REPORTABLE        

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 1117 OF 2010

State of Maharashtra & Ors        .... Appellant (s)

Versus

Subhash Arjundas Kataria               .... Respondent(s)

WITH CIVIL APPEAL NOs. 1118, 1120, 1121, 1122  

AND 1123 OF 2010

WITH CRIMINAL APPEAL NO. 118 OF 2010

J U D G M E N T  

P. Sathasivam, J.

1)  The principle question which arises in these appeals is as  

to what is the true scope and correct purport of the expression  

“commodity  in  packaged  form”  under  Section  2(b)  of  the  

Standards of Weights and Measures Act, 1976 (in short ‘the  

Act).  In Civil Appeal No. 1117 of 2010, the specific question is  

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whether  the  sun  glasses  can  be  considered  “pre-packed  

commodity” under Rule 2(l) of the Standards of Weights and  

Measures (Packaged Commodities) Rules, 1977 (in short ‘the  

Rules).  In the connected appeals, the product includes Titan  

watches, fixed wireless phones, sun glasses, electrical goods,  

home  appliances,  consumer  electronics  and  Samsung  

Microwave Oven.  The State of Maharashtra is the appellant in  

all these appeals.   

2)  For convenience, let us briefly state the facts in Civil Appeal  

No. 1117 of 2010.  According to the respondent, he is engaged  

in the business of trading in sun glasses and has a counter on  

commission basis at Globus Stores, Bandra.  On 17.10.2003,  

the Inspector of Legal Metrology/Appellant No. 2 herein visited  

the  store  and  seized  five  Sun  glasses  belonging  to  the  

respondent and issued a seizure memo.  At the time of search,  

it was explained to him that the sun glasses delivered to them  

were  in  polythene  bags  and  some  in  individual  openable  

pouches.   According  to  them,  sometimes,  at  the  time  of  

delivery, they are put in a pouch which is normally on display  

for the customers to identify for the purpose of purchase.  It  

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was  also  explained  that  the  package,  therefore,  is  only  a  

package for protection or safety of the article.  The value of  

sun glasses whether inside the package or outside the package  

does not alter if the package is opened nor does it undergo a  

perceptive  modification  on  the  package  being  opened.   The  

testing of the sunglasses by the customer is for the purpose of  

determining  whether  he  should  purchase  the  same  

considering  various  sizes,  designs,  colours,  aesthetic  value,  

makes and companies and after trying and ascertaining the  

suitability, quality etc.   

3)  It is the grievance of the respondent that in spite of proper  

explanation,  the  Inspector/Appellant  No.  2  seized  the  sun  

glasses for  allegedly not declaring name and address of  the  

manufacturer/month and year of manufacturing which is in  

violation of provisions of the Act and the Rules.  It is the claim  

of the respondent that by force they were compelled to write a  

letter  to  the  authorities  for  compounding  the  offence  and  

directing  them  to  pay  Rs.  3,000/-  as  compounding  fee  by  

order dated 30.10.2003.   

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4)  Aggrieved by the action of the appellant,  the respondent  

preferred Writ Petition No. 120 of 2004, inter alia, for quashing  

of the seizure memo dated 17.10.2003 and also for the order  

dated 30.10.2003 for the payment of  compounding fee.  By  

order dated 05.05.2006, the High Court, by appreciating the  

submissions made on behalf  of  the respondent,  allowed the  

writ  petition  holding  that  the  sun glasses,  whether  it  be  a  

frame or glass is not a  “pre-packed commodity” within the  

definition of the expression  “pre-packed commodity” under  

Rule 2(l) of the Rules.  Aggrieved by the said order of the High  

Court, the appellant-State preferred the present appeal by way  

of special leave petition.

