Jurisdictional Dispute in E-Commerce Transactions

By Sachika Vij

Published on: December 06, 2021 at 11:40 IST

Introduction

Before the advent of the horrendous and devastating Covid-19 Pandemic and even after some considerable time with the so called ‘Internet revolution’, Electronic commerce (E-Commerce) continued to stay unknown to a lot of public but now it can be seen as a young, developing, and rapidly changing sector of company management and information technology. E-Commerce, in layman’s words, is the complete process of marketing, selling, delivering items, and providing customer service through the Internet. It has transformed the way businesses operate. Consumers may buy practically anything online at any time of day or night. Business can be done wholly online or in conjunction with actual offices or stores.

India is undergoing a digital revolution, with the internet becoming ingrained in the populace and internet access available on mobile phones. The services provided do not stop at offering an online platform; they also include an effective delivery system, payment facilitation, and supply chain and service management. As a result, the business is not as straightforward as it appears, and it also contains several legal difficulties.

Which law applies and which court has jurisdiction to hear the case are the two legal problems at the heart of every disagreement. The main aim of this article is to understand the jurisdictional aspect of such E-Commerce contracts.

Legal Validity of E-Transaction

All e-contracts in India are governed by the Indian Contract Act, 1872, which includes provisions such as free consent and legitimate consideration. The question to be investigated is how the Indian Contract Act’s provisions for e-contracts would be met. In addition, the Information Technology Act of 2000 (‘IT Act’) ensures that e-contracts are legitimate.

Some of the key conditions of a legal contract, according to the Indian Contract Act, 1872, are:

The contract should be entered with the parties’ free consent;
The contract should have legal consideration;
The parties must be legally capable of contracting,
The contract’s goal must be legal.

The Indian Contract Act makes no obligation for written contracts to be physically signed. Specific statues, on the other hand, have signature requirements. Furthermore, the nature of e-commerce makes it nearly impossible to verify the age of anyone transacting online, posing problems and liabilities for e-commerce platforms because, under Indian law, a minor is not competent to enter into a contract, and any contract entered is not enforceable against the minor.

Recognizing the legitimacy of e-transactions, the Supreme Court in Trimex International FZE Ltd. Dubai Vs Vedanta Aluminum Ltd. decided that e-mail conversations between parties discussing mutual duties form a contract.

When it comes to applying these principles to E-contracts, Section 13 of the Information Technology Act comes in application mentioning, “The communication of an acceptance is complete as against the offeror, when the electronic record is dispatched such that it enters a computer resource outside the control of the originator (acceptor) and as against the acceptor, when the electronic record enters any information system designated by the offeror for the purpose, or, if no system is designated for the purpose, when the electronic record enters the information system of the offeror, or, if any information system has been designated, but the electronic record is sent to some other information system, when the offeror retrieves such electronic record.”

Place of Suing: E-Commerce Transactions

The Indian Penal Code, 1908

The Act provides for the punishment of offences committed outside of India’s four boundaries, but which may be prosecuted in India under Indian law. It specifies that anybody who is liable to be prosecuted under any Indian law for an offence committed outside of India shall be dealt with under the provisions of this Code for any conduct performed outside of India in the same manner as if the act had been committed within India. In India, there does not appear to be any jurisprudence on the issue of jurisdiction in e-commerce proceedings.

The Act also allows for the Code’s application to extraterritorial offences. The provisions of this Code also apply to any offence committed by anybody in any location outside and outside of India that targets a computer resource in India. It also defines the term “offence” as “any conduct undertaken outside India that would be punished under this Code if committed in India.”

However, there have been cases where the courts have acquired jurisdiction over a dispute at the early stages.

Like, the Delhi High Court took jurisdiction in the matter ofSMC Pneumatics (India) Pvt. Ltd. Vs Jogesh Kwatra[i], where a company reputation was slandered through e-mails.

The Code of Civil Procedure, 1908

The site of suing for moveable and immovable property is determined by Sections 15 to 20 of Part I of the Code of Civil Procedure (CPC). If the crime was committed within the local boundaries of one Court’s jurisdiction and the defendant resides, does business, or personally works for profit within the local limits of another Court’s jurisdiction, the plaintiff may file action in any of the stated Courts.

The defendant or each of the defendants, if there are more than one, actually and voluntarily resides or carries on business or personally works for gain, at the time of the suit’s institution; or any of the defendants actually and voluntarily resides or carries on business or personally works for gain, at the time of the suit’s institution, provided that either leave of the court is granted, or the defendants who do not reside, carry on business, or personally work for gain.

Information Technology Act, 2000

The Information Technology Act of 2000, Section 10-A, states that where the communication, acceptance, and revocation of proposals in a contract are expressed in electronic form or by means of electronic records, such contract will not be deemed unenforceable solely on the ground that electronic form or means were used to form the contract.

According to the preamble, the objectives of the Information Technology Act are to provide legal recognition for E-commerce transactions, to facilitate Electronic Governance, and to amend the Indian Penal Code, 1860; the Indian Evidence Act, 1872; the Bankers’ Book Evidence Act, 1891, and the Reserve Bank of India Act, 1934. The Act also creates a regulatory framework for cyber laws and specifies penalty regimes for certain cyber-crimes and offences.

