2002 (11) TMI 678 - HC - Companies Law

Summary

Issues Involved:
1. Constitutionality of Rules 2(r) and 23(2) of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977.
2. Violation of Articles 14, 19(1)(g), and 21 of the Constitution.
3. Impact of the 1990 amendment on the profit margins of small retail traders.

Issue-wise Detailed Analysis:

1. Constitutionality of Rules 2(r) and 23(2) of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977:
- The petitioners sought a declaration that Rules 2(r) and 23(2) of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977, are ultra vires the Standards of Weights and Measures Act, 1976, and thus void ab initio, non est, and without any effect in law.
- Rule 2(r) defines "retail sale price" as the maximum price at which a commodity in packaged form may be sold to the ultimate consumer, inclusive of all taxes, freight, transport charges, commission payable to dealers, and all charges towards advertising, delivery, packing, forwarding, etc.
- Rule 23(2) prohibits retail dealers or other persons, including manufacturers, packers, and wholesale dealers, from selling any commodity in packaged form at a price exceeding the retail sale price.
- The court examined the provisions of the Act and the Rules, concluding that the definitions and restrictions are intended to protect consumers by ensuring transparency and fairness in pricing.
- The court held that the rule-making authority had the power to define "retail sale price" and impose restrictions on selling prices to protect consumers, thus the rules are not ultra vires the Act.

2. Violation of Articles 14, 19(1)(g), and 21 of the Constitution:
- The petitioners argued that Rules 2(r) and 23(2) violate Articles 14 (right to equality), 19(1)(g) (right to practice any profession, or to carry on any occupation, trade, or business), and 21 (right to life and personal liberty) of the Constitution.
- The court noted that the Act and the Rules aim to protect consumer interests by ensuring that packaged commodities are sold at a fair and transparent price, which is essential for consumer protection.
- The court emphasized that the restrictions imposed by the rules are reasonable and have a rational nexus to the objectives sought to be achieved by the Act, which is consumer protection.
- The court rejected the contention that the rules impose unreasonable restrictions on the fundamental rights of retail traders, stating that the rules are designed to ensure that consumers are not exploited and have access to accurate information about the products they purchase.

3. Impact of the 1990 amendment on the profit margins of small retail traders:
- The petitioners contended that the 1990 amendment to the Rules, which imposed restrictions on selling prices, adversely affected the profit margins of small retail traders.
- The court acknowledged the petitioners' concerns about the financial impact of the amendment but emphasized that the primary objective of the Act and the Rules is consumer protection.
- The court suggested that any financial loss to retail traders should be addressed through contracts or understandings between manufacturers/packers and retail dealers, rather than challenging the validity of the rules.
- The court concluded that the rules are valid and necessary for ensuring consumer protection, and any adverse impact on retail traders' profit margins does not render the rules unconstitutional.

Conclusion:
- After examining the matter from various angles, the court held that the provisions of Rule 2(r) and Rule 23 of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977, are valid and not violative of the fundamental rights under Articles 14, 19(1)(g), and 21 of the Constitution.
- The writ petition was dismissed without any order as to costs.