IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HON'BLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE K.T.SANKARAN WEDNESDAY, THE 9TH APRIL 2008 / 20TH CHAITHRA 1930 WA.No. 218 of 2003(B) AGAINST THE JUDGEMENT IN OP.16488/1998 Dated 26/08/2002 APPELLANT: (RESPONDENTS 1 AND 2): --------------------------------- 1. UNION OF INDIA, REP. BY ITS SECRETARY, MINISTRY OF FOOD & CIVIL SUPPLIES (DEPARTMENT OF CIVIL SUPPLIES), KRISHI BHAVAN, NEW DELHI-110 001. 2. THE DIRECTOR OF LEGAL METROLOGY, MINISTRY OF CONSUMER AFFAIRS, FOOD AND PUBLIC DISTRIBUTION, DEPARTMENT OF CONSUMER AFFAIRS, KRISHI BHAVAN, NEW DELHI-110 001. BY ADV. SRI.P.PARAMESWARAN NAIR,ASG SRI.CYRIAC KURIAN, CGSC RESPONDENTS: PETITIONER & RESPONDENTS 3 AND 4: -------------------------- 1. GODREJ - GE APPLLENCES LTD., PIROJSHANAGAR, VIKHROLI, MUMBAI, REP. BY ITS BRANCH MANGER, E.A.AUGUSTINE. 2. CONTROLLER OF LEGAL METROLOGY, THIRUVANANTHAPURAM. 3. INSPECTOR, LEGAL METROLOGY, KAKKANAD. BY SR. GOVERNMENT PLEADER SRI.C.T.RAVIKUMAR THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 5/9/2007, ALONG WITH WA NO.1098 OF 2003 AND CONNECTED CASES, THE COURT ON 9/4/2008 DELIVERED THE FOLLOWING: H.L.DATTU, C.J. & K.T.SANKARAN, J. ---------------------------------------------------------------- W.A.NOS. 218 OF 2003, 1098 OF 2003, 1217 OF 2003,1268 OF 2003, 1287 OF 2003, 291 OF 2004 AND O.P.NOS.12058 OF 1993, 16410 OF 1993, 17873 OF 1993, 15944 OF 1994, 11776 OF 1998, 16411 OF 1998, 18575 OF 1998, 21869 OF 1998, 5157 OF 1999, 9544 OF 1999, 17181 OF 1999, 21390 OF 1999, 21966 OF 1999, 27234 OF 1999, 29816 OF 1999, 2074 OF 2000, 7575 OF 2000, 11318 OF 2000, 32784 OF 2000, 12395 OF 2001, 13446 OF 2001, 16338 OF 2001, 19313 OF 2001, 24323 OF 2001, 17675 OF 2002 AND 1656 OF 2003. ----------------------------------------------------------------- Dated this the 9th April, 2008 JUDGMENT K.T.SANKARAN, J. This batch of Writ Appeals and Writ Petitions are disposed of by a common judgment since common questions relating to interpretation of the provisions of the Standards of Weights and Measures Act, 1976 (hereinafter referred to as “the Standards Act”), the Standards of Weights and Measures (Enforcement) Act, 1985 (hereinafter referred to as “the Enforcement Act”) and the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 (hereinafter referred to as “the Rules”) are involved in these cases. 2. W.A.Nos.218 of 2003 and 1098 of 2003 arise out of O.P.No.16488 of 1998. The Original Petition was filed by Godrej/GE Appliances Limited, first respondent in the Writ Appeals. These Writ Appeals are being dealt with at first so that the decision herein can be followed, to the extent possible, in other cases. W.A.NO.218 OF 2003 AND CONNECTED CASES :: 2 :: 3. O.P.No.16488 of 1998 was filed for the following reliefs: “(a) for an order and declaration of this Hon'ble Court that the provisions of Standards of Weights and Measures Act, 1976 and the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 and the Standards of Weights and Measures (Enforcement) Act, 1985 do not apply to the products manufactured and marketed by the petitioner; (b) for an order and declaration of this Hon'ble Court that Section 33 of the Standards of Weights and Measures (Enforcement) Act, 1985 is ultra vires the Constitution of India and is void and liable to be struck down; (c) for a writ of certiorari, or a writ in the nature of certiorari, or any other appropriate writ, order or direction of this Hon'ble Court calling for the records of the case and, after perusing the same, to quash and set aside all actions initiated against the petitioner including Exts.P1, P3 and P5 of 3rd Respondent; (d) for a writ of mandamus, or a writ in the nature of mandamus, or any other appropriate writ, order or direction of this Hon'ble Court restraining the Respondents by themselves, their officers, servants and agents, from taking any action whatsoever against the petitioner pursuant to or in implementation of any of the provisions of the Standards of Weights and Measures Act, 1976, the Standards of Weights and Measures (Packaged Commodities) Rules, 1977, and the Standards of Weights and Measures (Enforcement) Act, 1985 in respect of the manufacture, sale, storage, packing and distribution in the petitioner's products including by launching and/or initiating any legal proceedings, civil or criminal whatsoever against the petitioner or the Directors, servant and agents of the petitioner;” 4. The petitioner in the writ petition, namely, Godrej/GE Appliances Limited, manufactures refrigerators, air-conditioners and washing machines. They filed the writ petition when show cause notices were issued on the ground that the statutory declarations as laid down under Rule 6(1)(c), (f) and Rule 12(5) W.A.NO.218 