This article is written by Divya Kathuria, a student of Raffles University, Nimrana.
Introduction
No doubt can be posed to the fact that technology has helped our world grow but, it is even more clear that it has even created more chaos in our lives. One such chaotic facility today we have is of e-commerce transactions. Electronic commerce or e-commerce is a term for any type of business, or commercial transaction that involves the transfer of information across the Internet.
E-commerce is the trend today and many business transactions are going online. Individuals and business houses now do not deal directly with other business houses or individuals. Industrial revolution began with the end of 18th century but, it does not seem that it has ended till now because industries of all kind are undergoing a revolution these days- the revolution of internet and computers. Business communities as well as individuals are increasingly using computers to create, transmit and store information in the electronic form instead of the traditional paper documents. Information stored in electronic form is very cheap, easier to store and retrieve, speedier, and long lasting, unlike paper documents. Now, business people have realized the advantages of business transaction in electronic form.
Another thing to be noted here is that whenever something new is introduced in society, it brings with itself its proc as well as cons. So, this age of internet revolution too has it’s proc and cons. To regulate these cons, our society needs law related to cyber space. One such law is IT Act, 2000 but, it is not at all enough. For the first time, a model law on e-commerce was adopted in 1996 by United Nations Commission on International Trade and Law (UNCITRAL). It was further adopted by General Assembly of United Nations by passing a resolution on 31st January, 1997. Further, India was also a signatory to this model law, and had to revise its national laws as per the said model law. Therefore, India also enacted the Information Technology Act, 2000.[1]
We need more regulations so that e-commerce transactions can work effectively and any dispute regarding these can be solved without any ambiguity. Through this article, I don’t want to highlight what problems the new technology of e-commerce has created for us but, what I want to highlight is the first step while deciding any dispute that needs to be taken effectively, that is, Jurisdiction. Before solving a dispute, it is very important to determine as to which court is competent to solve the particular problem.
Usually, in civil cases, the jurisdiction of the court is determined by various provisions of CPC, 1908. It is either where the defendant resides or where the cause of action lies. But, that is the exact impediment we face while deciding the cyber jurisdiction. The term ‘cyber-jurisdiction’ refers to the jurisdiction of those matters which were in conflict while parties contacted with each other through cyber space.
It is worth to be noted that cyber space is not a physical world that its place of jurisdiction can be easily decided. Instead, it’s a virtual world and that is why its jurisdiction too lies in space and thus, becomes too difficult to be determined. There is no street address and can’t be seen by eyes.
What till now has been decided regarding jurisdiction of ecommerce disputes?
Delhi High Court has many times tried to determine the jurisdiction of any disputes on the virtual space of World Wide Web. One such endeavor was done by the Hon’ble court in Banyan Tree Case[2] in 2009. The preliminary objection in the present case is the jurisdiction of the Delhi High Court. Interestingly, the Plaintiffs here did not rely on Section 134 of the Trademark Act to establish the jurisdiction of the Courts, but instead used Section 20[3] of the Code of Civil Procedure. The Plaintiffs averred in the plaint that the Court possessed the requisite jurisdiction since the services of the Defendants were being offered to residents of Delhi through brochures. Secondly, that the defendants’ website is interactive and is accessible from anywhere in India, and that “universality, ubiquity, and utility” of the Internet and the World Wide Web, all are indicative that the High Court possessed the jurisdiction to hear the matter. However, the court held that For the purposes of a passing off action, or an infringement action where the Plaintiff is not carrying on business within the jurisdiction of a court, and in the absence of a long-arm statute, in order to satisfy the forum court that it has jurisdiction to entertain the suit, the Plaintiff would have to show that the defendant “purposefully availed” itself of the jurisdiction of the forum court. For this it would have to be prima facie shown that the nature of the activity indulged in by the Defendant by the use of the website was with an intention to conclude a commercial transaction with the website user and that the specific targeting of the forum state by the Defendant resulted in an injury or harm to the Plaintiff within the forum state. Mere hosting of a website which can be accessible from anyone from within the jurisdiction of the court is not sufficient… Also a mere posting of an advertisement by the Defendant depicting its mark on a passive website which does not enable the Defendant to enter into any commercial transaction with the viewer in the forum state cannot satisfy the requirement of giving rise to a cause of action in the forum state.[4]
Another judgment regarding jurisdiction of ecommerce transactions came in 2014 from Delhi HC only. It was in WWE v. M/S Reshma Collections[5]. The Division Bench at the very outset agreed with the WWE that the issue of territorial jurisdiction is a mixed question of fact and law, and therefore, ought to be adjudicated at the final stage of the suit, and not at a preliminary stage of admission. Adding to this, the Division Bench held that the learned single Judge erred in returning the Plaint, as at the preliminary stage, only the averments of the Plaint should be seen, and if, on a demurrer, a case for territorial jurisdiction is made out, the plaint ought not to be returned.[6] In my opinion, the judgment of division bench had fundamental and basic errors. It is as simple as that we cannot climb the cliff with our first step directly on its peak. Similarly, when any case is decide, we need to go step by step and the first step. How can we first let the court solve decide the dispute and then determine if it was competent to do so or not? If it was incompetent then, what was the need to waste the court’s as well as parties’ time in arguing the case before a court which the court was not even eligible to hear. This is nothing but, logically senseless.
