In a recent ruling, the Delhi High Court observed that every person has a right to be informed about what he is consuming. The division bench, comprising Justices Vipin Sanghi and Jasmeet Singh, was hearing a plea moved by a trust comprising members following a strict vegetarian lifestyle. They were aggrieved by the fact that manufacturers of a plethora of products, including eatables, were keeping consumers in the dark by not disclosing the real source of the ingredients.

Now-a-days, consumers are mindful of the quality, potency, purity and standard of goods or services. However, owing to the absence of proper labelling as well as advertising gimmicks, consumers are more often than not, unable to make a rational choice. In order to lay down standards and guidelines for consumer safety, protection of their health and regulation of the food sector, the government enacted the Food Safety and Standards Act, 2006, and framed the Food Safety and Standards (Packaging and Labelling) Regulations, 2011. This was meant to ensure safe, wholesome and nutritious food for consumers, disclosing all essential information pertaining to its manufacturing, processing and storing.

The Act mandates that food business operators shall ensure that there is disclosure of all the ingredients used in manufacturing or processing of the product, and that the labelling and presentation of the food, the packaging materials used and the information displayed about the product does not mislead consumers. They are also required to declare on the packaging whether the food is vegetarian or non-vegetarian with green or brown-coloured dots, respectively.

The petition was filed by Ram Gaua Raksha Dal, an association following the Namdhari sect, which profess vegetarianism. The main contention raised by the association was that many products, including eatables that are available in the market, are unfit for consumption and use by those who profess strict vegetarianism. This was because they either had non-vegetarian ingredients or were processed in such a way that they cannot be described as “strictly vegetarian”. To substantiate its claim, the petitioner cited the manufacturing of white sugar, where bone char/natural carbon is used for whitening or refining the sugar. Other examples cited by the association include sugar, cheese, oil and juices.

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The petitioner sought formulation of guidelines and policies to strictly implement the existing rules for mandating manufacturers to label their products according to the nature of the ingredients used. Furthermore, the petitioner sought marking or labelling of all consumable items not only on the basis of their ingredients, but also on the basis of the items used during the manufacturing processes. In addition, the petitioner sought the setting up of an expert committee to examine the feasibility of labelling the products as vegetarian or non-vegetarian, as is already mandatory for eatables, toiletries and cosmetic items.

The association drew the attention of the bench to the fact that when animal fat is used, be it pork fat/lard, beef fat or extracts, regulations require specific declaration. However, when it comes to the disclosure of the source of other ingredients, such as cheese and gum base, there is no such obligation.

It was alleged that the lack of insistence under Clause 2(d) of Regulation 2.2.2 of 2011 Regulations about the disclosure of compound ingredients which constitute less than 5% of the food infringes on the rights of consumers as they are kept in the dark about the real source of such compound ingredients. It was contended that the said relaxation violates Articles 21, 19(1)(a) and 25 of the Constitution and impinges on their freedom of informed choice.

The bench noted that the Food Safety and Standards Act casts an obligation on food business operators to make a declaration on all food items. At the same time, some operators were taking advantage of the fact that the Act does not specifically oblige them to disclose the source from which the ingredients are obtained.

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The bench referred to an ingredient coded as E631 denoting disodium inosinate which is often sourced from pig fat and used as a food additive in noodles, potato chips and a variety of other snacks. There is often no disclosure on the packaging that the food article where this ingredient is used is a non-vegetarian product.

Even though their usage may constitute a miniscule percentage, the use of non-vegetarian ingredients would render such food articles non-vegetarian, and would offend the religious and cultural sensibilities/sentiments of strict vegetarians and interfere in their right to freely profess, practice and propagate their religion and belief, the bench said. “Every person has a right to know as to what he/she is consuming, and nothing can be offered to the person on a platter by resort to deceit, or camouflage,” held the bench. On account of the failure of authorities to check lapses in compliance of the Act and Regulations, many food articles which have ingredients sourced from animals, are passed off as vegetarian by affixing the green dot, thereby, deceiving the public at large, particularly those who wish to profess strict vegetarianism.

The bench consequently directed that the operators make a “full and complete” disclosure of all the ingredients that go into the manufacturing of food articles, irrespective of their percentage, indicating clearly their source, in whatever measure they are used. In addition, the bench made it clear that there should be full and strict compliance of the Regulations by the operators, and any failure on their part would expose them to class action for violation of the fundamental rights of public and invite punitive damages apart from prosecution.

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For raising awareness among the people of their legal and constitutional obligations and rights, the bench declared that the order should be given adequate publicity.