OF 2003 AND CONNECTED CASES :: 3 :: (f) of the Rules are not made on the package containing refrigerators. According to the petitioner, the products manufactured and despatched by them in corrugated boxes are so despatched primarily and essentially for the purpose of protecting the goods while in transit from the factory to the warehouse and thereafter from warehouse to the dealers' shops. Thermocole and polythene covers are used to protect the devices or equipments. The goods do not satisfy the definition of commodity in packaged form or pre-packed commodity. The products would be displayed in the shops after opening from the package. The customer would inspect the product and, if satisfied, would place an order and the product would be supplied to him. It was contended that the products manufactured by the petitioner do not come within the ambit of the aforesaid Rules of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977. The learned Single Judge allowed the Original Petition. It was held thus: “By reason of Standards of Weights and Measures (Enforcement) Act 1985, the former is made applicable for intra State trade as well. Therefore the provisions therein are applicable only in respect of the trade or commerce by weight, measure or number. A stereo set or a refrigerator is not sold in weight or by measure or by number. It will be sold only in single number. There is no case before me by the respondents that such equipments or devices are sold in packets containing more than one. ...... As already mentioned above, these equipments are sold, with freedom for the customer to inspect and satisfy regarding its appearance and functioning. Therefore it cannot be taken that it is a commodity sold in package. Nobody is purchasing equipments like refrigerator or devices like Television sets, stereo sets etc., in packed form. Any purchaser will first get satisfied of its appearance and functioning. Then alone one will buy such articles. Therefore on any count it cannot be taken that W.A.NO.218 OF 2003 AND CONNECTED CASES :: 4 :: such equipment or devices are packaged commodity to come under the definition in Sec.2(b) of the 1976 Act. 9. When those are not packaged commodities, restrictions contained in Sec.39 of 1976 Act cannot be made applicable to such commodities. Naturally, there cannot be any violation to be proceeded against the petitioners including by prosecution.” However, the learned single Judge held that the specifications of the equipments or devices are to be shown on the polythene or hardboard cover. It was held thus: “In such circumstances, it is only appropriate, when equipments or devices are so covered, though not covered by Section 39 of the 1976 Act, to show specification of the concerned equipments or devices as the case may be.” 5. The contention that Section 33 of the Enforcement Act ultra vires the Constitution of India, void and is liable to be struck down was not apparently argued before the learned Single Judge. The learned counsel for the first respondent (petitioner in the Original Petition) did not raise that contention in the Writ Appeal as well. 6. The Standards Act is 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. The Standards Act is divided into parts I to VIII. Part IV deals with “inter-State trade or commerce in weight, measure or other goods”. Section 2(b) of the Standards Act defines “commodity in packaged form” thus: W.A.NO.218 OF 2003 AND CONNECTED CASES :: 5 :: “”commodity in packaged form” means commodity packaged, whether in any bottle, tin, wrapper or otherwise, in units suitable for sale, whether wholesale or retail;” Section 31 of the Standards Act reads as follows: “31. Part IV to apply to inter-State trade or commerce only:- The provisions of this Part shall apply to -- (a) every weight or measure which is, or is intended to be, -- (i) made or manufactured for the purpose of inter-State trade or commerce, (ii) used, sold, distributed, delivered or otherwise transferred in the course of inter- State trade or commerce; (b) goods which are, or are intended to be, sold, distributed, delivered or otherwise transferred by weight, measure or number in the course of inter- State trade or commerce; (c) every service which is rendered by weight, measure or number in relation to, or in the course of, inter-State trade or commerce.” Section 39 of the Standards Act provides for declaration of quantities and origin of commodities in packaged form. Sub-sections (1) to (3) of Section 39 read as follows: “39. Quantities and origin of commodities in packaged form to be declared:-- (1) No person shall, -- (a) make, manufacture, pack, sell, or cause to be packed or sold; or (b) distribute, deliver, or cause to be distributed or delivered; or W.A.NO.218 OF 