In a recent judgment (I(2011) CPJ 13 NC), The National Consumer
Commission has upheld the order of Bharuch (Gujrat) District Forum
imposing a fine on Hotel Nyay Mandir for having charged more than the
Maximum Retail Price (MRP) on some soft drinks. While the decision of
the National Commission is to be welcomed from the point of view of the
consumer, unfortunately, it goes against an order of the Supreme Court.
This order of the Supreme Court order (State of Himachal Pradesh Vs. Associated Hotels of India, AIR 1972 SC 1131) given in 1972 makes MRP applicable only to retail sales, i.e., goods sold in shops. So food and drinks consumed in hotels, restaurants or airplanes may be sold at prices above the MRP. The Supreme Court held that such food and drinks can not be considered retail sales since they are always accompanied by service.
It appears that most consumer courts are not aware of this order, because they keep awarding compensation against hotels and restaurants which sell packaged commodities in excess of MRP. In one such case (II(2007) CPJ 96), The Delhi State Consumer Commission imposed huge punitive damages of Rs. 50,000 on a restaurant serving mineral water to its customers at three times the MRP. Local consumer courts have also given similar judgments in recent cases. But all these orders are against the Supreme Court order and are liable to be struck down.
But the situation is even worse. The laws related to MRP have been carelessly drafted and so, strictly speaking, even shops which sell above MRP can not be punished.
Most people believe that the Maximum Retail Price (MRP) printed on packaged commodities is beneficial to the consumers. They believe that the commodities can not be sold above the MRP and so printing of MRP prevents exploitation of consumers. Therefore, it is sad that defective drafting of the laws have made MRP a meaningless number.
The laws related to MRP are in the process of being changed. Let us see why both the present laws and the new laws are defective.
PRESENT LAWS:
Right now, MRP is governed by the Standards of Weights and Measures Act, 1976 and the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 made under Sec. 83 of the Act to carry out its provisions. Sec. 39 of the Act states that no commodity shall be sold in package form if the package does not have the price printed on it. A fine of upto Rs. 5000 and a prison term of upto 5 years is prescribed in Sec. 63 of the Act for not printing the price on the package. But the Act does not forbid selling a packaged commodity for a price higher than the printed price, much less fix a penalty for selling above the printed price.
Sec. 23(2) of the Rules prohibits the retail sale of any packaged commodity at a price higher than the printed MRP.
There are several Supreme Court orders which prescribe the limits of Rules made under an Act. They all say that Rules cannot extend the boundaries of the Act under which they have been made (e.g. Bharathidasan University Vs. All-India Council for Technical Education, (2001) 8 SCC 767). In the present case, the Standards of Weights and Measures Act only mandates that the price be printed on the package whereas the Rules go impermissibly further by stipulating that price charged can not exceed the printed price. Therefore, this part of the Rules is invalid. In other words, there is no limit on the price charged! Not printing MRP attracts punishment, but not selling above MRP. MRP becomes just a fiction.
It is amazing that the legal experts and bureaucrats who draft legislation are ignorant of such legal basics. They should have included the prohibition of charging a price higher than the printed price in the Act itself and not just in the Rules. By not doing it, they have negated the very purpose of MRP.
NEW LAWS:
It seems that the legal experts and bureaucrats do not learn from their past mistakes either. The Legal Metrology Act, 2009 which is replacing the Standards of Weights and Measures Act, 1976, and The Legal Metrology (Packaged Commodities) Rules, 2011 which will replace he Standards of Weights and Measures (Packaged Commodities) Rules, 1977 will come into force on 1-3-2011. But they are also badly drafted and the same problems which exist with the present laws exist with the new laws also. Sec. 36 of the Act prescribes a penalty of Rs. 25,000 for selling a packaged commodity which does not conform to the declarations on the package, but it appears that the nonconformity refers only to weight, number, etc. and not to the price. So there is no explicit prohibition of sale above the MRP. But Sec. 18 of the Rules prohibits the retail sale of any packaged commodity at a price higher than the printed MRP. So the situation is very similar to the present laws and again, not printing MRP attracts punishment, but not selling above MRP.