5)  It is the stand of the respondent that the Act brings in its  

purview not all  the items which are kept in the package to  

protect  or  for  other  reasons  but  is  limited  to  packaged  

commodity as defined under the Act, which are being sold by  

weights or measures or numbers, and which are being sold in  

a packed form without unpacking such packaged commodities  

at the time of sale and the sun glasses do not come within the  

ambit  of  definition  of  “commodity  in  packaged  form” in  

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terms of Section 2(b) of the Act nor under the purview of “pre-

packed commodity”  under Rule 2(l)  of  the Rules.   It  is also  

highlighted that sunglasses cannot be sold in the packaged  

condition without opening the packaging since the customer  

will buy only after comparing, trying it out for size and after  

checking its aesthetic value, the quality of glass and vision,  

looks etc and therefore, the sun glasses can never be and are  

not sold in packaged condition.

6)  We are concerned about Section 2(b) of the Act and 2(l) of  

the Rules which read as under:-

“2(b)  “Commodity  in  packaged  form”  means  commodity  packaged, whether in any bottle, tin, wrapper or otherwise,  in units suitable for sale, whether wholesale or retail.”

“2(l)  “pre-packed  commodity”,  means  a  commodity,  which  without the purchaser being present, is placed in a package  of whatever nature, whether sealed or opened, so that the  commodity  contained  therein  has  a  pre-determined  value  and includes those commodities which could be taken out of  the  package  for  testing  or  examining  or  inspecting  the  commodity;

Explanation I - Where, by reason merely of the opening of a  package  no  alteration  is  caused  to  the  value,  quantity,  nature or characteristic of the commodity contained therein,  such commodity shall be deemed, for the purposes of these  rules, to be a pre-packed commodity, for example, an electric  bulb or fluorescent  tube is a pre-packed commodity,  even  though the package containing it is required to be opened for  testing the commodity.

Explanation II. ……”

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7) Considering the above definition, the High Court observed  

that  the  expression  “pre-packaged  commodity” would  be  

applicable to:-

(i) commodities which are packed, and

(ii) the commodity packaged has a pre-determined value and

(iii)  that  value  cannot  be  altered  without  the  package  sold  

being opened at the time of sale, or

(iv) the product undergoes a modification on being opened.

8)  As rightly argued by Mr. Shekhar Naphade, learned senior  

counsel for the respondent, in the case of sun glasses, whether  

they come in a box or not, insofar as the retailer is concerned,  

at the time when they are being sold to the consumer, are not  

in  packaged  form.   Even  if  we  hold  that  they  come  in  a  

packaged  form,  before  they  are  sold  to  the  consumer  by  

removing them from the box, the value does not alter nor does  

the product undergo a perceptive modification and as such the  

provisions, particularly, under Section 2(b) of the Act are not  

applicable.  Further, as rightly observed by the High Court, the  

explanation to the said Rule is also not attracted because the  

package is not opened for the purpose of testing as in the case  

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of electric bulbs.  It was asserted by the learned senior counsel  

for the respondent that the sun glasses are tested by the buyer  

for his suitability.   

9)  Similar arguments were advanced by the respective counsel  

relating to their respective products.  On careful scrutiny of  

the provisions referred above, it is clear that the expression  

“pre-packed commodity” would be applicable to commodities  

which are  packed and the  commodity  packaged has  a  pre-

determined value and that value cannot be altered without the  

package sold being opened at the time of sale or the product  

undergoes a modification on being opened.  We are also of the  

view that the Explanation I  to  Rule 2(l)  of  the Rules is  not  

attracted because the package is not opened for the purpose of  

testing as in the case of electric bulbs.  We fully agree that the  

sun glasses are  tested by the  buyer for  his  suitability,  and  

therefore, sun glasses, whether it be a frame or glass is not a  

pre-packed commodity within the definition of the expression  

“pre-packed” under Rule 2(l)  of  the Rules,  hence, the High  

Court is fully justified in quashing the notice and allowing the  

writ petition filed by the respondent.  We also agree with the  

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similar  arguments  advanced  relating  to  other  products  

mentioned above.   

10)   Learned  counsel  appearing  for  the  appellant-State  

submitted  that  the  very  same  Rules  fell  for  interpretation  

before this Court in the case of  Whirlpool of India Ltd. vs.  

