The Central Consumer Protection Authority (CCPA) has imposed a INR 10 lakh penalty on Dial4Trade Technologies for facilitating the online listing, advertising and sale of ammonium nitrate without mandatory regulatory safeguards.
The final order was passed under sections 10, 20 and 21 of the Consumer Protection Act, 2019. The authority has also directed Dial4Trade to immediately discontinue the listing, hosting, advertising or facilitation of sale of ammonium nitrate, or any other substance classified as an explosive under the Explosives Act, 1884.
The CCPA said its examination found ammonium nitrate listed on the platform without safeguards required under the Ammonium Nitrate Rules, 2012.
These included disclosure of valid Petroleum and Explosives Safety Organisation (PESO) licence details of sellers, verification of the identity and licensed status of buyers, transaction traceability mechanisms and warnings regarding legal restrictions on possession and use of the substance.
The listing also carried imagery depicting explosions and blast effects. According to the CCPA, such imagery was likely to attract attention to the product rather than communicate its hazardous and regulated nature.
In a significant finding for online marketplaces, the CCPA held that a product listing hosted on a digital marketplace and communicated to the public over the internet falls within the definition of an “advertisement” under Section 2(1) of the Consumer Protection Act.
It further held that presenting a regulated explosive substance for sale as an ordinary consumer product, without informing users that lawful purchase requires the prescribed licence, amounted to a misleading advertisement and unfair trade practice under Sections 2(28) and 2(47) of the Act.
B2B intermediary defence rejected
Dial4Trade contended that it operated as a business-to-business marketplace intermediary and should not be held responsible for listings uploaded by third-party sellers.
The CCPA rejected the contention, noting that the platform permitted purchase of the substance in quantities as low as a single unit and did not have minimum-order quantities or institutional-buyer verification mechanisms ordinarily associated with a B2B model.
The authority also held that the Consumer Protection (E-Commerce) Rules, 2020 apply to marketplace e-commerce entities irrespective of how a platform describes its business model.
Section 79 safe harbour also examined
The CCPA also considered Dial4Trade’s reliance on intermediary safe-harbour protection under Section 79 of the Information Technology Act, 2000.
The authority observed that such protection is subject to compliance with prescribed due-diligence requirements. It found that a compliance mechanism relying only on reactive removal of listings after detection, rather than verification at the point of listing, was insufficient in the case of regulated and hazardous substances.
The CCPA also noted that Dial4Trade had the ability to block sellers and delist products from its platform, indicating that the platform exercised control over the content hosted on it.
