the learned Single Judge was passed in seven suits, five of which, i.e. CS (OS) 410/2018, 453/2018, 480/2018, 531/2018 and 550/2018, were filed by Amway and one each, CS (OS) 75/2019 and 91/2019, were filed by Modicare and Oriflame respectively. 37. It also requires to be noted here that Union of India was not made a party in any of the suits. However, when the Oriflame Suit CS (OS) 91/2019 was first listed on 13th February, 2019, the learned Single Judge issued notice to the learned ASG in order to elicit the stand of Union of India in respect of the legality and validity of the DSGs, and listed the matter for the following day i.e. 14th February, 2019 on which date an order was passed which has been referred to hereinbefore. The impugned judgment reflects that apart from all other counsel for the private parties, the learned ASG was also heard by the learned Single Judge. 38. In para 142 of the impugned judgment the learned Single Judge formulated the following four issues for determination: "i) Whether the Direct Selling Guidelines, 2016 are valid and binding on the Defendants and if so, to wha....
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.... sellers or the platforms." It was concluded that if the online platforms were permitted to violate the DSGs, the DSEs would be left with no remedies to enforce a binding law. The DSGs having been authenticated by a Gazette notification were binding on e-commerce platforms and sellers on such platforms. It was held that the online platforms were aware that they were bound to enforce the said guidelines which reflected the current public policy and that the online platforms had "deliberately chosen to only set up the alleged illegality and non-binding nature of these guidelines only by way of defence." 41. In coming to the above conclusion the learned Single Judge referred to the decisions in Bijoe Emmanuel v. State of Kerala (1986) 3 SCC 615 hereafter (Bijoe Emmanuel'), Union of India v. Naveen Jindal (2004) 2 SCC 510, Gulf Goans Hotels Company Limited v. Union of India (2014) 10 SCC 673, Delhi International Airport Limited v. International Lease Finance Corporation (2015) 8 SCC 446, New Delhi Municipal Council v. Tanvi Trading and Credit Private Limited (2008) 8 SCC 765, Union of India v. Moolchand Khairati Ram Trust AIR 2018 SC 5426, U Unichoyi v. State of Kerala AIR 1962 ....
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.... 30 (4) of the TM Act. 45. On the basis of the reports of the LCs, the learned Single Judge concluded that there was large scale tampering of the products of the Plaintiffs; there was a change of warranty of such products and that such products were repackaged and re-sealed by the online market places. Since the source of the goods sold on the online market places were not easily determinable, they were not lawfully acquired in terms of Section 30 (3) of the TM Act. 46. The learned Single Judge noted the contention of the Defendants that the suits were not based on violation of trade mark rights and observed that "While it may be true that the plaints are not structured like a traditional trademark plaint would be, the same does not mean that the Plaintiffs do not complain of violations of trademark rights." It was further observed that: "The allegations in the plaint are clearly based on provisions akin to misrepresentation in the context of passing off and dilution, as also violation of trademark rights as stipulated and protected under Section 29 of the Trade Marks Act, 1999. Moreover, the defence of Section 30 has been set up by the Defendants only because they a....
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....does not come to the aid of the Defendants." It was held that the use of the Plaintiffs' marks clearly constituted 'use' under Section 2 (2) (c) of the TM Act, 1999. It was concluded that: "The use of the Plaintiffs' marks clearly constitutes 'use' under Section 2 (2)(c) of the TM Act, 1999 which is the reason why the platforms obtain licenses for the marks from the sellers and warranties that they are authorised and that the products are genuine. These licences are themselves FAKE because the so-called licensors are not the owners of the marks nor do they have any permission to licence the marks. What is not owned cannot be licensed. Sellers have no rights if owners have not given consent." 51. The learned Single Judge further held that: "The platforms are also indulging in conduct falling under Section 29(6) of the Trade Marks Act as they are affixing the marks on the products, packaging the same and putting the same in the market for sale. Amazon is specifically using the Plaintiffs' mark Amway in advertising, without actual knowledge that the said products being sold on its platform are genuine or not and whether they are tampere....
