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LEGAL

1. Executive Summary
  • This legal opinion is rendered pursuant to a request by Uttar Pradesh Small Industries Corporation Ltd. (UPSIC) for an evaluation of the legal robustness, enforceability, and statutory compliance of the UP MSME 1 Connect Portal’s Terms of Use, Privacy Policy, and related legal instruments.
  • The primary objective of this review is to ensure that the portal’s legal framework sufficiently insulates UPSIC from operational and third-party liability, while maintaining compliance with applicable Indian laws. It is further advised that UPSIC’s role be expressly defined as that of a neutral facilitator, with no contractual or legal involvement in any transaction, negotiation, or dispute arising between users of the portal.
  • Following a comprehensive analysis, it is concluded that, with the incorporation of the recommendations set out herein, UPSIC shall be in a position to lawfully and effectively limit its liabilities, align with regulatory mandates, and safeguard its operational standing.
2. Key Legal Strengths Identified in the Existing Documentation
  • UPSIC as Neutral Facilitator: The Terms of Use consistently reinforce UPSIC’s limited role as a digital intermediary, facilitating engagement between artisans and consumers. No agency, employment, or fiduciary relationship is created, thereby supporting UPSIC’s entitlement to “safe harbor” protection under Section 79 of the Information Technology Act, 2000.
  • User Accountability: Obligations concerning data accuracy, credential protection, and transactional integrity are unequivocally assigned to users. UPSIC disclaims liability for unauthorized access or misuse, except where gross negligence on its part is established.
  • Content Control & Access Rights: UPSIC reserves discretionary authority to suspend, restrict, or terminate user access and remove content, without incurring any liability for resulting loss or inconvenience.
3. Review of Risk Mitigation Measures
  • Indemnity Provisions: The draft terms include clauses requiring users to indemnify UPSIC against any claim, damage, or liability resulting from user conduct, content, or disputes. These provisions are essential to deflect direct legal exposure.
  • Content Ownership and Licensing: While users retain ownership over their intellectual property, UPSIC is granted a perpetual, royalty-free, non-exclusive, global license to use such content. UPSIC expressly disclaims any endorsement and retains authority to remove infringing content and suspend repeat offenders.
  • “UPSIC is not a party to, nor does it endorse, guarantee, or mediate any contract, transaction, or communication between users, including MSMEs, buyers, or third parties. All rights, obligations, liabilities, and risks arising therefrom rest solely with the respective users.”
  • Warranty Disclaimers: The documentation comprehensively disclaims all warranties regarding content accuracy, legality, merchantability, or fitness for a particular purpose. UPSIC does not monitor, verify, or guarantee user-generated content except for legal compliance.
4. Regulatory Compliance Observations
  • Eligibility Restrictions: Platform access is limited to individuals aged 18 years or older and legally competent under Indian law.
  • Integration of Privacy Policy: The Terms of Use appropriately incorporate the Privacy Policy by reference, ensuring compliance with Section 43A of the Information Technology Act, 2000.
  • Grievance and Takedown Mechanisms: Provisions exist for reporting violations and unlawful content, along with requirements to notify relevant authorities in the event of criminal conduct.
5. Recommended Modifications to Strengthen Legal Position
  • Limitation of Liability: Introduce a comprehensive clause capping UPSIC’s liability to the maximum extent permitted by law, excluding indirect, incidental, consequential, and punitive damages.
  • Explicit Disclaimer of Involvement: Include express language stating that UPSIC does not participate in, facilitate, or enforce any contractual arrangement or transaction between users.
  • Dispute Resolution Clause: Mandate arbitration for all disputes, with exclusive jurisdiction vested in courts located in Uttar Pradesh, and confirm Indian law as the governing law.
  • Policy Updates and Amendments: Include an express reservation of rights to update terms in response to statutory or policy changes, and clarify that continued use constitutes acceptance.
  • Clarification of Takedown Procedure: Define the procedure, evidentiary standards, and response timelines for addressing claims of intellectual property infringement.
  • “UPSIC has no liability to , indirect, incidental, consequential, and punitive damages occurred between transaction of the parties”
  • UPSIC does not participate in, facilitate, or enforce any contract or transaction between users
6. Legal Characterization of UPSIC’s Role
  • UPSIC’s designation as a digital platform and non-participatory intermediary must be reiterated throughout all legal texts and user interfaces.
  • Suggested clause: “UPSIC is not a party to, nor does it endorse, guarantee, or mediate any contract, transaction, or communication between users, including artisans, buyers, or third parties. All rights, obligations, liabilities, and risks arising therefrom rest solely with the respective users.”
7. Disclaimers and Risk Allocation Clauses
To ensure comprehensive protection, the following checklist should be implemented:
  • Scope of Limitation: Clearly specify all categories of damages and claims excluded from liability.
  • Liability Cap: Establish a defined monetary cap on UPSIC’s liability, subject to judicial review for reasonableness.
  • Exclusion of Specific Damages: Exclude all indirect, special, incidental, consequential, or punitive damages except where prohibited by law.
  • Statutory Exceptions: Acknowledge that liability exclusions shall not apply to instances of fraud, willful misconduct, personal injury, or statutory violations.
  • Time Limits: Impose a defined period (e.g., 12 months) for the institution of claims against UPSIC.
  • Incorporation and Prominence: Ensure that the limitation clause is incorporated by reference and drafted in clear, conspicuous language.
  • Review and Revision Mechanism: Provide for periodic legal review to address evolving legal standards or statutory amendments.
  • “Any Dispute shall first be sent to mandatory arbitration for all, exclusive jurisdiction of UP courts, and Indian law as the governing law wherein an independent an neutral sole arbitrator be selected by parties and shall be hearing dispute as per arbitration and conciliation Act,1996”
