Delhi High Court - Orders
Oriflame India Pvt. Ltd vs Dinender Jain & Others on 14 February, 2019
Author: Prathiba M. Singh
Bench: Prathiba M. Singh
$~29
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS (OS) 91/2019
ORIFLAME INDIA PVT. LTD. ..... Plaintiff
Through: Mr. Balbir Singh, Sr. Advocate and
with Mr. Mahesh Singh, Mr. Karan
Veer Chopra and Ms. Mehak Khanna,
Advocates (M: 9818430581).
versus
DINENDER JAIN & OTHERS ..... Defendants
Through: Mr. Saikrishna Rajagopal, Ms. Sneha
Jain, Ms. Savni Dutt and Mr. Devvrat
Joshi, Advocates for D-6 (M:
9810621272).
Ms. Maninder Acharya, ASG with
Mr. Kirtiman Singh CGSC.
CORAM:
JUSTICE PRATHIBA M. SINGH
ORDER
% 14.02.2019 CS (OS) 91/2019 1. Let the plaint be registered as a suit.
2. Mr. Saikrishna Rajagopal, counsel for Defendant No.6, Amazon Sellers and Services Ltd. (hereinafter, „Amazon‟) has appeared and accepts summons. Let the written statement be filed within 30 days, along with the affidavit of admission/denial in terms of the Delhi High Court (Original Side) Rules, 2018.
3. Issue summons to the Defendant Nos.1-5 through all modes upon filing of Process Fee. The summons to the Defendants shall indicate that a written statement to the plaint shall be positively filed within 30 days from CS (OS) 91/2019 Page 1 of 7 date of receipt of summons. Along with the written statement, the Defendants shall also file the affidavit of admission/denial of the documents of the Plaintiff, without which the written statement shall not be taken on record. A copy of this order and a complete set of the paperbook be attached with the summons.
4. Liberty is given to the Plaintiff to file a replication within 15 days of the receipt of the written statement. Along with the replication, if any, filed by the Plaintiff, an affidavit of admission/denial of documents of the Defendants, be filed by the Plaintiff, without which the replication shall not be taken on record. If any of the parties wish to seek inspection of any documents, the same shall be sought and given within the timelines prescribed under the Delhi High Court (Original Side) Rules, 2018.
5. List before the Joint Registrar for marking of exhibits on 22nd April, 2019. It is made clear that any party unjustifiably denying documents would be liable to be burdened with costs.
6. List before Court on 18th February, 2019.
I.A. 2238/2019 and I.A. 2240/2019
7. Issue notice to the Defendants. The present suit was listed on 13th February, 2019 on which date, considering the issues raised in the suit, notice was issued to the Ld. ASG for today.
8. The present suit has been filed by the Plaintiff seeking a permanent and mandatory injunction restraining the Defendants from selling the Plaintiff's products on the e-commerce portal, Amazon.in.
9. The Plaintiff is a manufacturer and seller of various cosmetics, toiletries and other related products. It is the case of the Plaintiff that it is a Direct Selling Entity as per the Direct Selling Guidelines, 2016 (hereinafter, CS (OS) 91/2019 Page 2 of 7 „Direct Selling Guidelines‟) notified by the Ministry of Consumer Affairs, on 26th October, 2016. It is submitted by Mr. Balbir Singh, Ld. Sr. counsel for the Plaintiff that the company enters into contracts with distributors binding them to its Code of Ethics and Rules of Conduct, copies of which have been placed on record.
10. It is submitted that as per the per the Direct Selling Guidelines, the products of Direct Selling Entities cannot be sold on an e-commerce platform without the consent of the said entity. Mr. Balbir Singh, Sr. Adv, submits that this condition has been communicated to all the e-commerce portals by the Food Safety and Standards Authority of India on 9th April, 2018. He, thus, submits that the sale of Oriflame products on Amazon is contrary to the Guidelines and ought to be injuncted. It is further submitted that the Plaintiff had issued notice to Amazon on 5th June, 2018 in response to which it was claimed that since Amazon was only an intermediary under Section 79 of the IT Act, the obligation of obtaining consent is that of the Distributors and not of Amazon.
11. Notice was also served on Ld. counsel appearing for Amazon yesterday. Mr. Saikrishna Rajagopal, has appeared for Amazon and submits that Plaintiff is guilty of suppression of material facts. It is submitted that in 2015, correspondence was exchanged between the Plaintiff and Defendant, in which notice was issued by the Plaintiff, relying on provisions of the Trademark Act. In response thereto, Amazon had informed the Plaintiff that it would take down any unauthorised products from its platforms. In fact, it is submitted by Ld. counsel that the products which were objected to by the Plaintiff were, taken down.
12. He further submits that the Direct Selling Guidelines do not have the CS (OS) 91/2019 Page 3 of 7 force of law inasmuch as and they do not bind Amazon which is only intermediary under Section 79 of the Information Technology Act. 2000. Mr. Saikrishna Rajagopal further submits that his client had responded to FSSAI, vide letter dated 10th May 2018, a copy of which has been placed on record.