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....(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 Platforms' own policies, and as per the Intermediary Guidelines. 2011. Non-compliance with the Platforms' own policies would take them out of the ambit of the safe harbour." 56. On the last issue, i.e. issue (iv) regarding tortious interference with contractual relations, the learned Single Judge observed inter alia that: "The companies and entities, which run e-commerce platforms, have a greater obligation to maintain the sanctity of contracts, owing to the sheer magnitude and size of their operations. When an e-commerce platform is notified of existing contracts and violation of the same on its platform, the least that the platform would have to do would be to ensure that it is not a party, which encourages or induces a breach. The manner, in which e-commerce platforms operate, makes it extremely convenient and easy for ABOs/distributors/direct sellers to merely procure the products from the Plaintiffs and defeat the purpose of the....
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....s were made by the learned Single Judge concerning all the products of the Plaintiffs, by relying on the report of the LCs, in the following manner: "However, most of the Local Commissioners who have visited the various premises of the sellers and the platforms have seen that the products are being tampered with by removal of the codes, removal of the inner seal. Thinners and glues are being used to remove the codes and the products are being re-sealed, may be even under unhygienic conditions. In some cases, expired products are being given new manufacturing dates. Such tampering and impairment is, clearly, violative of the Plaintiffs' statutory and common law rights." 61. On the policies of the online platforms, it was observed by learned Single Judge as under: "All the platforms have their own policies, which broadly state that they respect the Intellectual Property Rights of trademark owners and that upon any grievance being raised, they are willing to take down. The Policies of all the platforms clearly are simply 'Paper policies' which are clearly not being adhered to as the facts of these cases go to show. They are a mere lip-service to the In....
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....roducts are genuine and not tampered with or impaired. They have also not been able to show as to how they granted licence of the Plaintiffs' marks to the e-commerce platforms." The present appeals 64. It requires to be noticed that only some of the Defendants in the above suits have come forward to file appeals. Amazon, which was Defendant No. 4 in CS (OS) 480/2018, Defendant No. 1 in CS (OS) 75/2019 and Defendant No. 6 in CS (OS) 91/2019 has filed three appeals; Cloudtail, which was Defendant No. 3 in CS (OS) 480/2018 and Defendant No. 2 in CS (OS) 91/2019 has filed its two appeals, and Snapdeal, which was Defendant No. 9 in CS (OS) 453/2018 has filed the 6th Appeal. The remaining Defendants in the above seven suits have not challenged the impugned judgment of the learned Single Judge. They have also not appeared in the present appeals wherever they have been impleaded. 65. While admitting the appeals on 25th July, 2019 this Court permitted the parties to file their respective written submissions and listed the interim applications in the appeals for hearing on 17th February, 2020. Thereafter applications for advancing of the date of hearing were filed. These applica....
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....urposes of relief appear to travel far beyond the pleadings in the suits and, in fact, at a stage when the issues in the suits themselves are yet to be framed. 67.4. Given the nature of the plaints and the prayers made therein, it is highly unlikely that the issues that were framed by the learned Single Judge for the purpose of considering the grant of interim reliefs would be the issues in the suits themselves. For instance, corresponding to the first issue whether the DSGs are in the nature of binding law there is no prayer in the suits themselves. It is doubtful, therefore, whether such an issue could have been framed in the suits. Likewise, in the absence of any prayer declaring that online platforms like Amazon, Snapdeal and Cloudtail are not "intermediaries" within the meaning of the IT Act, it is unlikely that such an issue could be framed in the suits. 67.5. There was also no question raised in relation to the constitutional validity of the DSGs either in the plaints or in the written statements and affidavits filed by the Appellants/Defendants in their suits and applications under Order XXXIX, Rules 1 and 2 of the Code of Civil Procedure, 1908 ('CPC'). It is,....
