Can Hotels Charge More Than The "Maximum Retail Price" ?

In a recent judgment (I(2011) CPJ 13 NC), The National Consumer Commission has upheld the order of Bharuch (Gujrat) District Forum imposing a fine on Hotel Nyay Mandir for having charged more than the Maximum Retail Price (MRP) on some soft drinks. While the decision of the National Commission is to be welcomed from the point of view of the consumer, unfortunately, it goes against an order of the Supreme Court.

This order of the 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.

It appears that most consumer courts are not aware of this order, because they keep awarding compensation against hotels and restaurants which sell packaged commodities in excess of MRP. In one such 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. Local consumer courts have also given similar judgments in recent cases. But all these orders are against the Supreme Court order and are liable to be struck down.

But the situation is even worse. The laws related to MRP have been carelessly drafted and so, strictly speaking, even shops which sell above MRP can not be punished.

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. Therefore, it is sad that defective drafting of the laws have made MRP a meaningless number.

The laws related to MRP are in the process of being changed. Let us see why both the present laws and the new laws are defective.

PRESENT LAWS:

Right now, 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.

There are 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 is 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.

NEW LAWS:

It seems that the legal experts and bureaucrats do not learn from their past mistakes either. The Legal Metrology Act, 2009 which is replacing the Standards of Weights and Measures Act, 1976, and The Legal Metrology (Packaged Commodities) Rules, 2011 which will replace he Standards of Weights and Measures (Packaged Commodities) Rules, 1977 will come into force on 1-3-2011. But they are also badly drafted and the same problems which exist with the present laws exist with the new laws also. Sec. 36 of the Act prescribes a penalty of Rs. 25,000 for selling a packaged commodity which does not conform to the declarations on the package, but it appears that the nonconformity refers only to weight, number, etc. and not to the price. So there is no explicit prohibition of sale above the MRP. But Sec. 18 of the Rules prohibits the retail sale of any packaged commodity at a price higher than the printed MRP. So the situation is very similar to the present laws and again, not printing MRP attracts punishment, but not selling above MRP.

Unless the parliament fixes this lacuna, MRP will continue to remain a paper tiger and not benefit any consumer.

P.M.Bhat, Mysore Grahakara Parishat

Consumer Protection Regulations

Consumer Protection Act was enacted to provide the common man a fast and inexpensive way of obtaining justice in consumer disputes. Consumer courts were meant to be very informal, (unlike the regular courts) where consumers could argue their cases themselves. They did not have to know a great deal about law and could argue (and win!) based only on common sense.

But this intent was not properly communicated to the judges who were appointed to the consumer courts. Since the presiding judges were appointed to consumer courts after long stints as judges in the regular courts, they tended to continue the same formalities and very soon consumer courts became the same as civil courts. One case in Mysore District Consumer Forum took 6 years and 105 adjournments to decide. This was despite the fact that the CPA states that adjournments should not be ordinarily granted and cases should be decided as far as possible within 90 days.

There are numerous judgments of the higher consumer courts which are binding on the lower consumer courts, but they are routinely ignored. For example, the National Consumer Commission has repeatedly ruled (e.g., III (1996) CPJ 77 (NC)) that an appeal can not be dismissed without entering into the merits of the case merely on the ground that the appellant was not present when the case was taken up for hearing. But State Consumer Commissions ignore this ruling routinely, to the detriment of the consumers.

Observing that many of its directives were being ignored by lower consumer courts, the National Consumer Commission codified them in the Consumer Protection Regulations, 2005 which were gazetted on 31-5-2005 . It is not clear if all consumer courts are aware of these Regulations because they are also being violated very often. As a result, consumer courts have become regular courts with too much emphasis on formalities. It has become very difficult for a common man to argue his case before consumer courts. He is being forced to hire lawyers. This goes against the very purpose of the Consumer Protection Act, namely, providing speedy, inexpensive and simple redressal to consumer disputes.

Here is a sample of Consumer Protection Regulations which are being commonly flouted by consumer courts:

1. Sec. 11(1) of the Regulations mandates that all proceedings before consumer courts are conducted as expeditiously as possible and as per the requirements of the CPA. But adjournments are commonly given and cases frequently take more than 3 months to decide.

2. To discourage adjournments, Sec. 11(3) of the Regulations mandates that the party asking for an adjournment has to pay a minimum of Rs. 500 as costs. But this is not being enforced in many cases. If the costs are imposed, the opposite party is not getting a part of it in many cases.

3. Sec. 13(1) of the Regulations mandates that all arguments should be as brief as possible and to the point at issue. This is not being uniformly enforced leading to avoidable delays. According to Sec. 13(3) of the Regulations, advocates have to file their briefs two days before the hearing, failing which they should be fined a minimum of Rs. 500. This is rarely enforced again leading to delays.

4. Sec. 18(5) of the Regulations mandates that all orders of a consumer court should be short and precise. But consumer courts often give lengthy orders which take valuable time to prepare.

5. Sec. 26(1) of the Regulations strongly recommends that provisions of Civil Procedure Code should be avoided. But many consumer courts still insist on the formalities of CPC making it very difficult for non-lawyers who wish to argue their own cases and also causing delays.

Thus despite all efforts by the parliament, the government and even the National Consumer Commission to make consumer courts more consumer-friendly, this goal is still far from being realized.

