Hotels in hot water over bottled water

Pushpa Girimaji

Here’s some good news for consumers: A restaurant or a hotel cannotcharge more than the maximum retail price (MRP) on bottled water. In February this year, the Delhi High Court made it clear that the legal metrology department can prosecute restaurants and hotels which overcharge on the MRP, thereby violating the Legal Metrology Act, 2009 and the Legal Metrology (packaged Commodities) Rules, 2011, framed under it.

This order, issued by a Division Bench of the Delhi High Court comprising Chief Justice G. Rohini and Justice R. S. Endlaw, takes away the right of the hoteliers and restaurateurs to charge as much as they want on the MRP, given by an earlier order of a single Judge of the Delhi High Court in 2007. After eight years, the provisions of the law pertaining to overcharging on MRP by restaurants and hotels has been restored by the court, thereby effectively stopping them from making a quick buck on water bottles.

Rule 6 of the Packaged Commodities Rules, 2011, formulated under the Legal Metrology Act, 2009, mandates display of retail price on all pre-packed goods meant for sale, distribution and delivery and this includes bottled water. Rule 18 (2) prohibits their sale at a price higher than the printed price. Rule 18 (6) also says that the manufacturer or packer or the importer shall not alter the price on the wrapper once printed and used for packing. So as per these provisions, a restaurant or a hotel cannot charge more than the price printed on the bottle. Nor can they change or obliterate the indicated price.

Before 2009, the same provisions were contained in the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 framed under the Standards of Weights and Measures Act, 1976 and the department of legal metrology, as the implementing authority, was routinely prosecuting hotels and restaurants for overcharging on MRP.

Unhappy with this, the Federation of Hotels and Restaurants Association of India and the National Restaurant Association of India, filed writ petitions before the Delhi High Court, questioning such action. In response, a single Judge held in 2007, “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 SWM Act as this does not constitute a sale or transfer of these commodities by the hotelier or Restaurateur to its customers”. This effectively tied the hands of the enforcement agencies and allowed restaurants to fleece consumers on an essential commodity — water — which they ought to give free with food.

Meanwhile, even as the appeal filed by the government against this judgement was pending in the High Court, the Legal Metrology Act, 2009 and the Legal Metrology (Packaged Commodities) Rules, 2011, replaced the old law.

Taking advantage of this, the Division Bench gave the enforcement agencies the go-ahead to take action against hotels and restaurants for overcharging, under the new law, saying that the 2007 judgement shall not come in the way of enforcing these provisions.

The Division Bench also ruled that owing to the change in the law, there was no need to set aside or affirm the judgement of the single Judge. However, the question of law adjudicated by the single Judge is open for adjudication in any fresh proceedings under the new law and that law shall not be a precedent for any such adjudication even if the provisions in the old and the new laws were similar, the Bench said.. (Union of India Vs National Restaurant Association, LPA No 334/2007).

So as of now, restaurants and hotels cannot charge more than the MRP (and this applies to soft drinks too) and will get hauled up if they do. Besides, what restaurants ought to remember is that consumers are today drinking bottled water only because the restaurants cannot guarantee the safety of the water (which is not bottled) that they serve. In fact, many restaurants insist on selling only bottled water. Also, it does not make sense for restaurants and hotels to overcharge on water, when they are free to charge as much as they want on food and their food bill does cover all their costs, including the profit margin.

So all in all, this is a great victory for consumers’ right to a fair price and a fair deal and given the fact that restaurants were charging as much as Rs 60 to Rs 200 on a bottle of water costing Rs 15, this order will certainly bring down the restaurant bills for consumers. Yes, the hospitality industry will not keep quiet and is sure to put up a fight. But this time, hopefully, the government will plug the loophole in the law that allows such interpretations that go against the interest of consumers.