Snapdeal not liable for sale of erectile dysfunction tablets on its platform: Karnataka High Court quashes criminal case

The Karnataka High Court recently quashed criminal proceedings against Snapdeal and its two Directors, Kunal Bahl and Rohit Kumar Bansal, for providing a platform to market and sell a drug without a valid license under the Drugs and Cosmetics Act [Snapdeal Pvt. Ltd v. State of Karnataka]..Justice MG Uma of the High Court's Dharwad Bench quashed the case on the grounds that the complaint suffered from delay, and that Snapdeal as an intermediary could not be held liable for the action or inaction of a vendor who makes use of the website's facilities. "It is held that intermediary as defined under Section 2(w) of IT Act or its Directors/Officers would not be liable for any action or inaction on the part of the vendor/seller making use of the facilities provided by the intermediary in terms of a website or a market place and that the Snapdeal/accused No.2 could not be responsible and/or liable for sale of any item not complying with the requirements under the Act on its platform by accused No.1 since the essential ingredients of Section 18(1)(c) of the Act not having been fulfilled neither Snapdeal nor its Directors can be prosecuted for the offence under Section 27(b)(ii) of the Act," the Court said while referring to its decision in Kunal Bahl vs State Of Karnataka, which dealt with the same parties in a similar offence. .The petitioners, Snapdeal Pvt Ltd, and Kunal Bahl and Rohit Kumar Bansal, the Directors of Snapdeal, had approached the Court seeking to quash criminal proceedings initiated against them for offences under Sections 18(c) (prohibition of manufacture and sale of certain drugs and cosmetics), punishable under Section 27(b)(ii) (penalty for manufacture, sale, of drugs without a valid licence) and 28 (penalty for non-disclosure of the name of the manufacturer) of the Drugs and Cosmetics Act. .Snapdeal, an online site which provides a platform for online marketing and sale of consumer products, was selling a drug named Suhagra tablets, a prescription medicine used to treat erectile dysfunction in men.The prosecution alleged that they received credible information that the drugs were being sold without a valid license. A detailed investigation was undertaken by the complainant, the Drugs Inspector, who found the information to be true..Kunal Bahl and Rohit Kumar Bansal, as the Directors-cum-Promoters and Chief Executive Officer and Chief Operating Officer were charged as they are responsible for the day-to-day conduct of the business of Snapdeal, and for providing a platform to exhibit and sell the drugs in question. .The Drugs Inspector filed a private complaint, and the trial court took cognisance of the offence under the relevant sections of the Drugs and Cosmetics Act, for which the petitioners approached the High Court seeking quashing of the complaint and criminal proceedings. .While examining the case, the High Court noted that the written complaint was filed under Section 200 (examination of complainant) of the Code of Criminal Procedure (CrPC). As per the case of the prosecution, the court witnesses placed orders for the purchase of the tablets, which they duly received, one in 2014 and the other in 2015. The private complaint, however, was filed in 2021 after a lapse of more than 6 years. .Since the alleged offence has a prescribed punishment of a minimum of 3 years, the period of limitation under Section 468 (bar to taking cognisance after lapse of the period of limitation) of the CrPC was within 3 years from the date of commission of the offence. The High Court noted that the complainant had not stated anything about the delay in filing the complaint and the Magistrate had lost sight of the delay."Even though the learned Magistrate has referred to the complaint in brief before taking cognizance of the offence, it has to be concluded that there is no application of mind before passing the impugned order against these petitioners," the Court said..Further, it was argued on behalf of the petitioners that Snapdeal is an intermediary as defined in the Information Technology Act, and is therefore exempted from the liability for which criminal proceedings were instituted. As per Section 79 (exemption from liability of intermediary in certain cases) of the IT Act, an intermediary is not be liable for any third party information, data or communication link made available or hosted by him, except for certain exceptions. .Referring to its own decision in Kunal Bahl vs State Of Karnataka, the High Court noted that as per the IT Act, Directors/officers are not liable for any action or inaction on the part of the vendor or seller making use of the facility provided by an intermediary as a website or market place. .The High Court, thus, allowed the petition and quashed the instant criminal proceedings against Snapdeal, Kunal Bahl and Rohit Kumar Bansal, for selling drugs without a valid license. .Senior Advocate CV Nagesh and advocate SS Poovayya appeared for the petitioners while High Court Government Pleader Praveen Uppar represented the State. .[Read Order]