Union of India and Ors. (2007) 14 SCC 468.  Heavily relying  

on the said decision, the learned counsel submitted that sun  

glasses are  “pre-packed commodity” within the meaning of  

the  Act  and  the  Rules.   He  also  submitted  that  the  other  

products  also  would  come  within  the  above  mentioned  

definition and by applying the ratio in that decision prayed for  

setting aside the impugned order of the High Court.   

11) In  order  to  consider  the  stand  of  the  State,  let  us  

consider  the  factual  position  and  the  ratio  laid  down  in  

Whirlpool (supra).  The short question in that matter was as  

to  whether  ‘refrigerator’  is  a  “packaged  commodity”  or  not.  

The  appellant-Whirlpool  was  engaged  in  manufacturing  

refrigerators.  The Central Government issued Notification No.  

9 of 2000 dated 01.03.2000 under Sections 4-A(1) and (2) of  

the Central Excise Act and specified the goods mentioned in  

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Column 3 of  the  said notification.  Entry 48 pertains to the  

refrigerators whereby the refrigerators invited valuation under  

Section 4-A of the Central Excise Act with the abatement of  

40%. Sections 4-A(1) and (2) of the Central Excise Act require  

that any goods included in the notification shall be valued on  

the basis of the maximum retail price (for short “MRP”) which  

is required to be printed on the packages of such goods. The  

five conditions for inclusion of the goods are:

“(i) The goods should be excisable goods;

(ii) They should be such as are sold in the package;

(iii) There should be requirement in the Act or the Rules  

made thereunder or any other law to declare the price of  

such goods relating to their retail price on the package;

(iv)  The  Central  Government  must  have specified such  

goods by notification in the Official Gazette;

(v)  The  valuation  of  such  goods  would  be  as  per  the  

declared retail sale price on the packages less the amount of  

abatement.”

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12) The  appellant  felt  aggrieved  by  the  fact  that  the  

refrigerators were covered and included in the aforementioned  

Notification dated 01.03.2000 as, according to the appellant,  

the refrigerator is not such a commodity which is sold in a  

package.  Significantly,  the  appellant  is  not  aggrieved  by  its  

valuation being under Sections 4-A(1) and (2) of the Act. The  

only complaint that the appellant made is that the appellant  

should not be required to print MRP on the package of the  

refrigerator manufactured by it. The appellant, therefore, filed  

a writ petition before the High Court of Punjab and Haryana  

praying,  inter  alia,  for  a  writ  of  certiorarified  mandamus  

restraining the authorities  for  taking any coercive measures  

against  the  appellant  or  its  Directors,  officers,  servants  or  

agents  for  not  declaring  MRP  on  the  refrigerators  

manufactured and cleared by the appellant from its factory.  

The  Notification  dated  01.03.2000  was  challenged  to  this  

limited  extent  only.  Before  the  High  Court,  the  appellant  

pleaded that refrigerator is not such a commodity which can  

be  termed  to  be  a  “packaged  commodity”  and  further  the  

provisions of the Act or the Rules made thereunder are not  

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applicable to the refrigerator at all. It was, therefore, prayed  

that  the  notification  was  liable  to  be  quashed  only  to  the  

extent that it included the refrigerator and the requirement of  

declaring MRP on the refrigerator.

13) The respondent authorities, however, maintained that the  

refrigerator was in fact sold in a package of polythene cover,  

thermocol,  hardboard  cartons,  etc.  and  thus  it  falls  in  the  

category  of  “pre-packed  commodity”.  On  that  basis  it  was  

contended that since every packaged commodity was included  

in the Act and the Rules made thereunder, there can be no  

escape from printing  MRP on the  package.  The High Court  

rejected the contention and dismissed the petition filed by the  

appellant.  