Earlier, the bench had called for a status report from the ministries of health and family welfare, consumer affairs, food and public distribution and the Food Safety and Standards Authority of India on the issue. It observed that “there can be no denying the fact that every person has a right to know—which springs from the right to freedom of speech under Article 19(1)(a), and the right to practice and profess his/her beliefs—which springs from Article 25 of the Constitution of India. The issues raised by the petitioner also have a bearing on the persons’ right to life, recognised under Article 21 of the Constitution of India inasmuch, as, a person is entitled to make informed choices—which is also protected under Article 21 of the Constitution of India”.

—By Banshika Garg and India Legal Bureau

The Supreme Court on Friday expressed displeasure over the delay in disposal of cases by the National Consumer Disputes Redressal Commission (NCDRC) relating to complaints of home buyers.

Justice D.Y. Chandrachud said the purpose of the Consumer Protection Act would be defeated if the NCDRC continues to delay the hearing of the cases. Moreover, the orders given by the Supreme Court have been violated which ought to be been followed at the first place, he added.

Justice Chandrachud directed the NCDRC chairperson to hear the matter within three months and give a decision and asked to file a compliance report in the registry.

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The fact of the matter is, earlier in February 2021, a case was put up for hearing by the NCDRC whose next date of hearing was fixed for August 2021. In between, the petitioner urged the NCDRC chairman to hear the matter early and settle it. In spite of that, the NCDRC fixed the matter for July 2022. After this, the petitioner moved to the Supreme Court.

Introduction

The Consumer Protection (E-commerce) Rules, 2020 (“Rules”) were notified by the Government of India on 20.07.2020. The Rules are intended to complement the Consumer Protection Act, 2020 (“Act”) to by regulating all e-commerce activities and transactions. The Rules have sought to govern all such e-commerce activities by laying down duties and liabilities to be adhered by e-commerce entities, marketplace e-commerce entities, sellers on marketplace, and inventory e-commerce entities. The Act defines ‘e-commerce’ under Section 2(16), as “buying or selling of goods or services including digital products over digital or electronic network”.

Scope of Rules

The Rules apply to:

1. All goods and services bought or sold over digital or electronic network including digital products;
2. All models of e-commerce, including marketplace and inventory models of e- commerce;
3. All e-commerce retails, including multi-channel single brand retailers and single brand retailers in single or multiple formats; and
4. All forms of unfair trade practices across all models of e-commerce

However, the Rules except activities carried out by a natural person in personal capacity not being part of any professional or commercial activity undertaken on a regular or systematic basis.

Definitions

Some of the important definitions under the Rules are:-

1. Rule 3(b) defines “e-commerce entity” to mean any person who owns, operates or manages digital or electronic facility or platform for electronic commerce, but does not include a seller offering his goods or services for sale on a marketplace e-commerce entity.
2. Rule 3(f) defines “inventory e-commerce entity” to mean an e-commerce entity which owns the inventory of goods or services and sells such goods or services directly to the consumers and shall include single brand retailers and multi-channel single brand retailers.
3. Rule 3(g) defines “marketplace e-commerce entity” to mean an e-commerce entity which provides an information technology platform on a digital or electronic network to facilitate transactions between buyers and sellers.
4. Rule 3(i) defines “platform” to mean an online interface in the form of any software including a website or a part thereof and applications including mobile applications;
5. Rule 3(l) defines “user” to mean any person who accesses or avails any computer resource of an e-commerce entity.

These definitions effectively include all stakeholders in the e-commerce sector from marketplaces to aggregators and inventory led models where the retailers own the stocks, are taken within the purview of the Rules. Apart from these definitions, the Rules integrate with the Information Technology Act, 2000 (“IT Act”) for any word or expression that has not been expressly defined in the Rules.

Duties of E-Commerce Entities

The Rules mandate the e-commerce entities to be one of the following types of registered entity:

• Company incorporated under Companies Act, 1956 or Companies Act, 2013
• Foreign company covered under Section 2(42) of Companies Act, 2013
• Office, branch or agency outside India owned or controlled by person resident in India under Section 3(v)(iii) of the Foreign Exchange Management Act, 1999.

The aforementioned entities have the following duties to be undertaken under the Rules:

(i) Provide the following information in a clear and accessible manner on its platform which shall be displayed to its users:

• Legal name of the e-commerce entity

• Principal address of its headquarters and all branches

• Name and details of its website; and

• Contact details for customer care and grievance officer

(ii) Should not adopt any unfair trade practice, whether in course of business or otherwise

(iii) Establish an adequate grievance redressal mechanism and appoint a grievance officer for the same who shall acknowledge receipt of any complaint within 48 hours and redress the same within one month. Contact information for such grievance officer is to be displayed on the platform.

(iv) In case of the entity offering imported goods and services, mention the name and details of any importer from whom it has purchased such goods or services

(v) Make every endeavour on best effort basis, to become a partner in the convergence process of the National Consumer Helpline of the Central Government

(vi) Should not impose cancellation charges on users unless the e-commerce entity itself has to bear the same.