  • “UPSIC Reserve rights to modify terms in response to legal or policy changes and continued use of the portal shall be considered as deemed acceptance to all disclaimers.”
8. Recommended Indemnity Clause:
  • “The User agrees to indemnify, defend, and hold harmless Uttar Pradesh Small Industries Corporation Ltd. (UPSIC), its officers, agents, employees, and representatives, from and against all claims, liabilities, damages, losses, or expenses (including legal fees) arising out of: (a) breach of the Terms or applicable law; (b) user-submitted content; or (c) disputes between users or with third parties.”
  • The User hereby agrees to indemnify, defend and hold harmless Uttar Pradesh Small Industries Corporation Ltd. (UPSIC), its affiliates, officers, employees, agents, contractors, and representatives from and against any and all claims, demands, actions, liabilities, losses, damages, costs or expenses (including reasonable attorney’s fees) arising out of or in connection with:
  • (a) any breach by the User of these Terms of Use, Privacy Policy, or any applicable law
  • (b) any negligence, willful misconduct, misrepresentation, or violation of rights by the User
  • (c) any content or materials provided, posted, transmitted, or contributed by the User on the portal;
  • (d) any disputes, transactions, or interactions between the User and other users, MSMEs, service providers, or third parties via the portal.
  • This indemnity shall survive termination or suspension of the User’s account or use of the portal.
9. Recommended User Warranty Clause:
“The User represents and warrants full compliance with applicable law, accuracy of information, and lawful ownership of any content submitted.” These clauses ensure full risk attribution to the user, a critical protection against third-party claims and statutory liabilities.
  • all information provided to UPSIC via the portal is true, accurate, and complete to the best of the User's knowledge
  • the User has full legal right, authority, and capacity to enter into and perform obligations under these Terms;
  • the User will comply at all times with applicable laws, regulations, and UPSIC policies in relation to portal use
  • the User's submitted content does not infringe or violate any third-party rights (including intellectual property, privacy, or publicity), nor contain unlawful, offensive, or misleading material
  • the User has not been restricted or barred by any competent authority from participating in relevant activities.
  • If any warranty is found to be false or breached, UPSIC reserves the right to suspend, terminate, or take any legal action as permitted by law.
10. Data Protection & Privacy Law Alignment
Observations: While the Privacy Policy reflects an intent to comply with existing law, it lacks certain critical elements:
  • Affirmative Consent for Sensitive Data: Explicit, revocable user consent should be obtained before collection or processing of sensitive data.
  • Data Subject Rights: Incorporate rights to access, rectify, delete, and object to data processing.
  • Transparency in Data Practices: Specify data categories, purpose of collection, processing activities, third-party access, and storage protocols.
  • Data Breach & Security Mechanisms: Align breach reporting with CERT-In guidelines, and describe encryption, audit, and retention policies.
  • Grievance Officer Appointment: In compliance with Rule 5(9) of the IT Rules, 2021, designate a Grievance Officer with publicly disclosed contact details and a 15-day resolution window.
11. Dispute Resolution and Jurisdiction
  • Introduce a binding arbitration clause for all disputes.
  • Establish exclusive jurisdiction of courts in Uttar Pradesh.
  • Confirm Indian law as the governing law for all platform-related terms and obligations.
12. Legislative Compliance
The Terms and Privacy Policy must reflect compliance with the following statutes and rules:
  • Information Technology Act, 2000
  • Indian Contract Act, 1872
  • Consumer Protection (E-Commerce) Rules, 2020
  • IT (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021
  • The proposed Digital Personal Data Protection Act (when enacted)
  • MSME Development Act, 2006 (where applicable)
  • Recommendation: Conduct biannual legal audits to ensure continued conformity with applicable laws.
13. Accessibility and User Transparency
  • Ensure that legal documents are prominently displayed, clearly worded, and translated where necessary.
  • Implement version control, with user notifications for all changes and a clear mechanism for continued acceptance.
14. Final Legal Opinion
Subject to the incorporation of the recommendations enumerated above, it is my professional opinion that:
  • UPSIC’s role as a neutral digital intermediary will be clearly and legally established.
  • Liability exposure will be limited through enforceable disclaimers, indemnities, and risk allocation.
  • Substantial compliance with current Indian law—including IT, e-commerce, and data protection frameworks—will be achieved.
  • Operational and reputational risks will be significantly mitigated.
  • Legal and regulatory challenges, including user litigation and statutory penalties, will be minimized.
15. Failure to implement the suggested amendments may result in:
  • Exposure to consumer litigation under IT and e-commerce laws
  • Claims of data privacy violations under prevailing or forthcoming statutes
  • Direct liability for user-generated content, failed transactions, or IP infringement

Accordingly, immediate revisions to the Terms and Privacy Policy are advised, along with biannual legal review to ensure ongoing compliance.

Uttar Pradesh Small Industries Corporation Ltd. (UPSIC), as operator of this portal, is solely a facilitator for the purpose of connecting artisans registered on the platform with potential service seekers. UPSIC neither engages in, participates in, nor facilitates any monetary transactions or negotiations between artisans and service seekers. Any financial arrangement, transaction, or negotiation conducted between an artisan and a customer is strictly between said parties and is outside the scope of UPSIC’s responsibilities. UPSIC shall not, at any stage, be liable or responsible for any claim, dispute, loss, damages, or demands arising from or relating to such monetary transactions or negotiations between artisans and customers. Users of this portal expressly acknowledge and agree that UPSIC bears no obligation with respect to any financial matters between portal participants”