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Sales dispute: SC tells Amazon, DSCs to urge Delhi HC to decide case by October end

Indu Bhan
Amazon was represented by senior counsel Mukul Rohatgi and counsel Ruby Singh Ahuja

The Supreme Court on Wednesday asked Amazon Seller Services and direct selling companies (DSCs) such as Amway, Oriflame and Modicare to approach the Delhi High Court for early disposal of their cases related to sale of products on the e-commerce platform.

Without going into the merits of the case, a bench led by Justice RF Nariman asked both sides to make a "joint request" to the HC to advance hearing in the case and decide the matter expeditiously by October end.

The case, as of now, is listed for hearing before the HC in February 2020.

Amazon had approached the apex court against the interim order dated July 25 of the division bench of the Delhi HC that refused to stay its single judge's order that had restrained the platform from displaying, advertising, offering for sale, selling, facilitating repackaging of any of the products of the direct selling companies on their websites and mobile application, except for those sellers who produce written consent. The injunction had come on petitions filed by direct selling companies alleging that Amazon was selling their products illegally.

Amazon was represented by senior counsel Mukul Rohatgi and counsel Ruby Singh Ahuja.

Stating that the single judge's order is "manifestly arbitrary and ought to be set aside", Amazon said in its appeal that it was an intermediary as defined under the Information Technology Act, 2000, and thus protected by Section 79, which exempts an online marketplace from all liabilities arising on account of third-party information such as product listings.

It further stated that the single judge had completely ignored the role played by an intermediary and had cast an obligation of seeking the consent of a direct selling firm without appreciating that no such obligation is cast upon an intermediary in law.

Besides, the direct selling guidelines do not have any force of law, as they were merely executive instructions and do not give an enforceable right to a private party against another private party, it said, adding that unless the right flows from a statute, such right cannot be enforced through a civil proceeding.

Stating that it is settled law that there can be no restriction imposed on sale and/or further sale of genuine goods, the e-commerce firm stated that the goods in question were original products that have been sold by the companies themselves and title in these goods have been passed on to the purchaser and subsequent buyers, thus, no restriction can be imposed on dealing and/or sale of original goods.

"The single judge's judgment vests unbridled power with brand owners to control the downstream sale and resale of its goods, which have already been sold for consideration and in which title has passed to the buyer. It has effectively created monopolies outside the existing intellectual property statutes, in direct derogation of these statutes. The judgment converts a transaction of sale (wherein rights in the property stood transferred in favour of the purchaser) into a licence (wherein only a permission to use has been granted)," the petition said.