TMI Blog2020 (1) TMI 1631X X X X Extracts X X X X X X X X Extracts X X X X ..... en to the Appellants/Defendants to challenge the Direct Selling Rules under the CPA, once they are notified, as being violative of Section 30 of the TM Act and Sections 419 and 420 of the Sale of Goods Act, 1930 ('SOGA'), Sections 23 and 27 of the Indian Contract Act, 1872 ('ICA') and the Competition Act, 2002. There is no occasion for the Court in the present case to further examine these issues - The Court sets aside the findings of the learned Single Judge on the first issue that the DSGs are 'law' and that, as such, they are enforceable. Trademark issues - Whether sale of Amway, Oriflame and Modicare products on e-commerce platforms amounted to infringement of trademark, passing off and misrepresentation, etc.? - HELD THAT:- Under Section 19 of the SOGA, upon a contract for sale for a specific property, the property and the goods are transferred to the buyer. The Code of Ethics framed by Amway itself states that once the sale takes place, the title in the products is transferred to the buyer i.e. the ABOs, on its first sale. Once the title passes to the ABO, no condition could be further imposed upon the buyer. Clause 7 (6) of the DSGs imposes one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Defendants could not invoke the principle of exhaustion in terms of Section 30 (3) read with Section 30 (4) of the TM Act, or that the sale of the Plaintiffs' products on e-commerce platforms violates their trademark rights, constitutes misrepresentation and passing off, and results in the dilution and tarnishing of the goodwill and reputation of the Plaintiffs' brand. These findings are outside the purview and scope of pleadings in the suits and unsustainable in law. Are the Appellants intermediaries? - HELD THAT:- The exemption under Section 79 (1) of the IT Act from liability applies when the intermediaries fulfil the criteria laid down in either Section 79 (2) (a) or Section 79 (2) (b), and Section 79 (2) (c) of the IT Act. Where the intermediary merely provides access, it has to comply with Section 79 (2) (a), whereas in instances where it provides services in addition to access, it has to comply with Section 79 (2) (b) of the IT Act. Under Section 79 (2) (c) of the IT Act, the obligation of the intermediary is that, in terms of the Intermediary Guidelines, it publishes its policies for the information and convenience of its users. The enforcement of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ior consent of the DSEs would not deprive the consumer of exercising the choice to buy such products on online platforms, while ensuring free flow of trade. As regards irreparable loss and injury, there was no empirical data placed before the learned Single Judge by the Plaintiffs in support of their contention that they had suffered huge losses. This again was a matter of evidence and not inference - the Court is unable to concur with the learned Single Judge that the three elements for the purposes of grant of interim injunction have been fulfilled in the present case. The impugned judgment of the learned Single Judge is hereby set aside. The applications seeking interim injunction in the suits stand dismissed - Appeal allowed. - FAO (OS) 133/2019, CM Appl. 32954/2019, FAO (OS) 134/2019, CM Appl. 32956/2019, FAO (OS) 135/2019, CM Appl. 32958/2019, FAO (OS) 141/2019, CM Appl. 34228/2019, FAO (OS) 142/2019, CM Appl. 34230/2019, FAO (OS) 157/2019 and CM Appl. 37244/2019 - - - Dated:- 31-1-2020 - Hon'ble Judges Dr. S. Muralidhar and Talwant Singh, JJ. For the Appellant : Saikrishna Rajagopal, Sidharth Chopra, Sneha Jain, Sauni Dutt, Savni Dutt, Devvrat Joshi, Surab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally stated that the suits filed by the Respondents and the corresponding appeals before this Court are not to be considered as arising out of commercial disputes , falling within the purview of the Commercial Courts Act, 2015 ('CCA'). They have accordingly been heard by this Bench, which is otherwise not authorised to hear appeals which are to be heard by the Commercial Appellate Division of this Court in terms of the CCA. Facts in Amazon's appeals 5. Amway is engaged in the manufacture and distribution business of its healthcare, wellness, cosmetic, and home products through a business model called the Direct Selling Business Model ('DSBM'). The products offered for sale by Amway include moisturizers, creams, lipsticks, detergents, surface cleaners, shaving creams, deodorants etc. Amway claims that it has given an undertaking to the Government of India ('GoI') to abide by the DSGs in the conduct of its business. Amway also sells its products on its own online market place, www.amway.in. 6. Amway is a wholly-owned subsidiary of Amway Corporation, now known as Alticor Inc., headquartered at Ada, Michigan, USA. The parent company which was fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey are sold only by Amway Business Owners . 