14)  It was vehemently contended before a three-Judge Bench  

by the counsel for the appellant that a ‘refrigerator’ is not sold  

in a “packaged form”.  It was further contended that even if it  

is  sold  in  the  packaged  form,  when  it  is  displayed  by  the  

dealers, it is not in the packaged form and the customers can  

take  the  inspection of  the  refrigerator  and at  least  for  that  

purpose the package has to be opened and, therefore, there  

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would be no question of the refrigerator being included in the  

Act  or  the  Rules  made  thereunder.   Rejecting  the  said  

submission as incorrect, this Court concluded as under:-

“5. It was not disputed before the High Court and also before  us  that  the  appellant  manufacturer  has  to  sell  the  refrigerators which are packed in polythene cover, thermocol,  etc. and placed in hardboard cartons. In fact the appellant  had so pleaded before the High Court in para 3 to which a  reference  has  been  made  by  the  High  Court.  Once  that  position  is  clear,  then  the  refrigerator  clearly  becomes  a  commodity in the packaged form. The use of the term “or  otherwise” in the definition would suggest that a commodity  if packed in any manner in units suitable for sale, whether  wholesale or retail, becomes a “commodity in packed form…”

15)  After adverting to Rule 2(l) “pre-packed commodity” and  

Explanation I,  their  Lordships have held that  refrigerator  is  

covered  under  the  term  “pre-packed  commodity” and  

concluded that:

“6. ….Even if the package of the refrigerator is required to be  opened for testing, even then the refrigerator would continue to  be  a  “pre-packed  commodity”.  There  are  various  types  of  packages  defined  under  the  Rules  and  ultimately  Rule  3  specifically  suggests  that  the  provisions  of  Chapter  II  would  apply  to  the  packages  intended  for  “retail  sale”  and  the  expression “package” would be construed accordingly.

7. It is not disputed before us that the sale of the refrigerator is  covered under the “retail sale”. Once that position is clear Rule  6  would  specifically  include the  refrigerator  and would  carry  along with it the requirements by that Rule of printing certain  information including the sale price on the package. Thus it is  clear  that  by  being sold  by the  manufacturer  in  a  packaged  

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form, the refrigerator would be covered by the provisions of the  SWM Act and the SWM (PC) Rules and it would be imperative  that MRP has to be printed in terms of Rule 6 which has been  referred to above.

8. The High Court has also made a reference to Rule 2(l) and  more particularly, the Explanation to which we have referred to  earlier. In our view the reliance by the High Court on Rule 2(l) is  correct.  Learned  counsel  tried  to  urge  that  every  customer  would like to open the package before finalising to purchase the  refrigerator. He would at least get it tested and for that purpose  the package would be destroyed. That may be so but it does not  change the position as rightly observed by the High Court.

9. It  was tried  to  be  suggested that  MRP would  be  different  depending upon the area in which it is being sold. That may be  so,  however,  that  cannot  absolve  the  manufacturer  from  displaying  the  price  i.e.  MRP  on  the  package  in  which  the  refrigerator is packed. Whatever be the situation, it is clear that  a refrigerator is a “packaged commodity” and thus is covered  under the SWM Act and the SWM (PC) Rules and, therefore, the  Notification dated 1-3-2000 cannot be faulted on that ground…. ”

16)  By heavily relying on the above dictum with reference to  

the  very  same  provisions  by  this  Court  in  the  Whirlpool  

(supra),  the  appellant-State  submitted  that  in  view  of  

substantive definition of the main section read with the Rules,  

the  sun  glasses  are  “pre-packed  commodity”  within  the  

meaning of the Act and the Rules thereof.  The appellant-State  

also submitted that similar analogy is to be applied for other  

products also.

