Karnataka HC Absolves Samsung India From Alleged Violation Of Legal Metrology Act And Packaged Commodities Rules

The Karnataka High Court recently made a significant ruling in response to a petition filed by Samsung India, seeking to dismiss the legal proceedings initiated against it for alleged violations of the Legal Metrology (Numeration) Rules, 2011, Legal Metrology (Packaged Commodities) Rules, 2011, and Legal Metrology Act, 2009. Presided over by Justice Sachin Shankar Magadum, the bench concluded that the alleged violations, identified by the Inspector of the Department of Legal Metrology, are only applicable to retail packages, not wholesale packages. Consequently, after carefully scrutinizing the allegations, it became abundantly clear that the complaint against Samsung India was motivated by a malicious intent. Moreover, the Court found that the impugned complaint had significantly misconstrued the provisions outlined in the 2009 Act and the Packaged Commodities Rules, 2011.

Facts:

The Inspector of Department of Legal Metrology (“Department”), deputed at Wilson Garden sub-division in Bangalore, inspected a Bengaluru-based company named M/s. ABM Tele Mobiles India Pvt. Ltd., who is the distributor of Samsung India Electronics Pvt. Ltd. (“petitioner”). During the inspection, the Inspector examined a pre-packaged Samsung Galaxy Tab-4 produced by the petitioner. It was discovered that the printed Maximum Retail Price (MRP) of Rs. 14,000/- did not comply with Rule 4(2) of the Legal Metrology (Numeration) Rules, 2011 ("Numeration Rules, 2011") in conjunction with Section 6(2) and (3) of the Legal Metrology Act, 2009 ("Metrology Act, 2009"). The Inspector also alleged a violation of Section 11, read with Section 29 of the Metrology Act, 2009.

Furthermore, the Inspector claimed to have inspected a wholesale packaged product consisting of 20 individual packages, which did not bear the qualifying symbol 'N' as required by Rule 13 sub-clause (5)(ii) of the Legal Metrology (Packaged Commodities) Rules, 2011 ("Packaged Commodities Rules, 2011"). The absence of the qualifying unit 'N' alongside the numeral '20' is considered a violation of the Packaged Commodities Rules, 2011.

Following these allegations, the Department of Legal Metrology issued a show cause notice to the petitioner. In response, the petitioner submitted a detailed reply. However, the department instructed the petitioner to appear before it for compounding, failing which a complaint would be lodged under the provisions of the Metrology Act, 2002. Consequently, a complaint was lodged with the jurisdictional Magistrate, accusing the petitioner of violating the provisions of the Metrology Act, 2009, as well as Rule 4(2) of the Numeration Rules, 2011. Upon registration of the private complaint, the jurisdictional Magistrate took cognizance and issued summons to the petitioner. In response, the petitioner filed a petition under Section 482 of the Criminal Procedure Code (Cr.P.C.) before the Karnataka High Court, alleging that very initiation of prosecution was illegal and the alleged violation indicated in the complaint, even if accepted, would not constitute an offence.

Contentions of the Petitioner:

The complainant argued that upon considering both Section 52 and Section 10 of the Metrology Act, 2009, it becomes evident that the Numeration Rules, 2011 exclusively apply to weight, measure, or number, as specified in Section 52(2)(f) of the Metrology Act, 2009. Consequently, the Numeration Rules, 2011 do not have any relevance to the price or maximum retail price (MRP) of packaged goods. The complainant further emphasized that the MRP of pre-packaged goods should adhere to Rule 2(m) of the Packaged Commodities Rules, 2011, rather than the Numeration Rules, 2011. Moreover, the product in question complied with the provisions of the law. Therefore, the Inspector misinterpreted the provisions and rules and arbitrarily issued a notice for compounding the alleged offenses without adhering to the principles of natural justice.

Contentions of the Inspector (Respondent):

The inspector argued that the petitioner was provided ample opportunity to provide an explanation for compounding the offenses. However, as the petitioner failed to provide a satisfactory explanation, he left with no choice but to register the complaint against the petitioner. Consequently, the grounds presented in the current petition cannot be entertained. The Inspector further maintained that these grounds should only be examined during the trial proceedings and, therefore, this case does not warrant the exercise of jurisdiction under Section 482 of the Criminal Procedure Code (Cr.P.C.).

Observations of the Court:

After closely examining Sections 52 and 10 of the Metrology Act, 2009, the court held that the Numeration Rules, 2011 only apply to weight, measure, or number as specified in Section 52(2)(f) of the Metrology Act, 2009. Consequently, the Court concluded that Rule 4(2) of the Numeration Rules, 2011 does not pertain to price or maximum retail price (MRP), and thus, no offense can be established under Section 11 read with Section 29 of the Metrology Act, 2009. The Court highlighted that the regulation of price/MRP for packaged goods is governed by the Packaged Commodities Rules, 2011, particularly under Rule 2(m). According to Section 18 of the Legal Metrology Act, 2009, no individual can manufacture, pack, sell, import, expose, or possess for sale any pre-packaged commodity unless it adheres to the prescribed standard quantity, as outlined in Section 52(2)(j) of the 2009 Act. Therefore, the MRP of pre-packaged goods must comply with the provisions of the Packaged Commodities Rules, 2011, specifically Rule 2(m). The Court concluded that a plain reading of Rule 2(m) clearly indicates that the Inspector misinterpreted the laws governing price/MRP and arbitrarily issued a notice for compounding the alleged offense.

Regarding the second alleged offense concerning packages without the qualifying symbol "N," the Court analysed Rule 13(5)(i) and (ii) of the Packaged Commodities Rules, 2011 and determined that these rules only apply to retail packages and are not applicable to wholesale packages. The provisions governing wholesale packages are outlined in Chapter-III of the Packaged Commodities Rules, 2011. The Court also examined Rule 24 of the Packaged Commodities Rules and pointed out that, under Rule 24(c), only the number of quantities is required to be disclosed without adding a prefix like 'N' or 'U' as mentioned in Rule 13(5)(ii) of the Packaged Commodities Rules, 2011. Additionally, the Court found the complaint filed by the Inspector to be unsustainable as it was lodged against all the Directors, even though the company had clearly nominated a person in accordance with Section 49 of the Metrology Act, 2009.

Based on these findings, the Court firmly concluded that the complaint did not disclose any offense, and the alleged offenses only applied to retail packages, not wholesale packages. The Court regarded the allegations in the complaint as entirely baseless and vexatious. Furthermore, the Court held that the complaint itself was contradictory and demonstrated a complete misinterpretation of relevant sections of the Metrology Act, 2009, Rule 2(m), and Rule 24(c) of the Packaged Commodities Rules, 2011. Hence, the criminal petition filed by Samsung India was allowed and the proceedings against it were quashed.

Case: M/S Samsung India Electronics Pvt. Ltd vs State of Karnataka

Case No.: Criminal Petition No. 9771 of 2017

Citation: 2023 LiveLaw (Kar) 222

Advocate for the Petitioner: Shri C.R. Mahendra Gowda

Advocate for the Respondent: Shri Vinayak V.S.

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