10. According to Amway, its products bear a unique code . This is stated to be located on the upper surface of the cap of the product packaging which allows Amway to track the distributor channel, selling the said product to an end customer . The imprinting of these unique codes is stated to ensure prevention of the circulation and sale of any counterfeit Amway products through unauthorized trade channels. According to Amway, the trust of its Direct Sellers and their customers receives the highest attention and it has a Customer Product Refund Policy , covering all Amway Products, which allows a customer who is not completely satisfied, to return the product within 30 days of the purchase of invoice/delivery. This refund policy is applicable to products in saleable condition, and partially used products (30%) accompanied with an invoice . According to Amway, it has a nationwide presence with 130 sales offices, 4 regional warehouses, 3 regional hubs and 34 city warehouses catering to over 8900 pin codes across the country. It is the founder member of the Indian Direct Sellers Association ('IDSA') which is stated to be an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at such a sale on Amazon's online platform was unauthorised, since it was without the leave, permission or licence of Amway, which has till date not authorised anyone to sell or advertise its products on Amazon's Online Platform. It was averred in the plaint that this was in direct violation of the Clause 7 (6) of the DSGs, which states: Any person who sells or offers for sale, including on an e-commerce platform/marketplace, any product or service of a Direct Selling Entity must have prior written consent from the respective Direct Selling Entity in order to undertake or solicit such sale or offer. 15. It was further averred in the plaint that Amway's products were being sold by the Defendants at much cheaper prices than the market price and that this cast serious doubts on the authenticity of Amway's products sold by the Defendants. It was claimed that Amway has been facing huge financial losses on account of the illegal activities of the Defendants. 16. On 22nd September, 2017, Amway sent a cease and desist notice to Amazon, asking it to remove reference to any statement/advertising/display of 'Amway products' from its website. 17. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is averred that on 21st September, 2018 Amway's representative purchased the Amway products from Amazon's website. 21. Further, a reference was made to the fact that by an order dated 1st June, 2018 in CS (OS) 297/2018 filed by Amway against some identified and unidentified medical shops/pharmacist in Bhagirath Palace, Delhi , this Court had granted an ad interim injunction and John Doe order against all the Defendants in the said suit. The Court also appointed four Local Commissioners ('LCs') and during raids it was found that Amway products worth lakhs of rupees with or without unique codes had been seized in the shops of such Defendants. Reference is also made to two other Civil Suits being CS (OS) 410/2018 and 453/2018 filed by Amway against two online aggregators/market places, in which an interim injunction restraining those online market places from selling Amway's products, without its prior authorisation, was passed. The LCs appointed in those suits were also asked to make an inventory of the Amway products being sold, to seal them and return them on superdari. 22. The prayers in CS (OS) 480/2018, inter-alia were for a decree of permanent injunc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and confirm the same to Amway through the counsel. It was stated that the question as to whether the e-commerce platform is liable in such situations and whether the doctrine of exhaustion would apply, would be gone into on the next date of hearing . 26. By the same order, the learned Single Judge disposed of IA No. 13160/2018 by appointing four LCs to visit the premises of Defendant Nos. 1 to 3 and directing them to make an inventory and take into custody all impugned products, including packaging, labels, stationery, hoardings and other materials bearing the mark AMWAY . The LCs were authorised to seal the impugned products and return them on superdari after obtaining undertakings of the respective Defendants. 27. The four LCs so appointed, submitted their respective reports to the Court on 6th, 12th, 15th and 16th October, 2018 respectively. Amazon filed an additional affidavit dated 31st May, 2019. The applications were heard along with similar applications in the other connected suits. 28. The interim injunction applications in the suits were heard on 13 dates between 10th January, 2019 and 30th May, 2019 on which date judgment was reserved. The impugned judgment w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Intermediary Guidelines. It too raises questions regarding the legal binding effect of the DSGs. 34. The 6th Appeal is by Snapdeal. It arises out of CS (OS) 453/2018 filed by Amway against nine Defendants with the ninth Defendant being Jasper Infotech Private Limited ('Jasper Infotech') which runs the e-commerce website www.snapdeal.com . It may be noticed here that the name of Jasper Infotech has been changed to Snapdeal on 20th March, 2019. Defendant Nos. 1 to 8 in the suit were sellers on the online platform of Defendant No. 9. Snapdeal too claims that its operations on its online market place was limited to facilitating the buying and selling of various goods and services between independent sellers and independent buyers. In other words, it was acting merely as an intermediary and did not directly engage in the sale or purchase of the products. 