CAIT demands clarification on Section 79 of IT Act

Small traders body has demanded clarification from the government on Section 79 of of the Act and rules which gives protection from any legal action to those who act as pure information intermediaries in either selling goods or providing services through any electronic mode.

Confederation of All India Traders (CAIT) has alleged internet firms such as Amazon, Flipkart, Uber, Ola, Zomato, Swiggy, Pharmeasy and others of taking recourse to Section 79 of the IT Act.

The said Act, passed in 2000, says that intermediaries will not be in the radar of legal action for any third party information, data, or communication link made available or hosted by them.

The section further says that the available protection shall be applicable only if the said intermediary does not, in any way, initiate the transmission of the message in question, select the receiver of the transmitted message, and does not modify information contained in the transmission. This means that if a social media platform becomes just a bridge to carry a message from one person to another without any kind of interference, then it will not be liable for any legal action.

CAIT Secretary General Praveen Khandelwal said that platforms like Amazon, Flipkart, Uber and Ola act as “trading intermediary” instead of data intermediary as envisaged under the IT Act. While pure e-commerce marketplace platform entities, which are not engaged in controlling inventory/sellers or delivery/warehousing or controlling billing and payments may qualify as “trading intermediaries”, however, such acts are not covered under the IT act. CAIT said that companies like Amazon, Flipkart, Ola and Uber, in its business practices, do control sellers and their inventory, charges platform fee based on the products/sellers – thereby fully knowing what is being sold, provide warehousing and delivery services, advertisement and marketing services, discounts/cashback, and also provide payment and billing services.

“In such a scenario, CAIT is unable to understand how an entity that does not qualify even as “trade intermediary” is claiming to be an intermediary under the IT act which it does not qualify technically as it store(s) the data for a long time, it is always in the knowledge of the data, it uses that data for billing, promotions, marketing , advertisement and launching their private label products. Therefore, steps must be taken to clarify section 79,” Khandelwal said.

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