REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 1117 OF 2010
State of Maharashtra & Ors .... Appellant (s)
Versus
Subhash Arjundas Kataria .... Respondent(s)
WITH
CIVIL APPEAL NOs. 1118, 1120, 1121, 1122
AND 1123 OF 2010
WITH
CRIMINAL APPEAL NO. 118 OF 2010
J U D G M E N T
P. Sathasivam, J.
1) The principle question which arises in these appeals is as
to what is the true scope and correct purport of the expression
"commodity in packaged form" under Section 2(b) of the
Standards of Weights and Measures Act, 1976 (in short `the
Act). In Civil Appeal No. 1117 of 2010, the specific question is
1
whether the sun glasses can be considered "pre-packed
commodity" under Rule 2(l) of the Standards of Weights and
Measures (Packaged Commodities) Rules, 1977 (in short `the
Rules). In the connected appeals, the product includes Titan
watches, fixed wireless phones, sun glasses, electrical goods,
home appliances, consumer electronics and Samsung
Microwave Oven. The State of Maharashtra is the appellant in
all these appeals.
2) For convenience, let us briefly state the facts in Civil Appeal
No. 1117 of 2010. According to the respondent, he is engaged
in the business of trading in sun glasses and has a counter on
commission basis at Globus Stores, Bandra. On 17.10.2003,
the Inspector of Legal Metrology/Appellant No. 2 herein visited
the store and seized five Sun glasses belonging to the
respondent and issued a seizure memo. At the time of search,
it was explained to him that the sun glasses delivered to them
were in polythene bags and some in individual openable
pouches. According to them, sometimes, at the time of
delivery, they are put in a pouch which is normally on display
for the customers to identify for the purpose of purchase. It
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was also explained that the package, therefore, is only a
package for protection or safety of the article. The value of
sun glasses whether inside the package or outside the package
does not alter if the package is opened nor does it undergo a
perceptive modification on the package being opened. The
testing of the sunglasses by the customer is for the purpose of
determining whether he should purchase the same
considering various sizes, designs, colours, aesthetic value,
makes and companies and after trying and ascertaining the
suitability, quality etc.
3) It is the grievance of the respondent that in spite of proper
explanation, the Inspector/Appellant No. 2 seized the sun
glasses for allegedly not declaring name and address of the
manufacturer/month and year of manufacturing which is in
violation of provisions of the Act and the Rules. It is the claim
of the respondent that by force they were compelled to write a
letter to the authorities for compounding the offence and
directing them to pay Rs. 3,000/- as compounding fee by
order dated 30.10.2003.
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4) Aggrieved by the action of the appellant, the respondent
preferred Writ Petition No. 120 of 2004, inter alia, for quashing
of the seizure memo dated 17.10.2003 and also for the order
dated 30.10.2003 for the payment of compounding fee. By
order dated 05.05.2006, the High Court, by appreciating the
submissions made on behalf of the respondent, allowed the
writ petition holding that the sun glasses, whether it be a
frame or glass is not a "pre-packed commodity" within the
definition of the expression "pre-packed commodity" under
Rule 2(l) of the Rules. Aggrieved by the said order of the High
Court, the appellant-State preferred the present appeal by way
of special leave petition.
5) It is the stand of the respondent that the Act brings in its
purview not all the items which are kept in the package to
protect or for other reasons but is limited to packaged
commodity as defined under the Act, which are being sold by
weights or measures or numbers, and which are being sold in
a packed form without unpacking such packaged commodities
at the time of sale and the sun glasses do not come within the
ambit of definition of "commodity in packaged form" in
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terms of Section 2(b) of the Act nor under the purview of "pre-
packed commodity" under Rule 2(l) of the Rules. It is also
highlighted that sunglasses cannot be sold in the packaged
condition without opening the packaging since the customer
will buy only after comparing, trying it out for size and after
checking its aesthetic value, the quality of glass and vision,
looks etc and therefore, the sun glasses can never be and are
not sold in packaged condition.
6) We are concerned about Section 2(b) of the Act and 2(l) of
the Rules which read as under:-
"2(b) "Commodity in packaged form" means commodity
packaged, whether in any bottle, tin, wrapper or otherwise,
in units suitable for sale, whether wholesale or retail."