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....een erroneously framed. Even going by the submissions made before the learned Single Judge, or for that matter before this Court, the question to be addressed was whether the DSGs were 'law' and whether suits could have been filed by the Plaintiffs for enforcing the DSGs? 70. It is clear from the first line of para 146 of the impugned judgment, that the stand of the Appellants/Defendants, as noted by the learned Single Judge, is that "the DSGs are not law and they are merely advisory in nature". The learned Single Judge notes the further submission that according to the Defendants, the DSGs were "merely a model framework for State Governments and Union Territories to come out with an actual legal mechanism to enforce the same" and that "they are not binding in nature". It is in the next sentence that the learned Single Judge appears to have committed an error while noting that the Appellants/Defendants had urged that the DSGs "are not law under Article 13 of the Constitution as they impinged upon the Fundamental Rights of the platforms and the sellers of the platforms guaranteed under Article 19 (1) (g) of the Constitution". 71. It has been repeatedly urged before thi....
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....tion to implement the guidelines". Enclosed with the said notification were "model guidelines on direct selling English and Hindi" and "the Performa (sic) for declaration and undertaking". 75. The title of the enclosed document explains its nature: "Advisory to State Governments/Union Territories: Model Framework for Guidelines on Direct Selling". Consequently, it is clear that the DSGs were not meant to be treated as law themselves, much less binding law. It was only to be a model framework and "advisory" in nature. It was for the State Governments to adopt it into law. Therefore, Clause 7 (6) of these 'model guidelines' is also purely advisory. 76. The learned Single Judge in the impugned judgment has noticed the background to the formulation of the guidelines, but crucially overlooked the fact that these were not in the form of "executive instructions" at all. A careful reading of the notification reveals that the guidelines have been issued by the DoCA. Its power to frame such guidelines can be traced back to the Consumer Protection Act, 1986 ('CPA'). The mere fact that the FSSAI may have written to e-commerce platforms to comply with the guidelines would ....
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.... which are made under a statute, regulations, which also ought to be traced to a statute, and mere 'guidelines', was lost sight of by the learned Single Judge. 81. The Plaintiffs appear to have jumped the gun in not waiting for the law to be formally made and enforced. It is possible that once the CPA Rules are notified, questions would further arise as to whether such rules, and in particular Rule 8 (6) thereof violated, as contended by the Appellants/Defendants, Section 30 of the TM Act or Section 79 of the IT Act. At the stage at which it was before the learned Single Judge, these questions were moot and purely hypothetical. 82. Significantly, had the learned Single Judge addressed the issue whether the DSGs did in fact have the character of law, there would have been no need to go into the further issue of whether they violated any fundamental rights. The route adopted by the learned Single Judge was to first examine the second question, viz., whether the DSGs violated any fundamental right, and having answered that in the negative, to conclude that they are accordingly valid and binding 'law'. 83. The learned Single Judge relied on the decision in Ram ....
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.... Supreme Court in Ram Jawaya Kapoor (supra) was explained by the Supreme Court in Thakur Bharat Singh (supra) as under- "...The executive action which was upheld in that case was, it is true, not supported by legislation, but it did not operate to the prejudice of any citizen. In the State of Punjab prior to 1950 the text-books used in recognized schools were prepared by private publishers and they were submitted for approval of the-Government. In 1950 the State Government published text books in certain subjects, and in other subjects the State Government approved text-books submitted by publishers and authors. In 1952 a notification was issued by the Government inviting only "authors and others" to submit text-books for approval by the Government. Under agreements with the authors and others the copyright in the text-books vested-absolutely in the State and the authors and others received royalty on the sale of those textbooks. The petitioners a firm carrying on the business of preparing, printing, publishing and selling text books then moved this Court under Art. 32 of the Constitution praying for writs of mandamus directing the Punjab Government to withdraw the notific....
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.... 87. In Poonam Verma v. Delhi Development Authority (2007) 13 SCC 154, the question was whether the action of the Central Government to confine the scheme formulated by the Delhi Development Authority ('DDA') for out of turn allotment of flats only for widows of government servants who died in harness and those who were killed by terrorists could have been validly issued. The Supreme Court held that the Central Government could not have, in the absence of any statutory provision directed creation of any quota and that too after closure of the scheme. In that process, the Supreme Court held that "guidelines per se do not partake the character of a statute" and that "such guidelines in absence of statutory backdrop are advisory in nature". The Court referred to its earlier decision in Narender Kumar Maheshwari v Union of India (1979) 3 SCC 489, where it was held as under: "107. This is because guidelines, by their very nature, do not fall into the category of legislation, direct, subordinate or ancillary. They have only an advisory role to play and non-adherence to or deviation from them is necessarily and implicitly permissible if the circumstances of any particula....
