National Commission Fines KBC3 for Unfair Trade Practice

P.M. Bhat, Member, Mysore Grahakara Parishat writes

In a recent decision (IV (2008) CPJ 1 (NC)), the National Consumer Commission has fined Kaun Banega Crorepati - 3 Rs. 1 Crore for unfair trade practice.

Kaun Banega Crorepati - 3 which ran on Star Plus TV from January 2007 to April 2007 under the anchor of Shah Rukh Khan, was running a contest called "Har Seat Hot Seat" in which TV viewers were invited to participate. The contest consisted of answering an objective type question with four possible answers. TV viewers who wanted to participate in the contest had to send their answers through SMS. Winners who were selected randomly from those who sent the correct answers were given a prize of Rs. 2 lakhs in each episode of KBC-3.

A consumer organization called Society of Catalysts filed a complaint before the National Commission alleging that Star Plus TV and the sponsor of the show, Bharti Airtel were guilty of unfair trade practice since they created an impression in the minds of the public that participation in the Har Seat Hot Seat contest was "free" and the prize money was being paid by the organizers. But in reality, the cost of organizing the contest as well as the prize money was built in the cost of SMS sent by the participants. Each SMS sent on Airtel by the contestants was charged Rs. 2.40 as compared to the normal charge of Re. 1 per SMS. In the 52 episodes of KBC-3, 58 million SMS were received and the organizers collected Rs. 14 crores. Only Rs. 1 crore were given out as prize money.

The National Commission agreed with this contention. According to Sec. 2(1)(r)(3)(a) of the Consumer Protection Act, a trade practice which "for the purpose of promoting the sale, use or supply of any goods or for the provision of any service" offers "gifts, prizes or other items with the intention of not providing them as offered or creating impression that something is being given or offered free of charge when it is fully or partly covered by the amount charged in the transaction as a whole" is an unfair trade practice.

The National Commission said that the organisers earned a revenue of Rs. 14 crores for the 58 million SMS messages received at Rs. 2.40 per message. Since the normal cost of SMS is Re. 1, the Commission said that the gross profit was about Rs. 8 crores. Subtracting the Rs. 1 crore prize money given, the net profit was Rs. 7 crores. Of this Rs. 7 crores, the Commission ordered the organizers to deposit 14% or Rs. 1 crore in the Consumer Welfare Fund as a fine.

The compensation ordered, though large, seems incorrect on two counts. Firstly, the gross profit was Rs. 14 crores and not Rs. 8 crores since no one would have sent an SMS if there was no contest. So at 14% of the profit, the fine should have been nearly double. Secondly, the organizers should have been asked to surrender all the net profit and be fined additionally, since the profit was obtained illegally. Taking back only a part of the illegal gain defeats justice.

Does "Maximum Retail Price" Have Any Value?

Prof. S.K. Ananda Thirtha, Member, Mysore Grahakara Parishat writes

Most people believe that the Maximum Retail Price (MRP) printed on packaged commodities is beneficial to the consumers. They believe that the commodities can not be sold above the MRP and so printing of MRP prevents exploitation of consumers.

But numerous decisions by the Supreme Court have destroyed this myth and have all but made MRP a meaningless number. Defective drafting of the laws related to MRP is the root cause of this state of affairs.

WHAT DOES THE LAW SAY?

MRP is governed by the Standards of Weights and Measures Act, 1976 and the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 made under Sec. 83 of the Act to carry out its provisions. Sec. 39 of the Act states that no commodity shall be sold in package form if the package does not have the price printed on it. A fine of upto Rs. 5000 and a prison term of upto 5 years is prescribed in Sec. 63 of the Act for not printing the price on the package. But the Act does not forbid selling a packaged commodity for a price higher than the printed price, much less fix a penalty for selling above the printed price.

Sec. 23(2) of the Rules prohibits the retail sale of any packaged commodity at a price higher than the printed MRP.

WHAT DOES THE SUPREME COURT SAY?

A Supreme Court order (State of Himachal Pradesh Vs. Associated Hotels of India, AIR 1972 SC 1131) given in 1972 makes MRP applicable only to retail sales, i.e., goods sold in shops. So food and drinks consumed in hotels, restaurants or airplanes may be sold at prices above the MRP. The Supreme Court held that such food and drinks can not be considered retail sales since they are always accompanied by service.

