Reebok India Company Through Its Executive Director (Finance and Operations/Chief Finanancial Officer) Mr. Vishnu Bhagat Vs. the Union of India (Uoi) Through Its Secretary Department of Consumer Affairs and ors. - Court Judgment

Excerpt:
- sections 39 & 63 & standards of weight and measures (packaged commodities), rules, 1977, rules 33(v) & 23 (1): [ram mohan reddy,j] violations of the provisions of acts and rules petitioner was directed to appear before the authority - criminal proceedings -seizer of goods - petitioners prayer to declare rules 6 and 33 of the packaged commodities rules as illegal and ultra vires the powers under the act and consequential prayers - held, 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 petitioners product falls within the definition of the term pre-packed commodity. in the light of rule 2a making.....orderram mohan reddy, j.1. common questions of fact and that of law arise for decision-making. hence, with the consent of the learned counsel for the parties, the petitions are clubbed together, finally heard and are disposed of by this order.2. the petitioner a manufacturer of sports goods including footwear has its authorised dealers in belgaum amongst others in all parts of this country. on 29-03-2006, and 5.4.2006, the 4th respondent is said to have searched the showroom of the petitioner's distributor m/s. square cut and m/s. foot mark respectively and seized shoes in packages said to be in violation of sections 39, 63 of the standards of weights and measures act, 1976 (for short 'act) read with rules 33(v) and 23(1) of the standards of weights and measures (packaged commodities),.....

Judgment:
ORDER

Ram Mohan Reddy, J.

1. Common questions of fact and that of law arise for decision-making. Hence, with the consent of the learned Counsel for the parties, the petitions are clubbed together, finally heard and are disposed of by this order.

2. The Petitioner a manufacturer of sports goods including Footwear has its authorised dealers in Belgaum amongst others in all parts of this country. On 29-03-2006, and 5.4.2006, the 4th respondent is said to have searched the showroom of the petitioner's distributor M/s. Square Cut and M/s. Foot Mark respectively and seized shoes in packages said to be in violation of Sections 39, 63 of the Standards of Weights and Measures Act, 1976 (for short 'Act) read with Rules 33(v) and 23(1) of the Standards of Weights and Measures (Packaged Commodities), Rules, 1977 (for short 'PC Rules'). The inspection, it is said, disclosed that the package in which the shoe was packed, did not contain the Maximum Retail Price (M.R.P.) inclusive of all taxes, in violation of Section 2 and Section 39 and 63 of the Act and PC Rules. The 4th respondent issued the notice dated 8-04-2006 and 26-05-2006 Annexurc-'C' in each of the writ petitions pointing out to the contravention of law and informing the petitioner that the violations were compoimdable under Section 73 of the Act and directed its appearance before the Compounding Authority, tailing which a complaint would be lodged before the Jurisdictional Magistrate. Hence, these writ petitions for the following reliefs:

(a) A wnt of mandamus to declare Rules 6 and 33 of the Packaged Commodities Rules as illegal and ulrravues the powers under the Act.

(b) Mandamus declaring that the petitioner's products are not regulated or covered by the Act or Rules;

(c) A writ of prohibition restraining the respondents or any of their subordinates from prosecuting/continuing the prosecution against the petitioner under the Act and Rules;

(d) Quash the Criminal proceedings instituted in the Summons case pursuant to a notice Annexure-'C;

(e) For a mandamus to Respondent No.4 to release the seized goods,

3. The Petitions are opposed by tiling Statement of objections dated 15-07-2008 of Respondents 1 and 2. interalia, contending Section 1(3)(d) of the Act being an enabling provision does not require the Central Government to issue separate notifications specifying each and every commodity in packaged form so as to bring them under the provisions of the Act. 'The fact that the petitioner's products are admittedly packed in cartons and delivered to its dealers for retail trade goes without saying that the PC Rules apply and the non-compliance of which has resulted in the action complained of. In addition, it is stated that the printing on the package the maximum retail price inclusive of the taxes is for the benefit of the consumer without which the consumer will be placed in a disadvantageous position, leading to exploitation at the various levels of trade. According to the respondent, the petitioner's commodities in packed form do not fall within the exemption provided for under Rule 34. The decisions of the Madras High Court in Philips India Limited v. Union of India 2002 WLR 140 as well as that of the High Court of Andhra Pradesh in Titan Watches Limited v. Senior Inspector Legal Metrology Weight and Measures Department AIR 2003 AP 75 and Eureka Forbes Ltd. v. Union of India 2003 (2) ALD 742, are said to be carried in appeal, pending before the Appellate Court. In addition, it is contended that the definition of the term 'Commodity in Packaged form' under Section 2(b) of the Act refers to 'units suitable for sale' and that the same applies to a pair of shoes packed in cartons. It is further contended under the notification dated 24-11-2000, the Government of India, Ministry of Commerce and Industry, Department of Commerce relating to import policy mandates that all packaged products subject to the PC Rules when packed and sold in domestic market in accordance with all the provisions of the said rules when imported into India. Having regard to the salient features of the Act and the laudable objective behind which it was enacted, to subserve the customer and to standardise the rates, the petitioner's shoes sold in packaged form when taken out for testing or examination, does not change its character as a packaged commodity.

