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2019 SCC OnLine Del 10717 : (2019) 178 DRJ 95

In the High Court of Delhi at New Delhi

(BEFORE RAJIV SAHAI ENDLAW, J.)

Vestige Marketing Private Limited .…. Plaintiff;

v.
Flipkart Internet Private Limited and Others .…. Defendants.
CS(OS) 540/2019
Decided on October 22, 2019
Advocates who appeared in this case:
Mr. Rishi K. Awasthi and Mr. Vikram Patralekh, Advs.
Mr. Sidharth Chopra, Mr. Saurabh Srivastava, Ms. Shilpa Gupta and Mr. Ranjeet
Singh Sidhu, Advs. for D-1.
The Order of the Court was delivered by
RAJIV SAHAI ENDLAW, J.:—
IA No. 14730/2019 (for exemption)
1. Allowed, subject to just exceptions.
2. The application is disposed of.
CS(OS) 540/2019 & IAs No. 14729/2019 (u/O XXXIX R-1&2 CPC) &
14731/2019 (u/S 151 CPC)
3. The plaintiff, claiming to be Direct Selling Entity, has instituted this suit against
Flipkart Internet Private Limited operating an e-marketing platform in the name of
Flipkart, and against the unknown defendants, to restrain the defendants from selling
on the e-marketing platform of the defendant No. 1, the goods which are directly sold
by the plaintiff to the consumers.
4. Being conscious of the dicta of a Coordinate Bench of this Court in Amway India
Enterprises Pvt. Ltd. v. 1MG Technologies Pvt. Ltd. 260 (2019) DLT 690, I have
enquired from the counsel for the plaintiff, whether in the said judgment the aspect of
the defendant No. 1 as also the unknown defendants having a fundamental right to
carry on any trade or business and which can be restricted only by law, has been
considered.
5. The counsel for the plaintiff has drawn attention to paragraphs 164, 169 and 173
of the said judgment.
6. The counsel for the plaintiff has also handed over in the Court, copies of the
orders dated 13th November, 2018 in CS(OS) No. 571/2018 and 14th January, 2019 in
CS(OS) No. 8/2019, being suits filed by the plaintiff against other e-marketing
platform i.e. Amazon and in which, orders of injunction restraining Amazon from
allowing sale on its e-marketing platform of goods directly sold by the plaintiff was
granted.
7. I have next enquired from the counsel for the plaintiff about the Direct Selling
Guidelines, 2016 referred to in Amway India Enterprises Pvt. Ltd. supra and which
have been held to be the law regulating the business of direct selling.
8. The counsel for the plaintiff has drawn attention to page 126 of Part III-A file,
being the Notification dated 26th October, 2016 of the Department of Consumer
Affairs, Ministry of Consumer Affairs, Food and Public Distribution, issuing the
Guidelines aforesaid “as guiding principles for State Governments to consider
regulating the business of Direct Selling…and strengthen the existing regulatory
mechanism on Direct Selling., for preventing fraud and protecting the legitimate rights
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and interests of consumers”.

