Food-tech platforms: Are they liable for bad biryani? The answers

Introduction

For dealing with e-commerce and food-tech entities, the food regulator of India i.e., Food Safety and Standards Authority of India (“FSSAI”) has time and again operationalized the specific parts of the Food Safety and Standards (Licensing and Registration of Food Business) Amendment Regulations, 2018 (“2018 Regulations”) issued under the Food Safety and Standards Act, 2006 (“Act”). The 2018 Regulations introduced and defined the term “E-commerce FBOs” for the first time. 

The FSS (Licensing and Registration of Food Businesses) Amendment Regulations 2018 and E-commerce FBO Guidelines, 2018

The FSSAI introduced the 2018 Regulations in an attempt to regulate the activities of the e-commerce FBOs, and to ensure quality and safety of the food in consumer interest. These regulations have been re-operationalized from February 28th 2021 according to a notification dated March 19th 2021. The FSSAI also formulated the Guidelines for operations of E-commerce FBOs (“FSSAI E-commerce Guidelines”) which explains the law relating to e-commerce FBOs as given under the FSSAI and the rules and regulations thereunder.

The relevant definitions under the 2018 Regulations are:

2(b). “E-commerce” means buying and selling of goods and services over digital and electronic network.

2(c). “E-commerce FBO” means any Food Business Operator carrying out any of the activities in Section 3(n) of the Food Safety and Standards Act, 2006, through the medium of e-commerce.

3(a). “Marketplace based model of e-commerce FBO” means providing of an information technology platform by an e- commerce FBO on a digital and electronic network to act as a facilitator between the buyer and seller/brand owner/ manufacturer.  E-commerce marketplace includes entities providing support services  to  sellers/brand  owners/ product manufacturers in respect of warehousing, logistics, order fulfilment, payment selection, facilitation of delivery and other services.

As is clear by the definition E-commerce FBO mentioned under regulation 2(c) of the 2018 Regulations read with Section 3(n) of the Act, any entity that uses the medium of e- commerce for carrying out any activities relating to manufacturing, processing, packaging, storage, transportation, distribution of food import including food services, catering services, sale of food or food ingredients, would be an e-commerce FBO.

Further, the 2018 Regulations also define a marketplace based model of e-commerce FBOs and it includes all e-commerce entities engaged in the business of “providing listing services to sellers/brand owners/ manufacturers/ restaurants on their platform thereby providing platform for commerce to the sellers, manufacturers, restaurants etc.” and also “providing transportation services to the sellers/brand owners, vendors, importers or manufacturers of the food products and/or providing last mile delivery transportation to the end customer.”

A reading of these definitions clearly shows that online food ordering entities such as Swiggy and Zomato run a marketplace-based model business and are squarely covered under these regulations as e-commerce FBOs. 

Under the framework of the Act, the FSSAI E-commerce Guidelines and the 2018 Regulations, companies such as Swiggy and Zomato that operate food-tech marketplace platforms have the duty to ensure that:

  • Restaurants are duly registered with the central licensing authority (FSSAI).
  • No misleading information/false claims pertaining to the sellers/brand owners, vendors, importers or manufacturers, or misleading images of food products are made available or shown on their platform.
  • The liability of any violation of the Act as applicable is clearly specified on their platform.
  • The sellers/brand owners/manufacturers display on their e-commerce platform the license/registration obtained by sellers/brand owners/manufacturers under the FSS Act and hygiene grading of FBO as may be assigned by FSSAI.
  • Mandatory food information to the consumers without charging supplementary costs is provided on the websites and this information should also be available before the purchase is concluded.
  • They sign an agreement with the sellers/brand owners/manufacturers stating that the said sellers/brand owners/manufacturers are compliant with FSS rules and regulations and that the liability for violation of the FSSAI rules rests with these FBOs. 

In addition, it is important to note that:

  • The food products offered for sale by any e-commerce FBO shall be liable to sampling at any point of the supply chain.
  • It is the responsibility of the e-commerce FBOs that the last mile delivery is undertaken by trained delivery personnel, and that the safety of food product is not compromised.
  • No misleading information/false claims to the product or misleading images of food products are to be made available or shown on the platform.
  • There has to be an immediate delisting of any food products listed on their platform, which are not in compliance with the Act or rules or regulations framed thereunder.
  • Complaints relating to products efficacy, quality, or any other such issues shall be communicated immediately by e-commerce FBO to the sellers/brand owners/ importers/manufacturing company concerned for expeditious resolution

Conclusion

As is evident from the above discussion, e-commerce FBOs as defined under the regulations cover both marketplace and inventory-based models. Certain compliances in case of marketplace model are different from inventory-based model as their business is considerably different. Thus, it becomes very important for food businesses to be aware of the legal landscape and plan their contracts and website disclosures accordingly. 

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