J&K High Court Quashes Coca-Cola Beverages Prosecution Over Pre-2018 Differential MRPs

On 3 July, the Jammu & Kashmir and Ladakh High Court held that manufacturers could lawfully declare different Maximum Retail Prices (MRPs) for identical packaged products before the 2017 amendment to the Legal Metrology (Packaged Commodities) Rules came into force.

Justice Rajnesh Oswal allowed Hindustan Coca Cola Beverages Pvt. Ltd.'s petition and quashed a criminal complaint, the Magistrate's cognizance order and all consequential proceedings, holding that no offence arose because neither the Legal Metrology Act nor the Rules in force in 2016 prohibited differential MRPs. He observed:

"The contention of the petitioner is that there was no law at the relevant point of time that prohibited the manufacturer from declaring differential MRPs for the same packaged product and once there is no prohibition under any law including the Act and Rules framed thereunder, declaration of differential MRPs for the same product was permissible, as such, no offence is made out against the petitioner."

Legal Metrology officials inspected a Domino's Pizza outlet in Katra on 25 October 2016 and found a 600 ml Coca-Cola bottle carrying an MRP of Rs. 60, while the same product was allegedly available in the open market for Rs. 35. The Department alleged that the company violated Section 18 of the Legal Metrology Act and Rules 2(bc) and 6 of the Legal Metrology (Packaged Commodities) Rules, 2011, and filed a criminal complaint.

Hindustan Coca Cola Beverages argued that neither the Legal Metrology Act nor the Rules, as they stood in 2016, prohibited manufacturers from declaring different MRPs for the same packaged product. It submitted that the 2017 amendment inserted Rule 18(2A), which introduced the prohibition with effect from 1 January 2018, and therefore authorities could not apply it retrospectively.

The Court accepted the company's contention and held that the unamended Rule 2(bc) merely defined the term "Institutional Consumer" and did not create a substantive prohibition that could support a criminal prosecution. It observed:

"The present controversy must, therefore, be resolved strictly in accordance with the unamended provision in force at the material time. The respondents have been unable to satisfy this Court as to how a prosecution can lie against the petitioner for an alleged violation of Rule 2(bc), given that the provision is purely a definitional clause for 'Institutional Consumer'."

It also held that Rule 18, as it stood on the date of inspection, did not prohibit differential MRPs. Further, it noted that the 2017 amendment inserted Rule 18(2A), which specifically prohibited the practice with effect from 1 January 2018.

Moreover, the Bench held that no legal prohibition existed on the date of inspection and reiterated that penal provisions cannot operate retrospectively. It concluded that the allegations did not disclose any offence against the company. It noted:

"In view of the detailed discussion and the settled legal position delineated hereinabove, this Court is of the considered view that the continuation of the impugned criminal proceedings would amount to nothing short of an abuse of the process of law."

Accordingly, the High Court quashed the criminal complaint, the Magistrate's cognizance order and all consequential proceedings against Hindustan Coca Cola Beverages Pvt. Ltd.

For Petitioner: Virender Bhat, Advocate

For Respondent: Dewakar Sharma, Dy.AG