(vii) Should effect all payments towards accepted refund requests of the consumers as prescribed by the Reserve Bank of India or any other competent authority under any law

(viii) Should not manipulate prices of goods or services offered on its platform to gain unreasonable profit or discriminate between consumers of the same class or make any arbitrary classification of consumers affecting their rights under the Act.

Liabilities of Marketplace E-Commerce Entities

All such entities are required to get an undertaking from the sellers that the descriptions, images and other content pertaining to the goods or services on their platform is accurate and corresponds directly with the appearance, nature, quality, purpose and other general features of such good or service.

Apart from the above, the marketplace e-commerce entity is also required to provide the following information on its platform in a clear and accessible manner:

1. Details about the sellers, including name of business (whether registered or not, address, customer care number, any rating or feedback and any other information necessary for enabling consumers to make informed decision at purchase stage
2. Ticket number for each complaint lodged for tracking the status
3. Information relating to return, refund, exchange, warranty and guarantee, delivery and shipment, modes of payment, and grievance redressal mechanism
4. Information on available payment methods, security of those methods, any fees or charges payable by users, procedure to cancel regular payments, charge-back options and contact information of the relevant payment service provider

In case the entity gives any differentiated treatment between goods or services or sellers of same category, the same should be mentioned in the terms and conditions governing relationship with sellers on platform. Further, the marketplace e-commerce entity is required to maintain a record of all relevant information allowing for identification of all sellers who have repeatedly offered goods or services that have been removed or access to which has been disabled under Copyright Act, Trademark Act or Information Technology Act.

Duties of Sellers on Marketplace

The Rules provide for an elaborate list of duties that sellers are required to undertake or follow, some of the important ones are as follows:

• Not to adopt any unfair trade practice whether during offer on e-commerce platform or otherwise
• Not to refuse to take back goods or withdraw or discontinue services purchased or agreed to be purchased or refuse to refund consideration if such goods or services are defective, deficient or spurious or if such goods or services are delivered late from the stated delivery schedule.
• Form a written contract with respective marketplace e-commerce entities on whose platform they propose to undertake or solicit sale or offer their goods or services
• Ensure that advertisements for marketing are consistent with the actual characteristics of the goods or services

• Provide the e-commerce entity with legal name, address of headquarter and branches, name and detail of website, email address, customer care details, GSTIN and PAN details.

Duties and Liabilities of E-Commerce Entities

All e-commerce entities are to mandatorily provide, in a clear and accessible manner, the information regarding return, refund, exchange, warranty and guarantee, delivery and shipment, modes of payment, and grievance redressal mechanism. They should also provide other information relating to notices under applicable laws, payment methods and security, contractual information required to be disclosed by law, total price in single figure with breakup price, and ticket number for all complaints for tracking.

Further, all such inventory based e-commerce entities should ensure that no false representation of itself as a consumer is made on its platform and it should not post review about goods and services itself or misrepresent the quality or features of the goods or services. The advertisements should be consistent with actual characteristics, access and usage conditions of such goods or services.

The entity should not to refuse to take back goods or withdraw or discontinue services purchased or agreed to be purchased or refuse to refund consideration if such goods or services are defective, deficient or spurious or if such goods or services are delivered late from the stated delivery schedule. However in case the late delivery is due to force majeure, an exception can be made.

Finally, if the entity in any manner vouches for the authenticity of goods or services, it shall bear the liability in any action related to the authenticity of such goods or services.

Conclusion

To sum up it can be said that E-commerce rules aim to bring transparency in provision of information and disclosure by the e-commerce platforms to the consumers. Rules also seek to put check on the practice of preferential treatment being accorded to some sellers. This provides space and equitable treatment for individual and small sellers on such platforms and also rules out possibility of unfair trade practices by large sellers. In addition to regulating the Indian origin e-commerce platforms, the E-commerce Rules also regulate foreign based e-commerce platforms under Rule 4(1)(a). Overall with increase in e- commerce activity especially in present times, E-Commerce Rules are a step to provide redressal to consumer grievances against e-commerce platforms and also prescribe certain best practices to be followed by e-commerce platforms for benefit of consumers.

The authors are Ramanpreet Singh, Associate and Rudrakshi Deo, Associate at Athena Legal

DISCLAIMER

The update is intended for your general information only. The information and opinions contained in this document are derived from public sources which we believe to be reliable and accurate but  which,  without further  investigation,  cannot  be  warranted  as  to  their  accuracy,  completeness  or correctness. It is not intended to be nor should be regarded as legal advice and no one  should act  on  such information without appropriate professional advice. Athena Legal accepts no responsibility for any loss arising from any action taken or not taken by anyone using this material.