IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 26TH DAY OF APRIL, 2019 BEFORE THE HON’BLE MR. JUSTICE JOHN MICHAEL CUNHA WRIT PETITION NO.26984 OF 2014 (GM-RES) C/W WRIT PETITION NOS.48030-041 OF 2014 (GM-RES) IN WRIT PETITION NO.26984 OF 2014 BETWEEN M/S UNITED SPIRITS LIMITED UB TOWER, NO.24, VITTAL MALLYA ROAD, BANGALORE-560 001 REPRESENTED BY ITS SENIOR GENERAL MANAGER-LEGAL & AUTHORISED REPRESENTATIVE MR MAHESH NADUNGADI (BY SRI: S R SHIVA PRAKASH, ADVOCATE) AND 1. THE INSPECTOR OF LEGAL METROLOGY THE OFFICER OF THE LEGAL METROLOGY, BABU MAISTRY COMPLEX, BIKARNAKATTA, MANGALORE-575 004 2. STATE EXCISE DEPARTMENT VOKKALIGARA BHAVANA, ASHWATH NAGAR, SAMPANGIRAMA NAGARA, BANGALORE-560 027 REP BY ITS COMMISSIONER (BY SRI: I.S.PRAMOD CHANDRA, SPP-II) ... PETITIONER ... RESPONDENTS THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED NOTICE DTD.13.12.2013 IN NO.22239 VIDE ANNEX- A ISSUED BY THE R-1 AND TO QUASH THE IMPUGNED NOTICE DTD.21.5.2014 VIDE ANNEX-D ISSUED BY THE R-1 BY REFERRING TO THE SEIZER RECEIPT BEARING NO.22239 DTD.13.12.2013 AS WITHOUT AUTHORITY OF LAW, ILLEGAL AND ARBITRARY AND PROHIBIT THE R-1 NOT TO EXERCISE HIS JURISDICTION, AS HE HAS NO AUTHORITY IN LAW AND ILLEGAL.
WRIT PETITION NOS.48030-041 OF 2014 BETWEEN 1. M/S UNITED SPIRITS LIMITED REGD OFFICE:U.B.TOWER 24, VITTALMALLYA ROAD, BANGALORE-560001 REPRSENTED BY THE MANAGING DIRECTOR MR.ANAND KRIPALU, SUCCEEDED TO THE PREVIOUS M.D. MR.ASHOK H CAPPOR, 56 YEARS.
2. ASHOK HARIKISHANLAL CAPPOR, (MANAGING DIRECTOR) 3. ARUNKUMAR RAMANLAL GANDHI, (DIRECTOR) 4. VIKRAM SINGH MEHTA, (DIRECTOR) 5. RAVI RAJAGOPAL, (DIRECTOR) 6. VIJAY MALLYA, (DIRECTOR) 7. MURALI ANANTHASUBBAMANAIAN PATHAI, (DIRECTOR) 8. SUDHAKAR RAO, (DIRECTOR) 9. GHYANENDRA NATH BAJPAI, (DIRECTOR) 10. SIVANANDHAN DHANUSHKODI, (DIRECTOR) 11. GILBERT GHOSTINE, (DIRECTOR) 12. PAUL STEVEN WALSH, (DIRECTOR) NOTE: THE ABOVE DIRECTORS 2 TO 12 ARE NOT AT THE ADDRESS OF 1ST PETITIONER COMPANY, BUT AT VARIOUS ADDRESS AS FOLLOWS:-
2. MR.ASHOK HARIKISHANLAL CAPPOR (FORMER MANAGING DIRECTOR) AGED ABOUT 53 YEARS, A-3, REGENCY, PAVAILION APARTMENTS, NO.14, ALEXANDRIA STREET, RICHMOND TOWN, BANGALORE-560025.
3. MR ARUNKUMAR RAMANLAL GANDHI (DIRECTOR) AGED ABOUT 48 YEARS, AKRUTI ASHTHA BUILDING, 9TH FLOOR, 23 DONGERSI ROAD, MUMBAI-400006.