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....hat the said Code was "not duly notified and gazetted" like the DSGs were. The Court is of the view that the mere fact that the DSGs were notified in the gazette would not set it apart from the Code that was being considered by the Supreme Court in G.J. Fernandez. 90. In Syndicate Bank v. Ramchandran Pillai (2011) 15 SCC 398, the question that arose was whether the Central Government's "guidelines to prevent arbitrary use of powers to evict genuine tenants from public premises under the control of the public sector undertakings/financial institutions" by a gazetted resolution dated 30th May, 2002, had the force of "statutory rules". Answering the question in negative, the Supreme Court held as under: "6. If any executive instructions are to have the force of statutory rules, it must be shown that they were issued either under the authority conferred on the Central Government or a State Government or other authority by some Statute or the Constitution. Guidelines or executive instructions which are not statutory in character, are not 'laws', and compliance thereof cannot be enforced through courts. Even if there has been any violation or breach of such non-st....
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....reasons, the Court sets aside the findings of the learned Single Judge on the first issue that the DSGs are 'law' and that, as such, they are enforceable. Trademark issues 94. The Court now turns to the second issue, and the findings thereon, that the sale of Amway, Oriflame and Modicare products on e-commerce platforms amounted to infringement of trademark, passing off and misrepresentation, etc. 95. The Court accepts the plea of the Appellants/Defendants that a fundamental error has been committed by the learned Single Judge in noting in the opening line of para 175 that "the Plaintiffs are owners of their respective trademarks and there is no dispute regarding the ownership". It must be observed at the outset, that in none of the plaints, have the Plaintiffs asserted or even mentioned anything about trademark registration. There was no occasion for the Plaintiffs to assert ownership of such trademarks. In fact, there is no such pleading to that effect at all. How the learned Single Judge could have come to such a conclusion and, that too, in a categorical manner, in the absence of any pleadings, is a mystery. 96. As the learned Single Judge rightly notes, the....
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....Oriflame and Modicare, with the online platforms. Lifting the corporate veil 100. Arguments at some length were advanced by the Respondents herein regarding the relationship between the Amazon, on the one hand, and Cloudtail, on the other. The assertion by Cloudtail is that it is a wholly owned subsidiary of M/s. Prione Business Services Pvt. Ltd. ('Prione'), which has no relation with Amazon and that Amazon and Cloudtail are independent legal entities. Prione is a joint venture between M/s. Catamaran Ventures and Amazon Asia Pacific and Amazon Eurasia. Cloudtail states that it does not have any shareholding, interest or directors from Amazon or Amazon Asia Pacific or Amazon Eurasia, controlling and managing its affairs. The board of Cloudtail is said to comprise of three directors, two of which are nominees of M/s. Catamaran Ventures and one is the MD-CEO i.e. an employee of Cloudtail. 101. In any event, these are matters of evidence. There could not have been a presumption that Cloudtail and Amazon are one and the same entity and that the obligations of the Cloudtail would bind Amazon and vice versa. There is merit in the contention of Amazon that by permitting p....
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.... the Indian public since their aim was to sell the products at the prices less than 30 to 50% of the compatible products sold by SECL and SIEPL. 102.4. The Appellants further contended that the Respondents did not manufacture the products in India and that they also import the products. According to the Appellants, their act of importing the products was authorized and the sale in the Indian market was legal inasmuch as the Appellants sold the products "as it is". 102.5. The learned Single Judge held in favour of SECL and SIEPL by holding that the TM Act involved the national exhaustion principle. The action brought by SECL and SIEPL before the Court was one of infringement of trademark and not for passing off. 102.6. The Division Bench identified the issue as one of "parallel imports/grey market goods". It was held that Section 30 operated as an exception to Section 29. Under Section 30 (2) (b) of the TM Act, if a trademark was registered, subject to any conditions of limitations, the use of that trademark in relation to the goods to be sold or traded in any place and in relation to the goods to be exported to any market, would not constitute an infringement. It was held ....
