Chapter 2

INDIAN JURISPRUDENCE ON CONSUMER PROTECTION IN

E-COMMERCE: A CRITICAL STUDY

The golden rule for every businessman is that there is only one boss- the customer,
who can fire everybody in the company simply by spending his money somewhere
else. The greatest assets of every business either physical or digital are its customers.
Consumer is the nucleus round whom all business activities revolve as the planets do
around the Sun. The concept of consumer protection has its deep roots in the rich soils
of Indian civilization. Indian Jurisprudence absorbs within its ambit ample of
legislations for the protection of consumers in physical commercial transactions.
However, the Internet has brought a new ‘e-revolution’ in which the nature of
commercial transactions has become highly advanced and sophisticated. On the one
hand, Information and Communication Technology is transformational tool which has
opened the doors of cyber world for physical world; on the other hand, a shift from
physical world to virtual world has introduced novice hurdles for consumers and
sellers. Hence, chapter seven deals with Law on Consumer Protection in physical
commerce as well as in e-Commerce. It contains two parts. Part-I explains various
consumer oriented laws in physical commerce with reference to the Consumer
Protection Act, 1986 and Part-II contains provisions of consumer concerns in e-
Commerce with special emphasis on the Information Technology Act, 2000. This
chapter reflects Consumer cum Cyber oriented legislations in India with a view to
enunciate that it is need of the time to update laws on consumer protection keeping in
view the changing dimensions of marketing.

Indian Jurisprudence on Consumer Protection in Modern India

India was popularly known as ‘Golden Sparrow’. Therefore, European countries were
attracted towards India for prosperity, growth and wealth. Only for commercial
relationships with India, foreigners namely: the Portuguese, the Dutch, the Duns, the
East India Company set their foot on the pious land of India. In 1600 A.D., the
Britishers came to India in the form of East India Company.Their intention was
entirely trade oriented. It was only in the second half of the 18th Century that the
trading powers of Britishers were converted into territorial power.The emergence of
the British Empire in India stands out as a unique event in the history of the world.
During the British regime (1765 to 1947) the government’s economic policies in India
were concerned more with protecting and promoting the Britisher’s interests than with
advancing the welfare of the native population.The administration’s primary pre-
occupation was rested on maintaining law and order, tax collection and defence.
Accordingly much of the legislations enacted during the British regime were
primarily aimed at serving the colonial rulers instead of the natives. However, a
systematic attempt on the path of consumer protection started only during Britisher’s
regime. Some pieces of legislations that came into existence for protection of the
overall public interest are discussed.
1. The Indian Penal Code, 1860
By the Charter Act of 1833, the First Law Commission was appointed by the
Government in India in 1835. Lord Macaulay and three members Charles Hay
Cameron, John Macpherson Macleod and George William Anderson prepared a draft
for the first Indian Penal Code which came into existence in 1860.51 Various
consumer protection provisions find its place in it, such as (1) Prohibition of
fraudulent use of false instrument for weighing (Section 264), (2) Fraudulent use of
false weight or measures (Section 265), (3) Being in possession of false weight or
measure (Section 266) and (4) Making or selling false weight or measure (Section
267). The purposes of these provisions are to maintain honesty in trade and commerce
for the protection of rights of consumers.52 There are more provisions like: (1)
Prohibition of Adulteration of food or drink intended for sale (Section 272), (2) Sale
of noxious food or drink (Section 273), (3) Adulteration of drugs (Section 274), (4)
Sale of adulterated drugs (Section 275) and (5) Sale of drug as a different drug or
preparation (Section 276). From these provisions the concern for consumer protection
is lucid in the early Indian modern era.
2. The Indian Contract Act, 1872
A vital element impacting business transactions and regulatory framework is contract.
Law of Contract is the most important and basic part of ‘Mercantile Law’. It is not
only
the merchants or trader but every person who lives in the organized society,
consciously
or unconsciously, enters into contracts from sunrise to sunset. When a person buys a
computer or hires a taxi or goes to video library to buy a video cassette or takes a
credit card from a bank or gives loan to another or he does booking for a marriage
palace, he/she enters into and performs contracts. Such contracts create legal relations
giving rise to certain rights and obligations.54 This legislation protects the rights of
traders as well as consumers in business transactions. The Indian Trust Act, 1882 was
also
enacted during this period.
3. The Sales of Goods Act, 1930
The term ‘Goods’ means every kind of movable property other than money and
actionable claims. The Sale of Goods Act, 1930 is mainly based on the English Sale
of Goods Act, 1893. Before the Sale of Goods Act, 1930, the law relating to sale of
goods was covered under the chapter VII of the Indian Contract Act, 1872, the
provision of which were found to be inadequate. Therefore, a strong need was felt to
have an adequate Sale of Goods Act and consequently a new Act called Sale of Goods
Act, 1930 was passed.This Act provides for the settlement of consumer seller
disputes.
This Act has changed the principle of ‘Caveat Emptor’ and casted a responsibility on
the seller to offer mercantile goods. Besides return of price or free repair or
replacement, damages can also be claimed for any loss or harm or inquiry if suffered
by buyer.