The provisions of this Act make the act applicable to offences or contraventions committed outside India by any person, regardless of nationality, if the act or behaviour constituting the offence or contravention involves an Indian computer, computer system, or computer network.[ii]

The court stated in the case of M/S BASE Educational Services Pvt. Ltd Vs Kayaka Foundation PU College of Science & Commerce and Others[iii] that e-contracts can be entered into by forms of communication such as the internet, e-mail, and fax. The sole condition for an e-contract to be validated is that it complies with the terms of the Indian Contract Act.

The Consumer Protection Act, 2019

The definition of “e-commerce” under the Act of 2019[iv] is “the purchasing and selling of goods and services, including digital items, through digital or electronic networks” [Section 2(16)]. Furthermore, the term “consumer” refers to any person who purchases products, hires or obtains services by electronic means, teleshopping, direct selling, or multi-level marketing [Section 2(7)(b)[v]].

The Act of 2019 superseded the Consumer Protection Act of 1986. The Act of 2019 now expressly addresses e-commerce transactions. It came after the Supreme Court in the case of SpiceJet Vs Ranju Aery upheld a National Commission special leave petition ruling that Spice Jet had appealed. In light of e-commerce transactions, the Consumer Protection Act of 1986 had limited geographical jurisdiction. This is due to the fact that e-commercial consumer transactions cross physical borders. Manufacturers, vendors, service providers, and purchasers may be in separate cities or even other countries.

E-Commerce Transactions and Indian Cases

Indian courts, as well as courts throughout the world, faced difficulty deciding where a person can suit or which courts have the necessary jurisdiction. Because e-commerce is not like a regular commercial transaction, this gets increasingly problematic. In Kiran Singh Vs Chaman Paswan[vi], the court ruled that any judgement made by a court that does not have the legal jurisdiction to hear the case is null and void. A flaw in jurisdiction might be of any kind — geographical, monetary, or even subject-matter in nature[vii]. As a result, if the court lacks legal jurisdiction, it loses all authority to determine a matter. Even if both parties accede to a specific court’s jurisdiction, the law will overturn the court’s power in such a circumstance.

The case of SpiceJet Vs Ranju Aery[viii] was a watershed moment in the question of determining jurisdiction in e-commerce issues. In this case, the complainant had purchased airline tickets online through yatra.com in order to go. The connecting flight was booked through SpiceJet, and all tickets were purchased in Chandigarh by the complainant. After collecting their boarding papers, the complainant and her family members discovered that the connecting flight had been cancelled. SpiceJet made no alternate plans. The complainant and her family members missed the bus back to Chandigarh since they arrived in New Delhi later than scheduled.

SpiceJet claimed that the District Forum in Chandigarh lacked territorial jurisdiction because the company’s headquarters were in Gurugram. The National Commission agreed with the State Commission that part of the cause of action originated in Chandigarh since ordering tickets online constitutes a contract, which the complainant acknowledged over the internet at her house. The National Commission decided that there was no lack of jurisdiction in the orders issued. The same orders were also upheld by the Supreme Court.

Conclusion

The e-commerce industry is still in its infancy, but its development has been remarkable especially after the Covid-19 outburst as the pandemic prompted traditional stores to close, in some cases permanently, business switched to the internet, which boosted the amount of e-commerce agreements entered into and completed. E-commerce platforms can feature not only new transdisciplinary facilities, but also well-functioning information systems with proper data protection and protections for persons.

The agreement’s terms depending on the location of the items must not be general, but rather particular in order to avoid jurisdiction conflicts in the case of a dispute. These must be brought to the customer’s notice and should even offer them enough time to read, review, and eventually approve the terms and conditions. It may imply that the difficulties are still being addressed appropriately, or that e-commerce platforms have a firm plan in place to address such issues with simplicity and speed. The many treaties between the nations and World Trade Organization rulings may serve to smooth the process of meeting the goals of justice; nevertheless, e-commerce is a relatively new sector, and the rules and regulations are behind the curve in dealing with cross-border concerns.

ABOUT THE AUTHOR

This article is written by Sachika Vij , a student, studying at Dr. Ram Manohar Lohiya National Law University, Lucknow. The Author is in her first year and has recently started her law school journey. She owns a keen interest in understanding and penning down her opinions and has a special interest in getting adept at writing and blogging.

Edited by: Aashima Kakkar, Associate Editor, Law Insider

References

[i] SMC Pneumatics (India) Pvt. Ltd. Vs Jogesh Kwatra Original Suit No. 1279 of 2001 New Suit No. 65/14

[ii] Mishra, Sachin, 2020, Determining Jurisdiction over E-Commerce Disputes in India, docs.manupatra.in (Last Visited on December 5, 2021)

[iii] M/S BASE Educational Services Pvt. Ltd Vs Kayaka Foundation PU College of Science & Commerce and Others Com.OS.No.309/2020

[iv] Mitra, Sukanya . “Place Of Suing And Cause Of Action In E-commerce Disputes – IPleaders.” IPleaders, Blog.ipleaders.in, 3 November. 2021

[v] The Consumer Protection Act, 2019 Section 2(7)(b)

[vi] Kiran Singh Vs Chaman Paswan (1955) 1 SCR 117

[vii] Editor, et al. “Place Of Suing And Cause Of Action In E-commerce Disputes | SCC Blog.” SCC Blog, Www.scconline.com, 5 June. 2021,

[viii] SpiceJet Vs Ranju Aery (National Consumer Disputes Redressal February 7, 2017) REVISION PETITION NO. 1396 OF 2016

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