Delhi High Court - Orders
M/S Fashnear Technologies Private ... vs State Of Nct Of Delhi & Ors on 13 April, 2023
Author: Yogesh Khanna
Bench: Yogesh Khanna
$~60
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(CRL) 955/2023 CRL.M.A. 8776/2023
M/S FASHNEAR TECHNOLOGIES
PRIVATE LIMITED & ORS. ..... Petitioners
Through: Mr.Sidharth Luthra and Mr.Siddharth
Aggarwal, Sr Advocates with
Mr.Failsal Sherwani, Mr.Shikher
Deep Aggarwal, Ms.Sanjukta
Kaushik, Mr.Onkar Thakur, and
Mr.Sarthak Karol, Advocates.
versus
STATE OF NCT OF DELHI & ORS. ..... Respondents
Through: Mr.Yasir Rauf Ansari, ASC and
Mr.Adeeb Ul Hasan, Advocate for the
State with SI Vishal Tiwari, PS C R
Park.
CORAM:
HON'BLE MR. JUSTICE YOGESH KHANNA
ORDER
% 13.04.2023
1. This petition is filed with the following prayers:-
(i)issue a Writ of certiorari or any other appropriate writ/ direction/order, thereby quashing/setting aside the Impugned DAD Notification bearing No.F/13/451/79- Home(G) dated 29th October 1980 as being ultra vires to the Arms Act, 1959 and rules framed thereunder and thus, being illegal, null and void.
ii) issue a Writ of Certiorari or any other appropriate writ/ direction/ order, thereby quashing / setting aside the Impugned FIR bearing No. 201/2022 dated 18.07.2022 registered under Sections 25/54/59 of the Arms Act,1959 at PS.: Chittaranjan Park, Delhi on the strength of the Impugned DAD Notification
iii) Issue a Writ of Certiorari or any other appropriate writ/ direction/ order, thereby quashing / setting aside the undated Notices issued under Section 41A of the Code against the - (i) Petitioner No. 2; (ii) Petitioner No. 3; and
(iii) Petitioner No. 4 received on 29.03.2023 issued by the Respondent No. 5 in connection with FIR bearing No.201/2022 dated 18.07.2022 registered at PS:
Signature Not Verified Digitally Signed By:PRADEEP SHARMA Signing Date:18.04.2023 15:39Chittaranjan Park, New Delhi & proceedings thereunder.
iv) any other order(s) as deemed fit in the interests of justice and equity.
2. Admittedly, per order dated 06.04.2023 prayer (i) stood withdrawn.
3. It is the submission of the learned senior counsel for petitioners the FIR bearing No.201/2022 was registered at police station Chittaranjan Park, Delhi under Sections 25 of the Arms Act, 1959 on an allegation an abandoned package containing 80 courier bags had been recovered on the Outer Ring Road, near Savitri Cinema flyover, New Delhi. The said package was found to contain button operated knives of different shapes and sizes and that 533 more button operated knives of different shapes and sizes were recovered at a later stage. In the said FIR it is alleged the accused person used to supply these illegal knives by way of e-commerce websites. The petitioner No.1 has provided the platform for sale and purchase of various items.
4. It is also the submission of the learned senior counsel for petitioners the e-platform of petitioner company has been used by accused person to sell their products. It is alleged as per provisions of applicable law, the petitioner has already uploaded the Terms and Conditions (Annexure P4) on its website to be followed by the person using its platform. He also referred to Supplier Agreement, copy of which is available at page No.112 of the paperbook.
5. The learned senior counsel for petitioners then referred to an order dated 12.01.2023 passed by the Coordinate Bench in W.P.(Crl) No.2077/2022, which petition was filed on issuance of notice under Section 160 Cr P C to petitioners. The order notes:-
4. It is contended by the Ld. Senior Counsel for the petitioner that the FIR No.201/2022, PS C.R. Park, relates Signature Not Verified Digitally Signed By:PRADEEP SHARMA Signing Date:18.04.2023 15:39 to a discovery of bags related to stainless steel knives found by the Delhi Police pursuant to PCR call. Subsequently, the investigation roped in various online platforms, on which such knives were apparently traded between the seller and the purchaser, The gravamen of the petition is that the petitioner No.1 runs a online portal called 'Meesho', of which the petitioner No.2 is the Director and that portal run by the company is merely an intermediary and is an online market for various entities to sell their products.
