Packaged by Law
An Overview of Existing Case Law on Packaged Commodities
The Standards of Weights and Measures (Packaged Commodities) Rules 1977 has been replaced in 2011 by the The Legal Metrology (Packaged Commodities) Rules, 2011. Therefore, the existing case law is available only under the erstwhile 1977 Rules.
Object of the Act
The statement of objects and reasons of the Bill culminating in the Standards of Weights and Measures Act, 1976 clearly indicate that pursuant to the adoption of international system of units of weights and measures and being a party to the General Conference of Weights and Measures and the International Organisation of Legal Metrology, India had to revise the standards of weights and measures with a view to providing a coherent scheme for measurements having regard to the rapid advance made in the fields of science and technology and to evolve a practical system of units of weights and measures, suitable for adoption for all the signatories thereof. Thereafter a committee was constituted by the government to consider what changes were required to he made in the 1956 Act in order to give effect to the recommendations made by the aforesaid international organization. It is stated in the objects and reasons that the bill further provides for consumer protection as well. I quote:
"The Bill further provides for consumer protection in respect of packaged commodities by providing, in pursuance of the recommendations of the International Organization of Legal Metrology, for the proper indication on the package of net quantity by weight, measures or number, the identity of the commodity contained therein, name of the manufacturer, and what is very important, the price of the package. It is also proposed that commodities commonly used by people should be packed in rationalized standard quantities by weight, measure or number, so as to facilitate the purchase and comparison of price by the people. Further, indication of date of manufacture and date of expiry would also be marked for appropriate products. A further provision for consumer protection is the approval of models of weights, measures and weighing and measuring instruments, which is recommended by the International Organization of Legal Metrology, draft law. The scientific evaluation of the performance accuracy and dependability of weights, measures etc., would enable the consumer to buy his requirements with greater confidence about accuracy and also give industries the facility to use more accurate measuring instruments in their production control and enable the scientists to measure accurately the quantities involved in their researches. All these benefits will contribute to national development."
Section 83 empowers the Central Government to make Rules for carrying out the provisions of the said Act. In exercise of the aforesaid powers, the Central Government made the “The Standards of Weights and Measures (Packaged Commodities) Rules 1977.”
The Rule making power of the Government was also upheld in Cottage Industries v. The Union of India (UOI) “The legislature by the specific provision has enabled the Central Government to frame Rules. It cannot be contended that the deletion of 'clause (c)' to Rule 34 is beyond the Rule making power. When only in terms of Rule 34 'incense sticks' i.e. Agarbathis the applicability of the (Packaged Commodities) Rules had been made in-applicable, it is equally well open to the first respondent to delete the clause and make the Rules applicable to Agarbathis. The learned Counsel has merely raised a contention that the exercise of Rule making power is arbitrary and unreasonable and had not cited any authority in support of his contention. By the deletion of 'clause (c)' to Rule 34 Agarbathis had been brought under the purview of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 and it cannot be contended that the notification is beyond the Rule making power nor it could be contended that it is ultra vires of the provisions of the Act.”(Paragraph 20)
Application of the Rules
Goods sold by weight, measure or number
The Preamble to The Standard of Weights and Measures Act declares that the Act applies only to inter-state sales of goods which are sold or distributed by weight, measure or number. In Tata Cellular Ltd. v. Shiva Kumar and State of A.P the Court observed that “Since the 1st respondent did not purchase the Tata Cellular Direct Card sold by the Petitioner as per its weight or measure, and since the weight and (or) measure of the card purchased by him (1st respondent) has no relation to its utility or the purpose for which he purchased it, the provisions of 1976 Act or the Rules framed thereunder would not apply to the TCD Card manufactured and sold by the Petitioner.” (Paragraph 8)
Inter-state trade or commerce
In Flemingo Duty Free Shops Pvt. Ltd., v. The State of Karnataka, it was held that the sale of goods at the departure terminal of an airport, does not constitute ‘inter-state sales’ within the meaning of the Standard of Weights and Measures Act, 1976. In The Federation of Hotels and Restaurants Association of India and Ors. v. Union of India and Ors, it was held that charging prices for mineral water in excess of MRP printed on the packaging, during the service of customers in hotels and restaurants does not violate any of the provisions of the Standard of Weights and Measures Act as this does not constitute a sale or transfer of these commodities by the hotelier or Restaurateur to its customers. The transaction of receiving a customer in a hotel or restaurant is one of service and not sale or transfer.
The penalty for violating Rule 6 of not making the stipulated declarations is only fine. Therefore, the period of limitation is 6 months. In Kimberly Clark Liver Ltd v. State the suit was dismissed on grounds of limitation.