35. As far as Snapdeal is concerned, the refrain in its appeal is that in the impugned judgment, the learned Single Judge has completely omitted to refer to the contentions of Snapdeal and has made observations vis-a-vis all the Defendants before it, without referring to the particular facts of the suit involving Snapd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors/direct sellers? v) What is the relief to be granted? 39. The conclusion of the learned Single Judge in the impugned judgment vis-a-vis the above issues can be summarised thus: (i) the Direct Selling Guidelines have been framed in terms of the legal procedure, and are binding in law. They have been issued and notified in terms of the Article 77 of the Constitution of India and it is the only document that regulates the business of Direct Selling; (ii) the present Appellant/Defendants were found guilty of infringing the trademarks of the present Respondents/Plaintiffs, of dilution/tarnishment, passing off, and misrepresentation; (iii) the Defendants were not merely passive players but in fact, massive facilitators inasmuch as they were providing warehousing, logistical support, packaging and delivery services; the bare minimum that the Defendants are required to do to avail the exemption under Section 79 (2) (c) of the IT Act, would be to observe due diligence required under Section 79 (2) (c); (iv) the continued sale of the products of the Plaintiffs on the e-commerce platforms without their consent, results in inducement of breach of contract, and tortious ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffs' trademark rights, the learned Single Judge opened the discussion by observing in para 175 of the impugned judgment that the Plaintiffs in each of the suits i.e. Amway, Modicare and Oriflame are the owners of their respective trademarks. The Defendants were found guilty of infringing the above trademarks and diluting it and passing off as their own misrepresenting their association with Amway, Oriflame and Modicare. It was concluded that the principles of exhaustion in terms of Section 30 of the Trade Marks Act, 1999 ('TM Act') did not exempt the Defendants from liability thereunder and the manner of sale on the e-commerce platforms also constituted passing off, misrepresentation and dilution/tarnishment of the products and business of the Plaintiffs. 44. It was held by learned Single Judge that the condition imposed by the Plaintiffs on the buyers of their products restricting post-sale alienation on an online market place without their consent, was an enforceable condition and that the Defendants should be restrained in terms thereof from offering any of their products including genuine and untampered ones on their online market places. It was held that the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mart 756 F. Supp. 280 (W.D. La. 1991), Matrix Essentials v. Emporium Drug Mart 988 F. 2d 587 (5th Cir., 1993), Sebastian Intern v. Long Drug Stores 53 F. 3d 1073 (9th Cir., 1995) and the decision of the Canadian Supreme Court in Consumers Distributing Company Limited v. Seiko Time Canada Limited (1984) 1 S.C.R. 583. 49. The learned Single Judge also relied on the decision dated 3rd July, 2019 of the US Court of Appeals in Case No. 18-1041 (Heather R. Oberdorf v. Amazon.com Inc), the decision of the European Court of Justice decided on 23rd April, 2009 in C-59/08 (Copad SA v. Christian Dior Couture SA), the decision dated 18th December, 2018 of the Court in Milan in G.R. No. 44211/2018 (Landoll S.R.L. v. MECS S.R.L.) and the decision dated 19th November, 2018 in G.R. No. 38739/2018 (L'Oreal Italia SPA v. IDS International Drugstore Italia SPA). 50. The learned Single Judge held that changes in warranty, refund/return policies, changes in packaging, removal of codes of the products, and any other conduct that causes damage to the reputation of the mark and is likely to undermine the quality of the mark, would constitute 'impairment' inasmuch as the online platf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation and dilution/tarnishment of the Plaintiffs' marks, products and businesses. 53. Turning to Issue (iii), the learned Single Judge concluded that the e-commerce platforms were not merely passive players but in fact are massive facilitators inasmuch as they were providing warehousing, logistical support, packaging, delivery services, payment services, collection gateways etc. Reference was made to the FDI Press Note No. 2 of 2018 issued by the GoI in respect of FDI in e-commerce, and its para 5.2.15.2.2 which defines e-commerce. 54. Reference was also made by learned Single Judge to the decisions in Christian Louboutin SAS v. Nakul Bajaj 2018 (76) PTC 508 (Del) and judgment of the Supreme Court of India in Shreya Singhal v. Union of Indi a (2015) 5 SCC 1, while distinguishing the decision of the Division Bench in My Space Inc. v. Super Cassettes India Limited (2017) 236 DLT 478 (DB), the decision of the learned Single Judge of this Court in Kent RO Systems Limited v. Amit Kotak 2017 (69) PTC 551 (Del) and the decision dated 1st May, 2017 of the Division Bench in FAO (OS) (COMM.) 95/2017 ( Kent RO Systems Private Limited v. eBay India Private Limited ). 