To curb misleading users from unintentionally doing something through deceptive UI/UX design patterns, the Department of Consumer Affairs has issued draft Guidelines on Prevention and Regulation of ‘Dark Patterns’ that prohibit persons, including platforms, from indulging in specified unethical practices.

The guidelines define ‘Dark patterns’ as “any practices or deceptive design patterns using UI/UX (user interface/user experience) interactions on any platform; designed to mislead or trick users to do something they originally did not intend or want to do; by subverting or impairing the consumer autonomy, decision making or choice. “The guidelines also provide a list of specified dark patterns with explanations and examples, including:

• False Urgency: Implying urgency or scarcity to deceive users into making an immediate purchase or any other action. Example: ‘Only 2 rooms left’.
• Basket Sneaking: Inclusion of additional items, charity money etc. However, free samples and complimentary services are allowed. Also, ‘necessary fees’ such as delivery charges etc. are allowed. Example: Adding travel insurance while booking flights.
• Confirm Shaming: Using phrases or other means to shame, guilt, ridicule etc. to nudge the user to act in a certain way. Example: “I will stay unsecured”.
• Forced Action: Forcing a user to buy additional items to continue using the contracted items. Example: Download a separate app to access services originally advertised in one app.
• Subscription Trap: Making paid subscription too complicated to discontinue or hiding the cancellation option or making instructions cumbersome.
• Interface Interference: Designs manipulating user interface to highlight certain information and obscure other relevant information.
• Bait and Switch: Advertising a particular outcome based on the user’s action but deceptively serving an alternate outcome.
• Drip Pricing: Elements of prices are not revealed upfront or are revealed surreptitiously within the user experience.
• Disguised Advertisement: Practice of posing, masking advertisements as other types of content such as user generated content or new articles or false advertisements. The onus shall be on the advertisers or sellers and not on the platform.
• Nagging: Overload of requests, information, options, or interruptions; unrelated to the intended purchase.

The guidelines shall apply to all platforms offering goods and services in India, including advertisers and sellers. Comments may be shared by October 5, 2023.

FACTS:

In the case of Diamond Entertainment Technologies (P) Ltd. v. Religare Finvest Ltd., [2023 SCC OnLine Del 4905] decided by the High Court of Delhi on August 14, 2023, the petitioners challenged an order passed under Section 14 of the SARFAESI Act, 2002 which deals with the possession of the secured asset. The respondent in the case, a Non-Banking Financial Corporation (NBFC) had sanctioned a loan of Rs. 10 Crores against mortgaged property. This loan account was restructured, a supplementary agreement was executed, and a payment schedule was given. On June 7, 2021, the sister of Diamond Entertainment (Petitioner no.1) filed for a suit of partition of the mortgaged property, and in this suit, the Court passed an order to maintain the status quo in respect of title possession of the suit property until the next date of hearing. However, due to payment default, this account was classified as a non-performing asset. The respondent, being a secured creditor instituted proceedings under Section 13(2) of the Act demanding the payment of the outstanding amount along with interest. Finally, on September 12, 2021, the respondent took constructive possession of the mortgaged property under Section 13(4) following which the application under Section 14 was filed wherein a receiver was appointed by the Magistrate. This is the order that was challenged in this case on the contention that it was an abuse of the process of law.

ISSUE:

Whether there is a bar/restraint in law against the secured creditor to directly proceed under Section 14 of the SARFAESI Act, 2002 after withdrawing measures taken under Section 13(4) of the Act.

JUDGEMENT:

It was the argument of the petitioners in the present case that there was a stay operating with respect to the mortgaged property in the partition suit which continued till the date of the application filed under Section 14 by the respondents. Further, they claimed that since the respondent had already sought a remedy under Section 13(4) of the Act, they could not at a later stage invoke proceedings under Section 14 by withdrawing the notice under Section 13. This, according to the petitioners, was an abuse of the process of law.

The Court observed that on withdrawal of the notice under Section 13 of the Act, any right of the petitioners which may have accrued to them under Section 17 was extinguished and therefore, the petitioners could not object against the respondent’s withdrawal of notice and initiation of proceedings under Section 14. As per precedent set in the cases of Standard Chartered Bank v. V. Noble Kumar (2013) 9 SCC 620] and Hindon Forge (P). Ltd. v. State of U.P. [(2019) 2 SCC 198], it is the right of the respondent, as a secured creditor, to decide the remedy that they wish to adopt, and the borrower or guarantor has no say in the manner or mode in which recourse is opted to be taken by the secured creditor. There was nothing in law that restrained the respondent from moving under Section 14 of the Act once he had taken measures under Section 13(4). Further, the rights of the petitioners under Section 17 would only accrue once possession was taken and they could not invoke Article 226 of the Constitution to frustrate the object of the recovery proceedings.

