Fine, jail for selling water, cold drinks above MRP

  1. A news item has appeared in the Times of India on the front page today that is 15.10.2016 titled “Fine, jail for selling water, cold drinks above MRP. The first part of the article quotes the Hon’ble Minister for Union Consumer Affairs, it thereafter goes on to state as follows:  “It can be recalled that the Delhi HC in 2007 had ruled that hotels and restaurants in the capital cannot sell bottled mineral water over and above the MRP to customers, who visit them and enjoy their other services and facilities. After the Legal Metrology Act became applicable in 2009, the hotel and restaurant associations had challenged the High Court order in the Supreme Court. But their plea was dismissed.”
  2. The above quoted statement has created much confusion amongst the members and we have received numerous queries in this regard. The above quoted paragraph is not correct and the correct facts are as follows:
    • FHRAI had filed a Writ Petition before the Delhi High Court challenging the notices issues under the then prevailing law namely the Standards of Weights and Measures Act. The Ld. Single Judge of the Delhi High Court by judgment dated 5.3.2007 in W.P. No 6517 of 2003 allowed the writ petition filed by FHRAI holding inter alia 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 SWM Act as this does not constitute a sale or transfer of these commodities by the hotelier or Restaurateur to its customers. The customer does not enter a hotel or a restaurant to make a simple purchase of these commodities. It may well be that a client would order nothing beyond a bottle of water or a beverage, but his direct purpose in doing so would clearly travel to enjoying the ambience available therein and incidentally to the ordering of any article for consumption…”
    • An appeal (LPA No. 334 of 2007) was filed by Union of India against the Judgement dated 05.03.2007. While the said appeal was pending, the Legal Metrology Act, 2009 was enacted on 13.01.2010
    • On 11.02.2015, the appeal was disposed off on the following terms: “17. We accordingly dispose of these appeals in following terms:
      • Owing to the change in law, there is no need to set aside or affirm the judgment of the learned Single Judge.
      • However the question of law adjudicated by the learned Single Judge is left open for adjudication in any fresh proceeding under the new law and the judgment of the learned Single Judge shall not be a precedent in any such adjudication even if the concerned provisions of the old and the new law are identical / similar.
      • The appellant shall however not be entitled to initiate any proceeding / prosecution for violation of the old law in this respect, even if notices of such violation were issued, as in our opinion, considering the nature of offence, the long time which has elapsed and the doubt which has arisen whether such prosecution will be within the prescribed time, it is not deemed expedient that the state resources in this regard, which are already strained, be expended thereon.”
      • While the division bench was right in recording that a new law had replaced the old act, FHRAI was aggrieved by the finding that the ealier judgment would not be a precedent. Accordingly, FHRAI filed a SLP before the Supreme Court.
      • The judgment of the learned Single Judge had already been followed by learned Single Judge of the (i) High Court of Delhi vide Judgment dated 15.04.2009 in the case of Delhi Gymkhana Club Ltd. v. Union of India, reported at ILR (2009) V DELHI 169 and (ii) High Court of Kerala vide Judgment dated 03.06.2013 in the case of Taj Kerala Hotels and Resorts Limited v. Union of India and Ors., in O. P. No. 5503 of 1999 (E); wherein a similar challenge to the applicability of the SWM Act was raised.
      • Notice was issued in the Special Leave Petition filed by FHRAI and the matter is pending.
  3.  Accordingly, the news article is incorrect on facts. We are already sending a letter to Times of India to be published with equal prominence in the newspaper. The matter pending in the Supreme Court is at present likely to be listed on 25.11.2016. Two other judgments have also reached the same finding which have not been challenged. These judgments are under the Standard of Weights and Measures Act but the provisions in the new Legal Metrology Act are similar. We will keep you informed.
  4. Meanwhile, in the present circumstances and without prejudice to rights & contentions in the pending case at Supreme Court, members are advised not to sell water bottles or such commodities carrying MRP over the counter at all, and if they do, they must sell at MRP. However, members can definitely serve any of the above items in their premises at a price suitable to them. Members are further advised to report any instance of prosecution at the hands of the department for serving any items / products in their premises above MRP, the association will accordingly take up the matter for challenge and or necessary action.
  5. Please find below the link of the Judgements referred above, in favor of Hotels / Restaurants.

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