A court is expected to hear a plea for bail today by the head of eBay's Indian subsidiary, who was jailed in connection with the online auction of a sex video involving teenagers.
Avnish Bajaj, the CEO of Baazee.com - India's most popular shopping portal, now owned by California-based eBay Inc - was arrested on Friday following the sale of images showing classmates at a New Delhi high school engaged in oral sex.
On Saturday, a judge refused bail for Bajaj and sent him to jail for a week. Lawyers for Bajaj said they would make a plea for bail in Delhi High Court today.
EBay purchased Baazee.com in June for $US50 million ($A65.56 million), part of a broad expansion strategy throughout Asia and particularly the subcontinent.
The US company said it was "outraged" by the police action, saying the sex video sale took place without the knowledge of company officials. The seller violated the company's policies and Baazee.com took appropriate action in removing the item from its site as soon as it became aware of it, eBay said.
Police say they arrested Bajaj because he violated the India's Information Technology Act of 2000, which makes a criminal offence out of "publishing, transmitting, or causing to publish any information in electronic form, which is obscene".
Some say Bajaj may have been a scapegoat for Indian police, who have been under considerable pressure from social conservatives to identify and arrest anyone involved in the lewd video and its wide distribution.
"This sounds like a gross overreaction," said Peter Morici, professor of international business at the University of Maryland in College Park, Maryland.
Morici, former director of economics at the US International Trade Commission, said law enforcement agencies and the courts may have been responding to demands from wealthy Indians whose children attend the school where the scandal erupted.
"Indian government responds to popular pressure in ways that we would not expect a state government to respond," Morici said. "Popular sentiment ... can create a mob mentality toward one business or any individual. They may not go after you with pitch forks, but they will send their sheriffs after you."
The boy who filmed the act on his camera-fitted mobile phone and circulated it to his friends was arrested on Sunday night. Police believe his arrest will help track how the video clip reached its seller - an engineering student in an eastern Indian city, who was arrested a week ago.
"The video clip itself was not shown on the site; the seller offered to email the clip to the buyer directly," an eBay statement said. "The listing violated Baazee.com's policies and user agreement and was removed from the site once it was discovered."
Bajaj was arrested after he voluntarily travelled to New Delhi to cooperate with the police investigating the case, eBay said, calling his arrest "unexpected and completely unwarranted".
Industry officials and legal experts in India also deplored the arrest and demanded that the government clarify the country's Information Technology Act. The law is ambiguous about who should be held responsible for such offences.
AP