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Title:Delhi HC refuses order against ecommerce firms Snapdeal, Myntra on FDI rules violations; seeks ED probe

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NEW DELHI: The Delhi High Court has refused to pass any interim order against 21 ecommerce firms, including Snapdeal, Myntra and Jabong, over allegations that they violated India's foreign direct investment rules. It, however, asked the Enforcement Directorate to initiate a probe against them.

The court didn't pass any interim order pending government investigations. It was hearing a case filed by shoe retailers, who said these ecommerce firms had created a complex and convoluted business structure to show that they were functioning only as marketplaces, where FDI is allowed, while actually selling products online, which the FDI rules don't allow.

Justice Rajiv Sahai Endlaw on Thursday ordered the Centre, Delhi government, central bank and ED to file affidavits within four weeks "detailing steps already taken so if any need for further directions is felt, the same can be issued".

In September, the court, while hearing the same case, had observed prima facie FDI violations by some online retailers and sought the government's response on the issue.

The respondents (Centre, Delhi government, RBI and ED) "state that out of the 21 entities with respect to which averments have been made in the petition, six are being investigated against and a decision has also been taken to investigate other entities as well", the court noted.

"It is stated that all this is taking time and owing thereto the counter affidavits have not been filed," it said. It asked the authorities to file a counter affidavit - even if investigations are not complete - detailing the steps already taken.

The likes of Snapdeal, Flipkart and Amazon have adopted a marketplace model and attracted billions of dollars of foreign capital. India's brickand-mortar retailers accuse them of "circumventing" FDI regulations by calling themselves marketplace, while indulging in actual retailing.