Author: Chestha Khurana, Institute of Law, Nirma University

The swift rise of E-contracts on digital platforms often creates blurred boundaries between neutral intermediaries and active commercial participants, challenging the existing provisions in Indian Contract, Consumer and Information Technology laws. This research article delves deeper into unpacking the role of such intermediaries by the ‘duty of care’ and ‘active control’ tests.  Further, critically examines the scope and extent of intermediary liability through different lenses of consumer protection laws, tort law and the traditional contractual obligations. By exploring the case study of the FBA model of amazon, analyzing judicial decisions in both the global and national context, evaluating the applicability of the Safe harbour provisions that often make possible shadow selling and limits liabilities. Thereof, concludes with suggestions for a differentiated liability regime that reflects the complexities of modern e-commerce, safeguarding consumer rights while fostering platform innovation.

Keywords – E-contracts, neutral intermediaries, active commercial participants, duty of care, active control, safe harbour, intermediary liability, differentiated liability, consumer rights. 

The digital economy has witnessed rapid transformation with the rise of E-commerce platforms, facilitating E-contracts and multi-faceted transactions between the buyers and sellers.  These platforms act as intermediaries, traditionally considered to be passive facilitators, however, an evolution in this function, from a mere facilitator to an active participant has posed complexities in determination of their liabilities, with contradictory views in different legislations. By assuming a major control over the operational roles, including managing logistics, storage, delivery, and customer relations, the intermediary swiftly transforms into an active party to the contract, at the same time escapes liability being an intermediary and therefore, indulges in shadow selling. The central question is whether these E-commerce platforms like Amazon, Flipkart can continue to claim their immunity under the Safe Harbor provisions of the Information Technology Act. The article investigates how control, participation, due diligence and duty of care influences the determination of the claimed immunity and concludes how the provisions should be used as a shield and not as a sword. By redefining boundaries, interpreting existing legal standards, the article seeks to balance consumer rights and smooth functioning of E-commerce, while incorporating fair and true liabilities of such platforms. The existing legal framework in India lacks guidelines for differentiating various levels of participants in intermediary liability, resulting in a significant lack of clarity. This issue can be addressed by a tiered approach, one that considers the level of control, knowledge and involvement exercised by the platform. Hence, platforms that pose a material control over operations, selling, and product must assume their liability proportionate to their role in execution. As a conclusion, redefining intermediary liability in India is essential not only to protect consumer interests but also to ensure fairness, transparency, and accountability in the digital economy. As online marketplaces continue to expand their influence, the legal system must evolve in tandem, offering both clarity and adaptability in regulating new-age commerce.

Foundational works and literature have yet to fully reconcile the gray gap by practical and possible rationales with the existing binary liability frameworks. Suggested practical approaches include differential liability based on proportionate control exercised and position in the transaction and related functions. International efforts including EU’s Digital Services Act,2022 and OECD’s reports remain focused on systematic compliance rather than simpler tools to hold liability, that can be simply understood by tortious responsibilities, obligations and further, strengthened by consumer protection statutes, even when contractual obligations fail to hold such intermediaries liable. The research proposes functional, less complex and logical approaches for enhancing intermediaries’ responsibilities -

• Duty flows from control – the more a platform controls, the more liability they owe.

• Contractual disclaimers or Safe harbour provisions cannot override public obligations under the tort and consumer protection laws.

• Recognize intermediaries’ duty of care and due diligence obligations.

In doing so, the article draws upon the insights of earlier scholars and judicial thought, while respectfully advancing a more subtle and pragmatically responsive way of regulating intermediaries.

Following a doctrinal and analytical legal research methodology, with a major focus on case law interpretation, both in international and national forums, statutory analysis and comparative reasoning, the research seeks for a deeper engagement with dynamic judicial reasoning to understand the gap especially in the digital commerce and platform liability space. 

The study centres on interpreting legal provisions including-

• S.79(2)(a) – Exemption from Liability of Intermediaries-Provides conditional safe harbour protection to intermediaries, highlighting that they wouldn’t be held liable only when they don’t initiate, select the receiver, or modify the content of the transmission. Therefore, any digital platform that engages in active participation like managing delivery, warehousing or customer communication, then this immunity ceases to exist.

• S. 4, 5, and 10 – Legal Recognition of Electronic Records and Contracts- provides for statutory backing of E-contracts, recognising electronic records, digital transactions and signatures, binding both sellers and buyers as in a traditional contract. However, complexities arise due to the unclear stance of intermediary when they assume an active role as a third party, often overriding the traditional principle of privacy of contract.

• Sections 2(1)(f), (l), (r), (t) and 68–74 of the Consumer Protection Act, 2019- defines consumers, product liability, unfair trade practices widening intermediaries’ responsibility by including product liability actions against service providers. These provisions draw liabilities of intermediaries into the liability net if their conduct fits the said definitions.

•  Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021- imposes greater responsibility on intermediaries enhancing due diligence, moving towards an active platform responsibility, setting higher duty of care standards for shadow sellers. 

Key judicial rulings and landmark cases that set precedence and empowers judicial interpretation to the concerned gap, shaping the contours of intermediary liability are listed as follows-

• Amazon Seller Services Pvt. Ltd. v. Amway India Enterprises Pvt. Ltd.- highlighted that intermediaries can be held liable for selling counterfeited products, indicating that intermediaries can lose immunity under section 79 of Information Technology Act, 2000. 

• Oberdorf v. Amazon.com, Inc.- found that Amazon could be held strictly liable as a seller due to its significant control over transactions, triggering global discourse on platform liability and consumer protection.