The Division Bench further clarified the law in relation to territorial jurisdiction by pointing out that in the Dhodha House v. S.K. Maingi[7], case itself, the Supreme Court had clearly observed that for the purpose of carrying on business, the presence of the person concerned at a particular place is not necessary, and must only conform with the three conditions to be fulfilled, namely that the agent must be a special agent who attends exclusively to the business of the principal; that the person acting as agent must be an agent in the strict sense of the term; and that to constitute ‘carrying on business’ at a certain place, the essential part of the business must be performed at that place. Acknowledging the growing concept of e-commerce models and the possibility of an entity conducting business only through a virtual presence rather than brick and mortar sales through a physical presence in a place, the Division Bench refined the applicability of this judgment, with emphasis on how to interpret what is actually meant by “carrying on business”.
The Division Bench, while extending the principles with respect to conclusion of contracts over the telephone to the facts of the case at hand, stated just how the Supreme Court in the Bhagwan Goverdhandas Kedia v. Girdharilal Parshottamdas & Co[8]. held that as the draftsman of the Indian Contract Act had not envisaged the use of the telephone as a means of personal conversation between parties, they had not intended to make any rule on those grounds. Similarly, “This applies with greater vigour insofar as commerce and business over the internet is concerned”. In deciding this, the Division Bench held that a contract formed over the Internet, just like a telephonically concluded contract, would not have been envisaged by the legislature. Thus, the legislature could not have intended to make any rule in that regard. The Division Bench accordingly interpreted the interactive website of WWE to constitute“invitation to an offer” for the sale of the Appellant/Plaintiff’s goods. The acceptance of this invitation by a customer in Delhi becomes an ‘offer’ made by the customer.
It is only when the transaction is confirmed and the payment is made to WWE through its website that WWE accepts the offer. Thus, under the provisions of the Indian Contract Act, 1872 read with the principles expounded in the Bhagwan Goverdhandas case[9], since the transaction between the two parties takes place instantaneously, the acceptance of the offer by WWE is communicated to the customer in Delhi, meaning that the contract is concluded in Delhi.
Consequently, the Division Bench found that since the offer is made in Delhi, the contract is concluded in Delhi and the money would emanate from Delhi, WWE is carrying on business within Delhi as the essential part of the transaction takes place there. Accordingly, the Division Bench held that “When the shop in the physical sense is replaced by the virtual shop because of the advancement in technology, in our view, it cannot be said that the appellant/plaintiff would not carry on business in India”, and therefore found that territorial jurisdiction may still be invoked by the Delhi High Court.
As per this decision (WWE v. Reshma Collections), the Plaintiff can institute the case where sales are made by it. Hence, the choice of forum is now as per the choosing of the Plaintiff if it makes sales across India. It means that it can now institute a suit in a civil court or a high court having original jurisdiction in such matters across India which is quite absurd because filing a suit anywhere in India might trouble the defendant and would defeat the very purpose of CPC. Also, this decision is limited to cases of copyright and trademark infringement and does not extent to passing off matters. For passing off matters (in which the trademark is not registered but has acquired secondary meaning), the High Court decision in Banyan Tree still holds the field.