"2(l) "pre-packed commodity", means a commodity, which
without the purchaser being present, is placed in a package
of whatever nature, whether sealed or opened, so that the
commodity contained therein has a pre-determined value
and includes those commodities which could be taken out of
the package for testing or examining or inspecting the
commodity;
Explanation I - Where, by reason merely of the opening of a
package no alteration is caused to the value, quantity,
nature or characteristic of the commodity contained therein,
such commodity shall be deemed, for the purposes of these
rules, to be a pre-packed commodity, for example, an electric
bulb or fluorescent tube is a pre-packed commodity, even
though the package containing it is required to be opened for
testing the commodity.
Explanation II. ......"
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7) Considering the above definition, the High Court observed
that the expression "pre-packaged commodity" would be
applicable to:-
(i) commodities which are packed, and
(ii) the commodity packaged has a pre-determined value and
(iii) that value cannot be altered without the package sold
being opened at the time of sale, or
(iv) the product undergoes a modification on being opened.
8) As rightly argued by Mr. Shekhar Naphade, learned senior
counsel for the respondent, in the case of sun glasses, whether
they come in a box or not, insofar as the retailer is concerned,
at the time when they are being sold to the consumer, are not
in packaged form. Even if we hold that they come in a
packaged form, before they are sold to the consumer by
removing them from the box, the value does not alter nor does
the product undergo a perceptive modification and as such the
provisions, particularly, under Section 2(b) of the Act are not
applicable. Further, as rightly observed by the High Court, the
explanation to the said Rule is also not attracted because the
package is not opened for the purpose of testing as in the case
6
of electric bulbs. It was asserted by the learned senior counsel
for the respondent that the sun glasses are tested by the buyer
for his suitability.
9) Similar arguments were advanced by the respective counsel
relating to their respective products. On careful scrutiny of
the provisions referred above, it is clear that the expression
"pre-packed commodity" would be applicable to commodities
which are packed and the commodity packaged has a pre-
determined value and that value cannot be altered without the
package sold being opened at the time of sale or the product
undergoes a modification on being opened. We are also of the
view that the Explanation I to Rule 2(l) of the Rules is not
attracted because the package is not opened for the purpose of
testing as in the case of electric bulbs. We fully agree that the
sun glasses are tested by the buyer for his suitability, and
therefore, sun glasses, whether it be a frame or glass is not a
pre-packed commodity within the definition of the expression
"pre-packed" under Rule 2(l) of the Rules, hence, the High
Court is fully justified in quashing the notice and allowing the
writ petition filed by the respondent. We also agree with the
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similar arguments advanced relating to other products
mentioned above.
10) Learned counsel appearing for the appellant-State
submitted that the very same Rules fell for interpretation
before this Court in the case of Whirlpool of India Ltd. vs.
Union of India and Ors. (2007) 14 SCC 468. Heavily relying
on the said decision, the learned counsel submitted that sun
glasses are "pre-packed commodity" within the meaning of
the Act and the Rules. He also submitted that the other
products also would come within the above mentioned
definition and by applying the ratio in that decision prayed for
setting aside the impugned order of the High Court.
11) In order to consider the stand of the State, let us
consider the factual position and the ratio laid down in
Whirlpool (supra). The short question in that matter was as
to whether `refrigerator' is a "packaged commodity" or not.
The appellant-Whirlpool was engaged in manufacturing
refrigerators. The Central Government issued Notification No.
9 of 2000 dated 01.03.2000 under Sections 4-A(1) and (2) of
the Central Excise Act and specified the goods mentioned in
8
Column 3 of the said notification. Entry 48 pertains to the
refrigerators whereby the refrigerators invited valuation under
Section 4-A of the Central Excise Act with the abatement of
40%. Sections 4-A(1) and (2) of the Central Excise Act require
that any goods included in the notification shall be valued on
the basis of the maximum retail price (for short "MRP") which
is required to be printed on the packages of such goods. The
five conditions for inclusion of the goods are:
"(i) The goods should be excisable goods;
(ii) They should be such as are sold in the package;
(iii) There should be requirement in the Act or the Rules
made thereunder or any other law to declare the price of
such goods relating to their retail price on the package;
(iv) The Central Government must have specified such
goods by notification in the Official Gazette;
(v) The valuation of such goods would be as per the
declared retail sale price on the packages less the amount of
abatement."
