HC Seeks Govt’s Reply On Plea Over Provision In Consumer Protection Rules

The Delhi high court has issued a notice to the government asking for responses on a petition filed by Dhruv Sethi which challenges a provision in the Consumer Protection (ecommerce) Rules that mandates all ecommerce entities to be registered as a company in India.

A bench of Chief Justice D N Patel and Justice Prateek Jalan issued the notice to the Ministry of Consumer Affairs seeking its clarity on the matter.

Petitioner Dhruv Sethi stated that this rule makes registration as a company mandatory for sole proprietorship business. In such a situation, ecommerce business cannot be done without registration as a company.

He further said that the rule is beyond the power of the Constitution “as it discriminates against all forms of legitimate business organisations like sole proprietorships, limited liability partnerships, hindu undivided families, etc.”

The plea challenges the vires of Rule 4(1)(a) of the Consumer Protection (E-Commerce) Rules, 2020.

Appearing for the petitioner, advocates Anand Grover and Samyak Gangwal, told the court that this rule stops every business which is not a company to be a part of the ecommerce sector. Or they will have to sell their products through forums like Amazon or Flipkart, reported ET.

The petitioner has also claimed that he is personally affected by the rule as he is an entrepreneur, who, through his sole proprietorship, Where Next Daily, sells custom merchandise online.

To this, the bench gave a suggestion to the petitioner asking him that he can sell his products and services by listing on Amazon. To which, the advocates replied that by doing this, they will have to pay Amazon, which does not have to be made on the sale of products through itself.

Advocate Grover also said that the obligation to incorporate as a company and the consequent exclusion of Sole Proprietorship, Limited Liability Partnerships, Hindu Undivided Families etc. from the e-commerce space, is neither reasonable, nor in the interests of the general public.

It was also argued that the impugned rule is violative of Article 14 of the Constitution of India as it discriminates against all forms of legitimate business organisations.