The Consumer Protection Act, 1986

The industrial revolution and the development in the trade and commerce have led to
the vast expansion of business and trade. As a consequence of this progress a variety
of consumer goods have appeared in order to cater the needs of the consumers and a
host of services have been made available to the consumers like insurance, transport,
electricity, housing, entertainment, finance and banking. A well organized sector of
manufacturers and traders with better knowledge of marketing has come into
existence, thereby affecting the relationship between the traders and the consumers.
New sector of marketing provided an atmosphere wherein the principle of consumer
sovereignty was almost inapplicable. The advertisements of a variety of goods in
television, newspapers and magazines has greatly influenced the demand by the
consumers, however, there are manufacturing defects or imperfections or short
comings in the quality, quantity and the purity of the goods or there may be deficiency
in the services rendered. For the welfare of the public, the glut of adulterated and sub-
standard products in the market needs to be snubbed. In spite of various provisions
providing protection to the consumers and providing for stringent action against
adulterated and sub-standard articles in the different enactments like Code of Civil
Procedure, 1908, the Indian Contract Act, 1872, the Sale of Goods Act, 1930, the
Indian Penal Code, 1860, the Standards of Weights and Measures Act, 1976 and the
Motor Vehicles Act, 1988, very little could be achieved in the field of Consumer
Protection. Though the Monopolies and Restrictive Trade Practices Act, 1969 and the
Prevention of Food Adulteration Act, 1954 have provided relief to the consumers yet
it became necessary to protect the consumers from the exploitation. In order to
provide for better protection to consumer the Consumer Protection Bill, 1986 was
introduced in the Lok Sabha on 5th December, 1986. The Consumer Protection Bill,
1986 seeks to provide for better protection of the interests of consumers and to make
provision for the establishment of Consumer councils and other authorities for the
settlement of consumer disputes and for matter connected therewith.
The Consumer Protection Bill, 1986 was passed by both the Houses of Parliament and
it received the assent of the President on 24th December, 1986. It came on the
Statutes book as the Consumer Protection Act, 1986 (68 of 1986). The chief
characteristics of the Act are-
(a) To promote and protect the rights of consumers. The right to be protected
against marketing of goods which are hazardous to life and property;
(b) To inform consumers about the quality, quantity, potency, purity, standard and
price of goods so as to protect them against unfair trade practices;
(c) To confer the right to be assured, wherever possible, access to an authority of
goods at competitive prices;
(d) To provide the right to be heard and to be assured that consumers interests will
receive due consideration at appropriate forums;
(e) Right to seek redressal against unfair trade practices or unscrupulous
exploitation of consumers;
(f) Right to consumer education and consumer awareness. This objective is sought
to be promoted and protected by the Consumer Protection Council that are
established at the Central and State level; and
(g) In order to provide speedy and simple remedy to consumer disputes quasi
judicial machinery is sought to setup at the District, State and Central levels.
These quasi-judicial bodies are bound to observe the principles of natural
justice and have been empowered to give relief of a specific nature and to
award, wherever appropriate, compensation to consumers. Penalties for
noncompliance of the orders given by the quasi-judicial bodies have also been
provided.

