Supreme Court advocate says draft ecommerce rules require massive course correction

The draft ecommerce rules released by the government on June 21, proposed to ban fraudulent flash sale and mis-selling of goods and services on ecommerce platforms.
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The government needs to hold wider consultation before framing ecommerce rules as in the present format, it is encroaching in the domain of various other legal frameworks and establishments, a senior legal expert said on Friday.

The draft ecommerce rules released by the government on June 21, proposed to ban the fraudulent flash sale and mis-selling of goods and services on ecommerce platforms.

It also mandates that the appointment of a chief compliance officer/grievance redressal officer, among other key amendments proposed to the Consumer Protection (E-Commerce) Rules, 2020.

Gopal Jain, Senior Advocate, Supreme Court of India, told reporters,

"The proposed amendments go beyond the ambit and scope of the Consumer Protection Act and indirectly regulate ecommerce entities by imposing additional obligations. If implemented, this can have an obstructive impact on the economic development of the country with respect to job opportunities, scope for the growth of MSMEs, global investments, and consumer experience."

He said that the proposed norms are an indirect attempt to regulate the online space by clubbing multiple issues relating to the act which aims to assess and investigate the adverse impact on consumers.

"There is a need for wider consultation before the government frames ecommerce rules," Jain said.

Jain believes holding ecommerce companies responsible for goods sold by other sellers and proposed restrictions on sale of goods by related parties on the platform will hurt the business of MSMEs.

"The rules impose fall-back liability strikes at the root of the ecommerce marketplace making them liable for fraud committed by a seller when the platforms are merely responsible for transmitting information provided by the seller," the advocate stated.

He further said that the draft rules are contrary to principles of proportionality, which requires a balanced and graded approach.

Prior to this, the Confederation of All India Traders (CAIT) had in a note to Prime Minister Narendra Modi said, "In the wake of expected pressure tactics of foreign-funded ecommerce companies against the draft of ecommerce rules... (we urged) him to ensure that no dilution is made in draft of ecommerce rules under any pressure."

(Disclaimer: Additional background information has been added to this PTI copy)

Edited by Kanishk Singh