June 13, 2021

Laws with E-Commerce in India


Introduction to E-Commerce

E-Commerce is an area which is not so ancient to be defined in the Indian context and to the World as well, but it is emerging constantly with the development and the changing demands of the Society, as a whole. It is seen to be constantly changing as per the needs of technology and business development. Sharing of business information, maintain business relationships and conducting business transactions by means of telecommunication networks are all a part of E-commerce today. 

Without any use of paper, the electronic medium is being used very well in buying and selling of products and services, and documents to be shared in electronic format like e-bills, without any risk of their being lost and damaged. The business conducted is totally through the electronic medium using the Internet as the medium enabling large firms to come together and do business all over the world, while managing it from a certain part, enabling firms to establish and enhance their market position, allowing a cheaper and efficient distribution chain of their products and services.

Websites like amazon, flip kart, and many more are developing in the same way today and achieving a high level of success. Even for the groceries today an individual does not need to step out of the house, just need an internet connection and a phone or laptop and the rest is what is available to you at your door without letting you go and hunt for the same. One need not to stand in long queues of the banks to get their funds transfer, the bank accounts of the customer are easily accessible to them through Online banking which enables them to transfer funds easily to another accounts, pay through internet banking, gathering information in relation to their accounts and the other services provided by the bank. Technologies like marketing, data interchange, supply chain management, online transaction processing, data collection can easily be done by way of Electronic Commerce.

The Consumer Protection (E-Commerce) Rules, 2020

The Bill of 2019 enacted the Consumer laws in India, aims to replace the Consumer Protection Act of 1986 to address the new set of challenges faced by the consumers in digital age. The bill received the assent of the President of India on 6th August 2019 and hence was passed as the Consumer Protection Act,2019 to provide an effective and more convenient way of timely administering and settling of consumer disputes. 

The government come up with new Rules on 23rd July 2020 which will bear on all electronic retailers registered in India or abroad but offering goods and services to Indian consumers. The rules will be relevant to all types of e-commerce, goods and services purchase over digital networks and all forms of e-commerce retail with an exception to natural persons, not being a part of any commercial activity on a regular basis but in their personal capacity.

Consumer protection Act enables the practice of protecting buyers of goods and services, and the public, against unfair practices arising in the marketplace. The procedure has been established under Consumer Protection Act, 1986 which was further amended to the Act of 2020 including some new provisions with the changing demands of the society. Such laws or provision expressed under the statute intent to prevent businesses from engaging in fraud or unfair practices of trade in order to gain an advantage or profits.

Challenges to Consumer Protection

With the growing needs and the digitalization of the market, there always arises a set of challenges in relation to the protection of consumers which should always be taken care of as the foremost responsibility. Central Consumer Protection Authority is the statutory body which is given the responsibility of protecting the rights of the consumers by performing subsequent functions, which includes:

  • Imposing sanctions;
  • To provide safety notices to consumers in case of bad services.
  • Passing of relevant orders in discontinuance of a particular service and unfair trade practices, recollection of goods which are not appropriate and also the remuneration of the price paid for such goods and services.
  • Inquiring into the violations of rights of consumers.
  • Providing directions to the concerned manufacturer/dealer/retailer/endorser either to modify the misleading advertisement or to discontinue the same.
  • Investigating and launching prosecution at the suitable forum.

Legal Aspect as to Electronic Commerce in India

Though electronic commerce has developed a vast importance in the lives of consumers with the variety of choices being provided and the easy access to the services as per their convenience, there does arise some challenges as to the same which has resulted in various legal issues arising out of the same developing a body of case laws due to inevitable fallout in business relationships and failed transactions. The Information Technology Act, 2000 came into effect to cater with such issues faced by the consumers dealing with the contractual aspects of the use of electronic records.

