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The Supreme Court has sought responses from Snapdeal and its directors on Karnataka government’s plea challenging a Karnataka High Court order that quashed criminal proceedings over the alleged sale of a prescription drug through theecommerce platform without a valid licence or doctor’s prescription.  

A special bench of Justices Ahsanuddin Amanullah and R Mahadevan issued notice on the state’s special leave petition (SLP) and its application seeking condonation of delay on July 15, according to a Bar & Bench report. 

The case relates to the sale of Suhagra-100, a Schedule H prescription medicine used to treat erectile dysfunction, through Snapdeal’s online marketplace. 

According to the prosecution, the medicine was sold by third-party seller M/s Herbal Healthcare, which allegedly lacked a valid drug licence. The medicine was also supplied without requiring a doctor’s prescription, violating the Drugs and Cosmetics Rules, 1945.

In 2019, a drugs inspector filed a criminal complaint before a judicial magistrate in Belagavi under the Drugs and Cosmetics Act, 1940. The magistrate subsequently took cognisance of the complaint and summoned Snapdeal, its directors Kunal Bahl and Rohit Kumar Bansal, and the other accused.

Following this, Snapdeal and its directors challenged the proceedings before the Karnataka High Court, which quashed the criminal case in February 2022.

The HC held that the magistrate’s order failed to adequately demonstrate application of mind. It also ruled that Snapdeal, as an intermediary, was entitled to safe harbour protection under Section 79 of the Information Technology Act, 2000, and could not be held liable for the actions of a third-party seller.  

Section 79 grants online intermediaries safe harbour from liability for third-party content or listings, provided they act as neutral platforms and comply with due diligence requirements.

The protection does not apply if an intermediary actively participates in unlawful activity or fails to comply with its legal obligations. 

The Karnataka government challenged the ruling before the apex court, arguing that safe harbour under the IT Act cannot protect intermediaries from prosecution under laws meant to safeguard public health.

Appearing for the state, additional advocate general Aman Panwar also argued that Snapdeal failed to meet its due diligence obligations under Section 79(2)(c) by permitting the sale of a prescription drug on its platform without the required safeguards. 

The case is being closely watched as it could determine the extent to which ecommerce marketplaces can invoke intermediary protection when products sold by third-party sellers allegedly violate sector-specific regulations such as drug laws.

The matter has been listed for hearing on August 10, along with a similar case.

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