The Information Technology (Amendment) Act, 2008

The lacunae in the IT Act, 2000 for long necessitated a refurbishing of the legislation.
This was achieved in 2008 when the Act is not only thoroughly amended but a lot
more is done. This amendment is a positive step to bring Cybercrimes within the legal
framework. These changes are highlighted as under:
1. The most prominent change is the replacement of the term “Digital Signature” by
the term “Electronic Signature” thus making the IT law more technology neutral
which has been the approach of the Model Law on Electronic Signatures, 2001.
2. The major amendments have been in the long- awaited criminal area. A host of new
Cyber crimes like child pornography, obscenity, depiction of sex explicit act,
violation of privacy, cheating by personation, identity theft, cyber terrorism and
sending offensive messages have been introduced.
3. The amendments are more investigation friendly and are paving the way for more
fruitful and easier way to investigate cybercrimes and other online activities.
Attempts and abetment of offences is also recognized as an offence under the Act.
The complaints regarding these offences can now be looked into by an officer of the
rank of Inspector and the earlier provision for Deputy Superintendent of Police has
been done away with.
4. Terms like “Cyber Café”, “e-mail”, “Communication device” have been defined.
This has enlarged the area of law and has enriched its vocabulary to meet the
Internet situations.
5. Elaborate provisions are introduced to safeguard cyber infrastructure in the country.
For this, provisions for the establishment of a National Nodal Agency and Indian
Computer Emergency Response Team (ICERT) have been introduced. The term
“intermediaries” has been defined to include within its area a number of other
service providers so as to enlarge the liability- susceptible class in cyberspace.
6. National Security has been given an upper hand. For this, monitoring, intercepting
and decryption of flowing information have been made mandatory by the
intermediaries and any person in charge of a computer source on the directions of
proposed government agency. Failure to follow the directions has been made an
offence.
7. To make the evidence more acceptable and reliable, the report of the Electronic
Evidence Expert has been made relevant under the Evidence Law by making an
amendment under the same. It is made clear that without technological expertise and
the digitization of the legal process, little can be done to counteract the silicon
onslaught..

7.2.6 Legal Control Mechanism under the Information Technology Act, 2000
(2008)
to combat Cyber Frauds
The Information Technology Law, in order to give impetus to the electronic activities
and to secure electronic signatures, has devised the ways and means to achieve
reliability in this regard. Thus, it envisages provisions on its own legal infrastructure
to ensure trustworthy online relations. A hierarchy of authorities is established under
this Act to deal with cyber frauds. These authorities are described as under:

Controlling Authorities
Section 17 empowers the Central Government to appoint a Controller of Certifying
Authorities and also appoint such number of Deputy Controllers, Assistant
Controllers, other officers and employees as it deems fit. Such appointment is to be
notified in the Official Gazette. Deputy Controllers, Assistant Controllers, other
officers and employees are under the general supervision of Controller while
Controller is subject to the general control and directions of the Central Government.
The major functions of
Controller are: (1) To supervise over the activities of the Certifying Authorities,
(2) To certify public keys of the Certifying Authorities, (3) To lay down standard to
be maintained by the Certifying Authorities, (4) To lay down the qualifications and
experiences of the employees of the Certifying Authorities, (5) To specify the form
and contents of Electronic Signature Certificate and the public key, (6) To specify the
manner in which the Certifying Authorities conduct its dealings with the subscribers,
(7) To lay down duties of the Certifying Authorities and (8) To maintain database
containing the disclosure record of every Certifying Authority containing particulars
as may be specified by regulations, which are accessible to public. Thus, the
Controller has large functions to perform which are almost related to the Certifying
Authorities.

7.2.6.2 Certifying Authorities

Under Section 35 of the IT Act, the Certifying Authorities are like a hyphen which
joins, a buckle which fastens the subscriber to the Controlling Authority. It is
originated as trusted Third Parties and is primarily instrumental in cryptographic key
management and identification of a party to a transaction. A Certifying Authority can
be generically defined as an authority who shoulders the following
responsibilities:115 (1) Reliable identification of the persons applying for (signature)
key certificates,
(2) Verification of legal capacity of the applicants, (3) Confirming the attribution of a
public signature key to an identified physical person by way of a signature key
certificates, (4) Maintaining the online access to the signature key certificates with the
agreement of the signature key owner, (5) To take measures for the guaranteed
confidentiality of a private signature key and (6) To provide authenticity to the
Electronic signatures, thereby making the electronic messages and public keys
reliable.116 The Certifying Authorities are subordinate to the Controlling Authorities.

7.2.6.3 Adjudicating Officer

The contraventions of any rule, regulation, direction or order made there under by a
person which renders him liable to pay penalty or compensation under the IT Act, are
adjudicated upon by an officer appointed by the Central Government. A person to be
appointed as an Adjudicating Officer must possess such experience as an adjudicating
officer must possess such experience in the field of Information Technology and legal
experience as may be prescribed by the Central Government.Under Section 46(5) the
Adjudicating Officer has all the powers of a civil court which are conferred on the
Cyber Appellate Tribunal under Section 58(2). Thus, the adjudicating officer serves
as the court of first instance regarding contraventions of the IT Act. It has all the
powers of a court and is legally equipped to provide remedy to the aggrieved and
punish the offender. While adjudicating the quantum of compensation, the
adjudicating officer takes into consideration the amount of gain of unfair advantage to
the offender, the extent of loss caused to the aggrieved and to the repetitive nature of
the default under Section 47 of the Act. The order passed by the adjudicating officer is
appealable before the Cyber Appellate Tribunal.

