lawyers in India

Maximum Retail Price - Consumer - Consumer Right

Written by: Chhoti Shahi
Constitutional Lawyers in India
Legal Service
  • In today's scenario it is usually found that the prices of consumer goods traded in the markets are settled arbitrarily by the manufacturers. Even you can realize that in a market where within one city, different products have different rates of taxes, it becomes very difficult for consumers to check whether retailers are actually charging the correct amount of local taxes on the products they sell. Therefore the confusion in respect of price of the goods is natural for the consumer and the manufacturers gain huge profit as the actual manufacturing cost is very low. The manufacturers arbitrarily fix the price and the consumers are compelled to purchase goods at higher costs.

    Under the Weights and Measures (Packaged Commodities) Rules, all packed goods should carry certain essential information on the contents of the package, such as its weight or volume, the name and address of the manufacturer, the date of manufacture, and in case of food packages, the best before date and, of course, the maximum retail price (MRP).

    Under the Consumer Goods (Mandatory Printing of Cost of Production and Maximum Retail Price) Act, 2006, certain guidelines has been provided so that the consumer can not charged over to the maximum price printed on the goods by the manufacturer. These guidelines are as follows:
    1. consumer goods mean all goods and items brought in the market for sale and are meant for the use and consumption of the consumers;

    2. cost of production means cost incurred directly or indirectly by the manufacturer in the production of goods;

    3.printing means printing of the cost of production and retail price at a visible place on the product in Hindi and English and the local language of the place it is sold; and

    4. maximum retail price means such price at which the product shall be sold in retail and such price shall include all taxes levied on the product.
    The legislation has made it mandatory for the manufacturers to printing of cost of production and maximum retail price on packaging of consumer goods, so that the consumer could not get overcharged by the agents/dealer.

    It is essential for the consumers to know the difference between the maximum retail price and actual price of the goods. The maximum retail price is inclusive of all taxes and a retailer can sell at a price below the MRP. In fact consumers should always look for retailers who sell below the MRP because the MRP is the maximum retail price allowed for that commodity and not the actual price and a retailer can well reduce his margin built into the MRP. While on the other hand, the actual price could be about 10-15 per cent lower than the MRP. Sometimes the printed MRP is so high that the difference between the selling price and the MRP can be as much as 30-50 per cent. It is an offence to sell at a price higher than the marked price. Whereas the actual price could be about 10-15 per cent lower than the MRP.

    Some times it has been found that the consumers go to market and take products from the shops without even looking the MRP written on the packaging and carton of the products. In that situation dealer told the price of the products to the buyer and also sates that I would give you on discount rate. After buying the same when buyer comes back to home than only he/she finds that the price of the goods mentioned on the packaging and carton is already less than the price on which he/she has bought after discount. Under the Standards of Weights and Measures (Packaged Commodities) Rules, manufacturers have to specify on all pre-packed goods meant for retail sale, the MRP inclusive of all taxes. This is a requirement meant to ensure that consumers are not misled by the agents/dealer and shopkeepers about the price of packed goods. Overcharging is an offence for which the trader can be prosecuted and prosecution can be launched against the manufacturer in case the packaged commodities bears the price which is altered. In the above-mentioned case, the dealer takes advantage of the fact that the consumer could not see the packaging and quoted a higher MRP.

    Sometimes it also happens that the manufacturer increases the price of a products and sells old stocks/products on new price rates and if buyers ask the reason they simply answer that the Price has increased because of the changes in duties or increase in the cost of production and the new packages carry the revised MRP. Obviously, this new price does not apply to the stock already with the retailer. And this is where retailers try to make a quick buck by trying to sell the old stock at the new revised rate, even though doing so is an unfair trade practice.

    On the similar issue a complainant filed a complaint case before the apex consumer court. The issue involved in the complaint was that the complainant went to purchase a product namely tarpaulin (Waterproofed Canvas), the price mentioned on the ‘duckback baby sheet’ purchased by him was Rs 92, but the seller asked him to pay for Rs 112 along with the statement that the price of the sheet was actually Rs 124 but it had an old label indicating the MRP as Rs 92. So after discussion, the price was settled between them (the seller and the buyer) at Rs 112.

    In the above said matter the State Commission held that if the old label on the product indicated Rs 92 as the MRP, then charging more than what has mentioned on the packaging is illegal and the activity of the seller constitutes an unfair trade practice. And as a punishment for indulging in such a practice, the commission used the relatively new provision in the Consumer Protection Act to impose exemplary damage and asked the seller to pay the consumer punitive damages of Rs 10,000.

    The apex consumer court, before which the seller filed an appeal, said it fully agreed with the view of the state commission. While doing so, it pointed out that if the price had been increased from Rs 92 to Rs 124 due to increased cost of production and transportation, which would apply only to the new stock. The price of the old stock cannot change. In the circumstances, the old stock cannot be sold at the new price. Therefore, the state commission was right in imposing exemplary compensation. (M/S Cargo Tarpaulin Industries Vs Sri Mallikarjun B.Kori, revision petition number 2132 of 2007, decided on July 5, 2007). It is an offence to sell at a price higher than the marked price. It is for this reason that manufacturers provide a more than adequate cushion for dealer margins while marking the MRP. Whereas it is specifically mentioned Under the Consumer Goods (Mandatory Printing of Cost of Production and Maximum Retail Price) Act, 2006 that No person shall sell or cause to be sold any consumer goods without the cost of production and maximum retail price of the product printed on such product after the expiry of six months from the date of coming into force of this Act.