2003 AND CONNECTED CASES :: 6 :: (c) offer, expose or possess for sale, any commodity in packaged form to which this Part applies unless such package bears thereon or on a label securely attached thereto a definite, plain and conspicuous declaration, made in the prescribed manner, of -- (i) the identity of the commodity in the package; (ii) the net quantity, in terms of the standard unit of weight or measure, of the commodity in the package; (iii) where the commodity is packaged or sold by number, the accurate number of the commodity contained in the package; (iv) the unit sale price of the commodity in the package; and (v) the sale price of the package. Explanation:-- In this sub-section, the expression “unit sale price” means the price according to such unit or weight, measure or number as may be prescribed. (2) Every package to which this Part applies shall bear thereon the name of the manufacturer and also of the packer or distributor. (3) Where the package of a commodity to which this Part applies or the label thereon bears a representation as to the number of servings, of the commodity contained therein, such package or label shall also bear a statement as to the net quantity (in terms of weight, measure or number) of each such serving.” Section 83 provides that the Central Government may, by notification, make rules for carrying out the provisions of the Standards Act. 7. The Standards of Weights and Measures (Packaged Commodities) W.A.NO.218 OF 2003 AND CONNECTED CASES :: 7 :: Rules, 1977 were framed by the Central Government in exercise of the powers conferred by Section 83 of the Standards Act. The Rules shall apply to the commodities in the packaged form which are, or are intended or likely to be (i) sold, distributed or delivered or offered or displayed for sale, distribution or delivery, or (ii) stored for sale or for distribution or delivery, in the course of inter- State trade and commerce ( Vide: Rule 1(3)). The expression “pre-packed commodity” is defined in Rule 2(l), thus: “(l) “pre-packed commodity” with its grammatical variations and cognate expressions, means a commodity or article or articles which, without the purchaser being present, is placed in a package of whatever nature, so that the quantity of the product contained therein has a predetermined value and such value cannot be altered without the package or its lid or cap, as the case may be, being opened or undergoing a perceptible modification and the expression “package”, wherever it occurs, shall be construed as a package containing a pre-packed, commodity; Explanation [1]:-- Where, by reason merely of the opening of a package no alteration is caused to the value, quantity, nature or characteristic of the commodity contained therein, such commodity shall be deemed, for the purposes of these rules, to be a pre-packed commodity, for example, an electric bulb or fluorescent tube is a pre-packed commodity, even though the package containing it is required to be opened for testing the commodity. Explanation II:-- Where a commodity consists of a number of components and these components are packed in one, two or more units for sale as a single commodity, such commodity shall be deemed for the purpose of these rules, to be a pre-packed commodity;” Rule 2(r) defines “retail sale price” as follows: “(r) “retail sale price” means the maximum price at which the commodity in packaged form may be sold to the ultimate consumer and where such price is mentioned on the W.A.NO.218 OF 2003 AND CONNECTED CASES :: 8 :: package, there shall be printed on the packages the words Maximum or Max, retail prices ... inclusive of all taxes or in the form MRP Rs.... inclusive of all taxes. Explanation:-- For the purpose of the clause “maximum price” in relation to any commodity in packaged form shall include all taxes local or otherwise, freight, transport charges, commission payable to dealers, and all charges towards advertisement, delivery, packing, forwarding and the like, as the case may be;” Chapter II of the Rules relates to “Provisions applicable to packages intended for retail sale”. Rule 3 provides that the provisions of Chapter II shall apply to packages intended for retail sale and the expression “package”, wherever it occurs in the said Chapter shall be construed accordingly. Rule 4 stipulates that on and from the commencement of the Rules, no person shall pre-pack, or cause or permit to be pre-packed any commodity for sale, distribution or delivery unless the package in which the commodity is pre-packed bears thereon, or on a label securely affixed thereto, such declarations as are required to be made under the rules. Rule 6 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 or where the manufacturer is not the packer, the