Monday, Aug 08, 2022

Amazon Marijuana Sale: Can Jeff Bezos-Owned Company Be Held Liable For Sale Of Drugs Under NDPS Act?

As per allegations, Amazon’s platform was used by smugglers to trade in drugs. Marijuana was allegedly listed on the platform as dry stevia leaves.

E-commerce behemoth Amazon has yet again found itself in the middle of a raging controversy in India.

Last Saturday, an online marijuana sale racket was busted by Bhind police in Madhya Pradesh, leading to the arrest of two persons and seizure of 20 kilograms of contraband. According to reports, the accused were operating the racket through a leading e-commerce firm, which received two-thirds of the profits generated.

As per allegations, Amazon’s platform was used by smugglers to trade in drugs. Marijuana was allegedly listed on the platform as dry stevia leaves, which is a type of natural food sweetener. Amazon’s platform was allegedly used to trade 1,000 kilograms of marijuana, which is worth $148,000.

Following the allegations, Madhya Pradesh police has summoned the local officers of Amazon to investigate the case. The trade body Confederation of All India Traders (CAIT) on November 15 made demands of an investigation by the Narcotics Control Bureau (NCB) into the case. According to the lobby group, Amazon has contravened Section 20(b) of NDPS Act (Narcotics Drugs and Psychotropic Substances Act, 1985).

Legal Opinion

“A vendor allegedly selling some leaves as marijuana, was caught. Legally, I don’t see how a platform can be held liable for conscious possession,” senior Supreme Court lawyer Sanjay Hegde said.

Hegde explained that there are cases where NCB proceeds to recover substances which are transmitted through, say, courier. The courier company could be prosecuted only if there is evidence of the company’s complicity.

“Otherwise, whether a courier company or a platform whose processes have been taken advantage of, they aren’t normally charged with conscious possession,” Hegde said.

Abraham C Mathews, a Delhi-based lawyer agrees that it would be difficult to hold Amazon responsible for an activity that used its platform, but which clearly happened without its knowledge. 

"However, this ought to be a wake-up call for e-commerce platforms to audit their system's ability to catch classic signs (unusually high price for a garden-variety item, huge price premium for a single seller, and so on) of misuse," Mathews said. 

Amazon v/s CAIT

“By selling the marijuana worth more than Rs 1 crore and earning a commission of 66% (i.e. over Rs 66 Lakhs) through its e-commerce website, Amazon has contravened Section 20(b) of NDPS Act that says “produces, manufactures, possesses, sells, purchases, transports, imports inter-State, exports inter-State or uses cannabis, shall be punishable,” CAIT said in a statement.  

CAIT further accused Amazon of having little regard for Indian laws and said that the foundation of their operation in India was built over the violation of FEMA and foreign direct investment (FDI) policies, as well as anti-competitive practices that are currently being investigated by the Competition Commission of India.

Amazon said in a statement that it operates a marketplace in India which enables third-party sellers to display, list and offer for sale, products to end customers directly. It said that it has a high bar on compliance and contractually our sellers are required to comply with all applicable laws for selling their products on

“We do not allow the listing and sale of products which are prohibited under law to be sold in India. However, in case sellers list such products, as an intermediary, we take strict action as may be required under the law, when the same is highlighted to us. The issue was notified to us and we are currently investigating it. We assure full co-operation and support required to Investigating Authorities and Law Enforcement agencies with ongoing investigations and ensure full compliance to applicable laws,” an Amazon spokesperson said.

Other controversies

This is not the first time that Amazon has found itself in the middle of a storm. CAIT took on Amazon earlier for allegedly violating foreign investment policies. CAIT has also accused the company of destroying the livelihoods of small traders in India because of their anti-competitive policies. A recent Reuters investigation found that Amazon removed several brands from its website by using internal data in order to push its own in-house brands.

The investigations found that Amazon ran an organised campaign of creating knockoffs. It found that the company manipulated search results so that sales of its own products in India could be boosted. India is the largest growth market for Amazon.

In September this year, RSS-affiliate magazine Panchjanya in a cover story accused the company of bribing officials to make policies that favour its growth, forming shell companies, as well as airing content on Prime Videos that allegedly disrespected Indian culture.

Amazon has also been involved in a legal battle with Future Group. The issue pertains to Future Group selling its wholesale and retail assets to Reliance Industries Ltd’s (RIL’s) retail unit for Rs 24,713 crore. The Singapore International Arbitration Centre (SIAC) had halted the deal. The dispute was regarding Amazon's deal with Future Coupons to invest $200 million in the Future group unit. The high-stakes legal battle would decide who emerges as the biggest player in the Indian retail market in the years ahead.