55 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of breach of contract, and tortious interference with contractual relationships of the Plaintiffs with their distributors. 58. In arriving at the above conclusions, the learned Single Judge referred extensively to an Article by John Danforth titled Tortious Interference with Contract: A Reassertion of Society's Interest in Commercial Stability and Contractual Integrity Columbia Law Rev. Vol. 81 No. 7, 1491 and the Commentary titled Salmond Heuston on the Law of Torts , R.F. V. Heuston and R.A. Buckley, 20th Edition Universal Book Traders at page 358, as well as the decisions in Aasia Industrial Technologies Limited v. Ambience Space Sellers Limited (1998) 18 PTC 316 (DB) and the judgment of the learned Single Judge of the Calcutta High Court in Balailal Mukherjee and Company Private Limited v. Sea Traders Private Limited (1990) SCC Online Cal 55. 59. In the concluding portion of the impugned judgment under the title Conclusions and Relief, it was concluded that the Plaintiffs had established a prima facie case, that the balance of convenience is in their favour and that irreparable injury would be caused to the Plaintiffs, their businesses and all those wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... some of the platforms. The source of the products listed on the platforms are suspect. The listings are also misleading as they use the Plaintiffs' product images, marks, logos, names, etc. giving an impression that the products are sold by the Plaintiffs themselves. The consumer is not being told that the seller is not authorised by the Plaintiffs, to sell the said products. A consumer would, literally, require investigative capabilities to trace the actual seller. 63. On whether the DSGs are considered binding law, and on how the Plaintiffs' right to carry on business was being affected by the actions of the Defendants, it was further reiterated by the learned Single Judge that: 324. The Direct Selling Guidelines are law. While the Defendants' platforms and sellers insist on their Article 19(1)(g) rights being jeopardised, what is lost sight of is the fact that the Plaintiffs' right to carry on business is being affected. It is being jeopardized in view of the large-scale violations on the e-commerce platforms. Further, the rights of genuine consumers are being affected, as is evident from the various comments, which consumers have put up on these platf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observations 67.1. The Court would like to preface the discussion on the issues with brief observations on the nature of the suits themselves. From the plaints and the suits filed, four to be precise, it is plain that none of them was filed as a commercial suit, since none of them was framed as a suit either for passing off or for infringement in terms of the TM Act. 67.2. The second factor to be kept in mind is that in none of the suits was there any prayer for a declaration that the DSGs are law that bind the Defendants and that, as such, they are enforceable. Thirdly, there was again no prayer for a declaration that Amazon and Snapdeal were not intermediaries within the meaning of Section 79 of the IT Act. These factors attain significance in light of the fact that the learned Single Judge has returned specific findings, which clearly run contrary to the structure and frame of the suits themselves. 67.3. Another aspect that bears noting is that the impugned judgment runs into 225 pages and returns extensive findings, without expressing any caveat that such findings may be prima facie or tentative findings, limited for the purpose of granting interim relief. The said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Union of India to address it on this aspect, in a civil suit, is indeed a deviation from the CPC itself, which would strictly govern the adjudication of civil suits filed on the original side of this Court. That this Court has original jurisdiction does not mean under that jurisdiction the Court will assume to itself the powers of a Writ Court. The flexibility of procedure that may be available to the Court while dealing with a writ petition under Article 226 of the Constitution, is not, and ought to not be adopted while dealing with civil suits filed on the original side, which would be strictly governed by the provisions of the CPC read with the corresponding provisions of the Delhi High Court Act and the Original Side Rules of the Delhi High Court. 67.8. In such circumstances, the question of what value the ASG's submission would have in determining the preliminary issue of the nature of the DSGs is a question that ought to have been addressed, but was not, by the learned Single Judge. The view expressed by the ASG before the learned Single Judge on the nature of the DSGs, can, at best, said to be 'advisory' and not 'evidence'. 68. With these preliminar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w be maintainable? 