319 7.2.6.4 Cyber Appellate Tribunal (CAT)

The Act establishes judicial body to adjudicate upon matters arising within the Act
called CAT. It is a fact finding as well as appellate authority. This is special judicial
body meant solely to adjudicate upon contraventions of the IT Act and also to handle
prosecution of the cybercrimes. This is a body which acts like a court and has all the
powers of a Civil Court established under the Civil Procedure Code, 1908 relating to
calling of records, examination of witnesses, issuing summons and warrant, etc.
Appeal is taken from the CAT to the High Court concerned and hence, the body sits
between the Adjudicating Officer and the High Court. The cyber cases whether civil
or criminal are new to the legal world and their area is also a global, hence, many
provisions of such laws are virgin. The CAT is a pioneer body and all its judgments
and ruling would be trendsetter.In addition to all these authorities, the Central
Government has been authorized to formulate rules of this Act.

Critical Analysis of the Information Technology Act, 2000 (The Information

Technology (Amendment) Act, 2008
E-Commerce is the latest entrepreneur bandwagon in India. Thousands of e-
Commerce portals have emerged during the year 2008-2012 and an atmosphere of
cyber marketing has been introduced in India. e-Commerce blue print captures full
spectrum of business processes that are being redefined and improved by leveraging
the Internet and its associated technologies towards success. However, in the zest of
earning profit, legal and compliance requirements pertaining to e-Commerce have
been totally ignored.A facilitative and legal framework is sine qua non for the
promotion and development of technology like electronic commerce. Besides
developing the e-infrastructure in the country through effective Telecom Policy
measures, the Indian Government must take appropriate steps for trust and confidence
building measures for the growth of E-Commerce. There are many important issues
which are critical for the success of E-Commerce that have not been covered under
the Information Technology Act, 2000 as well as the Information Technology
(Amendment) Act, 2008.
A). Lack of regulation of e-Commerce websites in Indian Cyber market
Lack of an effective Cyber law and Cyber law skills among the law enforcement
agencies of India is resulting in cyber frauds through the medium of e-Commerce
websites in India. Moreover, Cyber law awareness among online consumers is also
missing that has increased e-Commerce frauds in India. Some of these frauds are
highlighted as under:

1. The e-Commerce websites that are selling adult merchandise are openly violating
the laws of India.
2. e-Commerce websites engaged in punishable soft porn publication are ignored by
law enforcement agencies.
3. There are well framed legal requirements to start an e-Commerce website and e
Commerce business in India. But as on date, e-Commerce websites are not
following these legal requirements.
4. e-Commerce websites dealing with online pharmacies, online gambling are clearly
and continuously violating the Cyber laws of India.
5. ‘Cyber Law Due Diligence’ and ‘Cyber Security Diligence’ in India are two fields
that are not taken seriously. Under the Information Technology Act, 2000 there are
many “Due Diligence Requirements” that Banks, Internet Service Providers (ISPs),
Search engines, e-Commerce Portals etc. must fulfill. The e-Commerce websites
must ensure cyber law due diligence in India. However, these due diligence
requirements are not followed till some criminal prosecution takes place.
6. The only law governing online issues of e-Commerce in India is the Information
Technology Act, 2000. It mandates that the e-Commerce entrepreneurs and owners
must ensure ‘Cyber Law due Diligence’ in India. The Cyber law of India has express
provisions for both Civil and Criminal liabilities for “Non Observance of Due
Diligence”. Lack of awareness about Cyber law of India as well as lack of
implementation of Cyber Law Due Diligence Requirements is the main reason of
ignorance of its application.The legal requirements for undertaking e-Commerce in
India must be in compliance with the IT Act, 2000, the Contract law, 1872, Indian
Penal Code, 1860, the Companies Act, 1954 and Banking legislations etc. Further,
online shopping in India must be in compliance with the banking and financial norms
applicable in India.131 The fact is that most of e-Commerce web sites are ignorant
about these requirements. In India, for Cyber Security Due Diligence for Banks,
Reserve Bank of India (RBI) has recently constituted the Working Group on
Information Security, KYC (Know Your Customer) Guidelines, Electronic Banking,
Technology Risk Management and Cyber Frauds (Working Group). RBI has also
been taking non compliance of its recommendations seriously and imposed penalty
upon commercial banks for not following prescribed standards. Similar dedication is
also required regarding the recommendations issued by RBI for ensuring cyber
security infrastructure by Indian banks.

