Karnataka High Court
The Government Of Karnataka vs Ewac Alloys Limited on 24 January, 2020
Author: Ravi Malimath
Bench: Ravi Malimath
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
ON THE 24TH DAY OF JANUARY 2020
BEFORE
THE HON'BLE MR. JUSTICE RAVI MALIMATH
AND
THE HON'BLE MR. JUSTICE ASHOK S. KINAGI
WRIT APPEAL NO.1770/2012 (GM-RES)
BETWEEN:
1. THE GOVERNMENT OF KARNATAKA,
REPRESENTED BY THE CONTROLLER
OF LEGAL METROLOGY, NO.1, ALI ASKER ROAD,
BENGALURU - 560001.
2. THE INSPECTOR OF LEGAL METROLOGY,
CITY MARKET-II, SUB-DIVISION,
CORPORATION BUILDING, 1ST FLOOR,
MINERVA CIRCLE, V.V.PURAM,
BENGALURU - 560004.
...APPELLANTS
(BY SRI.KIRAN KUMAR, HCGP)
AND:
1. EWAC ALLOYS LIMITED,
PB NO.8933, L&T GATE NO.3,
SAKI VIHAR ROAD, POWAI, MUMBAI-400072,
REPRESENTED BY ITS HEAD OF FINANCE & ACCOUNTS
SRI.ANIL D.DHOND.
2. LARSEN & TOURBO LIMITED,
PB.NO.8901, MUMBAI-400072,
REPRESENTED BY ITS SENIOR DY.GENERAL
2
MANAGER (TAXATION),
SRI.SATISH SANGAMESHWARAN.
3. C.A.REDDY
SON OF JANARDHAN REDDY,
AGED ABOUT 60 YEARS, PARTNER,
QUALITY ENTERPRISES, NO.1105, KAMBI COMPLEX,
OTC ROAD, BENGALURU-02.
4. THE UNION OF INDIA,
THROUGH THE ADDITIONAL SECRETARY,
DEPARTMENT OF CONSUMER AFFAIRS,
MINISTRY OF CONSUMER AFFAIRS,
FOOD & PUBLIC DISTRIBUTION, KRISHI BHAVAN,
NEW DELHI-110001.
...RESPONDENTS
(BY SRI.VISHWANATH R.HEGDE, ADVOCATE FOR R1 TO R3,
SRI.M.N.KUMAR, ADVOCATE FOR R4)
THIS APPEAL IS FILED UNDER SECTION 4 OF THE
KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE
THE ORDER PASSED IN THE WRIT PETITION NO.20135 of
2007 (GM-RES) DATED 16.09.2011.
THIS APPEAL HAVING BEEN HEARD AND RESERVED
FOR JUDGMENT ON 04.11.2019, COMING ON FOR
PRONOUNCEMENT, THIS DAY, ASHOK S. KINAGI, J.,
DELIVERED THE FOLLOWING:
JUDGMENT
Aggrieved by the order dated 16.09.2011 passed by the Learned Single Judge in W.P.No.20135 of 2007, the respondents have filed this appeal. 3
2. The brief facts of the case are that, respondent No.1 herein is a joint venture company between Larsen & Tourbo Limited and respondent and the non-resident Messer Eutectic Castolin Group. Respondent No.1 is engaged in manufacturing welding products such as electrodes, brazing roads, powders and fluxes and selling thereof. These welding products are used mainly in repairs and maintenance work on costly industrial equipments and these are not meant for use in conventional fabrication work. A specialized welding technology process which has been patented as "Eutectic Castolin Welding Process" is used. Respondent No.1 is selling the products to its associate company and selling agent, respondent No.2. The business division of respondent No.2 is selling these products to a network stockiest spread all over India. Respondent No.3 is one such stockiest in Bangalore. These products are packed in plastic 4 containers known as dripacks in the industry. The dripacks contained the marked quantities and bear on them the declaration "for industrial use only".
3. Respondent No.2 selling these products with the help of a core team of sales/service engineers trained in the specialized "Eutectic Castolin Welding Process". These sales/service engineers meet the technical personnel of the industrial units and ascertain their requirements for reconditioning, remaking, rejuvenation and restoration of the machinery or equipment and accordingly advise them with reference to the quantities and types of the welding products required, the nature of the processes to be adopted for reconditioning/restoration of the machinery or equipment etc., In case of the leading industrial units, respondent No.2 itself carries out the welding process by employing trained service engineers. The sales personnel of respondent No.2 5 also identify contractors who are trained for carrying out the special processes of reconditioning etc. and engage them for that purpose.
