No Statutory Basis To Claim Exemption From Packaging Requirements Under Packaged Commodities Rules, PepsiCo Must Comply: Telangana High Court

The concern was related to the amendment brought in Rule 6(1)(a), which specified requirements regarding the name and address declaration on packages, especially for imported packages and those of companies acting as packers. The High Court noted that there was no statutory basis to justify the Central Government's authority to exempt manufacturers from complying with Rule 6(1)(a).

Brief Facts:

PepsiCo India Holdings, a company established under the Companies Act, of 1956, specialized in producing non-alcoholic carbonated beverages, packaged drinking water, and edibles like potato chips, operating primarily in India, including Andhra Pradesh. PepsiCo distributes its products through various channels involving wholesalers and retailers. It is legally bound to adhere to the regulations outlined in the Prevention of Food Adulteration Act, 1954, the Standards of Weights and Measures Act, 1976, the Standards of Weights and Measures (Enforcement) Act, 1985, the Standards of Weights and Measures (Packaged Commodities) Rules, 1977, as amended in 2006, and the Fruit Products Order, 1955.

Under Section 83 of the Standards of Weights and Measures Act, 1976 (“the Act”), the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 (“1977 Rules”) were formulated. These rules, particularly Chapter II, focused on regulations concerning packages intended for retail sale. Rule 6 of the said rules mandated specific declarations on every package, with Rule 6(1)(a) being amended from January 14, 2007. This amendment specified requirements regarding the name and address declaration on packages, especially for imported packages and those of companies acting as packers.

On January 12, 2007, the Central Government issued implementation guidelines for the 1977 Rules. These guidelines aimed at facilitating a smooth transition and included provisions for wide publicity of the changes, initial investigational surveys, and a grace period until April 30, 2007, before any prosecution. Manufacturers were also permitted to use stickers to declare consumer care details until June 30, 2007, to accommodate existing packaging materials.

However, the Respondents alleged that PepsiCo violated Rule 6(1)(a) of the 1977 Rules. Subsequently, multiple notices were issued between June and August 2007, informing PepsiCo of these violations. A proceeding dated October 12, 2007, was issued, advising PepsiCo to appeal to the Controller, Legal Metrology, Weights & Measures Department, Hyderabad. Further, a notice dated October 18, 2007, informed PepsiCo of a case registered against them for offences under relevant sections of the Act and the 1977 Rules since June 25, 2007. Subsequently, summons were served on March 15, 2008, by the Judicial First Class Magistrate, Hindupur, for offences under Section 72 of the Act.

Feeling aggrieved, PepsiCo filed a writ petition in the High Court of Telangana (“High Court”), seeking a directive from the High Court to prevent any action against it regarding packaging materials used before December 31, 2007, in accordance with directions issued by the Central Government on July 5, 2007.

Observations of the High Court:

The High Court noted that under Rule 6(1)(a) of the 1977 Rules, manufacturers are mandated to provide specific contact information on their product packaging for consumer complaint purposes. This requirement serves as a crucial avenue for consumer recourse in case of grievances.

The High Court emphasized that any exemption from this rule must find a place in statutory provisions, either within the relevant Act or the corresponding rules. However, in the case at hand, no such statutory basis was presented to justify the Central Government's authority to exempt manufacturers from complying with Rule 6(1)(a). Consequently, the High Court found the contention that PepsiCo was exempt from this obligation to be unfounded.

Furthermore, the High Court acknowledged the amendments made to the Act, which necessitated corresponding adjustments in the implementation of the 1977 Rules. The Central Government issued guidelines to facilitate a smooth transition, emphasizing the importance of raising awareness among manufacturers, wholesalers, and retailers regarding the revised provisions. These guidelines outlined initial steps, including investigational surveys and notifications of deficiencies, with the expectation that prosecutions would not occur during this transitional period until April 30, 2007.

Despite these guidelines, the High Court noted that prosecution had already commenced against PepsiCo in one instance, while actions regarding other notices remained pending. In light of this, the High Court directed the concerned authorities to adhere to the guidelines issued by the Central Government before proceeding further with the matter. Consequently, the writ petition was dismissed.

Case Title: Pepsico India Holdings Private Ltd. vs Union of India

Case No.: Writ Petition No. 9985 of 2008

Advocate for the Petitioner: Mr N. Naveen Kumar

Advocate for the Respondent: Mr P. Govind Reddy (For R6, R7, R8 and R11)