Associated Press Writer

NEW DELHI (AP) – The Delhi High Court on Tuesday granted bail to the head of eBay’s Indian subsidiary, an American citizen 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 Friday following the sale of images showing classmates at a New Delhi high school engaged in oral sex. His arrest drew the interest of the U.S. State Department and a strong rebuke from officials in India’s technology industry.

Judge Vikramjit Sen granted bail to Bajaj, but asked him to surrender his passport and not leave the country without the court’s permission, said Rajiv Luthra, his lawyer. He declined to comment on the case.

Police say they arrested Bajaj because he violated the India’s Information Technology Act of 2000, which makes a criminal offense out of “publishing, transmitting, or causing to publish any information in electronic form, which is obscene.”

But eBay, which bought Baazee.com for US$50 million (euro 38 million) in June, said it was “outraged” by the arrest. The sex video sale took place without the knowledge of company officials, it said. The seller violated the policies of Baazee.com and was deleted from the Web site as soon as the company became aware of the incident, eBay said in a weekend statement.

The 17-year boy who used a camera-fitted mobile phone to film himself and his girlfriend in an act of oral sex and then circulated the images to his friends was arrested Sunday night. He was brought to a court Tuesday and the judge ordered he be kept in a juvenile rehabilitation center until Jan. 4 for questioning.

Police believe the boy’s interrogation will help track how the video clip reached its seller, a student at India’s most prestigious engineering college in the eastern city of Kharagpur, who was arrested a week ago.

Bajaj’s arrest drew sharp criticism from Industry officials and legal experts, who demanded that the government clarify the country’s Information Technology Act. The law is ambiguous about who should be held responsible for such offenses.

Indian Trade minister Kamal Nath told CNBC television that police appear to have acted in haste.

In Washington, U.S. State Department spokesman Richard Boucher said Monday that American consular officials were providing help to the Indian-born Bajaj, a Harvard Business School graduate.

“It is a matter that we are paying quite a bit of attention to,” Boucher said. “This situation is one of concern at highest levels of the U.S. government.”

Some say Bajaj may have been the victim of overzealous Indian police, who wanted to appear on top of the case in the face of widespread shock and outrage among many parents and social conservatives.

“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 U.S. 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 sentimentcan 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.”