4. MR.VIKRAM SINGH MEHTA (DIRECTOR) AGED ABOUT 42 YEARS, FLAT NO.401, BAKHATAWAR, 4TH FLOOR, SHAHID BHAGATSINGH ROAD, OPP. COLABA POST OFFICE, MUMBAI-400005.
5. MR.RAVI RAJAGOPAL (DIRECTOR) AGED ABOUT 42 YEARS, B BUXTAN GARDENS, LONDON W3 9 LQ.
6. MR VIJAY MALLYA, (DIRECTOR) AGED ABOUT 58 YEARS, CHAIRMAN VILLA # B92, PALM JUMERIAH, P.O.BOX 20827, DUBAI, UAE.
7. MR.MURALI ANANTHASUBBAMANIAN PATHAI (DIRECTOR), AGED ABOUT 48 YEARS, EXECUTIVE DIRECTOR, FLAT NO.310, BLOCK B-3, "SABHA OPAL", 39TH CROSS, 4TH "T" BLOCK, JAYANAGAR, BANGALORE-560041.
8. MR.SUDHAKAR RAO (DIRECTOR) AGED ABOUT 44 YEARS, APARTMENT D, 1ST FLOOR, "SPRINGLEAF", APARTMENTS, 6 BRUNTON CROSS ROAD, BANGALORE-560025.
9. MR. GHYANENDRA NATH BAJPAI (DIRECTOR) AGED ABOUT 49 YEARS, 131, SHAAN APARTMENTS, JASHINATH DHURU MARG, OPP:KIRTI COLLEGE, PRABHADEVI, MUMBAI-400028.
10. MR.SIVANANDHAN DHANUSHKODI (DIRECTOR) AGED ABOUT 52 YEARS, NO.1803, B-WING, ASHOKA TOWERS, AMBEDKAR ROAD, PAREL, MUMBAI-400012.
11. MR.GILBERT GHOSTINE (DIRECTOR) AGED ABOUT 44 YEARS, 1.GEORGE STREET, # 13-01, SINGAPORE-049145.
12. MR.PAUL STEVEN WALSH (DIRECTOR) AGED ABOUT 43 YEARS, CEDAR FARM, KIRDFORD, BILLINGSHURST-RH140JJ, UNITED KINGDOM. ... PETITIONERS (BY SRI: S R SHIVA PRAKASH, ADVOCATE) AND 1. THE INSPECTOR OF LEGAL METROLOGY THE OFFICE OF THE LEGAL METROLOGY, BABU MAISTRY COMPLEX, BIKARNAKATTA, MANGALORE-575004.
2. THE STATE PUBLIC PROSECUTOR HIGH COURT OF KARNATAKA, HIGH COURT BUILDING, BENGALURU-560001.
3. THE KARNATAKA STATE BEVERAGES CORPORATION LTD V.S.KUDAVA ROAD, MAROLIKULSHEKARA POST, MANGALORE-571426.
BY SRI KARUNAKARA SHETTY, (DEPOT MANAGER).
... RESPONDENTS (BY SRI: I.S.PRAMOD CHANDRA, SPP-II FOR R1 & R2 SRI: M.I.ARUN, ADVOCATE FOR R3) THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE REGISTRATION OF THE VERY COMPLAINT FILED BY THE R-1, SETTING ASIDE THE ORDER OF TAKING COGNIZANCE, THE ORDER OF ISSUANCE OF PROCESS AND TO QUASH ALL FURTHER AND THE ENTIRE PROCEEDINGS IN CC.NO.2032/2014, MARKED AS ANNX-F DTD 27.06.2014 PENDING ON THE FILE OF LEARNED JMFC (II COURT), MANGALORE, FOR ALLEGED OFFENCES PUNISHABLE UNDER SECTIONS 18(1) AND 15 OF THE LEGAL METROLOGY ACT, (PACKAGED COMMODITIES RULES 2011) RULE 4, 6(3) & 18(1) PUNISHABLE UNDER SECTIONS 31 (1) AND 36 OF LEGAL METROLOGY ACT.
