Top Five Legal Challenges Faced by Online Fruits & Vegetable Vendors in India: Lawyers Advice

While a majority of the country’s population may purchase fruits and vegetables from the markets such as the street market or grocery stores, a large part of the Indian population has started purchasing fruits and vegetables from online vendors due to easy access to the internet and its convenience. This new format of selling fruits and vegetables has allowed the consumer to receive products of certified superior quality as well as pre-cut if they desire. Additionally, consumers receive the products are their convenience rather than having physically go to the market, thereby allowing them to save a lot of time. This market is therefore here to stay, especially after the impact of the pandemic.

However, like most industries, online fruit & vegetable vendors in India face certain legal issues as well. They are as follows

Licenses Required: Online grocery stores or companies selling fruits and vegetables have to follow a ton of laws like Section 2 (27) Shops and Establishment Act, 1953 wherein the definition of shop includes any premise where goods are sold, retail or wholesale, and any grocery store comes under this definition, thereby including online grocery stores. However, provisions of the Act do not provide for issues and nuances that are specific to e-commerce stores. Additionally, various states have their own acts for the establishments of shops such as the Maharashtra Shops and Establishments Act, 2017, which means that there is no uniformity in the laws, thereby causing various issues in creating uniformity among the market competitors. Online fruit and vegetable stores are also required to obtain licenses from the Food Safety and Standards Authority of India (FSSAI). However, similar to the Shops and Establishment Acts, there are various types of licenses such as the Basic FSSAI License Registration, State FSSAI License Registration, and Central FSSAI License Registration. In addition to this, they also require health trade licenses, trademark registrations, GST registration, vehicle compliances and many more. The abundance of provisions and compliances applicable to online fruit and vegetable vendors are spread over various acts. To move forward and provide an ease of doing business to such vendors, it is essential that a unified and exhaustive set of laws is created.

Delivery Charges: A major challenge faced by online fruit and vegetable vendors is their delivery charges. These charges are a deciding factor for a majority of their consumers. In case the charges are high, the consumers choose not to order. Amidst the pandemic, this issue has only increased. During the lockdown, industries have urged the Government for uniform classification of essential items across different states. The delivery staff of certain online grocery stores had also been arrested while travelling interstate. It had therefore become increasingly difficult for online vendors to procure passes for their logistics and delivery staff separately for each state due to the lack of a single enactment. They also suggested solutions like digital identity checks which would make the entire process uniform across the country thereby ensuring timely delivery of essential products. If in order to cut the competition in the market, these companies have to provide free delivery, their business models will not sustain in the long haul. It is therefore a lose-lose situation for online vegetable and fruit vendors.

Competition: Like most e-commerce industries, online fruit and vegetable vendors face cut-throat competition as well. Due to the dilution of the market, there are companies that sell items other than fruits and vegetables such as other groceries and food items as well. Companies that offer other products have a large amount of financial backing due to which they are able to offer discounts that may not be able to be matched by their competitors, thereby cutting their competition out unless they decide to follow in their footsteps. However, it is not possible for most of their competitors to do so due to the small margin of profits in the retail sector.

In a workshop held by the Competition Commission of India titled “CCI Workshop on E-Commerce: Changing Competition Landscape in India” dated August 30th, 2019, the commission observed that while considering the question of deep discounting in the food market four major things need to be taken into consideration from the antitrust perspective and they are as follows-
• Is it below cost?
• Scale of discounting
• Time period of discounting
• How is the market share changing?
A large number of competitors can therefore file cases against such vendors for using predatory pricing and anti-competition acts, which are punishable under Section 27 of The Competition Act, 2002.

Rigorous Penalties: The penalties that online fruit and vegetable vendors are liable to in cases of violations of the various governing laws are abundant as well as rigorous. Under the Food Safety and Standards Authority of India Act, 2006, in case the vendor sells food or raw materials such as fruits and vegetables which are not of the same nature, substance, or quality as demanded by the consumer, the vendor will be liable to pay a penalty up to Rupees five lakhs as per Section 50 of the Food Safety and Standards Authority of India Act, 2006. As per Section 51 of the Food Safety and Standards Authority of India Act, 2006, the penalty for selling, storing, distributing, or importing sub-standard food products is up to Rupees five lakhs as well. Sub-standard food does not meet the specified standards but not so as to render the article of food unsafe according to Section 2 (1) (C) (zx) of the Food Safety and Standards Authority of India Act, 2006. These provisions are evidently favouring the consumers as it becomes very easy for them to sue online fruit and vegetable vendors in cases where they may not be satisfied with the product, however not to an extent that it causes them any harm. Despite this, they may still choose to sue the vendors as they will be able to make easy money out of it. In addition to this may also face various penalties under all the other acts that apply to such online fruit and vegetable vendors such as The Indian Copyright Act, 1957, The Trade Marks Act, 1999 and, The Information Technology Act, 2000, among several others.

Protection of Data: In order to have a long haul in the industry it is essential that the online fruit and vegetable vendors ensure the protection of their customers’ data. Being an e-commerce platform, they receive sensitive data from their customers such as their names, sex, age, address, and even credit card number. They are bound to ensure that sensitive personal data or information like passwords, medical history and credit card details are protected and secured as per Section 43A of the Information Technology Act, 2000. For an e-commerce website to understand its customers and make its website more personalised than other websites is essential. In order to do so, they often require data such as their demographic, allergies, and so on. However, due to the lack of laws and judicial decisions on the same, it becomes extremely difficult for them to do so as even little negligence on part of the online vendors in the protection of their customers’ data will prove detrimental to the online vendors as it becomes very easy for them to be sued and their goodwill is lost. In addition to this, they will also be required to follow The International Standard related to ‘Information Technology-Security Techniques-Information Security Management System–Requirements’ [IS/ISO/IEC 27001] and if they want to follow any other guidelines or standards they require approval from the government which takes a long time. In an industry that is growing so fast, by the time the approvals arrive, their business model is no longer fit for the market.

Like most e-commerce platforms, the online fruit and vegetable vendors have seen an increase in popularity over the years which has been accentuated by the pandemic this year, as people prefer to stay home and receive their fruits and vegetables at their doorstep. However, in order to ensure that this market maintains its position it needs to come up with several ideas to tackle the abovementioned legal challenges until new legislations are brought into place, if at all they are.
Authored By: Adv. Anant Sharma & Suvigya Buch