OLX India B.V. vs State of Haryana: High Court’s Directions Quashed by Supreme Court

The case between OLX India B.V. and the State of Haryana revolves around an order passed by the Punjab and Haryana High Court concerning the regulation of online advertisements on platforms such as OLX. The Supreme Court of India, in its judgment dated March 8, 2022, addressed the legality of the High Court’s directives and ultimately quashed the impugned order.

The High Court, while dealing with the case of Pintu v. State of Haryana & Others, had directed OLX to implement stringent verification measures for users posting advertisements, requiring multiple ID proofs, verification by local authorities, and title documents for any sale-related advertisements. This directive was seen as an overreach by OLX India B.V., leading them to challenge the order before the Supreme Court.

Background of the Case

The Punjab and Haryana High Court, in its interim order, directed that all advertisements on the OLX platform should be deleted and re-listed only if they contained an open PDF file with the following details:

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• At least two ID proofs of the seller.
• Two mobile numbers with verification screenshots.
• Property details with ownership proof.
• A certificate from local authorities verifying the seller’s authenticity.

These requirements were imposed as a measure to curb fraudulent transactions occurring on the platform. However, OLX India B.V. contended that as an intermediary, it merely provided a platform for advertisements and was not responsible for verifying individual sellers or transactions.

Petitioner’s Arguments (OLX India B.V.)

Senior Advocate Sidharth Luthra, appearing for the petitioner, argued that:

• OLX is an internet intermediary under the Information Technology Act and does not control the quality or legitimacy of goods listed for sale.
• The High Court’s order placed unreasonable restrictions on the operation of an intermediary, which was beyond its legal authority.
• The directives imposed an undue burden on the platform and affected its core function as a marketplace.
• Without hearing OLX, the High Court’s interim directions were issued, violating principles of natural justice.

Respondent’s Arguments (State of Haryana)

Additional Advocate General Nikhil Goel, representing the State of Haryana, countered these claims by stating:

• The increasing number of fraud cases through online marketplaces warranted stricter regulations.
• The High Court had merely sought preventive measures to safeguard consumers from fraudulent sellers.
• Regulating online advertisements with identity verification measures was a legitimate step in the public interest.

Supreme Court’s Verdict

The Supreme Court, comprising Justices Uday Umesh Lalit, S. Ravindra Bhat, and Pamidighantam Sri Narasimha, analyzed the High Court’s order and found it to be excessive. The Court observed:

“Insofar as the afore-quoted interim directions passed by the High Court, in our view, there was no occasion for the High Court to pass these directions; and more particularly, without hearing the appellant. We, therefore, quash the directions quoted hereinabove.”

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Additionally, the Supreme Court had earlier stayed the operation of the High Court’s order during the pendency of the appeal.

Conclusion

The ruling reaffirms the legal position that intermediaries such as OLX cannot be held liable for the transactions facilitated on their platform beyond their due diligence obligations under the Information Technology Act. The Supreme Court’s decision to quash the High Court’s directions underscores the importance of procedural fairness and the need to avoid imposing impractical regulations on digital platforms.

Petitioner Name: OLX India B.V..
Respondent Name: State of Haryana & Others.
Judgment By: Justice Uday Umesh Lalit, Justice S. Ravindra Bhat, Justice Pamidighantam Sri Narasimha.
Place Of Incident: Haryana.
Judgment Date: 08-03-2022.

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