Marketplace Claims "We Are Only Intermediary": When Section 79 Defence Fails

The Three-Line Reply From Customer Care

The product arrived broken. Or fake. Or never arrived at all. You raised a complaint with the marketplace. After a week of "we are looking into this" you finally get a reply: "We are only a platform that connects buyers and sellers. The seller is a third party. Please coordinate the resolution directly with them." A polite version of: we are not responsible.

This is the so-called Section 79 defence. Marketplaces in India have learnt to push it like a trained reflex. The problem is that most buyers — and even many lawyers — accept it without testing it. The truth is that Section 79 of the Information Technology Act, 2000 is not an absolute shield. It has conditions. It has been read down by the Supreme Court. And it co-exists with the Consumer Protection (E-Commerce) Rules, 2020, which impose direct, separate liability on the marketplace as an e-commerce entity. This article unpacks all of it in plain language and shows you when the platform can hide behind Section 79 — and when it cannot.

What Section 79 Actually Says

Section 79 of the IT Act, 2000 is titled "Exemption from liability of intermediary in certain cases." It is a safe-harbour clause. The idea is that the postman should not be punished for the contents of the letter. So if an intermediary only transmits or hosts third-party information, it is not liable for that content — but only if it satisfies all three conditions:

• Its function is limited to providing access to a communication system over which third-party information is transmitted or hosted; and
• It does not initiate the transmission, does not select the receiver, and does not select or modify the information; and
• It observes due diligence while discharging its duties under the Act and follows guidelines prescribed by the Central Government.

Sub-section (3) of Section 79 lists two situations where the safe harbour disappears: (a) when the intermediary has conspired, abetted or aided in the unlawful act; or (b) when, upon receiving actual knowledge, or on being notified by the appropriate government or its agency, it fails to expeditiously remove or disable access to the unlawful material.

Read carefully, Section 79 says: be passive and follow the rules, and you are protected. Be active, ignore notice, or fail in due diligence, and you are not.

The Due Diligence Condition

The "due diligence" requirement in Section 79(2)(c) is not just a phrase. It is given content by the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 — commonly called the Intermediary Rules, 2021. These Rules tell every intermediary, including online marketplaces, what it must do at the minimum:

• Publish clear rules, privacy policy and user agreement that users must follow.
• Inform users of what content is prohibited (counterfeit, deceptive, infringing copyright, harmful, etc.).
• Appoint a Grievance Officer whose name and contact are displayed, and respond to complaints within stipulated timelines.
• Acknowledge complaints within 24 hours and resolve them within 15 days.
• Remove unlawful content within 36 hours of receiving a court order or government direction.
• Preserve records and cooperate with law enforcement.

The point is simple: if the marketplace's grievance officer is unreachable, if complaints are not acknowledged in 24 hours, if responses are template replies rather than action — then the "due diligence" leg of Section 79(2)(c) is broken. The platform has not earned the safe harbour. It cannot then ask the court to apply it.

Shreya Singhal: When Knowledge Is "Actual"

The Supreme Court took up the meaning of Section 79 in Shreya Singhal v Union of India, (2015) 5 SCC 1. The petitioners challenged Section 66A and incidentally also attacked Section 79(3)(b). The Court upheld Section 79 — but it read it down. The key passage holds:

Section 79 is valid subject to Section 79(3)(b) being read down to mean that an intermediary upon receiving actual knowledge from a court order or on being notified by the appropriate government or its agency that unlawful acts relatable to Article 19(2) are going to be committed then fails to expeditiously remove or disable access to such material.

The clear takeaway: an intermediary cannot be saddled with the impossible burden of judging every private complaint. "Actual knowledge" for the purposes of Section 79(3)(b) means a court order or a government direction. A casual buyer email that "your seller is selling fake goods" does not, by itself, trigger the duty to remove.