    Forum For Redressal
    The aggrieved complainant may file a complaint before the proper Forum and can get redressal. Several important Acts and laws have been announced by the legislation. These Acts are followings: Monopolies and Restrictive Trade Practices Act (hereafter "MRTP Act") and the Essential Commodities Acts, Environment Protection Act and the most significant Consumer Protection Act. The Consumer Protection Act, 1986 (hereafter "the Act") is a remarkable piece of legislation for its focus and clear objective, the minimal technical and legalistic procedures, providing access to redressal systems and the composition of courts with a majority of non-legal background members.

    The Consumer Protection Act establishes a hierarchy of courts, with at least one District Forum at the district level, a State Commission at the State capitals and the National Commission at New Delhi. The pecuniary jurisdiction of the District Forum is up to Rs. one lakh and that of the State Commission is above Rs. one lakh and below Rs. 10 lakhs. All claims involving more than Rs. 10 lakhs are filed directly before the National Commission. Appeals from the District Forum are to be filed before the State Commission and from there to the National Commission, within thirty days of knowledge of the order.

    Under the Act, a consumer or any registered voluntary consumer association or any Central or State Government can make a complaint. A "consumer" is a person who buys any goods or hires any service for consideration, paid or promised or partly paid or under deferred payment. This includes any user of such goods or services when such use is made with the approval of the person who paid or partly paid etc. However, goods obtained for commercial purposes or for resale are not covered under the Act.

    Complaints can be made against
    (a) unfair trade practices by which complainants suffer loss or damage;
    (b) goods that suffer from one or more defects; or
    (c) deficient service.

    The procedure adopted by the Forum or Commission on receipt of a complaint is to refer a copy of the complaint to the Opposite Party directing them to file their version within thirty days or such extended period not exceeding fifteen days at a time. The Forum or Commission has the powers vested in a civil court and these include the power to summon and examine witnesses, requisition reports of analysis or tests from appropriate laboratories and to receive evidence by way of affidavits.

    Based on its findings, the Forum or Commission can grant a direction to the Opposite Party to remove the defect, replace the goods free of defect, or refund the charges paid for the goods or service and to pay compensation for the loss or injury suffered by the complainant. Such directions are to be treated as if it was a decree of a court, and non-compliance can amount to imprisonment

    Other Laws That Impact Consumers

    Essential Commodities Act:

    Any complaint of hoarding or unfair trade practice against the thirty-four commodities listed as essential commodities under this Act can be preferred to the special courts established under the Act.

    Standards of Weights and Measures Act and Rules: This Act prescribes standards for the weights and measures used in trade. These standards ought to be certified by the Bureau of Indian Standards (BIS) and contain the ISI mark. This also prescribes rules for packaged commodities. The rules explain the details that a package should contain - like the maximum retail price (MRP), weight of the commodity, date of manufacture and expiry.

    MRTP Act:

    This Act establishes a Central Commission to initiate suo motu action against restrictive and unfair trade practices and also to hear and pass orders on complaints. The aim of the Act is to stop any trade practice that may have the effect of preventing, distorting or restricting competition or causes loss or injury to consumers.

    Prevention of Food Adulteration Act

    This Act contains stringent provisions against adulterators of food articles. The Act also prescribes a set of officers to check the quality and quantity of food in public establishments.

    Drugs and Cosmetics Act: This Act prescribes officers to enforce its various provisions and also prescribes stringent action against manufacturers of drugs and cosmetics for violations under this Act.

    Conclusion: All such legislations and rules would become effective if consumers know their rights and duties and perform accordingly.

    Consumers Right

    1. Right to Safety: To be protected against the sale of goods and services which are spurious/hazardous to life.
    2. Right to information: To know the quality, quantity, weight and the price of goods/services being paid for, so that you are not cheated by unfair trade practices.
    3. Right to choose: To be assured wherever possible, access to a variety of goods and services at a competitive price.
    4. Right to be heard: To be heard and be assured that your interest will receive due consideration at appropriate fora.
    5. Right to Seek Redressal: To seek legal redressal against unfair or restrictive trade practices or exploitation.
    6. Right to Consumer Education: To have access to consumer education.

    Consumers Responsibilities

    1) Obtain full information regarding quality and price before making any purchases.
    2) Be careful, about false and /or misleading advertisement
    3) Purchase goods having quality marks like ISI/Agmark etc. as and where available, for safety and quality.
    4) Obtain proper receipt/cash memo for purchases made and guarantee/warranty card duly stamped and signed by the seller, wherever applicable.
    5) Approach Consumer Forum for redressal of consumer grievances against sale of defective goods or deficient services or adoption of unfair restrictive trade practices.

    Precautions For Consumers:

    1. Purchase only when you need and do not purchase in a hurry.
    2. Do not buy blindly. Demand full information before you buy.
    3. Beware of false/misleading advertisements.
    4. Do not compromise on the quality of goods and services and its quality. Purchase only quality products.
    5. Do not forget to obtain proper receipt/cash memo. Always obtain the guarantee/warranty card duly stamped and signed by the shopkeeper, wherever necessary. These can be helpful in consumer courts

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