February 26, 2023

Intermediary liability of E-commerce companies under Information Technology Act, 2000

This article has been written by Ms. Aditi Mishra, a 4th Year B.Com. LLB (Hons.) student from Institute of Law, Nirma University.

E-commerce, usually referred to as electronic commerce, is the process of purchasing or selling goods through the Internet or through online services.

E-commerce has been a popular topic in discussions about technology regulation as well. Many people could compare regulating e-commerce to herding cats. Despite being excellent pieces of law overall, the Information Technology Act, 2000 (IT Act, 2000) and the Information Technology (Intermediaries Guidelines) Rules, 2011 (Rules) thereunder raise more concerns than they resolve with regard to e-commerce. Therefore, it is more important than ever to pass legislation to control the enormous beast that E-Commerce has grown into.

The Current Regulatory Framework

The Information Technology Act, 2000 (IT Act, 2000) and Information Technology (Intermediaries Guidelines) Rules, 2011 (Rules) govern all Information Technology Intermediaries.

Section 79 of the IT Act provides that an intermediary is not liable for any third-party content hosted/made available through such intermediary when:

  • The contravention is done without its knowledge, or
  • The intermediary observes due diligence and abides by other guidelines prescribed by the Government.

The 2011 Intermediary Rules provide for a diligence framework to be followed by intermediaries in order to avail the exemption under Section 79. Numerous procedures have been recommended which need to be adhered to by an intermediary, such as:

  • The necessity to warn computer resource users not to communicate any material that, among other things, is hazardous, offensive, or defamatory. Additionally, it cannot violate any trademark, copyright, patent, or other intellectual rights.
  • The intermediary is required to “act” within 36 hours and, if necessary, engage with the user or owner of the information to remove it if it is in violation of the rules about not publishing the previously listed forbidden material.
  • The intermediary is required to adhere precisely to “the Act’s” requirements as well as any other current legislation.

The Lacunae And The Ambiguity

According to the IT Act, an intermediary is “any person who receives, stores, or transmits that communication on behalf of another person or who offers any service with regard to that message.” Furthermore, Section 79 makes it quite obvious that a network service provider and an intermediary are one and the same. Consequently, the Statute makes it obvious that Section 79 defenses apply to all intermediaries, including those involved in E-Commerce. This illustrates the clarity of the writing and clarifies the purpose of the law. But the conflicts begin after this.

The Rules mention adhering strictly to the IT Act, but how will non-Indian businesses be subject to this Act? Due of the international character of transactions on some e-commerce websites and the distinctive business models they have developed, this subject has plagued not just attorneys but the whole industry. Legislation that isn’t clear enough to understand also contributes to the lack of clarity by omitting certain details and leaving others up for interpretation.

For instance, an e-commerce website that is now required to follow due diligence in order to receive protection under Section 79 of the IT Act must comply to and observe far too many laws. Let us take a look at some possible statutes:

  • Indian Penal Code, 1860 (IPC): Extraterritorial jurisdiction is granted to the IPC under Section 3 of the IPC. Therefore, even if an intermediary is from overseas or a content creator is from abroad, the intermediary must ensure that IPC requirements are not compromised if a website is visited from India.
  • Indecent Representation of Women (Prohibition) Act, 1986 (IRWPA): The IRWPA criminalizes indecent representations of women, which include depictions of a woman’s figure, shape, or body or any other component that has the impact of being indecent, disparaging toward, or demeaning women, or is likely to deprave, corrupt, or harm public morality or morals. Additionally, this law must be followed.

One may sense the overwhelming amount of rules that an E-Commerce firm in India needs to follow when taxation, data protection, intellectual property, and general corporate laws are added to this list of legislation.

Judicial Developments

The landmark judgement of Super Cassettes Industries Ltd. v. Myspace Inc. illustrates how crucial it is for any intermediary to abide by copyright rules by finding Myspace guilty of primary copyright infringement for permitting the viewing and sharing of pictures and music that Super Cassettes claimed ownership of.

In the case of Kent RO Systems Ltd. & Anr. v. Amit Kotak & Ors. (the “Kent RO Systems Case”), the Delhi High Court was asked whether the e-commerce platform had a duty to continuously check whether goods displayed by the same sellers that may have violated intellectual property rights after receiving a complaint from a complainant about allegedly infringing goods displayed by certain seller(s) on the platform A mediator should not “on its own, review every information being housed on its platform for infringement of the rights of all those people who have at any point in time complained to the mediator,” according to the Delhi High Court.


E-commerce, often known as electronic commerce, is the exchange of products and services as well as the sending of money and data through an electronic network, most commonly the internet. These commercial dealings can be either B2B (business-to-business), B2C (business-to-consumer), C2C (consumer-to-consumer), or C2B.

E-business and e-commerce are frequently used interchangeably. The transactional procedures that make up online retail purchasing are also referred to as e-tail.

The Government of India must establish a law or create guidelines under the IT Act, 2000 that might function as a self-contained code for e-commerce.

E-commerce is a new sector with limitless potential that is having a significant influence on the Indian economy. The proliferation of e-commerce start-ups is a really beneficial development in terms of giving jobs to the enormous number of Indian adolescents with technical or business degrees. However, there must be clarity in the rules that these intermediaries must abide by in order to create an environment that would attract more foreign firms to India and help the Indian e-commerce industry fulfill its potential.

These e-commerce intermediates can operate more easily if the EU model is adopted.

Aishwarya Says:

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