73. At this stage, it is important to examine the DSGs. A perusal of the notification dated 26th October, 2016 issued by the Department of Consumer Affairs reveals that an Inter-Ministerial Committee ('IMC') was constituted by the Government of India with representatives of the Ministry of Finance, Department of Industrial Policy and Promotion, the Department of Legal Affairs, the Department of Information and Technology and the Ministry of Corporate Affairs. Besides these five ministries and departments, the representatives of the Government of NCT of Delhi, the States of Andhra Pradesh and Kerala were also part of the said IMC. They were to look into the matters concerning the direct selling industries . This IMC is stated to have held consultations with stakeholders before formulating the model guidelines for the States and the Union Territories for protecting the legitimate rights and interests of industry and consumers . What was envisaged was that the State Governments will set up a mechanism to monitor/supervise the activities of direct sellers, DSEs regarding compliance for guidelines for direct sellers . In other words, even in terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re invited to offer their views and suggestions on the draft Rules till 2nd December, 2019. A comparison of the text of draft Consumer Protection (Direct Selling) Rules, 2019 with the DSGs shows that the former almost entirely replicates the latter. Rule 8 (6) of the draft Rules, for instance, is a verbatim reproduction of Clause 7 (6) of the DSGs. Interestingly, even the definition of the Act under Rule 2 (1) (a) is identical to Clause 1 (1) of the Model Direct Selling Guidelines, 2016 and is defined to mean CPA , with only the year being different; in the DSGs it is CPA, 1986, whereas in the draft Rules it is CPA, 2019. 79. Clearly, therefore, what was being invoked was the mechanism of formulating Rules under an existing statute that governs the subject, viz., the CPA. There was no occasion, therefore, to treat these draft DSGs, traceable as they were to the CPA, as executive instructions . The learned Single Judge appears to have missed this significant aspect of the matter. A large portion of the impugned judgment has been devoted to discussing the case law around executive instructions which filled up the lacuna of the statutory law on the topic, when there was no oc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e DSGs. In fact, they are seeking to enforce guidelines against third parties and not against those who might be bound by the DSGs, as and when it becomes law. Merely because the DSGs are notified in the Gazette, they do not attain the status of law within the meaning of Article 13 of the Constitution. The source of the power to frame such guidelines is traceable only to the CPA. With the CPA, 2019 itself not having been notified, these draft guidelines could not have attained the character of binding Rules under the CPA, 2019, or for that matter, even under the CPA, 1986. When clearly even the draft guidelines mentioned the Act to be the CPA, there was no occasion for the learned Single Judge to accept the plea that they could be sourced to Articles 73 or 77 of the Constitution of India. Therefore, there was no occasion to apply the decision in Ram Jawaya Kapoor (supra). 85. The fact that the DSGs may not have been challenged in a Court of law is neither here nor there. If they were not law in the first place, there was no occasion for the Defendants/Appellants to challenge it. They would be right in proceeding on the basis that as they were not law in the first place and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the petition in Rai Sahib Ram Jawaya's case that without legislative authority the Government of the State could not enter the business of printing, publishing and selling text-books. The Court held that by the action of the Government no rights of the petitioners were infringed, since a mere chance or prospect of having particular customers cannot be said to a be right to property or to any interest or undertaking. It is clear that the State of Punjab had done no act which infringed a right of any citizen: the State had merely. entered upon a trading venture. By entering into competition with the citizens, it did not infringe their rights. Viewed in the light of these facts the observations relied upon do not support the contention that the State or its officers may in exercise of executive authority infringe the rights of the citizens merely because the Legislature of the State has the power to legislate in regard to the subject on which the executive order is. issued. 