The definition of “manufacturer” given in Rule 2(h) came up for interpretation in Indus Videotronics and Anr.v.Digambar M. .Badodkar and Anr in which the Inspector seized video cassettes which did not bear particulars like price, month and year, size and time or length of the picture. Petitioner contended that the Act and Rules are not applicable since the Petitioners are neither manufacturers nor producers of the cassettes but they only transmit the film produced by the producer on blank cassette manufactured by the manufacturer of the blank video cassette. It is observed that the word "manufacture" used as a verb is generally understood to mean as "bringing into existence a new substance" and does not mean merely "to produce some change in a substance" however minor in consequence the change may be. Surely the blank cassette has been transformed by the Petitioners by transmitting on it the movie in respect of which the Petitioners had copyrights and a new and different article has emerged having a distinctive use. The Court held that even if it is held that the Petitioners cannot be said to have manufactured or produced these video cassettes, the activity of the Petitioners would amount to making of these video cassettes within the meaning of Rule 2(h). (Paragraphs 9, 10 and 12).
In M/s. India Photographic Co. Ltd v. M.D.Shourie, it was held in Paragraphs 6 and 7, “It is contended that Sub-rule (2) of Rule 6 alone was applicable in the case because the goods in the form of Kodak films were being sold by the distributor and not by the manufacturer. It is further contended that Sub-rule (1) of Rule 6 is applicable to the manufacturers alone. We are not satisfied with this submission. Accepting such a plea would result in frustrating the provisions of the 1986 Act and thereby encourage the retailers or distributors of foreign made goods to charge prices according to their convenience without letting the consumer know the actual price of the commodity. A perusal of Rule 6(1) of the Rules clearly shows that the stress of the sub-rule is upon the package and not upon the person manufacturing or selling the package. The provisions of Sub-rule (2) apparently appear to be in addition to the obligations cast upon the manufacturer and the dealer under Sub-rule (1) of Rule 6 of the Rules.”
The commodities in packaged form and pre-packed form are used interchangeably. “The definition of 'pre-packed commodity' in Rule 2(1) is exhaustive while the explanation I also contains illustration, when read in the context of the definition 'commodity in prepackaged form in Section 2(b) of the Act. The definition of the phrase 'commodity in the packaged form' in Section 2(b) of the Act though not exhaustive, cannot be read in isolation, but with the legislative history of the Act. Keeping in mind the purport and object of the Act and what it seeks to subserve, the definition of the phrase in Rule 2(1) must be given a meaningful application, with a view to make the Act workable. The consequences are that as long as the commodity in a prepackaged form is a package, and the commodity contained therein has a predetermined value, which cannot be altered on being opened or on undergoing a perceptible modification. In the circumstances, the definition in Rule 2(1) a subordinate legislation cannot be said to override the principal legislative definition of the phrase in Section 2(b) of the Act, or that the Rule controls the Act. In the admitted facts of this case, the shoe packed in a carton is in single unit meant for retail sale. It may be that the pair of shoe is opened from the package so that the customer tests it but having regard to the Explanation (1) to Rule 2(1), it is amply clear that the Petitioner's product falls within the definition of the term 'pre-packed' commodity.” (Paragraphs 13 and 14)
In Titan Industries Ltd. v. Union of India (UOI) and Ors, a Division Bench of Bombay High Court applied the test to determine whether a watch is a “pre-packed commodity” as defined under Rule 2(l). The Court observed that, "The test to see whether a commodity is pre-packed commodity would be - firstly whether by the very nature of commodity, it requires to be packed before it can be sold (and) secondly in the event a package is opened, does it undergo any perceptible change or reduction in value."
Electrical products like refrigerators, vacuum cleaners, washing machines and air-conditioners have been held to be pre-packaged commodity. The question whether sun glasses can be said to be a pre-packed commodity came up for consideration in Subash Arjandas Kataria v. State of Mah and Ors. The Petitioner has averred that the articles come to him either in polythene bags and some in individual openable pouch....Sometimes at the time of delivery they are put in a pouch which are normally on display for the customers to identify for the purpose of purchase. The package, therefore, is only a package for protection or safety of the article. Can therefore, sun-glasses be said to be a pre-packed commodity. The value of the product here sunglasses whether inside the package or outside the package does not alter if the package is opened nor does it undergo a perceptive modification on the package being opened. The question of Explanation 1, applying also will not arise as there is no testing and as the product need not be individually packed before the customer intends to buy it. The testing if at all by an individual who intends to purchase a sunglass is for the purpose of determining whether he should purchase the article considering his requirement, at which point of time the article is never in a package.