4. The case of the respondents is that these welding electrode products were seized from the premises of the stockiest of respondent No.2 by the appellant No.2 alleging that address of the manufacturer or packer and MRP have not been marked on such packages as required under the Standards of Weights and Measures (Package Commodities) Rules, 1977 (for short 'the PC Rules'). The respondents were received with the notice dated 11.09.2007 from appellant No.2. The respondents gave a reply to the said notice and explained that the provisions of the Standards of Weights and Measures Act, 1976 (for short 'the Act') and the PC Rules are not applicable to the packages of welding electrode products as these are meant for industrial consumers. 6 These products are very costly in comparison to normal products used by fabricators and not economical for the small users. The respondents again received one more notice dated 26.10.2007 from appellant No.2 informing the respondents that they were directed to appear before him on 05.11.2007 before the authorities for compounding the offence. The respondents appeared before appellant No.2 on 05.11.2007 and orally explained the legal position and also filed their reply. Appellant No.2 did not consider the legal position explained by the respondents and also reply submitted by them. Thereafter, they have filed writ petition challenging the notices issued to them.
5. The appellants filed statement of objections contending that Rules are applicable to the respondents packages kept for sale at the premises of respondent No.3. The packages manufactured by 7 respondent No.1 and marketed by respondent No.2 through respondent No.3 are not meant for sale for an industrial consumer since the definition of retail package excludes the packages for sale in retail to industrial consumer or institutional consumer. But there is no restriction for retail sale of such packages to industries and institutions with the compliance of law. The exemption is always available for the consumer who buy packages directly from the manufacturer or packer for using the product in their industry for production etc., The transaction is 'sale' as per the definition of Section 2(v) of the Act. The definition of 'retail package' and 'retail sale' contained in the Act never states anywhere that it covers only consumer goods used in household on day today basis. The provision of Rule 2(p) and Rule 2-A has to be interpreted harmoniously for proper understanding and applicability of law. The appellants do not deny 8 that the provisions of Rule 2(p) that the ultimate consumer shall not include industrial or institutional consumer, provided that the same package is bought by such consumer directly from the manufacturer/packer for using the product in their industry for production, etc., as produced in Rule 2- A(b). They further contended that the packages in question seized by the appellants are retail packages and the process involved is retail sale and the notice issued by the appellants are just and legal and the same is as per law and the respondents have failed to comply with the provisions of the Act and Rules. Therefore, no case for striking down the provisions of the Act nor for quashing the impugned notice is made out and sought for dismissal of the writ petition.
6. The respondents have filed a rejoinder stating the definition of 'consumer', 'consumer product', 'consumer goods' as defined in the 9 dictionary. They further submitted that Rules apply to goods used by the consumers and not to those used by institutions or industries. The product of the respondents are not meant to be used in households. They are used in engineers and contractors. They go by the technical parameters before purchasing the goods. Being non-consumer goods, the products manufactured and sold by the respondents are not within the purview of P.C. Rules. Since ordinary consumer goods are sold by weight, volume or other measure in packed condition, certain information is required to be declared on the package so that the consumer can make buying decision. Further stating that the very purpose of Rule 6 requires the name and address of the manufacturer, the common generic name of the commodity, net quantity in terms of the standard unit of weight or measure, the month of manufacturer, the sale price of the package and the 10 size of the commodity were relevant, are to be declared on the package. Even if the respondents make available such information on the packages, it will not be sufficient for a customer to make a buying decision with respect to any product of the respondents. Since the very purpose of Rule 6 is not achieved in the case of the products manufactured and sold by the respondents and that the interpretation sought to be placed by the appellants is not correct.
7. The learned single Judge has framed the following point for consideration:
"Whether the requirement of Rule 6 is to be complied with by a manufacturer who sells his packaged goods to an industrial consumer through a stockiest?