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12) The appellant felt aggrieved by the fact that the
refrigerators were covered and included in the aforementioned
Notification dated 01.03.2000 as, according to the appellant,
the refrigerator is not such a commodity which is sold in a
package. Significantly, the appellant is not aggrieved by its
valuation being under Sections 4-A(1) and (2) of the Act. The
only complaint that the appellant made is that the appellant
should not be required to print MRP on the package of the
refrigerator manufactured by it. The appellant, therefore, filed
a writ petition before the High Court of Punjab and Haryana
praying, inter alia, for a writ of certiorarified mandamus
restraining the authorities for taking any coercive measures
against the appellant or its Directors, officers, servants or
agents for not declaring MRP on the refrigerators
manufactured and cleared by the appellant from its factory.
The Notification dated 01.03.2000 was challenged to this
limited extent only. Before the High Court, the appellant
pleaded that refrigerator is not such a commodity which can
be termed to be a "packaged commodity" and further the
provisions of the Act or the Rules made thereunder are not
10
applicable to the refrigerator at all. It was, therefore, prayed
that the notification was liable to be quashed only to the
extent that it included the refrigerator and the requirement of
declaring MRP on the refrigerator.
13) The respondent authorities, however, maintained that the
refrigerator was in fact sold in a package of polythene cover,
thermocol, hardboard cartons, etc. and thus it falls in the
category of "pre-packed commodity". On that basis it was
contended that since every packaged commodity was included
in the Act and the Rules made thereunder, there can be no
escape from printing MRP on the package. The High Court
rejected the contention and dismissed the petition filed by the
appellant.
14) It was vehemently contended before a three-Judge Bench
by the counsel for the appellant that a `refrigerator' is not sold
in a "packaged form". It was further contended that even if it
is sold in the packaged form, when it is displayed by the
dealers, it is not in the packaged form and the customers can
take the inspection of the refrigerator and at least for that
purpose the package has to be opened and, therefore, there
11
would be no question of the refrigerator being included in the
Act or the Rules made thereunder. Rejecting the said
submission as incorrect, this Court concluded as under:-
"5. It was not disputed before the High Court and also before
us that the appellant manufacturer has to sell the
refrigerators which are packed in polythene cover, thermocol,
etc. and placed in hardboard cartons. In fact the appellant
had so pleaded before the High Court in para 3 to which a
reference has been made by the High Court. Once that
position is clear, then the refrigerator clearly becomes a
commodity in the packaged form. The use of the term "or
otherwise" in the definition would suggest that a commodity
if packed in any manner in units suitable for sale, whether
wholesale or retail, becomes a "commodity in packed form..."
15) After adverting to Rule 2(l) "pre-packed commodity" and
Explanation I, their Lordships have held that refrigerator is
covered under the term "pre-packed commodity" and
concluded that:
"6. ....Even if the package of the refrigerator is required to be
opened for testing, even then the refrigerator would continue to
be a "pre-packed commodity". There are various types of
packages defined under the Rules and ultimately Rule 3
specifically suggests that the provisions of Chapter II would
apply to the packages intended for "retail sale" and the
expression "package" would be construed accordingly.
7. It is not disputed before us that the sale of the refrigerator is
covered under the "retail sale". Once that position is clear Rule
6 would specifically include the refrigerator and would carry
along with it the requirements by that Rule of printing certain
information including the sale price on the package. Thus it is
clear that by being sold by the manufacturer in a packaged
12
form, the refrigerator would be covered by the provisions of the
SWM Act and the SWM (PC) Rules and it would be imperative
that MRP has to be printed in terms of Rule 6 which has been
referred to above.
8. The High Court has also made a reference to Rule 2(l) and
more particularly, the Explanation to which we have referred to
earlier. In our view the reliance by the High Court on Rule 2(l) is
correct. Learned counsel tried to urge that every customer
would like to open the package before finalising to purchase the
refrigerator. He would at least get it tested and for that purpose
the package would be destroyed. That may be so but it does not
change the position as rightly observed by the High Court.
