India: To Pay Or Not To Pay

Last Updated: 11 July 2017
Article by S.S. Rana & Co. Advocates

"Money is a bottomless sea, in which honor, conscience, and truth may be drowned."

- Eugene Arthur Kozlay

OVERCHARGING

Consumers may have observed that each time they visited a hotel or a restaurant, packaged commodities such as bottled mineral water, or snacks and items from the mini-bar present in the hotel room were priced extravagantly, often with their prices inflated anywhere between 100-200%.

Though the said practice seems ridiculous and contrary to law, the reality is that the whole question of overcharging for pre-packaged commodities is still under debate. The dispute occurred when the Federation of Hotels and Restaurants Association of India filed Writ Petitions before the Delhi High Court, seeking clarification on whether it was impermissible for the Petitioners to charge their guests any price higher than the MRP on mineral water, packaged and bottled by third parties as per the provisions of the Standards of Weights & Measures. On March 05, 2007, Hon'ble Mr. Justice Vikramajit Sen of the Delhi High Court held that overcharging did not violate the provisions of the Standards of Weights and Measures Act on the grounds that the sale of food items in such hotels cannot be constituted as "sale" of the said items, (as per the Supreme Court's decision titled State of Himachal Pradesh vs. Associated Hotels of India (AIR 1972 SC 1131)) and that when making a purchase from a hotel or restaurant, the customer is also paying for the ambience. The said viewpoint was also followed by the Kerala High Court in the case titled M/s. Hotel Savoy Bar & Ors. vs. The State of Kerala & Anr (2016 (2) KHC 377)., wherein the Hon'ble Court mentioned Hon'ble Mr. Justice Vikramjit Sen's judgment, and held that the overcharging of MRP of beer at the Hotel Savoy Bar was justified as the customer was not only paying for the product, but also for satisfactorily rendering of services and the ambience.

Thereafter, an appeal was filed by the Union of India with the Division Bench of the Delhi High Court. Vide judgment dated February 11, 2015, the Division Bench comprising of the Hon'ble Chief Justice Ms. G. Rohini and Hon'ble Mr. Justice Rajiv Sahai Endlaw, held that the Single Judge's decision shall neither be set aside, nor be affirmed, and if the Union of India is of the opinion that under the new Legal Metrology Act, it is entitled to take action against hotels/restaurants for sale of packaged mineral water at more than MRP, it should concentrate thereon. The Division Bench further held that the learned Single Judge's judgment shall not be treated as a precedent, and that the question of law shall be open to further adjudication. Thereafter, two special leave petitions bearing nos. 28685/2015 and 27629/2015 were filed by the Federations of Hotels against the Union of India in the Supreme Court of India and the same are currently pending adjudication. The judgment titled The Federation of Hotels and Restaurants Association of India & Ors. Vs. Union of India by the Delhi High Court on March 05, 2007 can be read here, while the Division Bench's order in Union of India vs. National Restaurants Association & Anr. can be read here.

It stands to reason that the basic contention which will be taken up by every hotel or restaurant when asked to justify their extravagant costs would be to state that not only are they charging for pre-packaged commodities, but also for the ambience, décor and maintenance of the premises. It shall be interesting to see on which side the Apex Court of the country will lean on, and how it will maintain balance in the aforementioned SLPs filed by the Federation of Hotels.

DUAL PRICING

While the above dispute was only restricted to overcharging of pre-packaged commodities sold in hotels and restaurants, there was another issue that has gained considerable importance and traction with the consumers. This issue was of dual pricing of pre-packaged commodities. Dual pricing is a practice undertaken by manufacturers of pre-packaged commodities, where they affix a higher retail sale price on a batch of pre-packaged commodities, which are then sent to restaurants, hotels, cinema halls, etc. These products have the disclaimer "FOR SELECT CHANNELS ONLY" printed on them, signifying that the printed MRP is applicable only in the establishment where they have specifically sent that particular batch.

In this regard, the National Consumer Dispute Redressal Forum (hereinafter referred to as the 'NCDRC') has pronounced a judgment on February 01, 2016 in the case titled BIG Cinemas & Anr. Vs. Manoj Kumar, in favour of the consumers and against BIG Cinemas, wherein it held that the higher MRP on mineral water bottles sold in BIG Cinemas was bad in law, and was contrary to the provisions of the Legal Metrology Act, 2009, and Legal Metrology (Packaged Commodities) Rules, 2011, thereby affirming the order of the District Forum and the State Commission, Rajasthan. The NCDRC further imposed costs of Rs. 5 lakhs (USD 7718approx.) on BIG Cinemas and Reliance Media (the second petitioner) on account of illegal enrichment by charging/extorting money from the consumers. In the said judgment, the NCDRC went as far as to ask the Director of Legal Metrology to "wake up, make an enquiry and take legal action against the wrongdoers". In fact, the presiding members captured the same quote as has been mentioned above, while addressing the illegal practices of the petitioners. The judgment by the NCDRC titled BIG Cinemas & Anr. Vs. Manoj Kumar dated February 01, 2016 can be read here.

It is pertinent to note that after the said judgment was passed by the NCDRC, the Deputy Director of the Legal Metrology Department issued a notification on August 04, 2016 sending the aforesaid judgment to various authorities. The notice as uploaded on the Delhi Government's website can be accessed here.

With a rise in the number of consumers protesting against the aforementioned dual pricing of the MRP on pre-packaged commodities, the Ministry of Consumer Affairs has finally paid heed to the consumers' complaints. Based on the experience of implementing the Packaged Commodities Rules, and after receiving valuable input from a detailed stakeholder consultation, the Department has amended the rules. The said amendments to the Legal Metrology (Packaged Commodities) Rules, 2011 is stated to come into effect from January 01, 2018. In the said amendments, it has been specifically mentioned that no person shall declare different MRPs (dual/differential MRP) on an identical pre-packaged commodity, unless allowed under any other law.

The press release for the aforementioned amendment on the website of the Press Information Bureau has gone as far as to categorically state that this amendment has been brought in as a result of various consumer complaints against Cinema Halls, Airports, Malls, etc. where the practice of dual pricing is prevalent. It is uplifting to see the Government listening to the voices of the consumers and taking action against malpractices designed to extract undue gain from such consumers.

However, the National Restaurants Association of India (hereinafter referred to as the 'NRAI') has reportedly approached the Ministry of Consumer Affairs regarding the above mentioned amendments coming into effect from January 01, 2018. It has been reported in the Economic Times that the restaurateurs and other such Companies in the hospitality industry are particularly unhappy with the aforesaid laws, stating the reason that they are not only selling a product, but are also selling services, ambience, infrastructure, and manpower. Considering how two SLPs as mentioned above are already pending adjudication, it shall be interesting to see how the Ministry for Consumer Affairs addresses the said issue.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
S.S. Rana & Co. Advocates
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.