The main objective of the Information Technology Act,2000 is to provide legal recognition to E-Commerce transactions. It also lays down procedure for networking operations and for civil wrongs and offences but with no express provision in regard to the validity of online contracts. It establishes the legality of the e-commerce transaction if the offer and acceptance are made through a ‘reasonable’ mode which includes:

  • Acceptance by Conduct, by pressing ‘Accept’ or ‘Submit’ button to an offer.
  • By doing payment for a particular good or service being provided.
  • By mailing directly to the offeror.

Example- A communication sent by an offeror to an offeree through indirect means, such as spam mails is not regarded to be a reasonable mode under the procedure laid down by the act.

The IT Act also governs the revocation of an e-commerce offer as well as acceptance. An online transaction becomes complete when the acknowledgement of the receipt of the offer is received by the offeror, the offeror having the liberty to terminate the offer if the acceptance for the same has not been communicated by the offeree. The act was amended in 2008 to enhance the security of e-commerce related transactions, providing special provisions to legally recognize the digital signatures and electronic documents and coming up with a new Section i.e., 43A which holds companies dealing in e-commerce accountable for protection of personal data of customers, failing to which the law makes the body corporate wholly liable for any wrongful loss incurred to the online buyer and to pay the damages in form of monetary compensation.

Indian contract Act ,1872 with IT Act of 2000 governs the conditions for the validity of contracts and agreements formed by way of electronic medium specifying the communication and acceptance of proposals, their revocation between consumers, sellers, and other intermediaries. It also deals with the policies of privacy, return either dealing with refund or replacement, terms and conditions as to the service making them legally binding to such agreements. The laws are yet to be updated in terms of age verification making 18 as the standard age of entering into a contract, digital signatures, etc.

Some other regulations applicable to E-commerce are-

  • Foreign Direct Investment Policy
  • Foreign Exchange Management Act, 1999 
  • Companies Act, 2013
  • Payment and Settlement Act, 2007
  • RBI regulations on payment mechanisms
  • Legal Metrology Act, 2009 read with Legal Metrology (Packaged Commodity) Rules, 2011
  • Sales, Shipping, Refunds and Returns
  • Income Tax Act, 1961
  • Good and Services Tax
  • Indian Copyright Act, 1957
  • The Patents Act, 1970
  • Intellectual Property Issues
  • Labour laws
  • Information Technology Act, 2000 (IT Act) and General Data Protection Regulations (GDPR).

Filing of Complaints Online

The Consumer Protection Act enables consumers to file their complaints online with the specified/jurisdictional consumer forum which in turn provides them with solutions as the damages caused by the consumers providing flexibility to the buyer. The earlier practice of filing it at the place of purchase or where the vendor has its registered office address has been an old practice now which was more time consuming than e-filling. The Act also contains provisions to file complaints electronically for consumers and through video conferencing hearing and examining the parties. This is aimed to provide procedural ease and also to reduce inconvenience and harassment for the consumers without the aid of any lawyer.

Modes of E-Commerce

 The Electronic commerce can be operated in four major segments of marketing:

  • Business to Business (B-B)
  • Business to Consumer (B-C)
  • Consumer to Consumer (C-C)
  • Consumer to Business (C-B)
  • Business to Business (B-B)

A business-to-business model also known as e-biz involves exchange of one’s products, services, or information to an intermediate buyer who then exchanges it with the final customer or consumer. The distribution and procurement of services is fulfilled by way of e-commerce. A wholesaler might place an order on the company website and sell it through physical retail stores. 

  • Business to Consumer (B-C)

This mode of e-commerce involves transaction occurring between a company and a consumer. This model deals directly with customers without enabling any mediator to intervene. The product can be finalised by the customer and place an order directly through the company’s website or application without any intermediator or marketplace.

  • Consumer to Consumer (C-C)

Some portals enable consumers to communicate their needs and obtain the same without the interference of the third party besides a platform provided by the third party charging some flat fee. It makes easy for strangers to trade with each other. Online auction, where one party posts an item for sale and the other bids to purchase the same.

  • Consumer to Business (C-B)

It is generally known as the reverse version of the traditional commerce models and is a new concept of trading. It involves consumers to provide services to the businesses and creating value for them. Consumers decide on their own what to pay and businesses decide whether to accept or not. The consumers can do the same by providing reviews and feedbacks and ideas in the development of the businesses thereby creating value to the business concerned.

