Hotels/Restaurants Can Sell ‘Packaged Water Bottles’ Above MRP: SC [Read Judgment]

Hotels and restaurants can continue to sell packaged mineral water bottles above ‘MRP’ rates as the Supreme Court has observed that no prevailing law prevents such a sale.

A bench of Justice RF Nariman and Justice Navin Sinha observed that neither the Standards of Weights and Measures Act, 1976, read with the Standards of Weights and Measures (Enforcement) Act, 1985, or the Legal Metrology Act, 2009, would apply so as to interdict the sale of mineral water in hotels and restaurants at prices which are above the MRP.

The Supreme Court upheld a Delhi High Court single bench judgment which had held that charging prices for mineral water in excess of MRP printed on the packaging during the service of customers in hotels and restaurants does not violate any of the provisions of the Standards of Weights and Measures Act, as this does not constitute a sale or transfer of these commodities by the hotelier or restaurateur to its customers.

The single bench, allowing the writ petition filed by the Federation of Hotel and Restaurant Associations of India, had observed: “The customer does not enter a hotel or a restaurant to make a simple purchase of these commodities. It may well be that a client would order nothing beyond a bottle of water or a beverage, but his direct purpose in doing so would clearly travel to enjoying the ambience available therein and incidentally to the ordering of any article for consumption. Can there be any justifiable reason for the Court or Commission to interdict the sale of bottled mineral water other than at a certain price, and ignore the relatively exorbitant charge for a cup of tea or coffee. The response to this rhetorical query cannot but be in the negative.”

The Federation of Hotel and Restaurant Associations of India had approached the Supreme Court against the division bench order which had disposed of the letter patent appeals by neither setting aside nor affirming the judgment of the Single Judge. The division bench had held that the single bench judgment would not come in the way of any de novo proceeding under the Legal Metrology Act, 2009, which has since replaced the two Acts of 1976 and 1985, even if the concerned provisions of the old and the new law are identical/similar.

Referring to various provisions of both new and the old Act, the apex court observed that despite the constitutional amendment having been passed, the definition of “sale” in the new Act still says that composite indivisible agreements for supply of services and food and drinks would not come within the purview of the Act.

“On a reading of the said Act and the Rules made thereunder, it is clear that the position qua “sale” remains exactly the same as that contained in the 1976 Act, which now stands repealed. This being the case, we are of the view that the learned Single Judge was absolutely correct in his conclusion that despite the constitutional amendment having been passed, the definition of “sale” contained both in the 1976 Act and now in the 2009 Act would go to show that composite indivisible agreements for supply of services and food and drinks would not come within the purview of either enactment,” the bench observed.