5. In order to facilitate the investigation, without prejudice the rights of the petitioner, this Court on 07.09.2022 had directed, based upon, the submissions of Ld. Sr. Counsel that Mr. Laxmi Narayan, Chief Experience Officer (CXO) of petitioner No.1 company who oversaw the process on platform, which was fully automated, would cooperate with the investigating agency. The said officer, has continued to cooperate in the investigation and the Ld. Additional Standing Counsel for the State also confirms the same:
6. In view of these facts and circumstances, the learned Addl. Standing Counsel fairly submits on instructions that they are willing to withdraw the impugned notices issued to the petitioner, if such cooperation by the said officer on behalf of petitioner No.1 shall continue. Further, it is stated that in this light, no coercive steps are contemplated against petitioner No.2 as well. In view of this submission, the grievance of the petitioner at this stage, is taken care of and the petition is disposed of noting the fact that the said officer of petitioner No. 1 shall continue to cooperate in the Investigation and that no coercive steps would be taken against petitioner No.2.
6. Reference was made to Google India Private Limited vs Visaka Industries (2020) 4 SCC 162 as also Flipkart Internet Private Limited vs State of NCT of Delhi & another W.P.(Crl) No.1376/2020 decided on 17.08.2022. The relevant portion of Flipkart Internet (supra) is extracted as under:-
20. In other words, the obligation of the intermediary is to observe "due diligence" and "follow" the guidelines that may be prescribed by the Government in this behalf.
Therefore, reference will have to be made to the I.T. Guidelines. What is "due diligence" to be observed by the Signature Not Verified Digitally Signed By:PRADEEP SHARMA Signing Date:18.04.2023 15:39 intermediary has been provided under Rule 3(1), which reads as below:
"3. Due diligence to be observed by intermediary -- The intermediary shall observe following due diligence while discharging his duties, namely: --
(1) The intermediary shall publish the rules and regulations, privacy policy and user agreement for access-or usage of the intermediary's computer resource by any person.
(2) xxx xxx xxx
(d) infringes any patent, trademark, copyright or other proprietary rights;
(e) to (i) xxx xxx (3) The intermediary shall not knowingly host or publish any information or shall not initiate the transmission, select the receiver of transmission, and select or modify the information contained in the transmission as specified in sub-rule (2):
provided that the following actions by an intermediary shall not amount to hosing, publishing, editing or storing of any such information as specified in sub-rule: (2) --
(a) xxx xxx
(b) removal of access to any information, data or communication link by an intermediary after such information, data or communication link comes to the actual knowledge of a person authorised by the intermediary pursuant to any order or direction as per the provisions of the Act;
(4) The intermediary, on whose computer system the information is stored or hosted or published, upon obtaining knowledge by itself or been brought to actual knowledge by an affected person in writing or through email signed with electronic signature about any such information as mentioned in sub-rule (2) above, shall act within thirty six hours and where applicable, work with user or owner of such information to disable such information that is in contravention of sub-rule (2). Further the intermediary shall preserve such information and associated records for at least ninety days for investigation purposes;Signature Not Verified Digitally Signed By:PRADEEP SHARMA Signing Date:18.04.2023 15:39
(5) The Intermediary shall inform its users that in case of non-compliance with rules and regulations, user agreement and privacy policy for access or usage of intermediary computer resource, the Intermediary has the right to immediately terminate the access or usage lights of the users to the computer resource of Intermediary and remove noncompliant information.