Absence of Consumer Protection and Compensatory provisions to online

consumers in e-Commerce laws of India

The nature of e-Commerce is conducive to creating a context in which disputes are

more likely than in face-to-face transactions. These disputes must be resolved in an
economically efficient manner, employing processes that the participants to the
dispute accept as fair. In the “real world” there are plethora of consumer protection
regulations and judicial processes that protect the consumers from the full market
forces of sellers. In addition, the market forces are restrained in terms of standard
form of contracting possibilities. Mercantile excesses through standard form contracts
unreasonably shift liability to consumers or impose obligations on consumers. In the
‘real world’ through consumer protection legislation and courts, governments are
willing to reform consumer contracts to conform to reasonable consumer
expectations, however, in online contracting several issues are still unresolved.
Moreover, no mandatory protection has been provided to consumers against offences
like Phishing, Pharming, Cyber Money laundering, ATM Frauds and other financial
frauds wherein innocent consumers are cheated and defrauded. Exploitation of the
rights of e-consumers in online shopping has grown from a cesspool into a huge
Iceberg like: Fake e-Advertisements, Defective delivery of goods, Extra charges,
Delay delivery of products and many more sophisticated frauds. One of the
characteristics of online frauds is that these are transnational and faceless unlike the
conventional crimes. Often investigations end up in vacuum due to the very nature of
these frauds and for the lack of effective legislative framework in combating the
same. In the relatively brief “history” of e-Commerce,

Growth of e-Commerce without effective e-Commercial Legal Mechanism

(eJustice) is a distant dream
The most significant aspect of the Internet is the economic phenomenon of e
Commerce, that is, the purchase and sale of goods and services using the Internet. The
ability of buyers to instantly shop and compare among legions of competing sellers
throughout the world, coupled with the ability of vendors to quickly and
inexpensively market to millions of potential consumers, makes e-Commerce
extremely efficient and desirable. Despite advantages that e-Commerce offers,
increased Internet sales activity also brings with it an increase in Internet legal
disputes. E-Commerce without e-Justice is irrelevant. These e-Commerce disputes
must be resolved efficiently, fairly and securely so that online consumers can place
full confidence in e-Commerce markets. The Internet must be viewed as a trustworthy
online global marketplace fully operating under the rule of law. For this to occur, the
principles of fairness, accessibility and equity available in most physical courts must
also be within reach for disputes arising out of online transactions. If e-Commerce
disputes cannot be resolved efficiently, then many of the economic and convenience
advantages of e-Commerce will be threatened due to legal enforcement risks and
resulting business uncertainties. It is need of hour to adapt to pre-Internet legal
systems to adjudicate post-Internet online legal disputes.
The fact is that traditional litigation, in a physical court chosen by either the online
seller or the online buyer, is rarely the optimum forum for resolving an online dispute,
especially if the item purchased was relatively cheap. The average online transaction
(online shopping) amount ranges from 100 to 1 Lakh Rupees because most of the
products include small products to laptops and electronics. A traditional lawsuit is
often not an economically worthwhile endeavor for an aggrieved party; given the
significant time and cost involved in such a lawsuit. Traditional litigation in a physical
court to resolve an online dispute typically ends up subjecting disputants to
comparatively expensive, inefficient and time-consuming lawsuits, often with
unpredictable or unsatisfactory results. Without a truly accessible and cost-effective
legal system to resolve disputes arising out of online transactions, e-Commerce
participants’ end up having to buy and sell at their own peril, relying principally on
the good-faith performance of their Internet transaction counterparts or on the
vagaries of antiquated pre-Internet legal systems. Consequently, many Internet
consumers risk suffering a violation of their rights-such as paying for an item that
does not get delivered or defective or expired or unsatisfactory, substandard quality-
because seeking justice in a physical court for an online transaction gone awry
becomes a very difficult and often an impractical undertaking. Moreover, some
consumers choose not to enter e-Commerce markets at all and instead choose to
conduct all of their transactions exclusively in traditional physical or non-Internet
markets.After years of indifference the cyber security policy of India has been finally
released by the Government of Indian.136 The Central Government has declared the
National Cyber Security Policy (NCSP), 2013 on 2 July, 2013. This policy includes
the National Critical Information Infrastructure Protection Centre (NCIPC), National
Cyber Coordination Centre (NCCC), National Intelligence Grid etc. Some of the areas
covered by the policy include: (1) Cyber Security Skills Development, (2) Cyber
Crisis Management Plan, (3) Critical Infrastructure Protection, (4) Preferential
Treatment to Domestic Hardware Software, (5) Security Issues of its Equipments, (5)
Engaging in public private partnerships to strengthen cyber security of India, (7)
Cyber Warfare, (8) Cyber Terrorism, (9) Cyber Espionage and (10) Protecting
Information and building capabilities to prevent cyber attacks.137 It has also rightly
touched the aspects of global co-operation and coordination in the cyber security
field. The objectives of the NCSP, 2013 include creation of a ‘Cyber Ecosystem’ in
the country, encouraging open standards, strengthening of regulatory framework,
securing e-governance services, critical infrastructure protection, promotion of
research and development in cyber security, spreading cyber security awareness,
providing fiscal benefits to businesses for adoption of standard security practices and
processes, developing effective public private partnerships and collaborative
engagements through technical and operational cooperation. The policy calls for
developing a dynamic legal framework and periodically reviewing it to address the
cyber security challenges arising out of technological developments in cyber space.
The policy plans to operate as 24X7 national level computer emergency response
team to function as a nodal agency for coordination of all efforts for cyber security
emergency response and crisis management. It has incorporated many good policy
decisions that can go a long way in improving the cyber security of India. However,
till it is made operational and is actually implemented, it would remain mere paper
work. Thus, the real challenge is to make the National Cyber Security Policy, 2013
operational at the ground level. In India there are very few cyber security institutions
that have the capability to effectuate the ambitious cyber security policy of India.
Similarly, there are many more techno- legal and social issues that a good and holistic
cyber security policy must incorporate. This NCSP Policy, 2013 is focused on several
major issues except consumer concerns in cyberspace.