Case Laws Related to E-Commerce

  • Hill v. Gateway (2000), Inc., 105 F.3d 1147 (7th Cir. 1997)

 Mr. and Mrs. Hill ordered a Gateway 2000 computer system. When they received the computer, along with the packet of warrantees was an arbitration agreement, which precluded Plaintiffs from bringing any action against Defendant, other than in the forum of arbitration. To the terms of such agreement, Mr. Hill was dissatisfied and filed a suit in federal court. The district court refused Gateway’s request that it honour the arbitration clause, stating that the record did not support a finding of a valid arbitration agreement, or that Hill had adequate notice of the arbitration clause. The case followed up on the principle of “shrink- wrap license” where license agreement includes the notice of agreement on the product packaging with full terms of the agreement inside the packaging, and prohibit access to the product absent an express indication of acceptance. In such circumstances the contract is not said to be formed at the time of purchasing the product but when the purchaser making the express indication of acceptance such as by declining to return the product within a specified time period.

  •  Avnish Bajaj vs State, famously known as Bazee.com case (2005)

In this case, theCEO of E-Commerce Portal was arrested and given bail later under Section 67 of IT Act on account of an obscene video uploaded on Bazee.com for sale. He proved Due Diligence but in 2005, Information Technology Act did not have any provisions related to ‘Intermediary’.

  • Sharat Babu Digumarti vs State, Govt. of NCT of Delhi

Petitioner was working as Senior Manager, Trust and Safety, BIPL on the day when DPS MMS was put up for sale on Bazee.com. i.e., the office responsible for the safety of the Portal, taking action on suspect lists when reported by the users, and block the user or close items listed accordingly.

It was held that there is prima-facie sufficient material showing petitioner’s involvement to proceed against him for the commission of offence punishable under Section 292 IPC. Though he was already discharged of offences only under Section 67 read with Section 85 of IT Act and Section 294 IPC.

  • Kent Ro Systems Ltd & Anr Versus Amit Kotak & Ors (Ebay – January 2017)

Kent RO had lodged Complaint with eBay as to IPR violation of its rights by a seller on latter’s platform and wanted Ebay to verify the products before it is uploaded on the platform.

Court said the IT Intermediary Rules only require the intermediary to publish the Rules and Regulations and Privacy Policy and to inform the users of its computer resources not to host, display, uphold or publish any information that infringes any Intellectual Proprietary Rights.

  •  Google India Pvt Ltd VS. Visaka Industries Limited (2009)

In this case, Google was held liable as Intermediary on guilt being proved as criminal complaint instituted before the Information technology (Amendment) Act 2008 came into force.

  • Vyakti Vikas Kendra & other vs Jitender Bagga & Google (2012)
  • In this case, the Art of Living Foundation filed for interim relief against a blogger and the intermediary Google owned Blogger.com for cyber defamation where the latter was ordered to remove all the defamatory content within 36 hours.


Internet has become the need of the hour, it has turned the generation of today deep into the minds that the world without Internet is hard to imagine, even an individual cannot stand without internet even for some time. It indicates how much today’s generation rely on Internet for every possible work accessible to them by way of digital media.

Everything however, small or big can be done through internet, like education, shopping, banking, etc. Day by day the digitalization is reaching the heights in fulfilling the demands of the society in the best possible manner. One of the most important part related to internet is E-commerce, which cannot be accessed without the internet. Growing of internet has also led to the growth of E-commerce and is developing rapidly. Every other business, just name it and the same can be conducted via e-commerce.

It is still a new concept and not the one which is being used from ancient times and the laws which has recently been discovered implies the same and hence, the new challenges are yet to come and will grow with the demands of the society and to ensure the same the regulatory mechanisms need to be much stronger than before and obviously; the world will grow and will bring in the changes that are imaginary for the generation of today.

Author: Vaishali Yadav (Campus Law Centre)

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