FACTS:

In the case of Md. Musir Ahmed v. Indian Oil Corporation. Ltd [WPA 17594] decided on August 16, 2023, by the High Court of Calcutta, the first petitioner was selected for the distributorship of LPG cylinders by the Indian Oil Corporation through a draw of lots, and the Letter of Intent (LOI) was also issued in his favour on April 24, 2019. After the issue of the Letter of Intent, the first petitioner entered into a partnership with the second petitioner to run the LPG distributorship and the partnership deed between the petitioners was executed on February 9, 2021, without obtaining the requisite approval from the Indian Oil Corporation. This was in direct violation of Clause 5.4 of the Letter of Intent which stated that prior approval was required for any change in the nature of the distributorship from that which existed at the time of application. Consequent to the withdrawal of the LOI via a rejection of the petitioner’s representation made on July 19, 2022, the petitioners filed a writ petition. In the petition, a Co-ordinate Bench directed the Indian Oil Corporation to consider the representation of the petitioners and to pass a reasoned order after giving the petitioners an opportunity to be heard. Following this order, the Indian Oil Corporation rejected the representation of the petitioners after due consideration and recalled the LOI. Aggrieved by this rejection the petitioners filed the present petition before the High Court of Calcutta.

ISSUE:

Whether the change in the distributorship structure from a proprietorship to a partnership without prior approval as stipulated in the LOI is a mere irregularity or a substantial illegality leading to the cessation of the LOI?

JUDGEMENT:

In deciding the matter, the Court noted that under Clause 5.4 of the LOI, it was explicitly stated that the petitioner was not permitted to induct anyone as their partner or make a change in the constitution of the proposed distributorship without obtaining prior approval of the Corporation. The Court also observed that the restrictive clause in the LOI stipulates that if the distributor wanted to change the nature of his business from proprietorship to partnership, prior approval of the Corporation was necessary. Thus, the partnership deed which was executed before even making a representation of the same to the Corporation, was in clear violation of this Clause.

Further, the Co-ordinate Bench directed that the decision taken by the Corporation should be grounded in the existing policy of the Indian Oil Corporation which dealt with the reconstitution of partnership deeds. This existing policy is what is laid down in the conditions of the Letter of Intent and therefore the decision of the Indian Oil Corporation in rejecting the representation of the petitioners was carried out in the manner specified by the order.

Thus, the High Court of Calcutta held that the change in the nature of distributorship from a proprietorship to a partnership without obtaining prior approval from the Indian Oil Corporation was a violation of the terms laid down in the LOI and therefore, the cessation of the LOI was valid.

In an order[1] dated May 31, 2023, the Karnataka High Court set aside the criminal proceedings instituted against the petitioner, M/s Samsung India for violation of packaging rules.

A complaint was filed before the jurisdictional Magistrate based on an inspection of one of the distributors of the petitioner company. During the inspection, it was discovered that the maximum retail price (MRP) printed on one of the petitioner’s products, a pre-packed Samsung Galaxy Tab-4 was in violation of the provisions of the Legal Metrology Act, 2009 and the Legal Metrology (Numeration) Rules, 2011. Another allegation levelled against the petitioner is that one of the pre-packed wholesale package products containing 20 individual packages does not have the qualifying symbol ‘N’ indicating the quantity in violation of the Legal Metrology (Packaged Commodities) Rules, 2011. Pursuant to the complaint, a show cause notice and subsequently a summons was issued to the petitioner.

With respect to the first allegation, the court held that the Numeration Rules apply only to weight, measure or number and not to the price or MRP of packaged goods. Concerning the second allegation, the court opined that the offence alleged relates to retail packages and not to wholesale packages. Further, attention was drawn to Rule 24 of the Packaged Commodities Rules which applies to wholesale packages and states that only the number of quantities must be specified without necessarily adding the prefix ‘N’ or ‘U’.

Holding that the provisions of the said Act and the rules made thereunder have been misinterpreted and the offences alleged are not made out, the court allowed the criminal petition and set aside the proceedings pending before the Metropolitan Magistrate, Traffic Court-I, Bengaluru.

[1] M/s Samsung India vs. State of Karnataka (CRL.P 9771/2017)