But — and this is what marketplaces conveniently forget — Shreya Singhal was a free-speech case. The Court was dealing with content that allegedly fell foul of Article 19(2) (sedition, defamation, etc.). The Court's narrow reading of "actual knowledge" was anchored in the worry that intermediaries could become private censors of speech. The same narrow reading does not automatically transplant to a consumer dispute over a counterfeit product, where free speech is not at stake. Even within Shreya Singhal, the Court accepted that conspiring, abetting or aiding the unlawful act under Section 79(3)(a) is independently fatal to the defence.

Marketplace vs Pure Intermediary

A pure intermediary like an ISP simply carries data. An online marketplace, in contrast, does much more: it sets the design of the listing pages, runs paid promotions, decides search ranking, processes payments, holds the money in escrow, runs its own delivery network, runs its own returns and refunds policy, and in many cases sells through a related-party seller using its own brand.

Each of these activities pushes the marketplace away from the "passive postman" model that Section 79 was written for. The more the platform does — selecting which products to promote, modifying listing presentation, controlling pricing and delivery — the harder it is to argue that "we did not initiate, did not select, did not modify." Courts have been alive to this distinction. In a series of trademark and copyright suits, Indian High Courts have refused to accept blanket Section 79 immunity for marketplaces that ran active commercial operations beyond passive hosting.

For a deeper view of how this plays out in counterfeit cases, see our piece on marketplace liability for counterfeit and fake products.

The E-Commerce Rules, 2020 — A Separate Duty

This is the part marketplaces hope buyers do not read. The Consumer Protection (E-Commerce) Rules, 2020 are notified under the Consumer Protection Act, 2019, not under the IT Act. They impose their own set of duties on a "marketplace e-commerce entity." These duties are independent of Section 79. A marketplace cannot bring Section 79 of the IT Act into a consumer forum and use it to escape obligations created under a different statute.

The 2020 Rules require the marketplace to:

• Display details of every seller (name, registered address, customer care, GSTIN where applicable).
• Not adopt any unfair trade practice in the course of business.
• Not falsely represent itself as a consumer, nor manipulate the price of any goods or services.
• Provide a clear and accessible grievance redressal mechanism.
• Acknowledge consumer complaints within 48 hours and redress them within one month.
• Be jointly responsible for the safety of goods sold and for any defective goods or deficient services on its platform where it fails to perform due diligence.

The Consumer Protection Act, 2019 itself defines an unfair trade practice in Section 2(47) — which expressly includes deceptive practices and misrepresentations about goods. A marketplace that knowingly continues to list a seller flagged for counterfeit goods is participating in the unfair trade practice; it cannot wave Section 79 of the IT Act and walk out of the consumer commission.

When the Section 79 Defence Fails

Putting it all together, the Section 79 defence fails in any of the following situations:

1. The marketplace was actively involved. It promoted the seller, ran paid ads, controlled the listing language, or sold through a related-party seller. Section 79(2)(b) requires no initiation, no selection, no modification — and these activities violate that condition.
2. Due diligence is broken. The grievance officer is not reachable, complaints are not acknowledged within 24 hours, takedowns are not done on court orders within 36 hours. The Intermediary Rules, 2021 are not followed.
3. Conspiracy, abetment or aiding. Even Shreya Singhal accepts that Section 79(3)(a) takes away the defence where the platform conspired in or aided the unlawful act. Continuing to list a seller after multiple proven complaints starts to look like aiding.
4. The case is a consumer complaint, not a content-removal challenge. Shreya Singhal's narrow definition of "actual knowledge" was crafted for Article 19(2) speech cases. For pure consumer disputes over defective or counterfeit goods, the E-Commerce Rules, 2020 impose direct duties on the marketplace that have nothing to do with Section 79.
5. The marketplace presented itself as the seller. If invoicing, packaging and customer communication came from the marketplace's brand, the marketplace is the seller and Section 79 simply does not apply.

What Should I Actually Do Now?