86.2. Accordingly, in State of Madhya Pradesh v. Thakur Bharat Singh (supra), it was held that the order issued by the State Government of Madhya Pradesh under Section 3 (1) (b) of the Madhya Pradesh Pub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... servants how to act in certain circumstances; but that will not make such instructions statutory rules which-are justiciable in certain circumstances. In order that such executive instructions have the force of statutory rules it must be shown that they have been issued either under the authority conferred on the State Government by some statute or under some provision of the Constitution providing therefore. It is not in dispute that there is no statute which confers any authority on the State Government to issue rules in matters with which the Code is concerned; nor has any provision of the Constitution been pointed' out to us under which these instructions can be issued as statutory rules except Art. 162. But as we have already indicated, Art. 162 does not confer any authority on the State Government to issue statutory rules. It only provides, for the extent and scope of the executive power of the State Government, and that coincides with the legislative, power of the State legislature. Thus under Art. 162, the State Government can take executive action in all matters in which the legislature of the State can pass laws. But Art. 162 itself does not confer any rule making pow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was violation or non-compliance with the aforesaid guidelines by the Appellant, relief to the Appellant could not be denied by relying upon the guidelines. To do so would amount to reading the guidelines into the statute, which is impermissible? The only 'remedy' of any person complaining of noncompliance with such guidelines, is to bring such violation, to the notice of a higher authority. We therefore hold that the enforcement of any right or exercise of any power by the Appellant, under the Public Premises Act cannot be set at naught by relying upon or referring to the guidelines issued by the Central Government. 91. Since this Court is of the view that the learned Single Judge was in error in overlooking the aforementioned legal position, and in holding the DSGs to be law, the Court does not consider it necessary to examine the further question whether the DSGs are violative of any fundamental right under Article 19 (1) (g) of the Constitution and whether the restriction placed on the said right by them are beyond the purview of Article 19 (6) of the Constitution. 92. The Court, therefore, leaves it open to the Appellants/Defendants to challenge the Direct Sel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts is that once the goods have been lawfully acquired by a person by sale of the goods in the market, the further sale of such goods in the market by that person would not amount to infringement of the proprietor's trademark. The contention is that Section 30 of the TM Act limits the monopoly rights of the trademark owner and confers a benefit on traders to trade lawfully and acquire goods. Conscious of this position, according to the Appellants/Defendants, the Plaintiffs did not argue that the Appellants were infringing any registered trademark. 98. As already noticed, the action brought by the Respondents/Plaintiffs in the shape of the suits in question, was not one of trademark infringement or passing off. 99. Under Section 19 of the SOGA, upon a contract for sale for a specific property, the property and the goods are transferred to the buyer. The Code of Ethics framed by Amway itself states that once the sale takes place, the title in the products is transferred to the buyer i.e. the ABOs, on its first sale. Once the title passes to the ABO, no condition could be further imposed upon the buyer. Clause 7 (6) of the DSGs imposes one such condition on the buyer that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f SECL. They were part of the Samsung group of companies, which had 14 listed companies and 285 worldwide operations. They were in the business of manufacturing and trading electronic goods, including colour televisions, home appliances, washing machines, air conditioners, computers, printers and cartridges, etc. The business was done under the brand/corporate name, using the trademark 'Samsung'. 102.2. In India, SECL had licensed the use of its trademark 'Samsung' to SIEPL under a Trademark Agreement dated 8th July, 2003, which had been filed with the Trademark Registry for registration. The grievance of both SECL and SIEPL was that Kapil Wadhwa and others i.e. the Appellants in that case, were purchasing from the foreign market printers manufactured and sold by SECL under the trademark 'Samsung', and after importing them into India and selling the products in the Indian market under the same trademark, thereby infringing the registered trademark of the Respondents in India. It was alleged that the Appellants were operating their website by meta-tagging the same to the website of SECL and SIEPL. 