Hotels, restaurants not bound by MRP while selling packaged mineral water: SC

Satya Prakash

Tribune News Service

New Delhi, December 16

Hotels and restaurants are not bound by the maximum retail price (MRP) while selling packaged mineral water to consumers, the Supreme Court has ruled.

A bench of Justice RF Nariman and Justice Navin Sinha said no action can be taken against hotels and restaurants for charging prices above the MRP for packaged mineral water within their premises.

“We are…of the view that neither the Standards of Weights and Measures Act, 1976 read with the enactment of 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 Bench said.

The December 12 order -- uploaded on the court’s website on December 16 -- will have a direct impact on sale of packaged water and other such products and can potentially be used to fleece consumers in the absence of any legal provision prohibiting hotels and restaurants from selling this category of products at a price beyond MRP.

The ruling came of a petition filed by the Federation of Hotel and Restaurant Associations of India against a verdict of a Division Bench of the Delhi High Court which had left open the question of law on the issue and stayed a Single Judge’s order that had gone in favour of the Federation.

The Federation of Hotel and Restaurant Associations of India had pleaded that the transaction consisting predominantly of a service, and not of a sale of drinking water, consisted of a composite charge which included incidental charges for food, drinks, etc.

But the Controller of Weights and Measures used to proceed against hotels and restaurants for charging a price higher than the printed Maximum Retail Price (“MRP” in short) for supply of packaged water bottles during services provided to their customers while they were there. Now they can’t be proceeded against.

The top court agreed with the finding of the Single Bench of the Delhi HC which had said, “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 Single Bench had said.

Agreeing with the Single Judge’s verdict, the top court said, “…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…”