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....ause further dealings, and in particular whether condition of goods has been changed or impaired. The Division Bench then went on to explain as under: "With respect to physical condition being changed or impaired, even in the absence of a statutory provision, the registered proprietor of a trade mark would have the right to oppose further dealing in those goods inasmuch as they would be the same goods improperly so called, or to put it differently, if a physical condition of goods is changed, it would no longer be the same goods. But, sub-section 4 of Section 30 is not restricted to only when the conditions of the goods has been changed or impaired after they have been put on the market. The section embraces all legitimate reasons to oppose further dealings in the goods. Thus, changing condition or impairment is only a specie of the genus legitimate reasons, which genus embraces other species as well. What are these species? (i) Difference in services and warranties as held in the decisions reported as 423 F. 3d 1037(2005) SKF USA v International Trade Commission & Ors.; 35 USPQ2d 1053 (1995) Fender Musical Instruments Corp. v. Unlimited Music Center Inc.; 589 F. ....
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....broad, but imported into India and further sold, they not being responsible for the warranty of those goods, nothing turns thereon, as regards said plea. There may be some merit that the ordinary consumer, who is provided with warranties and after sales by the appellants, on not receiving satisfactory after sales service, may form a bad impression of the product of the respondents and thus to said extent one may recognize a possible damage to the reputation of the respondents pertaining to Samsung/SAMSUNG printers and Samsung/SAMSUNG products sold in India after importation. But, this can be taken care of by passing suitable directions requiring the appellants to prominently display in their shop that the Samsung/SAMSUNG printers sold by them are imported by the appellants and that after sales services and warranties are not guaranteed nor are they provided under the authority and control of the respondents and that the appellants do so at their own end and with their own efforts. This would obviate any consumer dissatisfaction adversely affecting the reputation of the respondents, and thus if this is done, the respondents can claim no legitimate reasons to oppose further dealing i....
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....;s representatives, he inspected the premises, upon which he found a "good quantity" of products labelled 'Amway' on the second floor. He found copies of stock transfer notes dated 8th and 27th September, 2018, showing that more than 2400 Amway products were transferred from the premises of Pioneering Products to the premises under inspection, which actually belonged to Amazon but was referred to as "the additional place of business" of Pioneering Products. 105. The crucial portion of the report is where the LC states that he opened two different sealed packages of the said Amway products and found that one of those did not contain the unique code. The package which did not contain the unique code was resealed. The learned Single Judge has, in the impugned judgment, set out in the body of the judgment the photographs taken by the LC with the caption "images showing removal of seals and repackaging at Amazon warehouse." 106. What the LC has not indicated is whether prior to the LC opening the sealed packages, he found the packages to have been otherwise tampered with. If it was the LC who opened the seal of the packages, then clearly till such time they remained sealed....
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....o not have the unique code but some other marker. These, again, are matters for evidence. Therefore, this report is also unhelpful in determining if any tampering was done by Amazon. 111. The fourth report dated 16th October, 2018 is of Mr. B. Prashant Kumar. He also visited the premises of Cloudtail. He noticed that it was used as a common office for Cloudtail and its sister concern, Prione. The LC has placed on record pictures taken at the premises where Prione refers to itself as "a Catamaran and Amazon venture." The premises were "almost empty, with the desks completely clean." There were no laptops, files, desktops or any other office related products to inspect. There was no particular warehouse that could be associated with Cloudtail in and around the premises. How this report could then form the basis for inferring that there had been tampering of goods by Cloudtail or Amazon is beyond imagination. 112. The broad conclusions reached by the learned Single Judge tend to obfuscate the factual distinctions between the cases involving the different online platforms. For instance, both in the first and the fourth reports of the LCs, no Amway products were found on Cloudtail....
