This article is written by Deepti Dhanank and Debottam Chattopadhyay, fourth Year, B.A.LL.B, School of Law, KIIT University,Bhubaneswar


E-commerce has been a buzz word in the field of not just technology but also in context of regulating it. To, many regulating e-commerce might be similar to herding the proverbial cat. The Information Technology Act, 2000 (IT Act, 2000) and the Information Technology (Intermediaries Guidelines) Rules, 2011 (Rules) thereunder pose more questions than they answer with respect to E-Commerce, despite otherwise being fine pieces of legislation. Thus, there is a need more than ever to enact a statute to tame this mammoth creature that E-Commerce has become. Interestingly beyond the abovementioned Act, other statutes and Government policies are examined in this article to gauge the implications that E-commerce creates from an intermediary aspect. Further an analysis on other jurisdictions is made to see how the challenges can be tackled. This article attempts to find solutions to fill in the current regulatory lacunae and ambiguities with respect to E-Commerce. The relevance of this article is amply judged by the ambivalent attitude of the public towards E-commerce. Further, such analysis is required because there is a clamour for amelioration of laws from the industry.

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:

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  1. The contravention is done without its knowledge, or
  2. 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 of the exemption under Section 79. Numerous procedures have been recommended which need to be adhered to by an intermediary, such as:

  1. The need to inform the users of the computer resource not to transmit any information that, inter-alia is harmful, obscene or defamatory. Further, it cannot infringe any patent, trademark, copyright or other proprietary rights.
  2. The intermediary is compelled to “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 such Rules regarding not posting of the above mentioned prohibited matter.
  • The intermediary will have to shall strictly follow the provisions of “the Act” or any other laws for the time being in force.

The Lacunae and the Ambiguity

The IT Act defines intermediary as “any person who on behalf of another person receives, stores or transmits that message or provides any service with respect to that message”. Further Section 79 makes it very clear that an intermediary and a “network service provider” are one and the same. Thus, the Statute makes it clear that Section 79 defences are applicable to all intermediaries including those in E-Commerce and this represents the clarity in drafting and explains legislative intent. But beyond this starts the conflicts. The Rules talk about strict adherence to the IT Act, but how shall the non-Indian entities be brought under this Act? This question has haunted not only lawyers but the industry at large due to the global nature of transactions in some e-commerce websites and the unique models they have created. The lack of clarity does not only stem from unclear legislation but also from things not explicitly said and leaving things to open interpretation. For instance an e-commerce website which now has a liability to observe due-diligence to get protection under Section 79 of IT Act has to observe and adhere to way too many statutes. Let us take a look at some possible statutes:

  1. Indian Penal Code, 1860 (“IPC”): Section 3 of the IPC provides extra-territorial jurisdiction to the IPC. So even, if an intermediary is operating from abroad or a person posting content is from abroad, the intermediary has to see provisions of IPC are not affected, if the website is accessed in India.4
  2. Indecent Representation of Women (Prohibition) Act, 1986 (“IRWPA”): An indecent representation of a woman which includes depiction of the figure of a woman, her form or body or any part which has the effect of being indecent, or derogatory to, or denigrating, women, or is likely to deprave, corrupt or injure the public morality or morals is punishable under the IRWPA. This statute also has to be complied with.

Now add to this list of statutes, matters such as Taxation, Data Protection, Intellectual Property and General Corporate Laws and one can feel the overburdening of regulations that an E-Commerce entity has to comply with in India.

Judicial Developments

In the case of Super Cassettes Industries Ltd. v. Myspace Inc.[1] -the Court found Myspace guilty of primary copyright infringement for allowing the viewing and sharing of images and music over which Super Cassettes claimed ownership. Clearly showing how important is to adhere to copyright laws by any intermediary.

Laws in Other Jurisdictions

Online intermediaries being the key actors in the virtual space, the problem of their liability on the Internet was one of the initial problems to grab attention in the early 90s. The United States (US) and European Union (EU) have the highest concentration of established online intermediaries. US was the first to enact regulatory laws dedicated to the online intermediaries. In 2001, EU adopted E-Commerce Directive which dealt with online intermediary liability in the European Union. There are two mechanisms for regulating the liability: vertical and horizontal. United States adopted the vertical approach i.e. different liability regimes are established for different areas of law, while European Union applied the horizontal mechanism i.e. every kind of liability has been dealt under one Act only.

The United States which adopt the vertical approach have several laws regulating the liability of the online intermediaries. The Communication Decency Act, 1996 regulates the liability of the online intermediaries regarding any matter but intellectual property if the content is provided by third party. The US Digital Millennium Copyright Act, 1998 which contains the Online Copyright Infringement Liability Limitation Act (OCILLA) regulates copyright related liability. Further, Telecommunication Act, 1996 regulates the exoneration from liability arising out of violation of other areas of law.  European Union, which applies the horizontal mechanism, regulates the intermediary liability through E-Commerce Directive, 2001. All sorts of illicit content including copyright, trademark, pornography etc are dealt under this Directive. The structure and regulatory activities of both OCILLA and E-Commerce Directive are very similar. The E-Commerce Directive was drafted based on the cautions adopted by OCILLA.

The liability pertaining to caching and transmitting (mere conduits) providers are identical and appropriate in both the jurisdictions. The E-Commerce Directive falls short in certain areas. Hosting providers are one of the most significant intermediaries. The liability regime prescribed in both the jurisdictions relating to hosting providers vary widely in formal procedures. US enjoys higher degree of control through the “notice and take down” procedure established by them. The lacunae in the Directive poses a problem regarding the determination of actual knowledge. However, both US and EU have to deal with this problem relating to actual knowledge and freedom of speech and expression. The type of liability imposed in EU would be according to the national laws which are based on fault which would be dependent on the knowledge of the sender. Further, the European legislators have took a dangerous step and left certain areas like public educational body and liability of information location tools. The information location tools include Search engines which play a very dominant role in the development of internet. US through DMCA protects an intermediary from liability subject to the fulfilment of certain conditions. EU is exposed to a reasonable anxiety due to lack of legislation with regard to Information Location tools. Further, internet plays a major role in education these days. The US practice for both the above ignored areas can be referred to by the EU.

The EU and US in specific have laid down a fair mechanism dealing with intermediary liability which is appropriate and practical in almost all areas except the mentioned above. Being the jurisdiction with the maximum online intermediaries they have established a mechanism which deals with intermediary liability in specific and clarifies almost all the ambiguities possible. Indian legislation on online intermediary liability is yet to achieve such legal certainty and clarity.


Thus the need for the hours is for the passing of a law or the Government of India formulating a policy or rules under IT Act, 2000 which may be a self-contained code on E-commerce. E-commerce is an emerging industry with infinite possibilities and is making a deep impact on Indian Industry. The mushrooming of e-commerce start-ups is a very positive step in providing employment to the vast amount of Indian youths with technical education or business education. But to induce more international players to come to India and make the Indian e-commerce industry reach the zenith it can reach, there has to be clarity in the law that these Intermediaries have to follow in one code. The EU model can be adopted and shall offer ease of doing business for these e-commerce intermediaries.

[1] IA No.15781/2008 & IA No. 3085/2009 in CS (OS) No. 2682/2008



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