9. It was tried to be suggested that MRP would be different
depending upon the area in which it is being sold. That may be
so, however, that cannot absolve the manufacturer from
displaying the price i.e. MRP on the package in which the
refrigerator is packed. Whatever be the situation, it is clear that
a refrigerator is a "packaged commodity" and thus is covered
under the SWM Act and the SWM (PC) Rules and, therefore, the
Notification dated 1-3-2000 cannot be faulted on that ground....
"
16) By heavily relying on the above dictum with reference to
the very same provisions by this Court in the Whirlpool
(supra), the appellant-State submitted that in view of
substantive definition of the main section read with the Rules,
the sun glasses are "pre-packed commodity" within the
meaning of the Act and the Rules thereof. The appellant-State
also submitted that similar analogy is to be applied for other
products also.
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17) Learned senior counsel appearing for the respondent
vehemently submitted that the ratio of the judgment in
Whirlpool (supra) is not at all applicable to these cases,
firstly, because the issue in that case was in context of Central
Excise Act and, secondly, because none of the aspects stated
have been taken into consideration by this Court in the matter
of Whirlpool (supra). It is also pointed out that the judgment
is sub silentio because the provisions of the Act, specially the
provisions of Section 2(v) of the Act, have not been taken into
consideration in the said case. In the context of sub silentio
reference is made to the judgment of this Court in Municipal
Corporation of Delhi vs. Gurnam Kaur, (1989) 1 SCC 101,
which according to the counsel for the respondent, is that a
sub silentio judgment does not have a binding precedent. By
pointing out the same, the counsel for the respondent prayed
that the case of Whirlpool (supra) requires reconsideration
and, as a result, the present matter also would be required to
be considered by a larger Bench.
18) Though it was pointed out that the decision in Whirlpool
(supra) was made in the context of the Central Excise Act, we
14
have already extracted the question which fell for
consideration, relevant provisions from the Act and the Rules,
discussion as to the applicability, and the ultimate conclusion
in para 9, namely, "whatever be the situation, it is clear that a
refrigerator is a "packaged commodity" and thus is covered
under the Act and the Rules." In view of the same, it cannot
be claimed that the judgment in Whirlpool (supra) has no
bearing on the issues in these appeals. Inasmuch as the said
decision was rendered by a bench of three Hon'ble Judges with
reference to the very same Act and Rules, we are of the view
that the issue raised in all these appeals have to be heard by a
larger Bench.
19) Accordingly, we direct the Registry to place all these
appeals before Hon'ble the Chief Justice of India for listing
before a larger Bench.
...........................................
......J.
(P. SATHASIVAM)
..............................................J.
(H.L. GOKHALE)
15
NEW DELHI;
AUGUST 26, 2011.
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 1119 OF 2010
The State of Maharashtra & Ors .... Appellant (s)
Versus
Raj Marketing & Anr. .... Respondent(s)
J U D G M E N T
P. Sathasivam, J.
1) This appeal by State of Maharashtra is directed against the
judgment and order dated 08.12.2006 passed by the High
Court of Judicature at Bombay in Writ Petition No. 2982 of
2006 whereby the High Court allowed the writ petition of the
Ist respondent herein.
17
2) The issue involved in this appeal is whether Candy man,
Minto-Fresh, Kitchens of India, Badam Halwa and Ashirvaad
Atta etc. can be considered as a "wholesale package" within
the definition of the expression "wholesale package" under
Rule 2(x) of the Standards of Weights and Measures (Packaged
Commodities) Rules, 1977 (hereinafter referred to as "the
Rules").