Absence of Well-Informed and Structured Online Dispute Resolution

Mechanism for victimized e-Consumers
The continued high growth rate of e-Commerce is likely to be compromised if online
purchasers are not protected within a legal construct that generates confidence in the
Internet. Therefore, the rule of law must keep pace with the growth of the Internet so
that online consumers can have full confidence in the legitimacy of e-Commerce, and
the realistic ability to pursue a practical and effective legal recourse whenever
necessary. It is argued that best way to resolve e-Commerce disputes involves using
the very convenient and efficient mode in which these transactions are made in the
first place that is- the Internet. Online Dispute Resolution (ODR) can solve many
intractable cost and inefficiency problems associated with trying to adjudicate e-
Commerce disputes using traditional litigation in physical courtrooms. ODR can offer
online buyers and sellers the necessary confidence, convenience, fairness and security
to support the growth and stability of e-Commerce. The methods of Online Dispute
Resolution include cyber-negotiation, cyber-mediation and cyber- arbitration. In India
websites such as Cybersettle (http://www.cybersettle.com), Settlement Online (http://
settlementonline.com), ClickNsettle (http://www.clicknsettle.com), Smartsettle
(http:// www.smartsettle.com), Mediate.com (http://www.mediate.com),
Onlinearbitrators.com,(http://onlinearbitrators.com), T.V. channel CNBC AWAAZ
PEHREDAR (pehredar@network18online.com) offer services that are entirely online
and focus on negotiating as well as mediating monetary settlements and online
consumer disputes. Indian Council of Arbitration (http://ww.icaindia.co.in) has panel
of well-known arbitrators, mediators and conciliators. The bitter fact is that these
modes are not so popular as well as people are less aware about these modes of online
dispute resolution. The Internet must be perceived as a safe and legitimate global
marketplace, where buyers and sellers can have meaningful access to competent and
convenient legal enforcement mechanisms that adequately protect their legal rights
and minimize their economic risks. Because traditional litigation in physical
courtrooms is often expensive in these types of cases, aggrieved parties often choose
to forego their legal remedies because a formal lawsuit is just not worth it. Therefore,
a comprehensive ODR system should be embraced because it is uniquely adapted to
fairly and efficiently resolve e-Commerce disputes in an accessible, cost-effective
online forum that overcomes the physical and cost barriers associated with traditional
litigation.
In India several consumer groups have taken this problem seriously and come up with
organizations to make shopping on the Internet a safe experience. To raise one voice
against online frauds they have formed online portals to listen to the complaints of
consumers. Anyone can log in and submit complaint with complete facts and
documentation. Some of the leading National level, Non-Government and Non-Profit
Organizations working in India are: http://www.nationalconsumerhelpline.in,
http://www.consumerdaddy.com,http://www.indianconsumers.org, http://www.core.
nic.in, http://www.legalhelpindia.com, http://www.cag.org. This Online Dispute
Resolution Mechanism must be taken seriously and strengthened for the resolution of
various Internet frauds. By providing the appropriate incentives, Government must
encourage the private sector to create ODR policies and procedures that are fair,
comport with due process and build e-Consumer confidence.
The primary reason for failure of many e-Commerce websites offering various
commercial services has been lack of faith among online consumers. One of the fears
of the online consumer is whether the online institution is trustworthy. After all, if
online consumer is agreeing to arbitrate through an ODR institution, the very thought
that the online arbitrator’s decision would be binding on the person and can be
enforced as a decree of the Court, is in itself very scary. The parties would never
physically see the arbitrator and there is always an apprehension of partiality and bias.
It is, therefore, must that the ODR institution is able to generate e-trust and e-
confidence among the online consumers.Towards this effort ODR services must
follow some following guidelines(1) All information and disclosures should be
accurately and completely stated to parties, (2) ODR should disclose the minimum
basic information like organizational information, terms, conditions, disclaimers for
the service, explanation of services and pre-requisite for use of service like
geographical location or membership etc. (3) Disclosure as to the costs for the process
and what portion of the cost each party will bear are necessary, (4) In order to reveal
impartiality this mechanism must unwrap its relationship with other organizations to
online consumers, (5) ODR institutions must give their Privacy, Confidentiality,
Members of Panel, Neutrality of Members, Qualification and experience of its
members and (6) It must explain jurisdiction where complaints can be brought, and
any relevant jurisdictional limitation.