102.3. The Respondents alleged that injury was being cau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluded as under: 42. There is a patent fallacy in paragraph 68(c). There is no law which stipulates that goods sold under a trade mark can be lawfully acquired only in the country where the trade mark is registered. In fact, the legal position is to the contrary. Lawful acquisition of goods would mean the lawful acquisition thereof as per the laws of that country pertaining to sale and purchase of goods. Trade Mark Law is not to regulate the sale and purchase of goods. It is to control the use of registered trademarks. Say for example, there is food scarcity in a country and the sale of wheat is banned except through a canalizing agency. Lawful acquisition of wheat in that country can only be through the canalizing agency. The learned Single Judge has himself recognized that the law of trademarks recognizes the principle of international exhaustion of rights to control further trade of the goods put on the market under the trade mark. The task of the learned Single Judge thus was to resolve the impasse in the Indian Law, and thus the presumption/assumption in paragraph 68(c) could not be the point to resolve the textual context in which the learned Single Judge has discussed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. v. Granada Electronics Inc. 69. Now, as we see it, this can only happen in case where goods have to be imported from a country of manufacture or a country where they are put on the market thereof, and then imported into India. Only then would there be a difference in the language of the literature provided with the product; difference in services and warranties in the country from where the goods are imported by the seller and the country of import i.e. the manufacturer's warranties not being available in the country of import; difference in quality control, pricing and presentation as also differences in advertising and promotional efforts. 70. This is also an indication of India adopting the Principle of International Exhaustion of Rights in the field of the Trade Mark Law. 71. We accordingly conclude that 'the market' contemplated by Section 30(3) of the Trade Marks Act 1999 is the international market i.e. that the legislation in India adopts the Principle of International Exhaustion of Rights. 102.11. Finally, the Division Bench examined whether SECL and SIEPL were entitled to oppose further dealings by the importer of the printers to India u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il Wadhwa v Samsung Electronics (supra) by holding that the principle of exhaustion cannot be invoked by the Appellants/Defendants. Reports of the LC 103. At this stage, it is necessary to notice that the learned Single Judge has based the conclusions about the tampering of goods of the Plaintiffs essentially on the four reports of the LCs. The first LC report dated 6th October, 2018 has been submitted by Mr. Aditya Vaibhav Singh, who visited the premises of Cloudtail. All that the report indicates is that the LC was informed that the Amway goods supplied to Cloudtail were bought from one Mr. Vinit, who operated from Bhaghirath Place. The representative on the site informed the LC that he did not have any bills for the said transaction and the purchases had been made in cash. He further stated that he could not satisfy the complete purchase order (with respect to Amway) and only supplied the goods which he could purchase at that point of time. Thus, this report is entirely unhelpful to support the conclusions drawn by the learned Single Judge about large-scale tampering of goods. 104. The second report is dated 12th October, 2018 and has been submitted by Mr. Arun Wigh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h tampering take place in his presence by Amazon, the question could only be settled by examining evidence. 108. In fact, in the written submissions on behalf of Amway, it is conceded that these constitute matters awaiting trial. If that is the position, then it was not open to the learned Single Judge to conclude, and that too at the interlocutory stage, that there was tampering of the products by Amazon. The second LC's report, therefore, does not come to the Plaintiffs' aid in order to assert that Amway products were being tampered with on Amazon's premises. Amazon states that it receives goods in a packed condition and then repacks them in Amazon's own packing, for further security and safety, to make the packages tamper proof. This again is a matter for evidence. 109. Turning now to the third LC's report dated 15th October, 2018, Ms. Richa Bhargava visited the premises of Black Olive (Defendant No. 2 in CS (OS) 480/2018). The LC concluded that the premises were under the control of Amazon on the basis that boards and hoardings of Amazon were found there. The LC found various products bearing the mark 'Amway' getting packed to be dispatched to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... engage in the inflation of the maximum retail price ('MRP') of their products to offer 'fake discounts' to consumers. Amazon's case is that it has a strict policy of removing listings without further questions if a complaint is received claiming that the MRP of a particular product has been 'inflated'. In any event, according to Amazon, the MRP displayed on the listings are entirely user generated and it does not determine or influence the MRP whatsoever. 114. The learned Single Judge also did not inquire about the discounts passed on by Amway to its distributors, which are then passed on to the consumers, resulting in the sale of Amway products at high discounts in any case. In a similar vein, the conclusion that the consumers have to embark on a Sherlockian venture to trace the sellers of these products or that the sellers on Amazon's marketplace are not identifiable has not taken into account the sellers' details visible along with product listings on Amazon's marketplace, which were disclosed in Amazon's additional affidavits dated 24th April, 2019. 