Delhi HC Quashes FIR Against Flipkart: Scope of Safe Harbour for E‑Commerce Intermediaries

1. Background of the Writ Petition

The Delhi High Court examined whether an e‑commerce marketplace, functioning as an “intermediary” under Section 2(1)(w) of the Information Technology Act, 2000 (I.T. Act), can be subjected to criminal proceedings for alleged copyright and trade mark infringement by third‑party sellers using its platform, despite the safe‑harbour protection in Section 79 of the I.T. Act.

The petition in Flipkart Internet Private Ltd. Vs State of NCT of Delhi & Anr. was filed under Articles 226/227 of the Constitution of India read with Section 482 of the Code of Criminal Procedure, 1973 (Cr.P.C.), challenging:

  • FIR No.103/2020 dated 17th August, 2020, registered at the Economic Offences Wing, New Delhi
  • The FIR was lodged under Section 63 of the Copyright Act, 1957 and Sections 103/104 of the Trade Marks Act, 1999 (T.M. Act)
  • Flipkart sought quashing of the FIR and all consequential proceedings as against it

Respondent No.2, Ashish Girdhar, Managing Director of Sanash Impex Pvt. Ltd., alleged that counterfeit or unauthorised “DC DERMACOL” cosmetic products (a reputed Czech brand) were being sold through Flipkart and Amazon India. Sanash Impex Pvt. Ltd. claimed to be the exclusive authorised seller of DC DERMACOL products in India, both offline and online. The complaint accused Flipkart of acting in connivance with fake or unauthorised resellers, amounting to cheating and illegal sale of DC DERMACOL cosmetics.

Based on this complaint, the FIR was registered for offences under Section 63 of the Copyright Act and Sections 103/104 of the T.M. Act.

2. Investigation Status and Interim Protection

The State informed the Court through a Status Report that:

  • Pre‑investigation notices under Section 91 Cr.P.C. were issued to Flipkart and Amazon, seeking documents and information.
  • Instead of responding to the notices, Flipkart approached the High Court by filing the present writ petition.

When the matter first came up on 1st September 2020 and on subsequent dates, the Court was informed that a legal opinion was being sought from the Additional Solicitor General regarding the application of the Supreme Court’s ruling in Shreya Singhal v. Union of India, 2015 (5) SCC 1. On 14th September 2020, based on a statement of the Additional DCP, the Court recorded that no further investigation would be undertaken by the EOW until the next date. This interim protection effectively continued till final disposal.

3. Flipkart’s Core Submissions

3.1 Intermediary Status and Safe Harbour

Counsel for Flipkart contended:

  • Flipkart is an “intermediary” as defined in Section 2(1)(w) of the I.T. Act, providing an online marketplace where independent sellers list and sell products.
  • Under Section 79 of the I.T. Act, an intermediary enjoys safe‑harbour protection from liability for third‑party information, data, or communication links hosted on its platform.
  • Flipkart does not initiate the transmission, select recipients, or modify information, and only provides the communication system.

3.2 No Obligation to Takedown Without Court Order

Relying heavily on Shreya Singhal v. Union of India, 2015 (5) SCC 1, Flipkart argued:

  • The duty of an intermediary to remove or disable access to specific content arises only when:
    • The intermediary is notified by the appropriate Government/agency, or
    • A competent court issues an order directing removal.
  • A mere private complaint from a rights holder or affected person does not impose an automatic obligation to take down material.
  • Respondent No.2 had not initiated any civil proceedings, nor had any court passed an injunction or takedown order against Flipkart.
  • In such circumstances, registering an FIR against Flipkart was unsustainable and mala fide.

3.3 Compliance with Due Diligence under Intermediary Guidelines

Flipkart submitted that:

  • Its user agreement and Terms of Use incorporate clear restrictions prohibiting:
    • Listing or sale of infringing, counterfeit, or stolen goods
    • Material violating third‑party intellectual property rights
    • Content breaching any law in force
  • By publishing these rules and policies, Flipkart claimed it had fulfilled the “due diligence” mandate under Rule 3 of the Information Technology (Intermediary Guidelines) Rules, 2011 (I.T. Guidelines).
  • Having complied with Rule 3, Flipkart argued that Section 79 immunity applies not only against civil claims but must logically extend to criminal liability as well, absent proof of active complicity.

Flipkart relied upon a series of decisions, including:

  • Sanchayni Savings Investments (I) Ltd. & Ors. vs. State of West Bengal and Ors., Civil Appeal No. 5168 of 2000
  • Shreya Singhal v. Union of India, 2015 (5) SCC 1
  • Sharat Babu Digumarti v. Government of NCT of Delhi, 2017 (2) SCC 18
  • Lovely Salhotra and Anr. v. State (NCT of Delhi) & Anr., (2018) 12 SCC 391
  • Kanchan Sanyal v. State, CRL.M.C.331/2007 and CRL.M.C.332/2007
  • Amit Wasan & Anr. vs. State, W.P.(Crl.) 477/2007
  • Kent RO Systems Ltd. v. Amit Kotak, 2017 SCC OnLine Del 7201
  • Poonam Khanna v. State and Ors., 2018 SCC Online Del 6918
  • Thaufiq v. State and Ors., CRL.OP.2142 of 2017
  • PepsiCo India Holdings Private Ltd. v. Facebook & Ors., CS(OS) 80/2018
  • PepsiCo India Holdings Private Ltd. v. Facebook & Ors., CS(OS) 291/2018
  • Facebook Inc v. Surinder Malik, 2019 SCC OnLine Del 9887
  • Amazon Sellers Services Pvt. Ltd. v. Amway India Enterprises Pvt Ltd & Ors., 2020 SCC OnLine Del 454
  • Google India Private Limited v. Visaka Industries, (2020) 4 SCC 162
  • Kunal Bahl and Anr. v. State of Karnataka, CRL.P 4676/2020

4. State’s Objections and Reliance on Myspace