In Reebok India Company v. Union of India and Ors, the argument of the Petitioner that the Standard Weights and Measures (Packaged Commodities) Rules, 1977 can apply only to those commodities with respect to which a specific notification has been issued under s.1 (3) (d) of the Standard of Weights and Measures Act,1976 was rejected by the Delhi High Court. General notification dated 26th September, 1977 has been issued enforcing the provisions of the Act and there is no need for any specific notification. The same was held by the Andhra Pradesh High Court in TVS Electronics Limited and Anr. v. Union of India, Civil Supplies and Ors, in which an Electronic printer was held to be a pre-packed commodity. An electronic printer which is packed (may be for the purpose of insulation and protection from damage) in the absence of customer, after it is removed it undergoes perceptible modification, and therefore, it falls within the category of pre-packed commodity. Also, there was no need for different notifications specifying the different dates for application of the Rules to different products.
Manner of Display
The required information has to be displayed on the Principal Display Panel. “Principal Display Panel” as defined in Rule 2(m) of the Rules states that all the information could be grouped together and given at one place or the pre-printed information could be grouped together and given in one place. Further Sub-rule (1) of Rule 6 would provide that every package shall bear thereon or on a label securely affixed thereto a definite, plain and conspicuous declaration made in accordance with the provisions. Therefore, Rule 2(m) and 6 would indicate the manner in which the display is to be made. The requirements of area, size, etc of the principal display panel have been specified in Rule 7.
In The Manager, Asian Paints (India) Limited v. The Inspector of Legal Metrology, Flying Squad-1 a tin of paint was seized since it contained a sticker displaying the price of the article. The Honourable High Court dismissed the complaint since it was made by the Inspector and not by a person duly authorized.
The manufacturer or packer is not allowed to alter the price on the wrapper once printed and used for packing with effect from 26th August, 1993. The Government decided to withdraw the relevant provisions from the rule permitting revision of prices by use of stickers by deleting explanation clause to Rule 4 and adding a sub-clause 23(7) with immediate effect. This amendment was challenged in Ballarpur Industries Ltd. v. Union of India. The Honourable High Court upheld the validity of the amendment while stating that the purpose of the enactment is to have a firm price affixation and that all information should be printed on one label or sticker and there is no need to put repeated labels or stickers. A new provision has been added with effect from 13th January, 2007 that it is not permissible to affix individual stickers on the package for altering declarations required under the Rules, unless it is for lowering the MRP, and in that case also it should not cover the MRP declaration made by the manufacturer or packer.
“Wholesale package” has been defined in Rule 2(x) as a number of retail packages or a commodity in bulk which is intended for sale or sold to an intermediary and not to the consumer directly.
In ITC Ltd.v Inspector, Legal Metrology and Anr , it was held that a corrugated fibre board container used for the convenience of transport and storage cannot be considered a wholesale package. Similarly, in Raj Marketing v. State of Maharashtra, Inspector of Metrology it was held that secondary outer packing for transportation and safety of the goods being transported or delivered cannot be described as a wholesale package. In Manaksia Limited and Ors. v. Inspector, Legal Metrology, Weights and Measures Department and Ors also the case was sent back to the trial Court to determine whether declaration on the outer cover is sufficient compliance of the Rules. In ITC Ltd v. State NCT of Delhi and Ors, the question arose as to whether a wholesale package was also required to display the maximum retail price. The Honourable High Court held that, “The requirement in Rule 6 as to what should be specified on a retail package is not the same as specified in Rule 29 in relation to wholesale packages. Rule 6 requires retail packages to mention inter alia, the net quantity, the month and the year in which the commodity is manufactured and the retail sale price of the package. Rule 29, on the other hand, requires wholesale packages to mention the name and address of the manufacturer, the identity of the commodity contained in the package, the total number of retail packages contained therein and the net quantity in terms of standard units etc. There is no requirement of mentioning the MRP.” (Paragraph 8)
Commodities to be sold only in standard packages
Rule 5 requires that the commodities specified in the Third Schedule should be pre-packed in standard quantities. It was challenged in Britannia Industries Limited v. Union of India, in which it was held that a commodity given free of cost along with a standard commodity also had to comply with the requirements of Rule 5. The Honourable High Court observed that “there is no merit in the argument that Rule 5 would be violative of Art.14 or Art.19(1)(g) of the Constitution. If the manufacturer has to give something free of cost, the said quantity would have to be packed along with the standard package or in a standard quantity.” Similarly, in the case of Hindustan Lever Limited v. The Controller of Legal Metrology and Ors, a multi-piece package of 3 pre-packaged soaps of 75 g each and total weight of 225 g was held not to be in violation of Rule 5.
Declaration of name and address of the manufacturer
The name and address of the manufacturer is required to be displayed under Rule 6(1)(a). It provides that every package shall bear thereon or on a label securely affixed thereto a definite, plain and conspicuous declaration as to the name and address of the manufacturer made in accordance with the provisions. It was held in Lion dates Pvt. Ltd. v. Controller, Legal Metrology Dept and Anr that fruits are natures’ bounty, question of noting the name of the manufacturer on the package does not arise. In view of Rule 12(2) read with entry 8 in the Fifth Schedule which relates to 'all kinds of fruits' if weight of the product in the package is noted; it is sufficient compliance with the Rules.