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17)   Learned  senior  counsel  appearing  for  the  respondent  

vehemently  submitted  that  the  ratio  of  the  judgment  in  

Whirlpool  (supra) is  not  at  all  applicable  to  these  cases,  

firstly, because the issue in that case was in context of Central  

Excise Act and, secondly, because none of the aspects stated  

have been taken into consideration by this Court in the matter  

of Whirlpool (supra).  It is also pointed out that the judgment  

is sub silentio because the provisions of the Act, specially the  

provisions of Section 2(v) of the Act, have not been taken into  

consideration in the said case.  In the context of  sub silentio  

reference is made to the judgment of this Court in Municipal  

Corporation of Delhi vs. Gurnam Kaur, (1989) 1 SCC 101,  

which according to the counsel for the respondent, is that a  

sub silentio judgment does not have a binding precedent.  By  

pointing out the same, the counsel for the respondent prayed  

that  the case of  Whirlpool  (supra) requires reconsideration  

and, as a result, the present matter also would be required to  

be considered by a larger Bench.   

18)  Though it was pointed out that the decision in Whirlpool  

(supra) was made in the context of the Central Excise Act, we  

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have  already  extracted  the  question  which  fell  for  

consideration, relevant provisions from the Act and the Rules,  

discussion as to the applicability, and the ultimate conclusion  

in para 9, namely, “whatever be the situation, it is clear that a  

refrigerator  is  a  “packaged commodity”  and thus is  covered  

under the Act and the Rules.”  In view of the same, it cannot  

be claimed that the judgment  in  Whirlpool  (supra) has no  

bearing on the issues in these appeals.  Inasmuch as the said  

decision was rendered by a bench of three Hon’ble Judges with  

reference to the very same Act and Rules, we are of the view  

that the issue raised in all these appeals have to be heard by a  

larger Bench.

19)   Accordingly,  we  direct  the  Registry  to  place  all  these  

appeals  before  Hon’ble  the  Chief  Justice  of  India  for  listing  

before a larger Bench.  

...…………….…………………… ……J.                                 

         (P. SATHASIVAM)                                  

 …....…………………………………J.    (H.L. GOKHALE)  

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NEW DELHI; AUGUST 26, 2011.   

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REPORTABLE        

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 1119 OF 2010

The State of Maharashtra & Ors      .... Appellant (s)

Versus

Raj Marketing & Anr.               .... Respondent(s)

J U D G M E N T  

P. Sathasivam, J.

1)  This appeal by State of Maharashtra is directed against the  

judgment  and  order  dated  08.12.2006  passed  by  the  High  

Court of Judicature at Bombay in Writ Petition No. 2982 of  

2006 whereby the High Court allowed the writ petition of the  

Ist respondent herein.  

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2) The issue involved in this appeal is whether Candy man,  

Minto-Fresh, Kitchens of India, Badam Halwa and Ashirvaad  

Atta etc. can be considered as a “wholesale  package” within  

the definition of the expression  “wholesale package” under  

Rule 2(x) of the Standards of Weights and Measures (Packaged  

Commodities)  Rules,  1977  (hereinafter  referred  to  as  “the  

Rules”).   

3) Brief facts:

a) The  respondent  is  a  firm  carrying  on  the  business  of  

buying and selling various products and they used to store  

these  products  in  their  godown  at  Gali  No.8,  Senior  Tyre  

Compound,  N.S.S.  Road,  Narayan  Nagar,  Ghatkopar  (W)  

Mumbai.

b) On 31.10.2006, the second appellant/Inspector of Legal  

Metrology, Mumbai visited the first respondent’s godown and  

seized various packages of packed commodities such as Candy  

man,  Minto-Fresh,  Kitchens  of  India,  Badam  Halwa  and  

Ashirvaad Atta etc. vide seizure memo bearing Nos. 0114769  

and  0114770  dated  31.10.2006.   The  reason  for  seizure,  

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according to him, is that on the wholesale packets, the details  

regarding the name and addresses of the manufacturer, cost,  

month, year etc. has not been declared and also the retail sale  

price was not mentioned which is in violation of the Rules.   

c) A show cause notice dated 06.11.2006 has been issued  

by  the  appellant  to  the  respondent  for  the  violation  of  

Section/Rule  33 and 39 read with Rule  23(1)  and 6 of  the  

Rules.  It was mentioned in the said notice that the offence is  

compoundable as per Section 73 of the Standards of Weights  

and Measures Act, 1976 and Section 65 of the Standards of  

Weights and Measures (Enforcement) Act, 1985.   

d) On 18.11.2006, the respondents, vide their letter, replied  

to the notice dated 06.11.2006.  

e) On 28.11.2006, the respondents filed Writ Petition being  

W.P.  No.  2982 of  2006,  inter  alia,  for  quashing the  seizure  

memo dated 31.10.2006 and notice dated 06.11.2006.  