3) Brief facts:
a) The respondent is a firm carrying on the business of
buying and selling various products and they used to store
these products in their godown at Gali No.8, Senior Tyre
Compound, N.S.S. Road, Narayan Nagar, Ghatkopar (W)
Mumbai.
b) On 31.10.2006, the second appellant/Inspector of Legal
Metrology, Mumbai visited the first respondent's godown and
seized various packages of packed commodities such as Candy
man, Minto-Fresh, Kitchens of India, Badam Halwa and
Ashirvaad Atta etc. vide seizure memo bearing Nos. 0114769
and 0114770 dated 31.10.2006. The reason for seizure,
18
according to him, is that on the wholesale packets, the details
regarding the name and addresses of the manufacturer, cost,
month, year etc. has not been declared and also the retail sale
price was not mentioned which is in violation of the Rules.
c) A show cause notice dated 06.11.2006 has been issued
by the appellant to the respondent for the violation of
Section/Rule 33 and 39 read with Rule 23(1) and 6 of the
Rules. It was mentioned in the said notice that the offence is
compoundable as per Section 73 of the Standards of Weights
and Measures Act, 1976 and Section 65 of the Standards of
Weights and Measures (Enforcement) Act, 1985.
d) On 18.11.2006, the respondents, vide their letter, replied
to the notice dated 06.11.2006.
e) On 28.11.2006, the respondents filed Writ Petition being
W.P. No. 2982 of 2006, inter alia, for quashing the seizure
memo dated 31.10.2006 and notice dated 06.11.2006.
4) The High Court, by impugned order dated 08.12.2006
allowed the writ petition by holding that the packages
containing Candy man, Minto-Fresh, Kitchens of India, Badam
Halwa and Ashirvaad Atta are not wholesale package within
19
the definition of the expression "wholesale package" under
Rule 2(x) of the Rules.
5) Questioning the said order of the High Court, the State
filed the above appeal by way of special leave.
20
6) Heard Mr. Chinmoy Khaladkar, learned counsel for the
appellant-State and Mr. Ravinder Narain for respondent No.1.
7) Rule 2(x) of the Rules define "wholesale package" to
mean:
"(x) "wholesale package" means a package containing-
(i) a number of retail packages, where such first mentioned
package is intended for sale, distribution or delivery to a
intermediary and is not intended for sale direct to a single
consumer; or
(ii) a commodity sold to an intermediary in bulk to enable
such intermediary to sell, distribute or deliver such
commodity to the consumer in smaller quantities; or
(iii) packages containing ten or more than ten retail
packages provided that the retail packages are labeled as
required under the rules."
8) Rule 29 of the Rules read as under:
"29. Declaration to be made on every wholesale package.-
Every wholesale package shall bear thereon a legible,
definite, plain and conspicuous declaration as to,-
(a) the name and address of the manufacturer or where
the manufacturer is not the packer, of the packer;
(b) the identity of the commodity contained in the
package; and
(c) the total number of retail packages contained in such
wholesale package or the net quantity in terms of standard
units of weights, measures or number of the commodity
contained in wholesale package:
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Provided that nothing in this rule shall apply in relation to a
wholesale package if a declaration similar to the declaration
specified in this rule, is required to be made on such
wholesale packages by or under any other law for the time
being in force."
9) In order to attract violation of the Rules referred above,
the package seized must fall within the expression "wholesale
package". A package used merely for protection during
conveyance or safety would not be pre-packed commodity for
the purpose of the Act and the Rules. As rightly observed by
the High Court that for the package to be treated as a
wholesale package, the package must not be a secondary
package. In that event, we have to find out whether the
secondary package is only for safety, convenience or the like.
As demonstrated before the High Court, the counsel appearing
for the Ist respondent placed all the above-mentioned products
before us i.e. both the wholesale package as well as the retail
package. The Department's only contention was that the
secondary package in which the wholesale package was
packed does not contain the said information. In the light of
the provisions which we have referred above and on
verification of the products which were shown to us, we are of
22
the view that the secondary outer packing for transportation
or for safety of the goods being transported or delivered cannot
be described as a wholesale package.
23
10) On going through the statutory provisions which we have
adverted to in the earlier paras and on verification of the
products which were shown to us during the course of
argument, we fully agree with the conclusion arrived at by the
High Court. Consequently, the appeal fails and the same is
dismissed with no order as to costs.
.................................................J.
(P. SATHASIVAM)
..............................................J.
(H.L. GOKHALE)
NEW DELHI;
AUGUST 26, 2011.
24