THESE WRIT PETITIONS HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 24.01.2019 AND COMING ON FOR PRONOUNCMENT THIS DAY, JOHN MICHAEL CUNHA. J, MADE THE FOLLOWING:-
O R D E R The Inspector of Legal Metrology, Mangalore Sub Division, inspected the trading premises of M/s. Wines and Spirits, Time Square Complex, Kadri, Mangalore on 13.12.2013 and found three pre-packed packages of Black Dog Delux Gold Reserve Blended Scotch Whisky, aged 12 years, 750 ml, bottled in India by M/s. United Spirits Limited, Unit-2, Parmori District, Nasik, Regd. Office:U.B. Towers, 24, Vittal Mallya Road, Bengaluru-560 001. On the said packages, MRP Rs.2250.00 was declared on additional sticker and the same were kept for sale by the above trader. Since the pre-packed commodities were not in accordance with the provisions of The Legal Metrology Act, 2009 (for short ‘the Act’) and The Legal Metrology (Packaged Commodities) Rules, 2011(for short ‘the Rules’), they were seized under Section 15(1) (b) of the Act.
A notice was issued to the petitioner M/s. Wines and Spirits dated 21.05.2014(Annexure-D/Annexure-C) proposing to take action for the alleged violation of Section 18(1) of the Act, and Rules 4, 6(3) of the Rules. The petitioners submitted a reply dated 27.05.2014 inter-alia contending that on 30.07.2013, a Gazette notification was issued by the Government of Karnataka about changes in Excise Duty resulting in change in MRP and the said changes came into effect from 01.08.2013; and aggrieved by the said notification, The Karnataka Breweries and Distilleries Association requested the Government of Karnataka that due to changes in the excise duty, the MRP shall also be revised in respect of the stocks with Old MRP rates existing in KSBCL depots and to release the same, one month’s time was prayed and the same was granted vide letter dated 03.08.2013 by Excise Department, Bengaluru. Since the products were lying in the KSBCL(Karnataka State Excise) warehouse, in order to comply with the State Excise laws and rules, the representatives approached the KSBCL officials to know the mode of effecting new changes in the MRP based on the notification dated 30.07.2013, and the said officials advised to make necessary changes in MRP by stickering on the old MRP in their KSBCL warehouse, accordingly, necessary changes were made as required under Rule 6(1)(e) of the K.E. Acts and Rules and thus petitioners took up a plea that they have not violated the provisions of the Legal Metrology Act and the Rules framed thereunder.
2. Being not satisfied with the reply, the first respondent registered a case against the petitioners for violation of Section 18(1) and 15 of Legal Metrology (Packaged Commodities) Rules, 2011 and Rules 4, 6(3) and 18(1) punishable under Sections 31 and 36(1) of the Legal Metrology Act against the Manufacturer and also stockist/Wholeseller.
3. Petitioners in both the petitions are the manufacturer of liquor. They have sought for a writ or direction for quashing the seizure receipt dated 13.12.2013(Annexure-A) and a writ of certiorari quashing the impugned notice bearing No.ILM/MNG/PCR/27/14-15 dated 21.05.2014(Annexure- D/Annexure-C) and also for setting aside the order of taking cognizance of the above offences by the learned JMFC (II) Court, Mangaluru.
4. The learned counsel for the petitioners has argued in line with the contention urged in the petitions and would submit that the action initiated against the petitioners is impermissible in law, as the Karnataka Excise Act and Rules framed thereunder have superseding effect on the provisions of the Act and the Rules pertaining to packaged commodities.
5. The main thrust of argument of learned counsel for the petitioners is that Rule 6(1) (e) of the Rules exempts the industry or business of liquor and alcoholic beverages from the rigors of Rule 6(3). Therefore, Rule 6(3) is not applicable to the packages containing alcoholic beverages, as such, the first respondent had no jurisdiction to initiate criminal action against the petitioners and consequently, the prosecution initiated by the first respondent is in violation of Article 246 of the Constitution of India.
6. Refuting the submission, learned SPP-II appearing for respondent Nos.1 and 2 has argued in support of the impugned action. He would submit that Rule 6(3) of the Rules prohibits the affixture of individual stickers on the package for altering or making declaration required under these Rules. It in only in case of reduction of MRP(Maximum Retail Price), a sticker with the revised lower MRP may be affixed and the same shall not cover the MRP declaration made by the manufacturer or the packer, as the case may be, on the label of the package. In other words, it is the submission of learned SPP-II that the MRP having been determined by computing excise duty and tax, the respondents are not entitled to collect hike in duty levied on old sticker, as there is no provision under the Excise Act to pass on the excess duty to the Government.