name and address of the manufacturer and packer; the common or generic names of the commodity contained in the package; the net quantity, in terms of the standard unit of weight or measure, of the commodity contained in the package or where the commodity is packed or sold by number, the number of the commodity contained in the package; the month and year in which the commodity is manufactured or pre-packed; the sale price of the package etc. W.A.NO.218 OF 2003 AND CONNECTED CASES :: 9 :: Rule 12 provides the manner in which declaration of quantity shall be expressed. As per Rule 12(5), additional information about the commodity contained in a package shall also appear on the same panel in which the other information, as required by the rules have been indicated. Illustrations are provided in sub-rule (5). Illustration (f) therein states that in the case of electrical or electronic appliances, the voltage and wattage and also the output of such electrical or electronic appliances shall be mentioned. Rule 13(5) states that when any commodity is packed by number, such number shall be expressed on the package in international form of Indian numerals and every package intended to be sold by number shall be packed in the manner specified in the Sixth Schedule. The Sixth Schedule states that where any commodity is packed by number, such packing shall be made in the manner indicated therein. Clause (a) provides that where the number is less than ten, it shall be by the integral number. Rule 23 deals with the provisions relating to wholesale dealer and retail dealers. Rule 23 reads as follows: “23. Provisions relating to wholesale dealer and retail dealers:-- (1) No wholesale dealer or retail dealer shall sell, distribute, deliver, display or store for sale any commodity in the packaged form unless the package complies with, in all respects the provisions of the Act and these rules. (2) No retail dealer or other person including manufacturer, packer and wholesale dealer shall make any sale of any commodity in packaged form at a price exceeding the retail sale price thereof. Explanation:-- For the removal of doubts, it is hereby declared that a sale, distribution or delivery by a wholesale dealer to a retail dealer or other person is a 'retail sale' within the meaning of this sub-rule. W.A.NO.218 OF 2003 AND CONNECTED CASES :: 10 :: (4) Where, after any commodity has been pre-packed, for sale, any tax payable in relation to such commodity is revised, the retail dealer or any other person shall not make any retail sale of such commodity at a price exceeding the revised retail sale price, communicated to him by the manufacturer, or where the manufacturer is not the packer, the packer and it shall be the duty of the manufacturer or packer as the case may be, to indicate by not less than two advertisements in one or more newspapers and also by circulation of notices to the dealers and to the Director in the Central Government and Controllers of Legal Metrology in the States and Union Territories, the revised prices of such packages but the difference between the price marked, on the package and the revised price shall not, in any case, be higher than the extent of increase in the tax or in the case of imposition of fresh tax higher than the fresh tax so imposed: Provided that publication in any newspaper, of such revised price shall not be necessary where such revision is due to any increase in, or in imposition of, any tax payable under any law made by the State Legislatures: Provided further that the retail dealer or other person shall not charge such revised prices in relation to any packages except those packages which bear marking indicating that they were pre- packed in the month in which such tax has been revised or fresh tax has been imposed or in the month immediately following the month aforesaid: Provided also that where the revised prices are lower than the price marked on the package the retail dealer or other person shall not charge any price in excess of the revised price, irrespective of the month in which the commodity was pre-packed. (5) Nothing in sub-rule (4) shall apply to a package which is not required under these rules to indicate the month and the year in which it was pre-packed. (6) No retail dealer or other person shall obliterate, smudge or alter the retail sale price, indicated by the manufacturer or the packer, as the case may be, on the package or on the label affixed thereto. (7) The manufacturer or packer shall not alter the price on the wrapper once printed and used for packing.” W.A.NO.218 OF 2003 AND CONNECTED CASES :: 11 :: Rule 39 provides that if any person contravenes the provisions of rule 6, or tampers with, obliterates or alters any declaration made on any package, he shall be punished with fine, which may extend to Rs.2,000/-. 