C.V. Nagaraj, Mysore Grahakara Parishat

Open Chamber, No Warning Flag

This chamber is at the intersection of High Tension Double Road and Snake Shyam Road in Vijayanagar II Stage. It has been kept open for the last one month. It is more than eight feet deep, partly filled with water. It is a new chamber constructed by Nagarjuna Construction Co., to give 24-hour water supply to citizens. There are no red flags to warn during day time and no red lights to warn during night. 

Also the primary water pipe itself is open with a 1'x1' hole for fixing valve. Dead animals, garbage and anything may enter the water supply pipes now and we drink the same water after the scheme is commissioned. We request the concerned officers to see that something is done.

Gangaprasad, Member, Mysore Grahakara Parishat

Thanks to SOM, DH and CESC

We had written about the delay of Chamundeshwari Electric Supply Company in repairing a broken electric pole in Yadavagiri. The day after it was published in SOM (Voice of The Reader, 10-2-11) and in Deccan Herald (11-2-11), CESC workers came and replaced the broken pole. The residents of Yadavagiri thank SOM and CESC for solving the problem.

B.Vaikunth Shenoy, Mysore Grahakara Parishat

CESC's Irresponsibility Poses Danger To Public

Ten days ago a tipper truck rammed into an electric pole at the intersection of 1st Main and 2nd Cross in Yadavagiri, breaking the pole at the bottom (Photo 1). The force of the impact broke the adjoining electric pole at the top (Photo 2). It appears that these poles are standing only because of the wires connecting them to the surrounding poles.

Chamundeshwari Electric Supply Company was contacted by some of the neighbours and a CESC van came immediately. The staff told the person in charge of the tipper (which was removing earth from the neighbouring construction site) that he would have to pay Rs. 25000 for the damage. Hearing this figure, the person promptly disappeared with his excavator and tippers. The damaged poles are still standing there posing grave danger to passersby.

Why CESC is not installing new poles even after 10 days is beyond comprehension. It should do so immediately to prevent danger to life and property. Afterwards, it can initiate proceedings against the operator of the tipper for the cost of the new poles.

B.Vaikunth Shenoy, Mysore Grahakara Parishat

Mobile Towers and The Law

Mobile towers are being erected on houses and other buildings all over the city and MCC is permitting them without caring for the complaints of neighbours. What can the neighbours do about them? Here is the current legal position.

There are two Karnataka government circulars on the basis of which MCC is permitting mobile towers on buildings in Mysore. The first circular (No. UDD 17 Aa Pra Sa 2001) issued on 12-11-2001, instructs local bodies to permit mobile towers on terraces of residential and commercial buildings subject to the following conditions:

1. The company has the requisite licence from the Government of India,

2. Generators will not be installed on rooftops,

3. Zonal regulations are not violated,

4. The company furnishes a certificate from a registered engineer regarding the stability of the structure.

5. The company furnishes a certificate from a competent authority that the noise produced by the generator is within permissible limits,

6. Since establishment of a mobile tower is a commercial activity, the company pays the local body fees prescribed for commercial use.

This circular is self-contradictory. On the one hand, it says that establishment of a mobile tower is a commercial activity and that zonal regulations should not be violated. On the other hand, it instructs the local bodies to permit mobile towers on residential buildings. Establishing commercial mobile towers on residential buildings is a clear violation of zonal regulations.

The government issued another circular NaAI 55 GEL 2005 on 2-3-2005 in which it relaxed the above conditions. In this circular, it instructed local bodies to permit mobile towers and their equipment anywhere subject to the following revised conditions:

1. Public safety is the responsibility of the company,

2. Any taxes levied by the local bodies must be paid,

3. Other lawful rules are obeyed.

This is the circular under which MCC is giving permission to mobile towers on all types of buildings all over the city.

The second circular is also self-contradictory since it says that all other lawful rules should be obeyed and still instructs local bodies to permit towers on residential and public buildings as well as on private lands. But zonal regulations made under Town and Country Planning Act, 1961 does not allow mobile towers which are commercial buildings on residential or CA (public buildings) sites.

Mobile towers established on residential or CA sites can be challenged in courts because they violate zonal regulations. It is learnt that some challenges are already before the courts.

Here is one recent legal development. The revised circular, unlike the first one, does not explicitly prohibit the installation of generators on rooftops. So MCC has been allowing such installations. A resident of Brindavan has been fighting the installation of a generator on a rooftop next to his house, using the Right to Information Act. His argument was that the revised circular only allows the tower and its equipment to be installed. Generator is not a part of the tower equipment and so the condition banning generators on rooftops contained in the first circular is not overturned by the second circular. When his complaint against MCC came up before the State Information Commission, the Commission agreed with his contention and ordered (Case Nos. KIC 11545 cw 11373 and 11374 PTN 2009 decided finally on 3-9-10) ordered MCC Commissioner to ensure that orders prohibiting the installation of generators on rooftops is implemented. The generator has now been removed.

So anyone bothered by generators installed on neighbouring rooftops can approach MCC and get them removed quoting this decision. If it does not work, he should file a police complaint or a complaint with the State Human Rights Commission.

Dr. T.N. Manjunath, Mysore Grahakara Parishat

Down The Drain?

Storm water drains are being constructed in Mysore at enormous expense with JNNURM funds. One such drain passes next to Dhobi Ghat in Yadavagiri. According to the board next to the drain, this work which costs Rs. 29 crores was finished on 20-1-2011. Not even two weeks have elapsed since the completion, but the floor of the drain is covered with weeds some of them more than 4-5 feet high (See photo). If the work had been done properly, could so much vegetation have grown in such a short time? Or we could be mistaken and this is actually an urban forestry project!

B.Vaikunth Shenoy, Mysore Grahakara Parishat