UNCITRAL Model Law on Electronic Commerce with Guide to enactment 1996

with Additional Article 5 Bis as Adopted in 1998

Meaning of the United Nations Commission on International Trade Law

UNCITRAL is the United Nations Commission on International Trade Law. It has
been established by the U.N. in 1996 to harmonize the law of international trade; it is
a core legal body of the United Nations system that works to create accessible,
predictable and unified commercial laws. The Commission is composed of 36
member states elected by the General Assembly, who are chosen to represent the
world’s various geographic regions and its principle economic and legal system.
Members are elected for terms of six years, with the term of half the members
expiring every three years. The UNCITRAL Secretariat is located in Vienna and
carries out its work in annual sessions, which are held in alternate years in New York
and Vienna.The objective of providing a brief overview of index of UNCITRAL
Model Law, 1996 in this research is to highlight the fact that India has borrowed its e-
Commerce laws from UNCITRAL Model Law 1996. The United Nations
Commission on International Trade Law (UNCITRAL) adopted the Model Law on
Electronic Commerce in 1996. This Model Law provides for equal legal treatment of
users of electronic communication and paper based communication. India being
signatory to it has to revise its laws as per the said Model law.

7.4.2 Need for formulation of UNCITRAL Model Law 1996

The decision by UNCITRAL to formulate model legislation on electronic commerce
was taken in response to the fact that in a number of countries the existing legislation
governing communication and storage of information was inadequate or outdated in
the lap of ‘Cyber Revolution’. The lack of legislation in many countries in dealing
with eCommerce as a whole has resulted in uncertainty as to the legal nature and
validity of information presented in a form other than a traditional paper document.
The purpose of Model law was to offer legislators of various countries a set of
internationally accepted rules as to how a number of such legal obstacles may be
removed, and how a more secure legal environment can be created for electronic
commerce. The Model law seeks to permit States to adapt their domestic legislation to
developments in communication technology applicable to trade law without
necessitating the removal of the paper-based requirements themselves or disturbing
the legal concepts and approaches underlying those requirements. The Model law,
thus, relies on a new approach known as the ‘functional equivalent’ approach which is
based on an analysis of the purposes and functions of the traditional paper based
requirement with a view of determining how those purposes or functions could be
fulfilled through electronic commerce techniques. The drafters of the Model law had
considered the impracticability of enacting its entire text as a single statute in all
countries. Depending upon the situation in each enacting State, the Model law can be
implemented in various ways: either as a single statute or in several pieces of
legislation. India opted to enact it as one statute called the ‘Information Technology
Act, 2000’. Keeping in view the urgent need to bring suitable amendments in the
existing laws to facilitate e-Commerce and with a view to facilitate Electronic
Governance, the Information Technology Bill was introduced in the Parliament and
having been passed by both the Houses of Parliament, it received the assent of the
President on 9th June, 2000. It came on the statue book as the Information
Technology Act, 2000 (21 of 2000). It came into force on 17th October, 2000.

