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.