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.