Now it gets even worse. There several Supreme Court orders which prescribe the limits of Rules made under an Act. They all say that Rules cannot extend the boundaries of the Act under which they have been made (e.g. Bharathidasan University Vs. All-India Council for Technical Education, (2001) 8 SCC 767). In the present case, the Standards of Weights and Measures Act only mandates that the price be printed on the package whereas the Rules go impermissibly further by stipulating that price charged can not exceed the printed price. Therefore, this part of the Rules is invalid. In other words, there is no limit on the price charged! Not printing MRP attracts punishment, but not selling above MRP. MRP becomes just a fiction.

It ia amazing that the legal experts and bureaucrats who draft legislation are ignorant of such legal basics. They should have included the prohibition of charging a price higher than the printed price in the Act itself and not just in the Rules. By not doing it, they have negated the very purpose of MRP. It seems that they do not learn from their past mistakes either. The Legal Metrology Bill, 2008 which is replacing the Standards of Weights and Measures Act, 1976, was introduced in the Rajya Sabha on 24-10-08; it also does not contain any provision on the prohibition of charging a price higher than the printed price. Unless they fix this lacuna, MRP will continue to remain a paper tiger and not benefit any consumer.

It appears that most courts, including consumer courts, are not aware of the above mentioned Supreme Court decisions, because they keep awarding compensation against merchants who sell packaged commodities in excess of MRP. For example, in a recent case (II(2007) CPJ 96), The Delhi State Consumer Commission imposed huge punitive damages of Rs. 50,000 on a restaurant serving mineral water to its customers at three times the MRP. These are examples of two wrongs making a right! A badly drafted law and its incorrect interpretation have provided justice. But the correct way to do things is to rectify the law so that MRP again becomes useful in protecting the consumers.

Picture Tells All!

H R Bapu Satyanarayana, Convener, Mysore Grahakara Parishat writes

The real time picture snapped by Star of Mysore photographer capturing the accident of the head-on collision between a bike rider and the tempo near Highway Circle resulting in the death of the rider howing in graphic details the lurid scene of the pink spots from the smashed brain tell a tragic story (SOM-14/02/09) The very fact that the body is lying on one side of the continuous white line and the fact that it is a head-on collision is indicative that one of the vehicles was not following the traffic rule. However, from the reports of accident happening in recent times a more disturbing picture emerges. Recently SOM had published that in 2008 there were 171 fatal accident which is nearly 50-60% high over the accident rate in recent years It also gave that there are 4.5 lakh vehicles of which two wheeled motorised vehicles form 90% which is way above national average. The statistics of fine collected for 2008 indicated it as Rs1.97 crore which while indicates that our traffic police may have been more efficient do not tell the whole story. Both the vehicle population and amount of fine collected have dramatically increased. This calls for wholistic approach to tackle the problem for all indications are it is going to be worse in coming years if necessary corrective action is not taken immediately. The issues to be solved has many dimensions. The most important issues as it appears to me are the following:

1. Embargo on controlling vehicle population.
2. Popularise public transportation
3. Segregation of traffic-Introducing cycle tracks which DC talked of.
4 Raise fine amount for traffic violations to .discourage violation
5. Construct multi-story parking lots at various locations.
6. Augment traffic personnel and empower them to streamline fine collection
7 Improve road conditions and its maintenance
8 Take up transport and traffic survey to aid long-term planning

SBM Needs To Be More Considerate

B.V. Shenoy, Member, Mysore Grahakara Parishat writes

There is a big rush of ration card applicants at State Bank of Mysore branches to obtain 20 Rupee stamp papers. The attitude of the bank towards these applicants leaves a lot to be desired.

Many SBM branches have arbitrarily limited the service to these people for 1-2 hours a day. This is uncalled for. If it is a free service, the bank might have some justification for cutting down the service hours. But issuing stamp papers is not a free service, there being a Rs 5 fee on each 20 rupee stamp paper. The staff have been appointed to provide these services to the public and they can not arbitraily cut down service hours because there is a rush. If they cut down the service hours for issuing stamp paper, tomorrow, they may cut down service hours for depositing or withdrawing money. Taken to the extreme, branches may decide to work only for 1-2 hours (even though the salaries are paid for a full day's work). Can it be justified?

Also many of the people coming for stamp papers are poor people coming from surrounding villages and how many times do they have to come? Can they afford all this expense just because of some whim of the bank? What about the Mission statement of SBM "committed to provide consistently superior and personalised customer service backed by employee pride and will to excel, ... and be a responsible corporate citizen contributing to the well being of the society." Is this the consistently superior and personalised customer service? Is this the employee pride and will to excel? Is SBM being a responsible corporate citizen contributing to the well being of the society?

