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.