you are requested to note that some of the vital points involved with respect to e-auction are

a)      The jurisdiction

b)     Application of the Indian Contract Act.

c)      Electronic Documents

d)     Evidentry value of documents

a)      One of the basic questions involved in e-commerce, which includes e-auction, is jurisdiction. Since in case of e-auctions the access to the writ will be available worldwide and as such, the applicability of local laws and the laws of other foreign jurisdictions has every material as per Indian law jurisdiction in a case arises on the basis of the cause of action such matter and geographical locations etc. In the present case jurisdiction become more vital since contractual relationship between the participating parties will definitely arise and money is involved. The Information Technology Act 2000 is not very clear on this point or rather the same is silent.

However, Section 75 of Information Technology Act 2000 provides a rider that the provisions of this act shall be applicable to offence or contraventions committed outside India. However, in case of e-auctions, since the transactions involved a contractual relationship in the parties the provisions of the Contract Act would apply which are further Governed by the CPC. In view of the discussions above it is advisable that in terms and conditions the specific, public along any person to participate in e-auctions offered by your organization a specific condition shall be put limiting the applicability of laws and the territorial jurisdiction in case of any dispute. 

It may further be noted that Section 64 of the Sale of Goods Act, 1930 also deal with auction sale. 

b)     Applicability of Indian Contract Act and the Sale of Goods Act in this regard you are advised to note that except the fact that the transactions (e-auction) will take place on the Internet, of elements of the Contract Act and the Sale of Goods Act are attrated. All the parties, including your organization and bidders will be governed by the law of Indian Contract Act. 

c)      With respect to the terms of Electronic Documents, you are requested to kindly refer to Section 2 (r) (t, v), Section 4, Section 6, Section 11, Section 12 and Section 13 of the Indian Technology Act, 2000.  

In e-auctions every offer made by a participating party shall definitely be binding as submissions of an on-line bid, via internet well the amount to a valid communication and acknowledgement generated automatically and sent to the bidder or sent by e-mail or any other method on the Internet would be a valid acknowledgement/receipt and will have a binding force under Section 12 sub section 2 of the Indian Technology Act, 2000. It is further clarified that in case of stuplition is made in the agreement/terms and conditions that the contract will be binding only on the issue of the receipt of communication, in such case unless acknowledgement has been so received, the electronic record shall be deemed to have been never sent by originator. It may please further be noted that as per Section 13 (3) sub section the place of desparate of an electric record shall be treated as the place where the originator has its place of business is dimmed to have been received at a place where the addressesss has all place of business, thereby the retrival of inforamtion at different places is immaterial and well known for any effect over the jurisdiction. 

d)     The Indian Technology Act, 2000 specificallyprovides and consequent amendments in the Indian Evidence Act 1872 have made of electronic records including the record of e-auction/transactions admissible before the court of law. 

1.      There is no bar in any of the provisions of the Indian Contract Act 1872, Indian Technology Act, 2000 for or the constitution of India, which prohibits your organization, which is a Government of India company from contacting e-auction for sale of materials owned by different principles, because the entire exercise, which my include 3 or more parties inclusive of your organization, different principles and various bidders, shall be commercial and contractual in nature and governed by the terms, conditions and agreement between the contracting parties, moreover your organization one of the main object of our organization has given in clause 3 (1A) special clause of the memorandum of association is to act as selling or purchase and/or handling agents, commercial agents, authority, progress for any Government, semi Government or autonomus body or any organization or any private or public sector in India or any other part of the world for export import, purchase, distributions, stock, sale purchase, transport, marketing all types of material etc. The interpretation of the abovementioned clause of the memorandum of association clearly in case that your organization can act as a broker between two parties and in case of e-auctions the status of your organization will be of a broker or commission agent or handling agent for a consideration.  

3.   , no permission/approval or sanction is required under the provisions of the Indian Technology Act, 2000 from Government of India or any other ministry under it, subject to the condition for the compliance of rules, regulations and notifiaction issued from time to time of the Reserve Bank of India for dealing with money transfer etc without India. 

4.      In reply to query no.4, you are advised to kindly go through the opinion already given by us with respect to various topics already discussed. However, you are advised to take following precautions to avoid any legal oblications etc. Please refer to traft Annexure (c) clause no.16 pertaining to arbitration clause. Please update the act as the arbitrration and Cancellation Act 1996, as amended upto date. There is also typographical mistake in clause 16.1 of annexure ‘C’ in which it has been written. That the Arbitration Act, 1940 shall not be applicable to the arbitration under this clause, which should be replaced with the following sentence “the Arbitration and Cancellation Act 1996, as amended upto date shall be applicable to arbitration under this clause”. 

1. The participants of an e-auctions shall be allowed to participate only after a formal registration /membership on the website who shall be granted specific individual permission along with a pass word to enable such persons to participate in e-auction in the restricted square zone of the website with proper encription of the transformation of the data.

2. To make in auction of line legal binding, before becoming member participants in the e-auction. The participant shall subscribe and agree to all the terms and conditions laid down as a precondition for participating in e-auction.

3. The critaria for varification of the participants shall be strictly adopted and adhared ti the varification may be by way of a credit card or a person participating holding a valid digital signature.

4. All the e-auction transactions shall take place on a secured subscription with encription. All the informationto participants and clients shall be sent only through varified e-mails. In the agreement with the participating parties, e-mail address of such parties shall be specifically taken, to comply with the formalities required by the Indian Technology Act, 2000.

5. The conditions as laid down in class 5.00 of specimen Annexure ‘B’ may please be adhared to, as to make e-auction on Internet binding on the party’s consideration in the form of earnest money is necessary. It has already been advised that there shall be special clause with respect to the applicability of local laws and teritorial jurisdiction.

5.     There are no specific provisions with respect to e-auctions under the Indian Technology Act, 2000 and rules framed thereunder. However, relevant sections, their implications have been discussed earlier, covering Indian Technology Act, 2000, the Contract Act 1872, the Sale and Goods Act, Indian Evidence Act. 

Written By

Vijay Pal Dalmia,Advocate

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