1. Do not accept the first "we are only a platform" reply. Ask for the name and email of the Grievance Officer notified under the Intermediary Rules, 2021.
2. Send a written email — not a chat message — to both the seller and the marketplace, attaching photos, invoice and a clear demand. Quote the 48-hour acknowledgement timeline of the Consumer Protection (E-Commerce) Rules, 2020.
3. If the platform does not respond within 48 hours and resolve within a reasonable time, send a legal notice making both the seller and the marketplace party. A short notice from a lawyer is often enough.
4. Save every screenshot: the listing, the chat history, the email replies, the seller's profile, the refund policy. Save the URL as a PDF before they edit the page.
5. Lodge a complaint on the National Consumer Helpline (1915) and on the integrated grievance portal at consumerhelpline.gov.in. The complaint ID is later useful.
6. File a consumer complaint under the Consumer Protection Act, 2019 before the District Commission where you reside. Make the seller and the marketplace parties. Refer to the E-Commerce Rules, 2020.
7. If the issue is a fake or counterfeit product, also notify the brand owner. For pirated goods, notify the publisher or producer. A parallel copyright or trademark action against the seller can speed things up.
8. If the marketplace claims Section 79, ask it (in pleadings) to produce proof of: due diligence under the Intermediary Rules, 2021; the grievance officer's response within 24 hours; and the resolution within 15 days. Most platforms cannot produce this.
9. If the problem affects many consumers, consider a class action under Section 35(1)(c) of the 2019 Act, or hand over the brief to a consumer organisation.

The Bigger Picture for Online Buyers

Most online disputes are small in money but big in helplessness. The marketplace is huge, the seller is unknown, the buyer is one of millions. The instinct is to give up. The legal framework actually pushes against this instinct. Section 79 of the IT Act was drafted at a time when "intermediary" meant an ISP carrying email. The marketplaces of today are more like department stores than postmen — they design the shopping experience, take a cut, control payment, control delivery and decide what is visible at the top of the page. The law has been catching up to this reality. The 2019 Consumer Protection Act, the 2020 E-Commerce Rules, the 2021 Intermediary Rules and the Shreya Singhal ruling, read together, make it clear that the marketplace's accountability has grown — not shrunk.

For you as a buyer, the practical lesson is this: do not be satisfied with the customer-care line that "we are only a platform." Push back. Cite the right rules. Make the platform a party in your consumer complaint. If the platform was indeed passive, careful and prompt, Section 79 will protect it — and that is fair. But if it was active, careless or slow, the defence will collapse — and that is also fair. The shield was never meant to be a sword used to silence consumers. Pinaka Legal can help you frame the notice or the complaint in a way that does not let the marketplace slip through.

Frequently Asked Questions

What is Section 79 of the IT Act in simple language?

Section 79 of the Information Technology Act, 2000 is a safe-harbour rule. It says an online intermediary — an ISP, a hosting service, a social-media platform or a marketplace — is not liable for third-party content if three conditions are met: it only provides access, it does not initiate or modify the content, and it observes due diligence under the law. If any of these conditions are not met, the protection drops away. It is a defence, not an absolute shield, and it has been read down by the Supreme Court.

What does 'actual knowledge' under Section 79(3)(b) mean after Shreya Singhal?

In Shreya Singhal v Union of India, (2015) 5 SCC 1, the Supreme Court held that 'actual knowledge' triggering the duty to take down content means knowledge through a court order or a government notification — not just a private complaint. This is to protect free speech under Article 19(1)(a). However, the Court's narrow reading was anchored to speech cases. In consumer disputes over defective goods or counterfeit products, the duties under the Consumer Protection (E-Commerce) Rules, 2020 apply independently.

Is an online marketplace really an 'intermediary' or is it the seller?

It depends. A marketplace that simply lists third-party sellers and lets them transact is, in form, an intermediary. But the more it controls — promoting listings, modifying display, fixing prices, holding payments in escrow, running its own delivery — the more it looks like a department store. If the invoice and packaging come from the marketplace's brand, the marketplace is the seller and Section 79 does not apply at all. Even when it is treated as an intermediary, it must observe due diligence to keep the safe harbour.

What are the Intermediary Rules, 2021 and why do they matter to me?

The Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 give content to the 'due diligence' requirement of Section 79(2)(c). They require every intermediary, including marketplaces, to publish clear policies, appoint a Grievance Officer, acknowledge complaints within 24 hours, resolve them within 15 days, and act on court orders within 36 hours. If the platform fails any of these, its claim to Section 79 protection weakens. For you, this means the platform owes you measurable, time-bound action.

