2014 (4) TMI 806 - HC - Indian Laws

Whether the Electronics and Information Technology Goods (Requirement for Compulsory Registration) Order, 2012 and the notifications issued pursuant thereto are in any manner ultra vires Article 19(1)(g) of the Constitution of India or violative of any other provisions of law Constitutional Validity of Order & Notification Restriction on sale of Unregistered BIS products Reasonable Restriction - Right to Carry on Business Article 19(1)(g) - Held that - The notification restricting the sale from 3rd July 2013 onwards of the products which are not registered with the BIS department is in the interest of the people at large because if something goes wrong then nobody would be held responsible for the same and in the process, the innocent consumer will suffer This is not a case where the parallel imports are completely stopped or banned but are permitted subject to certain restrictions like submitting the products for testing to the BIS recognized labs to comply with the Order, 2012. Article 19(1)(g) read with Article 19(6) of the Constitution of India spells out fundamental rights given to the citizens to practice any profession or carrying on any occupation, trade or business so long as it is not prevented or is within the frame work of the regulation, if any - The restrictions permitted to be imposed by sub-clauses (2) to (6) of Article 19 must be read as a whole, each throwing light on the scope of the other and that the common thread running through these several provisions was the ground of public policy understood in a comprehensive sense - Every public statute was enacted in the public interest and, therefore, both public policy and public interest demanded its enforcement - The public interest justifying the restrictions might, therefore, arise from the very provisions of the enactment and might be grounded on the necessity to prevent its evasion. The restrictions permitted by sub-clauses (2) to (6) of Article 19 follow a pattern i.e. they are imposed by the legislature for the reasons of public policy - The aspect of public policy involved in the facts of each of the several fundamental rights conferred by the several sub-clauses of Article 19(1) might defer but one underlined principle, requirement of public policy, runs through various clauses of restrictions and pervades the scheme There is no justifiable reason found to declare the impugned Order, 2012 and the consequent notifications as ultra vires - The petition fails and is rejected Decided against the petitioner.

Summary

Issues Involved:
1. Validity of the Electronics and Information Technology Goods (Requirement for Compulsory Registration) Order, 2012.
2. Alleged violation of Article 19(1)(g) of the Constitution of India.
3. Alleged discrimination against parallel importers.
4. Compliance with Section 107A(b) of the Patents Act, 1970.
5. Public policy and consumer safety considerations.

Issue-wise Detailed Analysis:

1. Validity of the Electronics and Information Technology Goods (Requirement for Compulsory Registration) Order, 2012:
The petitioner challenged the Electronics and Information Technology Goods (Requirement for Compulsory Registration) Order, 2012, arguing it was ultra vires, unconstitutional, and violative of Article 19(1)(g) of the Constitution of India. The petitioner claimed that the order and subsequent notifications destroyed parallel imports and hampered business by mandating compulsory registration and testing by the Bureau of Indian Standards (BIS). The respondents countered that the order aimed to safeguard consumer interests by ensuring electronics and IT goods met Indian safety standards. The court held that the order was a policy decision taken to protect consumers and was not ultra vires or unconstitutional.

2. Alleged Violation of Article 19(1)(g) of the Constitution of India:
The petitioner argued that the order resulted in a total closure of lawful business, violating Article 19(1)(g) of the Constitution, which guarantees the right to practice any profession or carry on any occupation, trade, or business. The respondents contended that the order did not prohibit parallel imports but imposed reasonable restrictions to ensure consumer safety. The court concluded that the restrictions were in the public interest and did not violate Article 19(1)(g). The court emphasized that certain trades could be regulated for public welfare, and the restrictions imposed were reasonable.

3. Alleged Discrimination Against Parallel Importers:
The petitioner claimed that the order discriminated against parallel importers by giving preference to multinational companies (MNCs), thereby creating a monopoly. The respondents argued that the order applied equally to both domestic and foreign manufacturers and did not restrict parallel imports. The court found no merit in the petitioner's claim of discrimination, noting that the order aimed to ensure product safety and was applicable to all manufacturers, regardless of nationality.

4. Compliance with Section 107A(b) of the Patents Act, 1970:
The petitioner contended that the order indirectly banned parallel imports, which were permissible under Section 107A(b) of the Patents Act, 1970. The respondents maintained that the order did not deal with patent rights but focused on consumer safety standards. The court agreed with the respondents, stating that the order did not override Section 107A(b) and was concerned with ensuring that imported goods met Indian safety standards.

5. Public Policy and Consumer Safety Considerations:
The respondents argued that the order was part of a national policy to provide consumers with safe and high-quality electronics and IT goods. The court acknowledged the government's responsibility to address safety, health, and environmental issues and found that the order was a strategic initiative to protect consumers. The court held that the order was justified by public policy considerations and aimed to prevent the sale of substandard or defective goods.

Conclusion:
The court concluded that the Electronics and Information Technology Goods (Requirement for Compulsory Registration) Order, 2012, was not ultra vires the Constitution. It upheld the order, emphasizing that it was a policy decision taken in the public interest to ensure consumer safety. The petition was rejected, and the court found no justifiable reason to declare the order and subsequent notifications unconstitutional.