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....uyer's information is withheld from the seller until after the sale has concluded, a policy which is in the interest of the buyers insofar as it prevents the misuse of the buyers' information by the sellers. These aspects do not appear to have been considered by the learned Single Judge. These too are matters in respect of which clearer answers would emerge hopefully at the conclusion of the trial. 116. The Court is, therefore, unable to concur with the view expressed by the learned Single Judge that the Defendants could not invoke the principle of exhaustion in terms of Section 30 (3) read with Section 30 (4) of the TM Act, or that the sale of the Plaintiffs' products on e-commerce platforms violates their trademark rights, constitutes misrepresentation and passing off, and results in the dilution and tarnishing of the goodwill and reputation of the Plaintiffs' brand. These findings are outside the purview and scope of pleadings in the suits and unsustainable in law. Are the Appellants intermediaries? 117. Turning now to the third issue as to whether Amazon, Cloudtail and Snapdeal were in fact intermediaries within the meaning of Section 79 read with 2 (1)....
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....to that material on that resource without vitiating the evidence in any manner. Explanation-For the purposes of this section, the expression "third party information" means any information dealt with by an intermediary in his capacity as an intermediary." 119. In terms of Section 79 of the IT Act, there does not appear to be any distinction between passive and active intermediaries so far as the availability of the safe harbour provisions are concerned. In terms of Section 79, an intermediary shall not be liable for any third-party information, data or communication link made available or posted by it, as long as it complies with Sections 79 (2) or (3) of the IT Act. 120. The exemption under Section 79 (1) of the IT Act 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) of the IT Act. 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) of the IT Act. 121. In Amazon's case, as indeed in Cloudtail's and Snapdeal&....
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....rds of intermediary liabilities and to further digital trade and economy, an intermediary is granted certain protections. Section 79 is neither an enforcement provision nor does it list out any penal consequences for noncompliance. It sets up a scheme where intermediaries have to follow certain minimum standards to avoid liability; it provides for an affirmative defence and not a blanket immunity from liability." 123. Section 79 of the IT Act is a safe harbour for online market places, limiting their liability for third party information posted on their systems. It is to ensure that the liability for non-compliance and/or violation of law by a third party, i.e. the seller, is not fastened on the online market place. In holding that Amazon is in fact not an intermediary, the learned Single Judge has obviated the need for any evidence to be led in the matter. 124. During the course of arguments before this Court, the Respondents/Plaintiffs were not at all clear as to whether, according to them, Amazon was in fact an intermediary or not. In any event, the alternative arguments, claiming that Amazon is not an intermediary, appear to be riddled with inconsistencies. If, in fact, A....
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....en extracted hereinabove. Amazon explains that when the sale of product is "fulfilled by Amazon", all it means is that Amazon guarantees the quality of the product by rendering logistical support services, which include storage, packaging and delivery. These are again matters that would have to be tested at the trial. 127. Under Section 79 (2) (c) of the IT Act, the obligation of the intermediary is that, in terms of the Intermediary Guidelines, it publishes its policies for the information and convenience of its users. The enforcement of such a policy is another matter. Clause 17 of Amazon's policy prohibits sale, on its platform, of "unauthorised" products. This Clause 17 was put forth with the object of enabling Amazon to refuse listing of a product where, for instance, it originates from a country that does not follow international exhaustion. Amazon seeks to point out that this does not apply to India where the principle of international exhaustion is in fact followed. It is contended that Clause 17 cannot be interpreted to empower Amway to seek restrictions on the sale of its products on Amazon's online platform. 128. The Supreme Court in Shreya Singhal (supra) ....
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.... finally only at trial. The learned Single Judge could not, at the interlocutory stage, have brushed these contentions aside. 133. The judgments relied upon in this regard by the learned Single Judge, the Appellants submit, are distinguishable on facts from the present case. The sale of products of the DSEs on the Appellants' online platforms was neither in violation of extant laws or opposed to public policy, as in Aasia Industrial Technologies Limited vs. Ambience Space Sellers Limited (supra), nor were there, in the present instance, specific acts intended to induce breach, such as the persuasive telexes in Balailal Mukherjee and Company Private Limited vs. Sea Traders Private Limited (supra). In any event, on the facts of the present case, whether in fact any of the online platforms induced a breach of contract between the DSE and its ABOs/sellers is at best a matter of evidence, and not of inference. No case for interim injunction 134. Of the three elements to be considered for the grant of interim injunction, the Plaintiffs, in the considered view of this Court, failed to establish that they have a prima facie case particularly since the DSGs could not be conside....