• Flipkart Online Services Pvt. Ltd. v. State of U.P.- court rejected blanket immunity to Flipkart, emphasising due diligence must be proved to claim immunity in the existing criminal liability, in question. It was laid down that mere intermediary status can’t be used to escape such liabilities.

• State of NCT of Delhi v. Uber India Systems Pvt. Ltd.- The Delhi High Court held that intermediaries like Uber involved in active coordination and facilitation (pricing, customer relations, operational management) may be subject to regulatory oversight, can be held liable in criminal or regulatory violations and laid emphasis on platform responsibility in transport services.

• Google India Pvt. Ltd. v. Visaka Industries Ltd.- In an alleged defamation case on content hosted by google, it was stated that knowledge of unlawful content, followed by inaction can render the immunity void. In such cases platforms must prove due diligence was exercised.

• Kent RO Systems Ltd. v. Amit Kotak- reaffirmed immunity under section 79 of Information Technology Act, 2000 is lost upon existence of actual knowledge and platform’s inaction, emphasising the due diligence principle on intermediaries. 

They have reshaped digital governance by ensuring that intermediaries can't be wilfully blind to violations occurring on their platforms.

1. Intermediary liability is no longer binary

   

A multi-tiered or contextual liability approach should be adopted rather than a binary one. This shifts the liability to intermediaries, in accordance with their control, conduct and participation at different levels. 

2. Safe harbour under section 79 Informational Technology,2000 Act is conditional

Safe harbour provisions are used as a shield to protect intermediaries, however cannot be used as a shield by intermediaries who go beyond their role as a mere intermediary to a major participant in the transaction.

3. Consumer protection law bridges the grey space in contract law

Contract law, remains silent and often couldn’t answer such complexities to determine liability in the grey area, however, interpretations of tort law, substantiated in the Consumer Protection Act, 2019, holds marketplaces, sellers to be liable in its product liability provisions and hence, bridges the existing gap.

4. Comparative jurisdictions recognize functional liability

Through a set of case laws in Indian and Foreign jurisprudence, precedents laid emphasis on intermediary liability, as discussed before. As a result, this synthesises judicial and policy models which fulfil the gap by a Model of duty, summed up with control and conduct. In furtherance, such provisions can be legalised and substantiated into contract laws reinforcing intermediaries’ liability.

Illustration- How comparative insights reinforce intermediaries’ liability?

5. Judicial inconsistency creates doctrinal uncertainty

Illustration - Doctrinal Conflict Map, Section 79 Safe Harbour vs. Consumer Law Obligations- how regulatory friction creates new standards for e-commerce platforms.

The contextual analysis of precedent and judicial interpretations demonstrates that platform control and consumer harm are meaningful indicators of proportional liabilities of intermediaries and platforms in the digital arena. Finally, proposes a graduated liability model based on-

1. Level of Involvement of Platforms, ranging from passive to active.

2. Degree of consumer interaction, reliance and relations.

3. Foreseeability, knowledge of harm and further, due diligence and duty of care exercised.

4. Ability and actions taken to prevent or mitigate risks.

The article offers a conditional or contextual approach towards intermediary liability that can be summarized as follows-

With great power comes greater responsibility. Hence, as a conclusion, as digital platforms gain more control, at the same time, it enhances their responsibilities, and in case of breach of their duties, they can be held liable. Safe harbour and related immunities should be earned by accountable conduct, not merely by the status. Finally, liability is calculated, or inferred by control, conduct and consequences in the dynamic functioning of E- commerce platforms and participants. 

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4. Ind. Information Technology Act, No. 21 of 2000, § 79(2)(a) (2000).

5. Ind. Consumer Protection Act, No. 35 of 2019, §§ 2(1)(f), 2(1)(l), 2(1)(r), 2(1)(t), 68–74 (2019).

6.  Ind. Information Technology Act, No. 21 of 2000, §§ 4, 5, 10 (2000).

7. Ind. Contract Act, No. 9 of 1872, §§ 10, 11, 12 (1872).

8. Amazon Seller Services Pvt. Ltd. V. Amway India Enterprises Pvt. Ltd., CS(OS) 146/2019 (Delhi High Ct. 2019).

9. Oberdorf v. Amazon.com, Inc., 930 F.3d 136 (3d Cir. 2019) (U.S. Third Circuit).

10. Flipkart Online Services Pvt. Ltd. V. State of U.P., 2022 SCC online All 1122.

11. State of NCT of Delhi v. Uber India Systems Pvt. Ltd., 2017 SCC online Del 5010 (Delhi High Ct. 2017).

12. Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021.

13. Google India Pvt. Ltd. V. Visaka Industries Ltd., (2020) 4 S.C.C. 162 (India).

14. Kent RO Systems Ltd. V. Amit Kotak, 2017 SCC online Del 7222 (Del. H.C).

15. Christian Louboutin SAS v. Nakul Bajaj & Ors., 2018 SCC online Del 12215.

16. Intermediaries and Their Liabilities: Analysis of Christian Louboutin v. Nakul Bajaj, Khurana & Khurana (June 23, 2023), https://www.khuranaandkhurana.com/2023/06/23/intermediaries-and-their-liabilities-analysis-of-christian-louboutin-vs-nakul-bajaj/

17.  Siddharth Varshney, Can E-Commerce Intermediaries Be Held Liable for Sale of Counterfeit Goods on Their Platforms?, ALG India Law Offices LLP (July 14, 2020), https://www.algindia.com/can-e-commerce-intermediaries-be-held-liable-for-sale-of-counterfeit-goods-on-their-platforms/.algindia.com

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