115. Not only Amazon, but also Cloudtail and Snapdeal submit that details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n cases: (1) Notwithstanding anything contained in any law for the time being in force but subject to the provisions of sub-sections (2) and (3), an intermediary shall not be liable for any third-party information, data, or communication link made available or hosted by him. (2) The provisions of sub-section (1) shall apply if-- (a) the function of the intermediary is limited to providing access to a communication system over which information made available by third parties is transmitted or temporarily stored or hosted; or (b) the intermediary does not-- (i) initiate the transmission, (ii) select the receiver of the transmission, and (iii) select or modify the information contained in the transmission; (c) the intermediary observes due diligence while discharging his duties under this Act and also observes such other guidelines as the Central Government may prescribe in this behalf. (3) The provisions of sub-section (1) shall not apply if-- (a) the intermediary has conspired or abetted or aided or induced, whether by threats or promise or otherwise in the commission of the unlawful act; (b) upon receiving actual knowledge, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icated on the site, as long as this entire transaction is not controlled by Amazon and the choices, of which the transaction consists, are made solely by the customer, such as, say, the decision to purchase three copies of the book, and these choices are not altered by Amazon, the requirements of Section 79 (2) (b) of the IT Act would stand fulfilled. 122. Given the disputed questions of fact that emerge from the pleadings in the suit, it is obvious that the issue of whether an entity is an intermediary or not can be decided only after a trial. In this context, it should be noted that the reasoning of the learned Single Judge in Christian Louboutin SAS v. Nakul Bajaj (supra) was disapproved of by a Division Bench of this Court in its judgment dated 4th April, 2019 in RFA (OS) (COMM.) 1/2019 ( M/s. Clues Network Pvt. Ltd. v. M/s. L'Oreal), wherein the Court set aside an order of the learned Single Judge, which relied, inter alia, on Christian Louboutin SAS v. Nakul Bajaj (supra). Indeed, the learned Single Judge appears to have erred in distinguishing the decision in Myspace Inc. v. Super Cassettes Industries Ltd. (supra), where the Division Bench held that Section 79 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded services provided by them as online market places, as listed out by the learned Single Judge, do not dilute the safe harbour granted to them under Section 79 of the IT Act. Section 2 (1) (w) of the IT Act does envisage that such intermediaries could provide value-added services to third party sellers. This interpretation is sought to be buttressed by Press Note No. 2 issued by the Ministry of Commerce and Industry. In particular, reference is made to para 5.2.15.2.4 (vi), which reads as under: In marketplace model goods/services made available for sale electronically on website should clearly provide name, address and other contact details of the seller, post sales, delivery of goods to the customers and customer satisfaction will be responsibility of the seller. 126. There was no occasion for the learned Single Judge to have, at the stage of considering applications for interim injunction, returned a conclusive finding that Amazon is a massive facilitator and plays an active role in the sales process. These are too sweeping and definitive a set of findings which have to be properly rendered at the conclusion of the trial. Here again there is prima facie merit in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turns now to the last issue, viz., whether the platforms are guilty of tortious interference with a contractual relationship. This incidentally is the central plank of Modicare's case. 131. In the first place, the tort of inducement to breach of contract necessitates that there be a contract in the first place between the online platforms and the DSEs. The mere fact that the online platforms may have knowledge of the Code of Ethics of the DSEs, and the contractual stipulation imposed by such DSEs on their distributors, is insufficient to lay a claim of tortious interference. It was incumbent on the part of the Plaintiffs to demonstrate active efforts on the part of or contracts entered into by the Appellants/Defendants to make a viable case for tort of inducement to breach of contract. 132. The Appellants state that the placing of the products on the Appellant's online platforms is entirely voluntary. It is not induced by these platforms. The services of warehousing, transportation, packing, and so on are provided by these online platforms, not just to the products of the DSEs, but to all products offered for sale on their platforms. They accordingly contend that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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