New ruling on jurisdiction key for e-commerce cases

Adivision bench of Delhi High Court, in World Wrestling Entertainment v M/s Reshma Collection & Ors, recently dealt with an interesting question pertaining to the territorial jurisdiction of courts in relation to determining the “cause of action” of disputes.

This ruling is of great significance in light of reports of the e-commerce business exploding in India. The e-commerce market in India was worth US$11 billion in 2013 and is expected to grow approximately 37% a year and to US$20 billion by 2015, according to a recent report from Motilal Oswal Securities.

Judicial developments

The Supreme Court of India in Dhodha House v SK Maingi (2005) considered the meaning of the term “carries on business”. The court held that a person may carry on business at a place not necessarily by themself, but through an agent or a servant. But three conditions need to be fulfilled, namely: (1) the agent must be a special and exclusive agent; (2) the agent must be an agent in the strict sense of the term; and (3) to constitute the location of “carrying on business”, the essential part of the business must be performed within the said jurisdiction.

Vivek Vashi is the mainstay of the litigation team at Bharucha & Partners, where Krishnendu Sayta is an associate.