Unless the parliament fixes this lacuna, MRP will continue to remain a paper tiger and not benefit any consumer.
This order of the Supreme Court order (State of Himachal Pradesh Vs. Associated Hotels of India, AIR 1972 SC 1131) given in 1972 makes MRP applicable only to retail sales, i.e., goods sold in shops. So food and drinks consumed in hotels, restaurants or airplanes may be sold at prices above the MRP. The Supreme Court held that such food and drinks can not be considered retail sales since they are always accompanied by service.
It appears that most consumer courts are not aware of this order, because they keep awarding compensation against hotels and restaurants which sell packaged commodities in excess of MRP. In one such case (II(2007) CPJ 96), The Delhi State Consumer Commission imposed huge punitive damages of Rs. 50,000 on a restaurant serving mineral water to its customers at three times the MRP. Local consumer courts have also given similar judgments in recent cases. But all these orders are against the Supreme Court order and are liable to be struck down.
But the situation is even worse. The laws related to MRP have been carelessly drafted and so, strictly speaking, even shops which sell above MRP can not be punished.
Most people believe that the Maximum Retail Price (MRP) printed on packaged commodities is beneficial to the consumers. They believe that the commodities can not be sold above the MRP and so printing of MRP prevents exploitation of consumers. Therefore, it is sad that defective drafting of the laws have made MRP a meaningless number.
The laws related to MRP are in the process of being changed. Let us see why both the present laws and the new laws are defective.
PRESENT LAWS:
Right now, MRP is governed by the Standards of Weights and Measures Act, 1976 and the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 made under Sec. 83 of the Act to carry out its provisions. Sec. 39 of the Act states that no commodity shall be sold in package form if the package does not have the price printed on it. A fine of upto Rs. 5000 and a prison term of upto 5 years is prescribed in Sec. 63 of the Act for not printing the price on the package. But the Act does not forbid selling a packaged commodity for a price higher than the printed price, much less fix a penalty for selling above the printed price.
Sec. 23(2) of the Rules prohibits the retail sale of any packaged commodity at a price higher than the printed MRP.
There are several Supreme Court orders which prescribe the limits of Rules made under an Act. They all say that Rules cannot extend the boundaries of the Act under which they have been made (e.g. Bharathidasan University Vs. All-India Council for Technical Education, (2001) 8 SCC 767). In the present case, the Standards of Weights and Measures Act only mandates that the price be printed on the package whereas the Rules go impermissibly further by stipulating that price charged can not exceed the printed price. Therefore, this part of the Rules is invalid. In other words, there is no limit on the price charged! Not printing MRP attracts punishment, but not selling above MRP. MRP becomes just a fiction.
It is amazing that the legal experts and bureaucrats who draft legislation are ignorant of such legal basics. They should have included the prohibition of charging a price higher than the printed price in the Act itself and not just in the Rules. By not doing it, they have negated the very purpose of MRP.
NEW LAWS:
It seems that the legal experts and bureaucrats do not learn from their past mistakes either. The Legal Metrology Act, 2009 which is replacing the Standards of Weights and Measures Act, 1976, and The Legal Metrology (Packaged Commodities) Rules, 2011 which will replace he Standards of Weights and Measures (Packaged Commodities) Rules, 1977 will come into force on 1-3-2011. But they are also badly drafted and the same problems which exist with the present laws exist with the new laws also. Sec. 36 of the Act prescribes a penalty of Rs. 25,000 for selling a packaged commodity which does not conform to the declarations on the package, but it appears that the nonconformity refers only to weight, number, etc. and not to the price. So there is no explicit prohibition of sale above the MRP. But Sec. 18 of the Rules prohibits the retail sale of any packaged commodity at a price higher than the printed MRP. So the situation is very similar to the present laws and again, not printing MRP attracts punishment, but not selling above MRP.
Unless the parliament fixes this lacuna, MRP will continue to remain a paper tiger and not benefit any consumer.
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