Can I sue the marketplace and the seller together in a consumer commission?

Yes. You can name both as opposite parties. The marketplace's defence will usually be Section 79 of the IT Act. The seller's defence will usually be that it sold what it had. Under the Consumer Protection Act, 2019 and the E-Commerce Rules, 2020, the consumer commission can examine the role of the marketplace separately. If the marketplace failed in due diligence under the 2020 Rules or actively promoted the listing, the commission can hold it jointly responsible for refund, replacement or compensation.

Does the Consumer Protection (E-Commerce) Rules, 2020 override Section 79?

Both can run together. The 2020 Rules are made under the Consumer Protection Act, 2019. They create direct, free-standing duties on a marketplace e-commerce entity — display seller details, no unfair trade practice, grievance redressal in defined timelines, joint responsibility for safety. Section 79 of the IT Act is a defence in a tort or content-removal context. A marketplace cannot transplant Section 79 of the IT Act into a 2019 Consumer Protection Act proceeding and use it to escape duties created under that other statute.

The platform says the seller's address is incomplete. Is that my problem?

No, it is the platform's problem. Rule 5 of the Consumer Protection (E-Commerce) Rules, 2020 specifically requires the marketplace to display details of every seller offered on its platform — legal name, address, customer care, GSTIN where applicable. If the address is hidden or incomplete, the marketplace has breached its own statutory duty. You can make this breach part of your consumer complaint, and the commission can take note of it while deciding the platform's role.

How long do I have to file a consumer complaint against a marketplace?

Section 69 of the Consumer Protection Act, 2019 gives you two years from the date the cause of action arose. For online purchases the cause of action typically arises on the date of delivery of the defective goods or on the date the deficiency comes to your knowledge — whichever is later. Even if you tried customer care for weeks, that period does not eat into your two years. The District Commission can also condone delay beyond two years if you show sufficient cause, though it is risky to depend on condonation.

Will the marketplace really turn up if I file a consumer case?

Yes. Once notice is served on the registered office (the Grievance Officer's contact details and registered address must be displayed under the Intermediary Rules, 2021), the marketplace will appoint a lawyer and appear, or face an ex parte order. In practice, many marketplaces settle the matter before the first hearing because pursuing the Section 79 defence in a small-ticket case is more expensive than refunding the buyer. A well-drafted notice often delivers a refund without ever reaching the commission.

Can I also file a police complaint against the seller and the marketplace?

Against the seller, yes — for cheating under the relevant penal law, and for offences under the Copyright Act or Trade Marks Act if pirated or counterfeit. Against the marketplace, a criminal complaint is harder because the marketplace will plead Section 79. The Section 79 defence is stronger in the criminal context than in the consumer context, because the burden of proof and the duty of due diligence interact differently. The smarter strategy is to keep the criminal complaint focussed on the seller and use the consumer commission for the platform's accountability.

What is the cheapest way to put real pressure on the platform?

A lawyer's notice on letterhead, addressed to the Grievance Officer and to the registered office, citing Sections 2(47) and 39 of the Consumer Protection Act, 2019, Rule 5 to 7 of the Consumer Protection (E-Commerce) Rules, 2020, and Rule 3 of the Intermediary Rules, 2021. This costs a few thousand rupees and almost always produces a response within 7 to 15 days. If it does not, the same notice becomes part of the record in your consumer complaint, and the commission sees that the platform was given a fair chance and chose to ignore it.

Can Pinaka Legal handle a small online-shopping dispute?

Yes. Pinaka Legal regularly handles online-shopping consumer matters where the issue is not just the money but the platform's behaviour. The firm can draft a notice, file the District Commission complaint, and represent the buyer at hearings. For class actions under Section 35(1)(c) of the 2019 Act, where the same defect or unfair trade practice has hit several buyers, the firm can coordinate a consolidated complaint. The first consultation is free and confidential.

For more articles on Indian law, visit the Pinaka Legal Blog.