4. Sri. S K Sahiji Pal, learned Counsel for the petitioner advances the following contentions:

(1) the notification dated 26-09-1977 of the Central Government bringing into force Sections 1, 2, 3, 39 and 83 of the Act w.e.f. 26-09-1977, it is contended does not specify the classes of goods and therefore, is not a notification in the eye of law as mandated by the Parliament covering the petitioner's products. It is further contended that though Section 83(2)(zd) empowers the Central Government to make rules in respect of any other matter which is required to or may be prescribed, and in the absence of a notification covering the products of the petitioner, the PC Rules have no application. Learned Counsel contends that the rule of ejusdem generis applies and in the absence of a notification specifying the classes of goods, neither the Act nor Rules covers the products manufactured and distributed by the petitioner. The PC Rules it is contended cannot control the Act since the definition of the term 'pre-packed commodity' under Rule 2(e) is not in consonance with the definition of the term 'commodity in the packaged form', in Section 2(b) of the Act.

(ii) It is next contended that Rule 2(k) of the PC Rules defines a packer' while 2(1) defines 'pre-packed commodity' and that the Explanation-1 therein excludes the applicability of the rules to the commodity, being a pair of shoes which the petitioner has put up for retail trade. Learned Counsel relies upon the decision of the Division Bench of the High Court of Bombay in Subash Ajrjandas Kataria Mumbai v. State Of Maharashtra and Ors. AIR 2006 Bombay 293

5. Per contra, learned Senior Standing counsel for the Central Government reiterates the averments in the Statement of objections and in addition submits that the rule of erusdem generis does not apply to Section 1(3)(d) in the light of the notification of the year 1977 coupled with the definition of the term 'commodity in packaged form' in Section 2(b) of the Act. Learned Counsel contends that the Act as well as the PC Rules were enacted to protect the consumers so as to pay only such price as has been permitted and printed on the package. Learned Counsel places reliance upon the decision in Jayanthi Food Processing (P) Ltd. v. Commissioner of Central Excise Rajasthan : 2007(121)ECC1 It is further contended that since the petitioner's commodity was kept for 'retail sale' defined in Rule 2(q), consequently Rule 6 applies, requiring declaration of the 'retail sale price' as defined in Rule 2(r) of the PC Rules. Learned Counsel hastens to add that the shoes packed in carton boxes for retail sale was for consumption of 1 he ultimate user, the consumer, making it mandatory for every package to contain declarations including theretail sale price.

6. In almost identical circumstances, Bopanna, J., in Khaitan Electricals Ltd. v. The Union of India and Anr. : ILR2008KAR3370 , not persuaded to accept the view of the Andhra Pradesh High Court in Titan Watches Limited AIR 2003 AP 75, followed the view of the Division Bench of the Bombay High Court in Kataria's case AIR 2006 Bombay 293 in so tar as it relates to the reasons, findings and conclusions that the notification dated 26-09-1977 bringing into force Sections 1, 2, 3, 39 and 83 of the Act was sufficient and did not require a separate notification for different class of goods under Clause (d) of Sub-section (3) of Section 1. In the present day scenario of market trends and technological advancements, it to well nigh impossible for the Central Government to issue notifications to bring into fold new classes of goods manulactured by hour and the day. If the contention of the learned Counsel for the petitioner is accepted, it would lead to a narrow interpretation and cause hardship rendering the application of the act impracticable, The Courts must give a purposive interpretation of Section 1(3) of the Act, in view of the laudable object in framing the Act which is in the larger interest of the consumer as also to standardise the rates applicable to the product when put up for retail sale throughout the country. This, 1 am afraid, cannot be achieved by applying the rule of ejusdem generis, to interpret Section 1(3)(d) as requiring issue of a notification every tune a new product belonging to a class of goods is manufactured and put for retail sale.