13. Learned Additional Solicitor General submits that she was served with the documents and pleadings late last night. According to the Ld. ASG, the guidelines have biding effect, and the same have been notified in 10 states. It is further submitted that these guidelines have to be followed though they are advisory in nature. It is further submitted by Ld. ASG that guidelines of this nature have issued by various ministries and have binding effect under Article 77 of the Constitution. She, however, wishes to file an affidavit in this regard.
14. At this stage, after taking into consideration the pleadings and documents on record, firstly, it is clear that the Plaintiff ought to have disclosed the correspondence of 2015, which they exchanged with Amazon. Secondly, the present suit is not based on any statute, but is based on the Direct Selling Guidelines 2016, unlike the notice exchanged in 2015 which was based on the provisions of the Trademark Act. Amazon relies on its reply dated 10th May,2018 to FSSAI which reads as under:
"Without prejudice To, May 10, 2018 Garima Singh, Director (RCD), Food Safety and Standards Authority of India, FDA Bhawan, Kotla Road, New Delhi - 110002 CS (OS) 91/2019 Page 4 of 7 Re: Your communication dated April 09, 2018 ("Communication") Dear Ma‟am,
1. This is with reference to the aforesaid Communication pertaining to the alleged violation of Model Direct Selling Guidelines, 2016 ("Model Guidelines").
2. At the outset, we would like to inform that we have not formally received the Communication from your office. However, since the said Communication was posted on your official website, as a responsible corporate citizen, we are providing our brief response to the Communication below.
3. We submit that Amazon Seller Services Private Limited ("Amazon") operates and manages an online marketplace namely amazon.in, wherein it enables third party sellers listed on the marketplace ("Seller(s)") to display, list, sell and offer for sale, their goods for sale to end-customers in India. As a result, Amazon is an online marketplace that qualifies as an intermediary under Section 2(1)(w) of the Information Technology Act, 2000 ("Act"). Amazon does not initiate the transmission, select the receiver of the transmission and/or select/modify the information contained in the transmission of the content on its marketplace. The Sellers on amazon.in are responsible for the information uploaded by them on Amazon‟s website and also for ensuring compliances under all applicable Indian laws in relation to the products sold/offered for sale by the Seller. Further, section 79(1) of the Act, exempts intermediaries like Amazon from liability for any third-party information made available/hosted by the intermediary. It has also been held by several courts in India that intermediaries, like Amazon, do not have any obligation under applicable laws to monitor/police its website. Thus, it is the Sellers and not Amazon that are mandated by law to ensure that the requirements under the food related laws in India are complied with, and Amazon cannot be held liable CS (OS) 91/2019 Page 5 of 7 for the actions of the Sellers.
4. As per the Communication, we understand that the Model Guidelines (though being in their model form) provides that for sale of a product of a direct selling entity ("DSE") through an ecommerce portal/marketplace, the seller of such product must obtain prior written consent of the respective DSE. However, as Amazon is merely an intermediary and does not sell and/or offer any products for sale, it is the Sellers (and not the marketplace entity) which is responsible for all compliances of their products, including obtaining consent from the respective DSE.
5. Given the above, we humbly submit that the Model Guidelines are not applicable to Amazon and it is the Sellers listed on the marketplace (as part of their supply chain process) who should independently obtain appropriate consent from the DSE for selling their products. Amazon in its capacity of a marketplace should not be held liable under the Model Guidelines for not obtaining such consent, or for any other non-compliance by the Sellers. Accordingly, we humbly request you to please reconsider your (a) interpretation of the Model Guidelines pertaining to online marketplaces; and (b) decision of asking Amazon to obtain consent for sale of products of DSE by the Sellers on the marketplace. Do let us know if you may require further additional clarifications or information in relation to the above. Thanking you, For and on behalf of Amazon Seller Services Private Limited Sd/-
(Authorised Signatory)"
15. The stand of Amazon in the above letter is that the responsibility of obtaining consent is that of the Direct seller and not of Amazon. Considering the overall facts, and the stand taken by Amazon in its letter dated 10th May, 2018, it is deemed appropriate to pass the following interim directions:
CS (OS) 91/2019 Page 6 of 7a) Amazon to inform the Plaintiff as to the number of Direct sellers who are offering the Oriflame products for sale on its website within 4 weeks.
b) The Plaintiff to intimate Amazon if there are any unauthorised or objectionable products being offered for sale on Amazon's platform.
c) Upon the same intimation being given, Amazon to enquire from the direct sellers on its platform if consent of the Plaintiff has been obtained by them. The said exercise be completed within four weeks after receiving intimation from the Plaintiff. Such sellers who have obtained permission from the Plaintiff may then be permitted to display their goods on Amazon's platform. If no consent is obtained by the sellers, the URLs/listings of such sellers shall be taken down within two weeks thereafter.
d) If consent has not been obtained by Defendants Nos.1-5, from the Plaintiff for offering for sale or selling Oriflame products on e-
commerce platforms, they shall, upon receipt of notice and summons, remove their listings within 48 hours from the Amazon platform.
16. Reply to the application be filed within two weeks. List on 18th February, 2019. Parties are permitted to file additional documents, if any, and affidavits in response.
17. Dasti.
PRATHIBA M. SINGH, J.
FEBRUARY 14, 2019 MR CS (OS) 91/2019 Page 7 of 7