2021 (10) TMI 1166 - HC - Indian Laws

Applicability of RBI circular No. RBI/2009-10/231 dated 24th November, 2009 - opening and operation of accounts and settlement of payments for electronic payment transactions involving intermediaries and the same applies to the Petitioner - e-commerce entity - transaction between natural persons or not - intent of petitioner - HELD THAT - Admittedly, herein the transaction is not between two natural persons. Petitioner operates e-commerce entity to provide information on digital network and acts as a facilitator between buyer and seller. Petitioner does not own the product and sell the goods to the customer directly. Since Petitioner is not following inventory based model, it has no control over the transaction between two parties i.e. buyer and seller. Petitioner simply, receives and stores the information on behalf of the seller and buyer and acts as a facilitator. In the order issuing process, the learned Magistrate has clearly understood that it was not conventional transaction and human contact is minimal. The allegations do not constitute an offence of cheating, nor the allegations disclosed the fraudulent intention of the Petitioner, when Complainant placed an order of the product in question. The Petitioner being a mere facilitator, Complainants allegations that he was induced to buy a product with intention to cheat him, is wholly absent. There is no material on record to even suggest that the Petitioner had a direct involvement and inducing the Complainant to place an order with intention, not to deliver it, even after receiving the consideration for the same. Thus, neither the complaint, nor inquiry report submitted by the Investigating Officer constitute the offence of cheating against the Petitioner. In the case in hand, the allegations do not imply or suggest that any point of time, the Petitioner induced the Complainant to part with property (consideration for a product) with a dishonest intention, not to deliver the same. On the contrary, facts of the case show that the Complainant volunteered to purchase the product through the e-commerce market platform of the Petitioner from the seller. Thus, the ingredients to constitute offence of the cheating are wholly absent. The learned Magistrate failed in appreciating the facts of the case and thereby committed an error in concluding that prima-facie case of cheating has been made out. Petition allowed.

Issues Involved:
1. Jurisdiction and applicability of Article 227 of the Constitution of India and Section 482 of Cr.P.C.
2. Nature of the dispute: Commercial vs. Criminal
3. Role and liability of the Petitioner as an intermediary
4. Prima facie case of cheating under Section 420 read with 34 of IPC
5. Compliance with procedural requirements under Cr.P.C.

Detailed Analysis:

1. Jurisdiction and Applicability of Article 227 of the Constitution of India and Section 482 of Cr.P.C.:
The petition was filed under Article 227 of the Constitution of India and Section 482 of the Code of Criminal Procedure, 1973, seeking to quash the private complaint and the order issuing process against the Petitioner. The court exercised its supervisory jurisdiction to evaluate whether the lower court's order was justified.

2. Nature of the Dispute: Commercial vs. Criminal:
The Petitioner argued that the dispute was purely commercial and could be defined as a consumer dispute or deficiency in service. The complaint did not suggest any element of dishonest intention or fraudulent act on the part of the Petitioner. The court observed that the transaction involved was not between two natural persons but between the complainant and an e-commerce entity acting as a facilitator.

3. Role and Liability of the Petitioner as an Intermediary:
The Petitioner, operating as an e-commerce marketplace, claimed to be an intermediary under Section 2(w) of the Information Technology Act, 2000. The Petitioner did not own the products but merely provided a platform for buyers and sellers to interact. The court noted that the Petitioner had no control over the delivery of the product, which was dispatched through an independent service provider.

4. Prima Facie Case of Cheating under Section 420 read with 34 of IPC:
The court examined whether the allegations constituted an offence of cheating. It was noted that the Petitioner, being a facilitator, had no direct involvement in the transaction. The court found that the complaint did not disclose any role of the Petitioner in inducing the complainant to part with money with a dishonest intention. The complaint and the inquiry report did not constitute an offence of cheating.

5. Compliance with Procedural Requirements under Cr.P.C.:
The Petitioner argued that the Magistrate could not have issued directions under Section 156(3) or 200 of Cr.P.C. without compliance with Section 154(3) of Cr.P.C. The court observed that the police report did not reveal an investigation as contemplated under Section 202 of Cr.P.C. The Magistrate failed to examine the complaint closely and did not apply the mind to the facts of the case.

Conclusion:
The court concluded that the allegations did not constitute an offence of cheating and that the Petitioner, being a mere facilitator, could not be held liable. The complaint and the order issuing process were quashed. The court emphasized that the ingredients to constitute the offence of cheating were wholly absent and that the Magistrate had erred in concluding that a prima facie case of cheating had been made out. The petition was allowed, and the rule was made absolute.

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