7. I have carefully considered the rival contentions with reference to the material on record.
8. Petitioners do not dispute the fact that during inspection, three pre-packed packages of Black Dog Deluxe Gold Reserve Blended Scotch Whisky were found in the trading premises of M/s. Wines and Spirits and on the said packages, MRP Rs.2250.00 was declared on additional sticker. The contention of the petitioners that on account of notification issued by the Government of Karnataka hiking excise duty, the officials attached to KSBCL (Karnataka State Excise) advised them to make necessary changes in MRP by stickering on the old MRP in their KSBCL warehouse, is not substantiated with any reliable material. Even otherwise in the wake of clear rules on the subject, the petitioners could not have acted upon any such advice. Section 6(3) of the Rules in unambiguous terms prohibits affixture of individual stickers on the package for altering or making declaration required under these rules. Said Rule reads as under:-
6(3) “It shall not be permissible to affix individual stickers on the package for altering or making declaration required under these rules:
Provided that for reducing the Maximum Retail Price(MRP), a sticker with the revised lower MRP (inclusive of all taxes) may be affixed and the same shall not cover the MRP declaration made by the manufacturer or the packer, as the case may be, on the label of the package.”
9. A reading of the above Rule make it evident that it is only in case of reduction of MRP, a sticker with the revised lower MRP(inclusive of all taxes) may be affixed and the same shall not cover the MRP declaration made by the manufacturer or the packer, as the case may be, on the label of the package. In this context, if Rule 6(1) is perused it mandates that “6(1). Every package shall bear therein or on label securely affixed thereto, a definite, plain and conspicuous declaration made in accordance with the provisions of Chapter 2 of the Rules.
Rule 6(1) (e) which is relevant for our purpose reads as under:-
“the retail sale price of the package [shall clearly indicate that it is the maximum retail price inclusive of all taxes and the price in rupees and paise be rounded off to the nearest rupee or 50 paise;”
Illustration- for declaration or retail sale price;
(a) Maximum or Max. retail price Rs. or Rs.xx.xx(inclusive of all taxes), or (b) Maximum or Max. retail price Rs. or Rs.xx.xx inclusive of all taxes, or (c) MRP Rs. or Rs.xx.xx incl. of all taxes, or (d) MRP Rs. or Rs.xx.xx (incl. of all taxes):] Provided that for packages containing alcoholic beverages or spirituous liquor, the State Excise Laws and the rules made thereunder shall be applicable within the State in which it is manufactured and where the state excise laws and rules made thereunder do not provide for declaration of retail sale price, the provisions of these rules shall apply:
[Provided further that if the retail sale price of any essential commodity is fixed and notified by the Competent Authority under the Essential Commodities Act, 1955 the same shall apply].
10. The argument of the learned counsel for the petitioners that the proviso to Rule 6(1) (e) of the Rules creates an exception in respect of packages containing alcoholic beverages and the said rule has overriding effect on the other provision of the Act and Rules pertaining to packaged commodity is not correct. A plain reading of Rule 6 and the proviso thereto indicates that the said Rule requires the declaration of the retail sale price printed on the label affixed thereto and specifically provides that the maximum retail price declared on the packages shall be inclusive of all taxes. This proviso makes the Excise laws and rules applicable to the packages containing alcoholic beverages or spirituous liquor so that whatever excise duties are levied may also be added to the MRP and the same be declared on the label. This proviso is not intended to grant any exemption to the manufacturer or to the retailer of the alcoholic beverages and spirituous liquor as contended by the learned counsel for the petitioners rather the proviso intended to make the Excise Laws applicable even for packages containing alcoholic beverages.