We also saw some branches pleading lack of 20 rupee stamp papers and selling 50 and 100 rupee papers instead. This is also unconscionable.

We request SBM branches to be kind and considerate towards these applicants, many of whom are poor and uneducated.

State Commission Upholds Mysore District Commission Order

C.V. Nagaraj, Member, Mysore Grahakara Parishat writes

In a recent decision (given on 22/1/09 in Appeal No. 1405/2008), Karnataka State Consumer Commission has upheld the decision of the Mysore District Consumer Forum ordering Thyrocare Technologies, Mandi Mohalla to compensate Gerald Barbaoza of Gokulam for providing incorrect test results.

Gerald Barboza and his wife had gone to Thyrocare for checking their cholesterol and triglyceride levels. The test results given by Thyrocare showed higher than normal values. Barboza and his wife who are very health-conscious immediately underwent treatment. At the end of the treatment, they again went to Thyrocare for blood tests. The results still showed very high values. Shocked by this finding, they went to another diagnostic laboratory whose results showed that cholesterol and triglyceride levels were only borderline high. To settle the matter, they went to still another laboratory whose results agreed with the second laboratory but disagreed with Thyrocare. Alleging that Thyrocare gave incorrect results as a result of which they had to undergo expensive but unnecessary treatment, Barboza filed a complaint with the District Consumer Forum.

During the hearings, Thyrocare argued that it only collects blood samples which are analyzed by a laboratory in Mumbai and so it can not be held liable. The Forum did not agree with this contention. The Forum said that seeing such high values for cholesterol and triglycerides, the complainant or any other person in his place would have suffered shock and anxiety. Referring to the claims of Thyrocare that the testing laboratory has numerous accreditations and the latest machines, the Forum said accredition does not mitigate the deficiency caused by it in giving such inaccurate test reports. The laboratory may be equipped with highly sophisticated machines, but when those machines do not indicate accurate reports and when Thyrocare endorses such inaccurate test reports, it would be liable for deficiency in service, the Forum said. The Forum ordered Thyrocare to pay damages of Rs.8,000 to the complainants within 60 days from the date of its order, failing which it shall pay interest at 9% p.a. from the date of the order till the date of payment. It also ordered Thyrocare to pay the complainants Rs. 500 as costs.

Thyrocare appealed against this order before the State Commission. The appeal was dismissed.

Some Problems Connected With Property Tax

G.L.Nagaraj Urs, Member, Mysore Grahakara Parishat writes

SAS system for property tax has been in place for more than three years. It still has many wrinkls that need to be ironed out.

1. Property tax can be paid in banks and the stamped challan has to be submitted to Mysore City Corporation within 30 days. If this is not done, the 2007 SAS handbook of MCC prescribes a fine of Rs. 100 (p.12) . But the forms at the end of the book prescribe a fine of Rs. 200! Which is right?

2. Property tax has to be paid by June 30 of every year. Sec. 112(4) of the Karnataka Municipal Corporations Act levies a penalty of 2% per month for delay in payment. But this penalty is only on the property tax and not on the various cesses (including solid waste management cess) that are levied along with the property tax. This is not right. The law has to be amended to make the late payment penalty apply to the cesses as well..

3. The Property Tax calculator on the MCC website adds 10% for the property tax on corner sites. Tax preparers at MCC offices were adding 20% for corner sites till last year. Have the rates been changed?

4. The Property Tax calculator on the MCC website can calculate only for the current year. What should people who have not paid last year's tax do? Therefore the calculator should be modified so that it calculates tax for previous years also.

5. MCC says that property tax can be paid in any one of four banks, Axis, SBM, Vijaya and Syndicate. But last year, only Axis challans were available and it was not possible to pay in other banks. Has MCC taken any steps to change the situation?

Mobile Phone Towers Also Violate Heritage and Zoning Laws

C.V.Nagaraj, Member, Mysore Grahakara Parishat, writes

Mobile towers being built all over Mysore city are in the news because of the danger they pose to public health.

Mobile towers built near heritage buildings violate the height restrictions placed on structures in the vicinity of heritage buildings.

Most mobile phone towers also violate the zoning regulations. These towers, being commercial buildings, can not be built on residential sites. But many towers have been erected on residential sites in various parts of the city. Repeated complaints from MGP on these violations to MCC,MUDA and the State Government have produced no results.