4) The  High  Court,  by  impugned  order  dated  08.12.2006  

allowed  the  writ  petition  by  holding  that  the  packages  

containing Candy man, Minto-Fresh, Kitchens of India, Badam  

Halwa and Ashirvaad Atta are not wholesale package within  

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the definition of the expression  “wholesale package” under  

Rule 2(x) of the Rules.  

5) Questioning the said order of the High Court, the State  

filed the above appeal by way of special leave.  

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6) Heard Mr. Chinmoy Khaladkar, learned counsel for the  

appellant-State and Mr. Ravinder Narain for respondent No.1.

7) Rule  2(x)  of  the  Rules  define  “wholesale  package” to  

mean:

“(x) “wholesale package” means a package containing-

(i) a number of retail packages, where such first mentioned  package  is  intended  for  sale,  distribution  or  delivery  to  a  intermediary and is not intended for sale direct to a single  consumer; or

(ii) a commodity sold to an intermediary in bulk to enable  such  intermediary  to  sell,  distribute  or  deliver  such  commodity to the consumer in smaller quantities; or  

(iii) packages  containing  ten  or  more  than  ten  retail  packages provided that  the retail  packages  are  labeled  as  required under the rules.”

8) Rule 29 of the Rules read as under:

“29. Declaration to be made on every wholesale package.-  Every  wholesale  package  shall  bear  thereon  a  legible,  definite, plain and conspicuous declaration as to,-

(a) the name and address of the manufacturer or where  the manufacturer is not the packer, of the packer;

(b) the  identity  of  the  commodity  contained  in  the  package; and  

(c)  the  total  number  of  retail  packages  contained  in such  wholesale package or the net quantity in terms of standard  units  of  weights,  measures  or  number  of  the  commodity  contained in wholesale package:

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Provided that nothing in this rule shall apply in relation to a  wholesale package if a declaration similar to the declaration  specified  in  this  rule,  is  required  to  be  made  on  such  wholesale packages by or under any other law for the time  being in force.”

9) In order to attract violation of the Rules referred above,  

the package seized must fall within the expression “wholesale  

package”.   A  package  used  merely  for  protection  during  

conveyance or safety would not be pre-packed commodity for  

the purpose of the Act and the Rules.  As rightly observed by  

the  High  Court  that  for  the  package  to  be  treated  as  a  

wholesale  package,  the  package  must  not  be  a  secondary  

package.   In  that  event,  we  have  to  find  out  whether  the  

secondary package is only for safety, convenience or the like.  

As demonstrated before the High Court, the counsel appearing  

for the Ist respondent placed all the above-mentioned products  

before us i.e. both the wholesale package as well as the retail  

package.   The  Department’s  only  contention  was  that  the  

secondary  package  in  which  the  wholesale  package  was  

packed does not contain the said information.  In the light of  

the  provisions  which  we  have  referred  above  and  on  

verification of the products which were shown to us, we are of  

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the view that the secondary outer packing for transportation  

or for safety of the goods being transported or delivered cannot  

be described as a wholesale package.   

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10) On going through the statutory provisions which we have  

adverted  to  in  the  earlier  paras  and  on  verification  of  the  

products  which  were  shown  to  us  during  the  course  of  

argument, we fully agree with the conclusion arrived at by the  

High Court.  Consequently, the appeal fails and the same is  

dismissed with no order as to costs.  

...…………….…………………………J.            (P. SATHASIVAM)                                  

 …....…………………………………J.    (H.L. GOKHALE)  

NEW DELHI; AUGUST 26, 2011.                     

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