11. This view gets fortified from the second proviso appended to the said Rules, which makes the notification issued by the Competent Authority under the Essential Commodities Act, 1955 applicable to retail sale price declared on the packages. There is nothing in the said proviso to suggest that the alcoholic beverages or spirituous liquor are exempted from the Rules. Therefore there is no scope to contend that the proviso operates as an exemption. On the other hand, the commodities which are exempted from the provision of Chapter II are detailed in Rule 3 of the Rules. As per Rule 3:-
(a) only packages or commodities containing quantity of more than 25 kilogram or 25 litre;
(b) cement, fertilizer and agricultural farm produce sold in bags above 50 kilogram; and (c) packaged commodities meant for industrial consumers or institutional consumers.
are exempted from the provisions of Chapter II of the Act. Alcoholic beverages or spirituous liquour are not included in Section 3 of the Act. Therefore the argument of the learned counsel is wholly misplaced and does not find support from the provisions of the Act and the Rules framed thereunder. As a result, contention urged by the learned counsel in this regard is liable to be rejected.
The 2nd contention urged by the learned counsel for the petitioner also does not merit acceptance. The term ‘manufacturer’ is defined in Rule 2(d) as under:-
“(d) “manufacturer” in relation to any commodity in packaged form, means a person who or a firm which produces, makes or manufactures such commodity and includes a person or firm which puts, or causes to be put, any mark on any packaged commodity, not produced, made or manufactured by him or it, and the mark claims the commodity in the package to be a commodity produced, made or manufactured by such person or firm as the case may be;”
12. The reply submitted by the petitioners’ indicate that the seized commodities were packed by the petitioners and the additional stickers was affixed in the warehouse of the petitioners. Rule 6(3) of the Rules strictly prohibits affixture of individual stickers on the package.
13. Sub-rule 6 (3) is mandatory. Any violation of the said Rule is punishable under Section 18 of the Act. It stipulates that ‘No person shall manufacture, pack, sell, import, distribute, deliver, offer, expose or possess for sale any pre-packaged commodity unless such package is in such standard quantities or number and bears thereon such declarations and particulars in such manner as may be prescribed.”
14. Section 36 of the Act provides for penalty for selling, etc., of non-standard packages. Section 36 reads as under:-
“36. Penalty for selling, etc., of non-standard packages.
(1) Whoever manufactures, packs, imports, sells, distributes, delivers or otherwise transfers, offers, exposes or possesses for sale, or causes to be sold, distributed, delivered or otherwise transferred, offered, exposed for sale any pre- packaged commodity which does not conform to the declarations on the package as provided in this Act, shall be punished with fine which may extend to twenty-five thousand rupees, for the second offence, with fine which may extend to fifty thousand rupees and for the subsequent offence, with fine which shall not be less than fifty thousand rupees but which may extend to one lakh rupees or with imprisonment for a term which may extend to one year or with both.
(2) Whoever manufactures or packs or imports or causes to be manufactured or packed or imported, any pre-packaged commodity, with error in net quantity as may be prescribed shall be punished with fine which shall not be less than ten thousand rupees but which may extend to fifty thousand rupees and for the second and subsequent offence, with fine which may extend to one lakh rupees or with imprisonment for a term which may extend to one year or with both.”
15. As the material collected by the investigating agency prima-facie discloses that the petitioners herein had offered for sale three pre-packed packages of Black Dog Deluxe Gold Reserve Blended Scotch whisky containing additional sticker bearing MRP, contrary to Rule 6(3) of the Rules, the prosecution of the petitioners does not suffer from any illegality or infirmity warranting interference by this Court under Article 226 and 227 of the Constitution of India. As per Section 15 of the Act, Director, Controller or any Legal Metrology Officer has power of inspection and seizure of any goods, register or other documents in respect of which an offence under Rule 6 of the Rules appears to have been or likely to be committed or kept or concealed in any premises, therefore, the contention urged by the petitioners that the first respondent had no jurisdiction or competence to search the trade premises of M/s. Wines and Spirits is also liable to be rejected. As a result, I do not find any justifiable reason to quash the seizure receipt dated 13.12.2013 Annexure-A and the proceedings initiated against the petitioners pursuant to notice dated 21.05.2014 Annexure-D/Annexure C. The petitions fail and consequently, the petitions are dismissed.
Sd/- JUDGE *mn/-