The Jammu and Kashmir High Court on Friday quashed a criminal case registered in 2016 against Hindustan Coca-Cola Beverages Pvt. Ltd. over the alleged sale of Coca-Cola bottles at different Maximum Retail Prices (MRPs) through different sales channels.

Justice Rajnesh Oswal held that the legal framework in force at the time of the alleged offence did not prohibit manufacturers from declaring different MRPs for identical pre-packaged products.

The case arose after officials of the Legal Metrology Department conducted an inspection on October 25, 2016, and found that a 600 ml Coca-Cola bottle was priced at ₹60 at a Domino's Pizza outlet in Katra, while the same quantity of the beverage carried an MRP of ₹35 in the open market. Alleging overcharging, the department filed a complaint against Hindustan Coca-Cola, following which a Judicial Magistrate First Class (Munsiff), Reasi, took cognizance and issued process against the company.

Challenging the proceedings before the High Court, the company argued that the bottle sold at Domino's carried a printed MRP of ₹60 and there was no allegation that it had been sold above the price declared on its packaging. It further contended that different MRPs for identical products sold through different trade channels, including restaurants and premium outlets, were a recognised commercial practice at the time and were not prohibited by law.

The company also pointed out that the restriction on dual MRPs was introduced only through the insertion of Rule 18(2A) in the Legal Metrology (Packaged Commodities) Rules, 2011. Although the amendment was notified in 2017, it came into force only on January 1, 2018, and therefore could not be applied retrospectively to an inspection carried out in 2016.

Accepting the contention, the High Court observed that neither the Legal Metrology Act, 2009 nor the Legal Metrology (Packaged Commodities) Rules, 2011 barred manufacturers from declaring different MRPs for the same product on the date of the inspection.

"It is, therefore, manifest that on the date of the alleged inspection, there existed no bar preventing a manufacturer from declaring differential MRPs for an identical product. This restriction was brought into force for the first time only w.e.f. 01.01.2018 through G.S.R. 629(E), dated 23rd June, 2017. Consequently, this Court is of the considered opinion that the uncontroverted facts fail to disclose the commission of any offense by (Coca Cola)," the Court held.

The Court noted that Rule 18 originally contained no prohibition against differential MRPs. Such a restriction was introduced only after the insertion of Rule 18(2A), which prohibits manufacturers, packers and importers from declaring different MRPs for identical pre-packaged commodities through restrictive or unfair trade practices, unless specifically permitted by law.

Holding that no offence was made out under the legal regime prevailing in 2016, the Court quashed the criminal proceedings against Hindustan Coca-Cola Beverages.

Advocate Virender Bhat appeared for Hindustan Coca-Cola Beverages, while Deputy Advocate General Dewakar Sharma represented the Legal Metrology Department.

Case Title: Hindustan Coca-Cola Beverages Pvt. Ltd. v. Assistant Controller, Legal Metrology, Reasi.