(6) to (11)xxx xxx xxx"
21. However, the non-compliance of these Guidelines/Rules have not been declared to be an „offence‟ under the I.T. Act.
25. It is trite that the standard for fixing criminal liability is far higher than that under civil law, one requiring proof „beyond reasonable doubt‟ and not just a „balance of probabilities‟. For instance, to establish criminal liability for negligence, the standard of proof is set much higher than for „civil liability‟ under the law of Torts for negligence. There is no reason why that higher standard should not be available to courts to determine whether an intermediary would be liable under the criminal law for action or inaction. It would also stand to reason that when the intermediaries have been granted the "safe harbour"
qua civil liability, and when a higher standard of culpability is required for a criminal prosecution, such "safe harbour" should be available even in respect of criminal prosecution. Thus, unless an active role is disclosed in the commission of the offences complained of, the intermediary, such as the present petitioner, would be entitled to claim protection under Section 79 of the I.T. Act. In other words, the question must be answered in the affirmative that when compliance with the "due diligence"
requirement under Rule 3 of the I.T. Guidelines is evident, ex facie, the exclusion of liability under Section 79 of the I.T. Act would include exclusion from criminal prosecution.
26. Admittedly, the petitioner has complied with the Guidelines by putting it on their "Terms of Use"
(Annexure-P/2) under the title of the "use of the platform"
and "selling", that the users cannot display what belongs to another person and over which they have no right; or which infringes upon or violates any third party‟s rights, including but not limited to intellectual property rights, rights of privacy or rights of publicity; or promotes an illegal or unauthorized copy of another person‟s Signature Not Verified Digitally Signed By:PRADEEP SHARMA Signing Date:18.04.2023 15:39 copyrighted work; or infringes any patent, trademark, copyright, proprietary rights, third-party‟s trade secrets, rights of publicity or privacy, or is fraudulent or involves the sale of counterfeit or stolen items; or which violates any law for the time being in force. Thus, "due diligence"
under Rule 3(2) of the I.T. Guidelines has been complied with.
28. The contention of the learned senior counsel for the petitioner is upheld that the obligation to take down the offending material/sites, etc., from their platform would arise only on service of a court order upon them, which admittedly, is absent in the present case. This would be in keeping with the views taken by the courts consistently since the judgment in Shreya Singhal (supra). It would also be a moot question as to whether such disobedience of an order, if any, would amount to a criminal offence, for which an FIR can be registered. The answer would, no doubt, be firmly in the negative.
29. The present case goes a step ahead as the FIR has been lodged only against the petitioner and another platform, as none of the other sites or entities, allegedly selling the products which are either fake or unauthorized, are even named. Without determining the rights of those other sites to sell the products, prima facie, the petitioner has not committed any offence, leave alone under the Copyright Act or the T.M. Act.
31. This is one such case where the registration of an FIR against an intermediary would lead to miscarriage of justice. Therefore, this Court finds itself justified in allowing the present petition and quashing the FIR qua the petitioner. However, further investigations are not barred in order to ascertain the identity of those who are infringers and/or unauthorized sellers of the products of the Czech company.
7. It is alleged immediately on coming to know about registration of FIR, the petitioner company had cancelled the Supplier Agreement with accused person as mentioned in para No.8 of its reply dated 10.08.2022 sent to the Investigating Officer, a part of annexure P5. The petitioner No.1 admittedly is an intermediary company and it is alleged no liability can be fastened upon it either civil or criminal, particularly in view of the Signature Not Verified Digitally Signed By:PRADEEP SHARMA Signing Date:18.04.2023 15:39 observations made in Flipkart Internet (surpa). The petitioners seek exemption under Section 79 of the Information and Technology Act.
8. The learned ASC on the other hand submits the petitioners have an active role in sale and purchase of the banned item and exemption under Section 79 of the IT Act would not be applicable to them.
9. The learned ASC for the State though contends the petitioners must join the investigation pursuant to notice under Section 41A Cr P C, it is equally argued on behalf of the petitioners per order dated 12.01.2023 (supra) an officer of petitioner No.1 shall continue to cooperate and join the investigation. Accordingly, Mr.S.N.Murthy, their Nodal Officer shall appear before the Investigating Officer and cooperate in the investigation.
10. In view of above, subject to joining the investigation by the Nodal Officer of petitioner No.1, no coercive steps be taken against the petitioners till the next date of hearing.
11. Status report be filed by the police with an advance copy thereof to the learned counsel for petitioner.
12. List again on 28.08.2023. Order dasti.
YOGESH KHANNA, J.
APRIL 13, 2023 M Signature Not Verified Digitally Signed By:PRADEEP SHARMA Signing Date:18.04.2023 15:39