Declaration of maximum retail price
Rule 6(1)(f) requires that every package must have a declaration of the retail sale price.
Retail sale price.- “Retail sale price” has been defined in Rule 2(r) as the maximum price at which the commodity in packaged form maybe sold to the ultimate consumer.
Under Rule 23, no retail dealer can make a sale of a commodity at a price exceeding the retail sale price. Rule 23 read with Rule 2(r) was challenged in Mumbai Bidi Tambaku Vyapari Sangh and Ors v. Union of India (UOI) and Anr. The Petitioner’s contention was that they are small retail traders whose turnover is always very low and they earn profits from the commission they charge on the sales. The difference between the purchase price for the members of their association of pre-packaged commodities and the retail sale price which has to be published on various brands of pre-packaged commodities, did not fetch commission of more than 10%. It was therefore, unreasonable to impose a maximum retail price which does not allow the retailer to have at least 15%-20% commission on their sales. The Court held that the Rules were not violative of fundamental rights guaranteed under Articles 14, 19(1)(g) and 21 of the Constitution. The Rules were for consumer protection and had to be complied with.
By amendment to Rule 2(r), the present requirement is that the package should contain "M.R.P." and not "Maximum Retail Price" with effect from 12th March, 1994. In Lucas Indian Service Limited and Ors .v. State of A.P. rep. by P.P, it was held, “Turning to the case on hand, the offence under Rule 2(r) prior to amendment was that a package should have contained "Maximum Retail Price" in so many words, whereas the same is amended and it would be sufficient if "M.R.P." is marked thereon. In fact, the Petitioners have marked "M.R.P." and thereby they have fulfilled the requirement of the amended Rule.” (Paragraph 11)
Exemption from Packaged Commodities Rules with regard to scheduled and non-scheduled formulations covered under the Drugs Control Order came into effect from 1st December, 2003 and Rule 34(e) has been added specifying the same. Thus, packaged commodities rules ceased to apply to formulations covered by the Drugs (Price Control) Order, 1995 made under s.3 of the Essential Commodities Act, 1955. A complete code with regard to pricing of drugs is enacted by the Drugs Control Order. Exemption is also granted to commodities of net weight 10 g or 10 ml or less.
# This practical system of weights and measures was given the name “Le Systeme Internation d’Units” (with its international abbreviation “SI”)
# M/s.T.T.(Pvt) Ltd. v. union of India.,(Paragraph 4); AIR 1991 Kant 79: MANU/KA/0020/1991
# (1998)1MLJ553: MANU/TN/1192/1997
# An Act to establish standards of weights and measures, to regulate inter-State trade or commerce in weights, measures and other goods which are sold or distributed by weight, measure or number, and to provide for matters connected therewith or incidental thereto.
# 2002 (1) ALD (Cri) 924 : MANU/AP/0768/2002
# 139(2007)DLT 7: MANU/DE/7183/2007
# 2006CriLJ2438; MANU/AP/0445/2006
# AIR 1999 SC 2453 : MANU/SC/0447/1999
# AIR2006Bom336: MANU/MH/0949/2006
# Whirlpool of India Limited v. Union of India (UOI) and Anr; AIR2008SC397: 2007(218)ELT167(SC)
# Eureka Forbes Limited v. Union of India (UOI) and Ors; AIR2003AP275: MANU/AP/0174/2003
# Union of India(UOI) v. Godrej-Ge Appllences Ltd; 2009(235)ELT435(Ker): MANU/KE/0142/2008
# AIR 2006 Bom 293: MANU/0579/2006
# Referred to in the annexure to the List of Cases
# 2009(1)ALT 243: 2009 CriLJ 1470: MANU/AP/0761/2008
# Khaitan Electricals Ltd., v. The Union of India and Anr, Paragraph 8; ILR 2008 KAR 3370: MANU/KA/0172/2008.
# AIR 1997 Delhi 1
# Rule 6(1-B)
# 2009(III)Bom LR 3245: MANU/MH/0580/2009
# The standard sizes of biscuits are 25g, 50g, 75g, 100g, 150g, 200g, 250g, 300g and thereafter in multiples of 100g upto 1 kg.
# 2009(2)KLJ 378: MANU/KE/0247/2009
# The standard sizes of toilet soap including all kinds of bath soap (cakes) are 25g, 50g, 75g, 100g, 125g, 150g, and thereafter in multiples of 50g.
# AIR 2008 AP 188
# 2003(4)BomCR300: 2003(2)MhLj147
# Colgage Palmolive India Ltd. and Ors. v. State of Maharashtra and Anr,(Paragraph 19); MANU/MH/0939/2006
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