Pre-packed commodity - The controversy continues
By Divya Jain
“Metrology is the science of measurement, embracing both experimental and theoretical determinations at any level of uncertainty in any field of science and technology.” [International Bureau of Weights and Measures (BIPM)].
The Legal Metrology Act, 2009, enacted in April, 2011, repeals the over three-decades-old cumbersome Standards of Weights & Measures Act, 1976. There are significant changes between the earlier and the new versions of the legislation but the definition of a pre-packed commodity continues to be controversial. The question as to whether a particular commodity qualifies as a pre-packed commodity or not has been discussed not only by various High Courts in the country but also by the Supreme Court.
The High Courts of Andhra Pradesh, Madras and Bombay considered such a question in relation to vacuum cleaners, wristwatches and electrical components/TV sets and VCRs, radios, tape recorders and sunglasses. 'Whether a commodity is incapable of sale in any manner other than in a packaged form' was the test applied by these High Courts while deciding the cases.
The Madras High Court in Philips India Ltd. v. Union of India [(2002) 1 Mad.L.W (Cri.) 211] while discussing as to whether televisions, video and audio players or speakers would qualify as ‘packaged commodity’ pointed out that the definition of pre-packed commodity would have no application to packages which are packed only for the convenience of customers for safe transportation and for protection during storage and handling. Apex Court also in a recent judgment [Civil Appeal No. 1119 of 2010] observed that a package used merely for protection during conveyance or safety would not be pre-packed commodity. The court held that for the package to be treated as a wholesale package, it must not be a secondary package i.e. for safety, convenience or the like.
In the case of Titan Industries Ltd. [AIR 2006 Bombay 336] the Bombay High Court dealt with the question whether in the case of sale of watches the provisions of the Standards of Weights and Measures Act and rules thereunder would apply. It was contended by the manufacturer that the watches were kept for display and sale in showrooms and outlets and were sold by the piece. The customers insist upon inspection/checking. It was contended that the goods by their very nature were such that they could not be sold in a packaged form, but had to be allowed to be handled and inspected and even worn by the customer before sale. The Bombay High Court accepted the contention of the manufacturer and held that those commodities which intrinsically require to be packed and without being packed cannot be sold, and merely because they were removed from the package for testing would not cease to be pre-packed commodity. The court, however, clarified that it did not mean that a package, merely because it was packed for protection or safety in the course of conveyance would become a pre-packed commodity.
The decision of the Madras High Court in Philips India Limited v. Union of India [2002 Writ LR 140] dealing with electronic items like TV and the decision of the learned single Judge of the Andhra Pradesh High Court in Eureka Forbes Limited v. Union of India [AIR 2003 Andhra Pradesh 275] were followed by the Bombay High Court. The court in the latter case held that a vacuum cleaner is sold as a single piece and when the customer visits the office of the petitioner it is not in a pre-packed commodity nor can it be packed, be deemed as commodity in packed form.
The High Court of Kerala in Union of India v Godrej-GE Appliances Ltd. [order dated 9-4-2008] however, differed from the judgments laid down in Eureka Forbes and Titan Industries. The court held that interpretation of relevant provisions must be made from the point of view of the consumer and keeping in mind the object sought to be achieved by the statute and intention of the manufacturer, packer or retailer was not relevant in construing the provisions of the relevant statute.
In the landmark judgment of Whirlpool India Ltd. [AIR 2008 SC 397] the Apex Court while deciding whether refrigerators would qualify as a “pre-packed commodity”, held that use of the term "or otherwise" in the definition of ‘pre-packed commodity’ suggest that a commodity packed in any manner in units suitable for sale, whether wholesale or retail, becomes a "commodity in packed form..."
The question of applicability of packaged commodity rules to sunglasses was discussed by Bombay High Court in State of Maharashtra v. Subhash Arjundas Kataria. The matter went up in appeal to Apex Court [Civil Appeal No. 1117 of 2010 – 2012 (275) E.L.T. 289 (S.C.)] which held that, “We fully agree that the sun glasses are tested by the buyer for his suitability, and therefore, sun glasses, whether it be a frame or glass is not a pre-packed commodity within the definition of the expression "pre-packed" under Rule 2(l) of the Rules, hence, the High Court is fully justified in quashing the notice and allowing the writ petition filed by the respondent”. The court, however, pointed out that the question of applicability of the Standards of Weights and Measures Act and the rules thereunder should be heard by a larger Bench of the Supreme Court.
The test to determine whether a commodity qualifies as a packaged commodity should be whether by the very nature of the goods, they can be sold without being pre-packed. If the intention of the legislature or the rule-making authority was to include every commodity which was packed then the rule itself could have stated that every commodity which is packed or in other words comes to the retailer in a packed form will be a pre-packed commodity.
Courts have held that the PC Rules and Act are consumer welfare legislations and the objective of such legislation is to protect the rights of ultimate consumers, yet it would be relevant at this point of time to note that the law with reference to packaged commodities is yet to be settled.
[The author is Principal Associate, Corporate Division, Lakshmikumaran & Sridharan, New Delhi]