8. The learned single Judge was pleased to observe that the word 'consumer' is not defined under the Act or the Rules and considered the word 11 'consumer' from the dictionary. As per the Black's Law Dictionary, Eighth Edition, the word 'consumer' is defined as a person who buys the goods or services for personal, family or household use, with no intention of resale, a natural person who uses products for personal rather than business purposes. The words 'consumer product' is defined as an item of personal property that is distributed in commerce and is normally used for personal, family or household purposes. The word 'consumer transaction' is defined as a bargain or deal in which a party acquires property or services primarily for a personal, family or household purpose. The 'consumer goods' means a goods by or use primarily for personal, family or household purpose and not for resale or for purchasing other goods. In this context, ordinarily, the word 'consumer' refers to an individual who buys goods or service for himself or his family or for his 12 household use. Therefore, a producer or manufacturer or a whole sale dealer who buys goods is excluded in common parlance.
9. The learned single Judge considered the word 'consumer' as defined under Section 2(d) of Consumer Protection Act and held that it excludes a person who obtains such goods for resale or for any commercial purpose. The consumer should be an individual who purchases goods for his personal use. Reseller of goods or purchaser of goods for any commercial purpose is not treated as consumer. Therefore, when the word 'consumer' is not defined under the Act and Consumer Protection Act was enacted to protect the interest of consumer whose interest is not sufficiently protected under the Act.
10. As per Rule 6 of the Rules which prescribes the declaration to be made on every package makes it 13 clear that one of the requirement, which a package should contain is common generic names of the commodity contained in the package, as contained in Rule 6(1)(b).
11. The learned single Judge considering the definitions of 'retail package', 'retail sale', 'retail sale price' and considering Clause (a) of Rule 34 of the Rules held that Rule 34 expressly exclude the application of Rule 6 to any package containing a commodity if the making on the package unambiguously indicates that it has been specially packed for the exclusive use of any industry as a raw material or for the purpose of servicing any industry, mine or quarry. The packages meant for industry, mine or quarry, did not fall within these Rules.
12. From the perusal of the Rule 2-A, the explanation expressly states that 'For the purpose of 14 this rule' and then gives the meaning of institutional consumer and industrial consumer. On the date Rule 2-A was introduced by way of amendment into the Rules, Rule 2(p) was also substituted introducing the very same words 'industrial consumer and institutional consumer' in the proviso. Thus, it amounts to re- writing the Rules by the Court which is not permitted in law. The difference between the definition of institutional consumer and industrial consumer in Rule 2-A and Rule 2(p) appears to be thus.
13. In rule 2-A, industrial consumer or the institutional consumer are purchasing the packaged commodities directly from the manufacturer. In the case of retail package, the manufacturer of goods meant for industrial use may not be able to supply the goods directly. Therefore, they may take the assistance of a stockiest. If the customers are spread over the country and if the manufacturing unit is in 15 one part of the country and they want to concentrate on manufacturing activity, they may not have resource or ability to arrange for the sale of their product through out the country. In these circumstances, it is quite but natural that they need middle men or stockiest as distributors, through whom they would distribute their product or sell their products to an industrial or institutional user. In such an event, that packaged commodity cannot be construed as a retail package. Therefore, after deleting Rule 34(a), in the very definition of 'retail package', the legislature while defining the meaning of 'ultimate consumer' to whom a retail package is meant, excluded institutional or industrial consumer. Thus, it is clear that the protection under this Act is confined only to individuals and persons who are eking out livelihood by self employment and not to 16 institutional and industrial consumers or consumers who purchase goods in large quantities.
14. In the present case, respondent No.1 is a manufacturer of industrial product. On the packet, it is expressly stated that it is meant for industrial use. The product which is manufactured by them is high end industrial welding products, such as electrodes, brazing rods, powders and fluxes. Respondent No.2 is their selling agent and selling these products through a network of stockiest spread all over India, 90% of the sales are generated through the involvement of core team of sales/service engineers of respondent No.2 who are trained in specialized Eutectic Castolin Welding Process.
15. The learned single Judge after considering the entire material on record has rightly held that the impugned notices issued by appellant No.2 are one 17 without authority, illegal and contrary to the express provision contained in the enactment, cannot be sustained and rightly quashed the notices. We do not find any grounds to interfere with the impugned order. Hence, we proceed to pass the following:
ORDER The writ appeal is dismissed.
Sd/-
JUDGE Sd/-
JUDGE MBS/-