Flipkart moves Karnataka High Court challenging ₹5 lakh penalty for selling non-BIS-compliant toys

E-commerce platform Flipkart has moved the Karnataka High challenging a Central Consumer Protection Authority (CCPA) order that imposed a ₹5 lakh penalty on it for selling toys that did not comply with norms prescribed by the Bureau of Indian Standards (BIS) [Flipkart Internet Private Limited v. Central Consumer Protection Authority].

Justice Suraj Govindaraj issued notice in the matter today to CCPA.

However, during the hearing, the judge questioned Flipkart's reluctance to pay the penalty.

"This is a small amount of ₹5 lakh, you want us to increase it?" he asked.

Representing Flipkart, Senior Advocate Vikram Huilgol replied that the company did not want to pay the amount since it would look like an admission of guilt.

"That is an admission of my guilt. I will pay it under protest, lordship may issue notice we will pay it. I asked the same question, ₹5 lakh is really not much for a company of that magnitude, but the problem is that then (it would look like) they (his client Flipkart) are admitting guilt," he said.

The Court, in turn, observed that it would be easier for Flipkart to admit it made a mistake and move on, instead of risking the penalty being increased by an appellate forum.

"Everybody makes mistakes. Admit the mistake and go ahead with life. That's all. And don't make that mistake again... There would be a possibility of 0s being added also (to the penalty amount). (It) need not be restricted to the ₹5 lakh," the judge said.

Huilgol told the Court that the company is ready to pay the penalty for now under protest, but urged that its legal challenge to the CCPA order be considered further.

He also submitted that the CCPA did not have jurisdiction to penalise the e-commerce site since there is already a seperate authority prescribed under the Bureau of Indian Standards Act, 2016, to ensure compliance with BIS standards.

"At the very most it is a BIS Act violation. There is a parallel regulatory mechanism," he said.

However, the Court took note of the CCPA's finding that non-BIS-compliant toys were sold with a Flipkart "assured" tag which may have led customers to trust that Flipkart had also verified the quality of the toys.

"These are toys that children will use. Those infants will put the toys in their mouth. If your plastic is not that good, the impact is huge. It is not compliant. Do you have the addresses of all the people it has been supplied to? We will recall them and send it to the Forensic Science Laboratory. You are the one who has delivered, so you have the addresses. This is part of your corporate social responsibility to see. Even otherwise, these are children's toys. You can't be doing like this," the Court added.

Huilgol replied that there was no allegation that dangerous materials were used in the toys sold on Flipkart. The allegation is only about non-compliance with BIS standards, he said.

The Court eventually issued notice in the matter and recorded Flipkart's submission that it would pay the penalty under protest for now.

It also asked Flipkart to file an affidavit indicating what steps it has taken to ensure that all products sold on its platform are BIS-compliant.

The Court took note of a CCPA direction that Flipkart must display a grievance officer's details prominently on its website. The Court observed that this information must be displayed prominently.

The matter will be heard next on October 6.