Another point is that the number of available forums for the Plaintiff, especially an ecommerce retailer is large. The criticism by the Single Judge of this indicating the possibility of forum shopping by the Plaintiff seems credible. Many ecommerce and online retailers have forum selection clauses with customers. Usually they will be inapplicable to such cases since an alleged infringer is usually a third party and not a customer bound by the contract and hence the clause. However, if given a peculiar fact situation where this does occur, there is uncertainty how the Division Bench’s decision in WWE v. Reshma Collections will be applicable.
In the same year, there came an another case- Christian Louboutin v Nakul Bajaj[10] where the defendant sold the plaintiff’s products without permission through its website www.darveys.com, thus creating doubts as to the quality of those products in the minds of consumers. The plaintiff alleged that the defendant’s activities also affected the reputation of its brand and consumer goodwill towards it, and that continued use of its name would cause its luxury brand irreparable harm. The court granted an interim injunction restraining the defendant from selling unauthorized products.[11]
The Delhi High Court recently restrained online retailer Brandworld from using the brand name L’Oreal to sell or supply any goods, on any website or in any other manner, after the cosmetics company alleged that counterfeit products bearing its trademark were being sold by the merchant on its shopping website www.ShopClues.com.[12]
Solution and conclusion
As the present field we talked about is an emerging field in itself and so, it is quite obvious that the law related to it will also take some time to emerge and develop. Though India has started dealing with it by enacting IT Act, 2000 but, it still lacks a lot as no specific legislation governs online transactions and IP issues in India. The Information Technology Act, 2000 provides for the admissibility of electronic records and sets out offences and penalties for cybercrimes, etc. But, this is just an enabling statute to facilitate online transactions and thus has to be read in conjunction with the Contract Act in order to determine whether an online transaction constitutes a valid contract or not. the present Act too is not complete in itself and indicates that our legislature still requires to work a lot on this.
Further, when ecommerce takes place as B2C that is, business to consumer, then Consumer Protection Act, 1986 obviously has its role to play but, alas! It too does not talk about online transactions and on account of jurisdiction of various consumer forums, it gives only the brief account of pecuniary jurisdiction of the forums. There is a dire need for specific provisions for online transactions where directly consumer is involved. All businesses engaged in e-commerce should ensure that they take account of consumer protection issues.
Despite all the discussions, the gist of the article is that our country needs a specific law to decide the jurisdiction of Courts where dispute related to ecommerce transaction arises. This is so because a website can be accessed anywhere in India and thus, according to the precedents till now, plaintiff can institute the suit anywhere he wants without taking into account any of the defendants’ convenience thus infringing his right to fair, convenient and speedy justice.
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[1] CYBERSPACE: JURISDICTIONAL ISSUES OF ECOMMERCE AND CONSUMER PROTECTION, Abhinav National Monthly Refereed Journal of Research in Commerce & Management(Volume 3, Issue 7 (July, 2014)) ‘Chetan Karnatak’
[2] Banyan Tree Holding (P) Limited vs A. Murali Krishna Reddy & Anr. on 23 November, 2009 by HON’BLE THE CHIEF JUSTICE and HON’BLE DR. JUSTICE S. MURALIDHAR
[3] 20. Other suits to be instituted where defendants reside or cause of action arises.
Subject to the limitations aforesaid, every suit shall be instituted in Court within the local limits of whose jurisdiction-(a) the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or(b) any of the defendants, where there are more than one, at the time of the commencement of the suit actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or(c) the cause of action, wholly or in part, arises.1[* * *][Explanation].-A corporation shall be deemed to carry on business at its sole or principal office in3[India] or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place.
[4] Supra 2
[5] On 15 October, 2014 by HON’BLE MR JUSTICE BADAR DURREZ AHMED and HON’BLE MR JUSTICE VIBHU BAKHRU
[6] Ibid
[7] 2006 (9) SCC 41
[8] AIR 1966 SC 543
[9] Ibid
[10] on 26 September, 2014 in the High Court of Delhi by HON’BLE MR. JUSTICE MANMOHAN SINGH
[11] http://www.worldtrademarkreview.com/Intelligence/IP-Lifecycle-India/2015/Articles/Protecting-brands-in-the-digital-space last accessed on 2nd July, 2015
[12] Ibid
