E-commerce Industry Reels After Baazee CEO's Arrest

by Hinesh Jethwani & Ankush Sohoni    Dec 21, 2004

In what is being seen as a “travesty of cyber laws and e-commerce regulations”, the widely reported arrest of Baazee CEO, Avnish Bajaj has opened up a can of worries for the Indian e-commerce industry.

The “sex, lies & videotape” controversy has gathered both historical and diplomatic proportions, making it the first of its kind involving the arrest of a US citizen on Indian soil. The case is lined up for hearing in the High Court today. Although Bazee clearly specifies a disclaimer clause on each transaction, referred to as a ‘terms of service’ agreement, the magistrate has refused to accept it as debatable evidence in court.

Meanwhile, many online groups are building up a strong defense, like Mahesh Murthy, director, TIE, who is working on submitting an online Public Interest Litigation to the prime minister through India GII . The PIL has already gathered over 1000 signatures. Influential Web pioneers like Sharad Sanghi, CEO & MD, Netmagic Solutions, have rushed to Delhi to lobby for Bajaj’s release.

“I’m starting this petition because the arrest raises far wider implications that can affect the entire industry of internet-based businesses in India and perhaps elsewhere too,” claimed Mahesh Murthy.

Captain Raghu Raman, CEO, Mahindra Special Services Group is not convinced that arresting the CEO of an auction website simply on the grounds that it has carried a post selling pornographic video is the right solution to stop cyber crime.

“Throwing the CEO of Baazee behind bars is not going to curb cyber crime. Such stringent control over content circulated on the Internet cannot be exercised - it’s impossible. You can’t expect authorities to stop a crime that they themselves have limited knowledge about,” he reasoned.

The apex voice of the technology industry, NASSCOM expressed its dismay at the news of the arrest, demanding Bajaj’s release immediately. Hinting that the incident may be damaging to India’s positive offshore identity, NASSCOM declared, “As a global, mature, and responsible technology industry and the most attractive destination for services, we need to ensure that we do not send out the wrong signals to global customers and investors. While the law must take its own course - without favour or fear - such a peremptory arrest in a case like this is not only an extreme and completely unnecessary step, it verges on draconian measures that do not fit into our self-image as a civilized, modern democracy.”

Scrutinizing the technology aspect, Baazee has thousands of online merchants and its automated keyword scanning systems could not have possible caught anything untoward in the title of the ad (innocently called “Delhi girls having fun”).

Murthy has urged the government to clarify its stand on the legality of e-commerce in India without ink-on-paper signatures and demanded an immediate change to the Information Technology Act.

“I believe that the arrest of the head of the Indian arm of one of the world’s most respected e-commerce companies is a retrograde step for a country that seeks to attain excellence in all fields of information technology. This can only further push other investors to look at India with doubt for its ability to offer a strong, fair law that protects the interests of Internet and other technology-driven businesses here,” reasoned Murthy.

By rejecting the admissibility of the paper version of ‘terms of service’, and insisting on an ink-on-paper signature for legal status, the entire legality of the e-commerce business in India has been called to question.

“This is ironic, as the largest e-commerce operation in not just India but South Asia is the Indian Railways online ticket-selling business - a Government-owned and run operation - which does business worth Rs 18 crore (US$4 million) a month. This Magistrate’s decision seems to imply a lack of legal standing for all ticket sales online by the Railways. It also calls to question all other e-commerce sales in India - which amount to hundreds of crores of rupees a year,” added Murthy.

To pledge support for Bajaj, sign the petition addressed to the Prime Minister of India.

Your say
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satisfactory ... 18 Nov 2007, Mani
Bajaj should be locked up and the key thrown away. Future websites should include provisions in the service agreement contract which make the posting subscriber liable for all the costs involved - so that there is a deterrent for frivolous or vulgar postings.
Let ecommerce evolve and meet new situations -no need to squeal and whine.
Baazee should menawhile sack their high powered lawyers for stupidity.
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... 29 Dec 2004, Fighter jock
Please understand this is not a brick and mortar business where the Chief can be made accountable for any wrong actions of the company. This is online and live. There is no way a CEO of a company will know what among the 1000s of goods on sale really are. This does however call for such portals to keep a close watch on material posted by members. But I dont think its that simple. There are several small sites and personal pages, which have Guestbook / Forums / Blogs. Is it practically possible for the site owner to monitor it closely, lest he be arrested for unknowingly displaying illegal information? What if this ad was posted on a bulletin board of any govt. site? Would they have arrested the PM or President as they are the heads of the
Government? In any way, it is clear that Mr. Bajaj was not involved in the racket, though it was an overlook by his team. This incident will always ring alarm bells for any entrepreneur looking at setting up online businesses, till the IT Act is made more relevant.
... 23 Dec 2004, Ninad
When the Chritine Keeler episode rocked the British Parliament, Harold McMillan, the then British PM resigned with his entire cabinet, although it was a minister of Harold’s cabinet, and not Harold himself, who had slept with Christine. To uphold the best values of Bharat Varsh, the best thing that could happen in the case of Bazee.com is ban Bazee and subject Bajaj to a maximum jail term. It is unfotunate for our country that a Regulator normally tends to regularize things (for reasons best known only to him and Him) rather than “regulate” things. A regulator is to regulate not to regularize. A regulator is not a municipality ward officer.
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... 23 Dec 2004, Chanakya
Its Fact ... 23 Dec 2004, Smith
It is always the top man who is responsible in an organization. Here the best that should happen is ban Bazee and let the industry get the message.
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... 22 Dec 2004, Chanakya
Ban Bazee lest such episodes will recur.
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... 22 Dec 2004, Chanakya
The arrest of Mr.Bajaj goes against the whole ethos of internet based C2C trade practices. The Delhi Police have proved their incompetence in handling a delicate matter by arresting and insulting the innocent. There is the need to have stringent laws to protect the innocent and also to punish the real accused ... 22 Dec 2004, Ameya Kamat
excellent coverage. Thanks ... 22 Dec 2004, Satyajit das
this is really ridiculous. I agree there is some responsibility which Bazee should bear but it really needs to be thought whether such action is necessary.
Continuing this line of thought I guess all mobile phone companies CEO should be worried as I believe the same clip is getting exchanged between all users - minors included - using MMS & Blue tooth facility. And as we are on the spree why not the ISPs, DOT & even mobile phone companies. Guess action should be against the IIT student who put it up for sale. It should be maybe for the person who originally shot the video and the girl who took part in it. Punishing Bajaj is ironic and foolish
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... 21 Dec 2004, Subir
There will be no impact at all. The CEO is responsible for the actions of his staff. In a country like India where pronography is banned, people concerned should have taken some basic precaution as it was not sold in a hidden manner which would have been difficult to find out. I am sure after this incident people would start taking the law of the land more seriously and not go with the ” Chalta Hai” attitude. ... 21 Dec 2004, Rajiv
The extent of impact on the e-commerce industry will be huge ... 21 Dec 2004, Govind