2021 (2) TMI 44 - HC - Indian Laws

Principles of Natural Justice - order of Cognisance - compliance with the requirement of Section 191(1)(a) of the Cr.P.C or not - validity of issuance of summons without following the procedure under Section 204 of Cr.P.C - issuance of notice to accused Nos. 2 who is stated to be not registered within the Jurisdiction of the Magistrate without holding an enquiry under Section 202(1) of Cr.P.C. - petitioner residing outside the jurisdiction of the Magistrate without holding an enquiry under Section 202(1) of Cr.P.C. - Jurisdiction as regards an offence relating to an e- commerce transaction - intermediary as defined under Section 2(w) of the Information Technology Act - 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 - non-compliance with the requirements under the Drugs and Cosmetics Act, 1949 on its platform accused No.2 being an intermediary - Effect of delay in filing a Criminal Complaint. Whether the order of Cognisance dated 8.6.2020 complies with the requirement of Section 191(1)(a) of the Cr.P.C? - Whether Summons could have been ordered without following the procedure under Section 204 of Cr.P.C? - HELD THAT - 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 Court taking Cognisanse as regards each accused. The Court taking Cognisance ought to have referred to and recorded the reasons why the said Court believes that an offence is made out so as to take Cognisance more so on account of the fact that it is on taking Cognisance that the criminal law is set in motion insofar as accused is concerned and there may be several cases and instances where if the Court taking Cognisance were to apply its mind, the Complaint may not even be considered by the said Court taking Cognisance let alone taking Cognisance and issuance of Summons - the order dated 08.06.2020 taking Cognisance is not in compliance with applicable law and therefore is set aside - 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. Whether the Magistrate could have issued Summons to accused Nos. 2 who is stated to be not registered within the Jurisdiction of the Magisterate without holding an enquiry under Section 202(1) of Cr.P.C.? - Whether the Magistrate could have and 4 i.e. petitioners in Crl.P.No.4676/2020 since they are residing outside the jurisdiction of the Magistrate without holding an enquiry under Section 202(1) of Cr.P.C.? - HELD THAT - Section 202 of Cr.P.C. 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 - 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. 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 no requirement for any enquiry under Section 202 of Cr.P.C. It would, however, be required for the Magistrate to in the order of issuance of summons/process record as to why the enquiry under Section 202 of Cr.P.C is not being held - In the event of accused being an individual, if the said accused has a temporary residence within the Jurisdiction of the Magistrate, again merely because he does not have a permanent residence, there is no enquiry which is required to be conducted under Section 202 of Cr.P.C. It would, however, be required for the Magistrate to in the order of issuance of summons/process record as to why the enquiry under Section 202 of Cr.P.C is not being held - In the event of accused being aggrieved by the issuance of Summons, the said accused immediately on receipt of the Summons and/or on appearance before the Magistrate is required to make out his grievance before the Magistrate and/or by petition under Section 482 Cr.P.C. If there is any delay, in such challenge and/or if challenge has not made within reasonable time, the accused would not be entitled to raise the grievance that the procedure under Section 202 of Cr.P.C. has not been followed on account of delay and latches. Which Court could exercise Jurisdiction as regards an offence relating to an e- commerce transaction? - HELD THAT - In the present case as in all e-commerce transactions, the sale took place on the internet, in that once the product was put up for sale on the marketplace, anyone could have bought the same from any place so long as the product could be delivered at the place where the buyer was located. A buyer could also place an order from one place and get the product delivered at another. It is for this reason that the concept of Jurisdiction of courts in e-commerce transactions gets complicated - In a prosecution for criminal offences, white collared or otherwise the accused is required to be present physically on each date of hearing, so long as such appearance is not exempted. As such the court would have to protect the accused from possible forum shopping and or from complaints being filed in multiple jurisdictions, which could cause undue harassment to such an e-commerce entity - only a Court in which the accused has a presence, like registered office, branch office, corporate office or the like could exercise Jurisdiction as regards an offence relating to an e- commerce transaction. 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? - HELD THAT - 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 - 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 of the intermediary, as the same would be only vicarious, and such proceedings as initiated against them would be unjust and bad in law - The only liability of an intermediary under Section 79(3)(b) of the IT Act is to take down third-party content upon receipt of either a court order or a notice by an appropriate government authority and not otherwise, which as per the Complaint filed indicates has been complied with by Snapdeal, by removing the information regarding the sale of the offending item. Thus, an intermediary as defined under Section 2(w) of the Information Technology Act or its directors/officers would not be liable for any action or inaction on part of a vendor/seller making use of the facilities provided by the intermediary in terms of a website or a market place. Whether Snapdeal/accused No.2 would be responsible and/or liable for sale of any item not complying with the requirements under the Drugs and Cosmetics Act, 1949 on its platform accused No.2 being an intermediary? - HELD THAT - Though the platform is owned and operated by Snapdeal it is Accused No. 1, who has exhibited and offered its products for sale on the Snapdeal's platform. Snapdeal being an intermediary is exempt from criminal prosecution as aforestated - In this background neither Snapdeal nor its Directors can be or made liable for alleged offences punishable under Section 27(b)(ii) of the Drug and Cosmetics Act - Snapdeal/accused No.2 would not be responsible and/or liable for sale of any item not complying with the requirements under the Drugs and Cosmetics Act, 1949 on its platform by accused No.1 since the essential ingredients of Section 18 (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. Effect of delay in filing a Criminal Complaint? - HELD THAT - In the present case the Complaint was filed with an inordinate delay of nearly six years, though the transaction is stated to have occurred in the year 2014 - In the Complaint filed there is no explanation or justification w h i c h has been given for the unreasonable delay caused by the Respondent, more so when the Respondent/Complainant is a government official - Such a delay would result in arriving at a rebuttable presumption that there was no offence committed. Even if there may be no embellishments, criminal proceedings cannot be initiated after a period of 6 years, irrespective of the applicability of limitation period in terms of Section 468 of the Cr. P.C or not. The only excuse for the delay provided is that the complainant being a government employee the process of obtaining permission to file the complaint took some time. In my considered opinion a period of 6 years cannot be said to be some time. It is required for the state to act with alacrity, the fact that there was a delay of 6 years in filing would itself indicate and/or establish that even the authorities might have probably considered that there is no offence as such made out - thus, there being no acceptable explanation for the highly belated lodging of the Complaint, the delay is fatal to these proceedings.