7 in Kavalappara Kottarathil Kochuni v. State of Kerala AIR 1960 SC 1080, reported in : [1960]3SCR887 , their lordships of the Supreme Court, interpreting the word 'otherwise', in the context in which it is used, held that it must be construed by applying the rule of ejusdem generis, when general words follow particular and specific words of the same nature, the general words must be confined to the things of the same kind as those specified. It was further held that it is clearly laid down by decided cases that the specific words must form a distinct genus or category and that it is not an inviolable rule of law but is only permissible inference in the absence of an indication to the contrary. In my considered opinion, in Sub-section (3) of Section 1 of the Act the phrase 'by notification, appoint and different dates may be appointed for different.--

(a) xxx

(b) xxx,

(c) xxx,

(d) classes of goods,

in the context only means that by the notification the Central Government may appoint different dates for different class of goods and not for the Central Government to issue separate notifications for different, classes of goods to bring them under the Act.

8. It is no doubt true that Clause (zd) of Sub-Section 2 of Section 83 of the Act, empowers the training of rules in respect of any other matter which is required or prescribed, pursuant to which the 'PC Rules' are framed. In the light of the finding that Section 1(3) does not con template a separate notification to cover different class of goods, under the Act, the contention that the Rules do not apply to the petitioner's product is without merit.

9. Section 2(b) of the Act defines 'commodity in packaged from' to mean commodity packaged in any bottle, tm, wrapper or otherwise in units suitable for safe, whether wholesale or retail. Rule 2(1) of the PC Rules delines 'prepacked commodity', thus:

(1) 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 m a package of whatever nature, so that the quantity of the product contained therein has a pre-determined 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 I: Where any such weight or measure is or other goods are, delivered, to a earner or other bailee for transmission, the movement of such weight, measure or other goods shall, for the purposes of Sub-clause (u), be deemed to commence at the time of such delivery and terminate at the time when delivery is taken from such carrier or bailee.

Explanation II: Where the movement of any such weight, measure or other goods commences and terminates 111 the same State, it shall not be deemed to be a movement of such weight, measure or other goods from one State to another merely by reason of the fact that in the course of such movement it passes through the territory of any other State;

10. Indisputably, 'in packaged from' commodities excluding statutory exceptions, are governed by Sections 1, 2, 3, 39 and 83 of the Act brought, into force w.e.f, 26.09.1977, while Rule 2A, makes Chapter-II of the PC Rules' applicable to ail pre-packed commodities except in respect of grains and pulses of quantity more than 15 kgs. Rule 3 states that the provisions of the Chapter shall apply to the packages intended for retail sale and the expression 'package' wherever it occurs in the chapter shall be construed accordingly.

11. A feeble attempt was made by the learned Counsel for the petitioner to contend that the definition of the term pre-packed commodity' in Rule 2(1) being a sub-ordinate legislation overrides the principal legislative definition of the term 'commodity in packaged form' in Section 2(b) of the Act.

12. In Ramesh Mehta v. Sanwal Chand Singhvi AIR 2004 SC : (2004) 5 SCC 409, the principles of interpretation of subordinate legislation having fallen for consideration the Apex Court held thus:

A subordinate or delegated legislation must also be read in a meaningful manner so as to give effect to the provisions of the statute. In selecting the true meaning of a word regard must be had to the consequences leading thereto. If two constructions are possible to adopt, a meaning which would make the provision workable and in consonance with the statutory scheme should be preferred.

13. The definition of 'prepacked 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.

14. 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. In that view of the matter, I am not persuaded to accept the view taken by the Division Bench of the Bombay High Court in Kataria's case holding that sun glasses exposed for retail sale after being removed from the cartons would not fall within the definition of the term 'pre-packed' commodity.

15, In the light of Rule 2A making Chapter-II applicable to all pre-packed commodities while Rule 3 makes the chapter applicable to packages intended for retail sale meant for consumption by individual or group of individuals or any other customer, the petitioner's products placed for retail sale in package of single units, cannot escape from the applicability of the Act and the PC Rules. Rule 6 requires every package to make certain declarations including retail sale price. There is also no dispute that the declaration was partly made on the package by printing Maximum Retail Price (M.R.P.) without printing the price inclusive of taxes. No exception can be taken to the action of the authorities under the act and Rules, and the notices impugned cannot but be said to be valid and legal.

16. The validity of Rule 6 of the PC Rules came up for consideration before this Court in T.T. Private Limited v. Union of India and Ors. AIR 1991 KAR 79, whence it was held to be intra vires. Although the relief is to declare Rule 6 and Rule 33 as ultra vires the Constitution, nevertheless arguments are not advanced. Learned Central Government Counsel submits that Rule 33 is omitted by notification dated 17.07.2006.

In the result, these writ petitions are without merit and are accordingly, rejected.