It is observed that the Model Law is divided into two parts, Part- I deals with
electronic commerce in general and the Part- II deals with electronic commerce in
specific areas. The Part two of the Model Law, which deals with electronic commerce
in specific areas, is composed of a chapter I only, dealing with electronic commerce
as it applies to the carriage of goods. Other aspects of electronic commerce need to be
dealt with in the future, and the Model Law can be regarded as an open-ended
instrument, to be complemented by future work. UNCITRAL intends to continue
monitoring the technical, legal and commercial developments that underline the
Model Law.
Comparative Study of the Information Technology Act, 2000 (2008) and the
UNCITRAL Model Law 1996: An Observation
This Model Law, 1996 focuses on commercial law reforms and creating model
commercial laws that enhances the use of paperless communication. In 2001 a Model
Law on Electronic Signatures came into existence. It has played a leading role in
developing model laws for secure and reliable e-Commerce transactions. The
Information Technology Act, 2000 is a commendable piece of legislation for India
and is a step in the right direction. It upholds the spirit of the UNCITRAL Model law.
India has borrowed its e-Commerce law from it; however, it is observed that even in
UNCITRAL Model Law, there is no provision for consumer protection in online
shopping, regulation of e-Commerce websites and regulatory legal mechanism for
compensation to consumers. The Model Law does not go beyond to solve the
jurisdictional questions, legal requirements to data message and communication of
data messages. It is submitted that the Model law is not intended to cover every aspect
of the use of electronic commerce. Hence, there are many more substantive areas that
need to be addressed like Consumer Protection, Data Privacy, Spamming, Intellectual
property, Online Banking transactions, online taxation, adequate online dispute
redressal mechanism etc., etc.
A brief comparative study has been made between the Information Technology Act,
2000 (2008) and the UNCITRAL Model Law, 1996. It is seen that the major aim of
these legislations is to recognize e-documents and e-transactions in e-Governance and
e-Commerce. No protection is afforded to consumers in online commerce or online
shopping. It is submitted that consumer faces severe challenges from the ‘e-
revolution’
ushered by the Internet with regard, inter alia, to virtual commercial communications,
contracts concluded without face-to-face negotiation at a distance and e-Banking
transactions. The applicability and effectiveness of traditional rules of consumer
protection in the online environment is limited.127 With the development of an
invisible world, in which consumers from all corners of the globe do business,
difficulties in implementing traditional law are aggravated. Traditional policies of
consumer protection are not suitable for the Internet age and it is need of the time to
make suitable amendments in Indian Legal Jurisprudence. Therefore, in Indian
Jurisprudence a strong legislation is required for the protection of rights of consumers
in e-marketing for online shopping.

Conclusion
From a rural and agriculture dominated entity, India has travelled a long journey on
the Information Superhighway. The need of establishment of an effective and
technology centric law and enforcement regime led to the creation of Cyber law in the
country. An analysis of the e-Commercial laws reveals that the Information
Technology Act, 2000 (2008) is a boon to the online business transactions. Much
before the reporting of Cybercrimes in India, electronic commerce flourished with
considerable speed. As the Internet is a multidimensional junction of online
commerce that involves so many legal issues like: e-Contracts, e-Banking, rights of
online consumers and authenticity of eCommerce websites, therefore, a lethargic
approach has given India a setback in the area of online commercial activities. The
Cyber Law of India is technology centric and not much attention is given to
commerce and economy in this legislation. The IT (Amendment) Act, 2008 has given
importance to Cybercrimes and their magnitude of hazards to the security of India.
The concern for consumer protection in online commercial activities has highly been
ignored in this law. In the absence of sound legal framework e-Commerce cannot
create a success story in India. Indian Government must give attention to the fact that
for safe and secure business environment in cyberspace, a sound legal framework is
needed. It is suggested that court systems and e-Commerce participants should
incorporate Online Dispute Redressal Mechanism as a modern justice system for
online transactions wherein consumers are victims of e-Commerce frauds.