Summary

Issues Involved:
1. Compliance with Section 191(1)(a) of the Cr.P.C.
2. Issuance of Summons without following Section 204 of Cr.P.C.
3. Issuance of Summons without holding an enquiry under Section 202(1) of Cr.P.C.
4. Jurisdiction of the Court regarding e-commerce transactions.
5. Liability of intermediaries under Section 2(w) of the Information Technology Act.
6. Responsibility of Snapdeal for non-compliance with the Drugs and Cosmetics Act, 1949.
7. Effect of delay in filing a Criminal Complaint.

Detailed Analysis:

1. Compliance with Section 191(1)(a) of the Cr.P.C. & 2. Issuance of Summons without following Section 204 of Cr.P.C.:
The court emphasized the necessity for a speaking order when taking cognizance, which must reflect the application of judicial mind to the material presented. The order dated 08.06.2020 by the Magistrate was found deficient as it did not demonstrate such application of mind, failing to establish a prima facie case against the accused. The court held that the order did not comply with Section 191(1)(a) and Section 204 of Cr.P.C., necessitating a detailed order indicating the reasons for taking cognizance and issuing process.

3. Issuance of Summons without holding an enquiry under Section 202(1) of Cr.P.C.:
The court noted that the accused, including Snapdeal and its directors, resided outside the jurisdiction of the Magistrate. Section 202(2) mandates an enquiry before issuing summons to such accused. The Magistrate failed to conduct this mandatory enquiry, making the issuance of summons illegal. The court reiterated that an enquiry under Section 202(2) is essential to prevent unnecessary harassment of accused residing outside the court’s jurisdiction.

4. Jurisdiction of the Court regarding e-commerce transactions:
The court clarified that for e-commerce transactions, jurisdiction lies with the court where the accused has a presence, such as a registered office or branch office. This prevents forum shopping and undue harassment. The court held that only a court within the jurisdiction where the accused has a presence can exercise jurisdiction over e-commerce-related offences.

5. Liability of intermediaries under Section 2(w) of the Information Technology Act:
Snapdeal, being an intermediary, is protected under Section 79 of the Information Technology Act, provided it meets the due diligence requirements. The court found that Snapdeal had exercised due diligence by informing sellers of their responsibilities and prohibiting the sale of prescription medicines. As an intermediary, Snapdeal is not liable for the actions of third-party sellers using its platform.

6. Responsibility of Snapdeal for non-compliance with the Drugs and Cosmetics Act, 1949:
The court held that Snapdeal, as an intermediary, is not responsible for the sale of items not complying with the Drugs and Cosmetics Act, 1949. The essential ingredients of Section 18(1)(c) were not fulfilled, as Snapdeal did not manufacture, sell, stock, or exhibit the drug. Therefore, neither Snapdeal nor its directors can be prosecuted under Section 27(b)(ii) of the Act.

7. Effect of delay in filing a Criminal Complaint:
The court highlighted the importance of prompt filing of complaints to avoid embellishments and ensure the veracity of allegations. The six-year delay in filing the complaint was deemed inordinate and unexplained, leading to a rebuttable presumption that no offence was committed. The delay was considered fatal to the proceedings, indicating a lack of urgency and seriousness in pursuing the matter.

Order:
The court quashed the proceedings in C.C.No.156/2020, pending before the Principal Senior Civil Judge and CJM, Mysuru, due to non-compliance with legal requirements and the inordinate delay in filing the complaint.