Flipkart & Its Sellers Jointly Liable For Charging Over MRP: District Consumer Forum

A District Consumer Disputes Redressal Commission in Telangana's Nalgonda has held that Flipkart cannot avoid liability for sale of products through its platform over the maximum retail price (MRP).

It held both the e-commerce platform and the seller jointly and severally liable for such "unfair trade practice" and ordered compensation to be paid to the consumer. The Commission held that a "tripartite contract" exists between the consumer, the seller and the service provider (being Flipkart and its seller herein). 

The Commission presided over by the President, Mamidi Christopher, and members Sandhya Rani and K. Venkateshwarlu, observed that the Opposite Parties (Flipkart and the seller) would be liable for any defect, deficiency of service and unfair trade practice on the services provided or good/product sold by them.

It was also held in this light that the e-commerce platform "have not performed their duties of sellers on market place as laid down in the Consumer Protection E-Commerce Rules, 2020". 

The complainant was charged Rs. 70 more than the MRP of each packet of Refined Sunflower Oil pouch. He averred that the original MRP was wiped out by the Opposite parties.

In its written version, Flipkart denied the averments and stated that it had wrongfully been impleaded in the complaint. It pointed out that as per the Legal Metrology (Packed Commodity) Amended Rules, 2017, an E-Commerce entity shall ensure that all monetary declaration as specified in the said Rules shall be displayed on the digital and electronic network used for e-commerce transactions. However, the responsibility to ensure the correctness of declarations was vested upon the manufacturer, the seller or the importer.

It was further stated that the function of e-commerce entity is limited to providing access to a communication system, over which information made available by the manufacturer or the seller or dealer or importer is transmitted or temporarily stored or posted. Since Flipkart does not directly or indirectly sell any products on its platform, and all products are sold by third party sellers who avail the online market place services provided by it and decided the terms also themselves, it was contended that only a bipartite contract existed between the seller and the buyer, and accordingly, only the seller could be held liable.

It was further contended that the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Govt. of India has clarified that in a market place model of e-commerce any warranty, guaranty of goods and services sold by responsibility of the seller. Hence, it was contended that in the absence of any privity of contract between the complainant and Flipkart, the latter could not be held liable, and the complaint ought therefore, have to be dismissed with costs. 

Further, on its part, the service provider had also submitted that following an internal investigation and on finding the seller to be in violation of the policies of the platform, it had also blacklisted the seller, and disallowed them from selling any products on the platform, thereon. 

The Commission perused the definitions of 'unfair trade practice', 'deficiency in service', and 'electronic service provider' in the Consumer Protection Act, 2019 to affirm that the Opposite Parties did come within the ambit of those definitions. 

"The Opposite Parties No.1 and 2 are in contract and agreement with the manufacturer and are service providers through e-commerce entity and are bound by the contract between the manufacturer product seller, i.e. Opposite Parties No.1 and 2 and the consumer and are bound to provide about the information and details about the product to the sellers offering goods".

Section 4 (11) (a) which prohibits e-commerce entities from manipulating the price of goods or services on its platform so as to gain unreasonable profits, and Section 6 which stipulates the 'duties of sellers on the marketplace' of the Consumer Protection (E-Commerce) Rules, 2020 were also perused to determine that the Opposite Parties had not performed their duties as sellers in the market place. 

Accordingly, the two Opposite Parties were directed jointly and severally to return the additional extra charge of Rs.140/- (i.e. Rs.70/- more than MRP on each Freedom Refined Sunflower Oil packet) and to pay an amount of Rs.50,000/- towards compensation and Rs.3,000/- towards costs, to the Complainant. Flipkart was also directed to replace the two packets with two others to the Complainant. A period of 30 days was granted to comply with the Order of the Commission.

Case Title: Shaik Umar Farooq v. Flipkart Internet Pvt Ltd & Anr. 

Click Here To Read/Download The Order