9. I have enquired from the counsel for the plaintiff, whether in pursuance to the
said Guidelines, any of the State Governments have brought out any laws for
regulating the business of direct selling.
10. The counsel for the plaintiff states that he will have to check up.
11. The Notification aforesaid is silent with respect to the provision of any statute,
in exercise of power whereunder the Guidelines have been issued. Though the counsel
for the plaintiff has referred to Serial No. 1 in Clause 1 titled “Definitions” of the
Guidelines, defining ‘Act’ as meaning the ‘Consumer Protection Act, 1986’, but is
unable to show any provision in the Guidelines showing the same to have been issued
in exercise of any power vested in the Ministry of Consumer Affairs, Food and Public
Distribution under the Consumer Protection Act.
12. It appears that without the Guidelines having been issued in exercise of power
under any statute, the same are akin to the Guidelines issued by the Government for
guidance of the Estate Officers under the Public Premises (Eviction of Unauthorised
Occupants) Act, 1971 and which Guidelines, in Syndicate Bank v. Ramachandra Pillai
(2011) 15 SCC 398 were held to be merely directory and not regulating the procedure
to be followed by the Estate Officer in exercise of powers under the Public Premises
(Eviction of Unauthorised Occupants) Act.
13. Article 19(1)(g) of the Constitution of India confers in all citizens, the right to
practise on any profession or to carry on any occupation, trade or business. Article 19
(6) however empowers the State to make any law imposing, in the interest of general
public, reasonable restrictions on the exercise of the right conferred by Article 19(1)
(g). Thus, the restriction, if any on exercise of fundamental right under Article 19(1)
(g) has to be by law enacted by the Parliament or the State Legislature and not by
Executive Guidelines, as the Direct Selling Guidelines, 2016 appear to be.
14. Though the plaintiff, in the plaint has suggested that the goods being sold on
the platform of defendant No. 1 are counterfeit goods but the counsel for the plaintiff,
on enquiry whether any testing has been got done by the plaintiff of the impugned
goods being sold, answers in the negative and contends that only because the goods
are being sold at much lower price than the price which the plaintiff has stipulated,
the plaintiff suspects the goods to be counterfeit. However, on enquiry of the right of
the plaintiff to control the price, the counsel for the plaintiff states that he will have to
look up.
15. The counsel for the defendant No. 1 appears on seeing the matter in the Cause
List.
16. The counsel for the defendant No. 1 points out that the plaintiff is the
defendant in CS(COMM) No. 763/2016 titled Modicare Limited v. Gautam Bali, recently
decided by this Bench and in which it has been held that no claim on the basis of tort
of unlawful interference with business by enticing the persons with whom a plaintiff
has a contract, to breach the said contract, is available in India.
17. Issue summons of the suit and notice of the applications.
18. Summons/notice are accepted by the counsel for the defendant No. 1 who is
the only contesting defendant till now.
19. Though I am bound by the dicta in Amway India Enterprises Pvt. Ltd. supra but
since the aforesaid doubts have arisen, it is deemed appropriate to hear the counsels
further before following the dicta in the said judgment.
20. The counsel for the plaintiff has handed over to the counsel for the defendant
No. 1 the complete paper book.
21. Though the counsel for the defendant No. 1 has contended that this matter be
also kept on 30th October, 2019 when other matters are listed but as far as I
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remember, none of the matters listed on that date are filed by a Direct Selling Entity
as the plaintiff herein is, though Amway India Enterprises Pvt. Ltd. supra is being
relied upon in those suits also.
22. The counsel for the defendant No. 1 has also contended that the appeal against
Amway India Enterprises Pvt. Ltd. supra is being heard.
23. The counsels to also consider, whether in view of the hearing already underway,
even if a case for reference to the Division Bench was to be made out, there is any
need therefor.
24. The suit is accompanied with IA No. 14731/2019 for direction to the defendant
No. 1 to provide details of all the persons selling the goods on the defendant No. 1's
website/mobile application and in respect to which the plaintiff claims direct selling
rights. The counsel for the plaintiff states that all the URLs are listed in the
plaint/application.
25. The defendant No. 1 is directed to, within one week, furnish the particulars
available with it of the sellers of the said URLs, to the plaintiff through counsel.
26. The defendant No. 1, till further orders, to maintain records of the sales on the
URLs mentioned in the plaint/application and to, along with its written statement, file
before this Court the quantity of goods sold and the price at which the goods have
been sold, as well as the proportion in which the price has been distributed between
the defendant No. 1 and the sellers on the said URLs.
27. Written statement be filed within the prescribed time.
28. Replication thereto, if any be filed within thirty days thereafter.
29. Affidavits of admission/denial of each other's document be filed before the next
date of hearing.
30. The counsel for the plaintiff at this stage has also drawn attention to page 160
of Part III-A file, being a communication dated 9th April, 2018 of the Food Safety and
Standards Authority of India (FSSAI) to the defendant No. 1 with respect to violation
of Direct Selling Guidelines.
31. It is made clear that pendency of this suit shall not come in the way of the
FSSAI taking any action against the defendant No. 1 in pursuance thereto.
32. List on 26th March, 2020.
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