8. The Standards of Weights and Measures (Enforcement) Act, 1985 was enacted to provide for the enforcement of the standards of weights and measures established by or under the Standards of Weights and Measures Act, 1976, and for matters connected therewith and incidental thereto. The Enforcement Act extends to the whole of India. It shall come into force in a State on such date as the State Government may, by notification, appoint. The Enforcement Act came into force in the State of Kerala in the year 1992, by a notification issued by the State Government on 24.7.1992. Section 33 of the Enforcement Act occurring in Chapter IX reads as follows: “33. Provisions of the Standards Act and the rules made thereunder relating to commodities in packaged form to apply to commodities in packaged form sold or distributed within the State: -- (1) The provisions of the Standards Act and the rules made thereunder, as in force immediately before the commencement of this Act, with regard to commodities in packaged form which is distributed, sold, or kept, offered or exposed for sale, in the State as if the provisions aforesaid were enacted by, or made under, this Act subject to the modification that any reference therein to the “Central Government”, “Standards Act” and the “Director” shall be construed as references respectively, to the “State Government”, “this Act” and the “Controller”. (2) The State Government may make rules, not inconsistent with the Standards Act or any rule made thereunder, to regulate the packaging of any commodity intended to be sold or distributed, within the State in packaged form, or to regulate the sale or distribution, within the State, of any commodity in W.A.NO.218 OF 2003 AND CONNECTED CASES :: 12 :: packaged form. Explanation:- For the purposes of this section, “commodity in packaged form” shall have the meaning assigned to it in the Standards Act and shall include a pre-packed commodity.” Section 51 of the Enforcement Act provides for penalty for contravention of Section 33. 9. W.A.No.218 of 2003 is filed by respondents 1 and 2 in the Original Petition No. 16488 of 1998 while W.A.No.1098 of 2003 is filed by respondents 3 and 4. Sri.P.Parameswaran Nair, learned Assistant Solicitor General of India and the learned Government Pleader appearing for the appellants submitted that the finding of the learned single Judge that a stereo set or a refrigerator is not sold by weight or by measure or by number is not correct in view of the provisions of the Standards Act and the Rules. Learned counsel also submits that simply because the customer has the freedom to inspect and satisfy regarding appearance and functioning of the refrigerator, it cannot be taken that it is not a commodity sold in package. The finding of the learned single Judge that refrigerators or stereo sets are not packaged commodities is also being questioned by the learned counsel for the appellant. 10. Sri.A.M.Shafiq, learned senior counsel appearing for the first respondent/writ petitioner submits that the Standards Act and Rules and the Enforcement Act do not apply to the manufacture and sale of refrigerators as it W.A.NO.218 OF 2003 AND CONNECTED CASES :: 13 :: does not satisfy the definition of “packaged commodity” of “pre-packed commodity”. He submitted that the decision of the learned single Judge is correct, in the light of the various provisions in the Standards Act and Rules. 11. We also heard Senior Advocate Sri.Chacko George, Sri.Jaju Babu, Senior Advocate Sri.S.V.Balakrishna Iyer and other counsel appearing for the parties in the connected writ petitions, who made submissions in the connected cases and touched upon the various aspects of the Standards Acts and Rules. 12. The Honourable Supreme Court in India Photographic Co. Ltd. v. H.D.Shourie ((1999) 6 SCC 428), considered the question whether it was necessary to print the price on the package of films manufactured by Kodak. A complaint was filed by a consumer before the District Consumer Disputes Redressal Forum for the issuance of appropriate directions to protect the interests of the consumers. The complainant contended that it was mandatory to print the price on the package. The District Forum directed the manufacturer to display the sale price of the film on the package. The decision of the District Forum was confirmed by the State Consumer Disputes Redressal Commission and the National Consumer Disputes Redressal Commission. The National Commission held that the cartons containing large numbers of film rolls sold on wholesale basis shall be affixed with a sticker indicating the price at which film roll may be sold in retail and that in the case of retail sales, each packet containing a