Background of the Case

The matter arose from proceedings initiated under the Legal Metrology Act, 2009 and the Legal Metrology (Packaged Commodities) Rules, 2011. The applicants were issued a show cause notice in January 2024 for alleged non-compliance with statutory requirements relating to the display of Maximum Retail Price (MRP) and product dimensions on packaged commodities.

Although the applicants responded and sought compounding of the alleged offences, a demand notice dated 28 May 2024 directed them to deposit a penalty of ₹3,20,000. Subsequently, a criminal complaint was filed before the ACJM, Gautam Budh Nagar, summoning the applicants under Sections 18(1) and 36(1) of the Act.

Legal Issues

The challenge before the High Court focused on two central issues:

1. Whether the penalty of ₹3,20,000/- exceeded the statutory limits prescribed under Section 36 of the Legal Metrology Act.
2. Whether the compounding process under Section 48 had been correctly applied.

Submissions on Behalf of the Applicants

Appearing on behalf of the applicants, Atanu Saikia, along with co-counsel, argued that:

• Under Section 36, the penalty for a first offence cannot exceed ₹25,000.
• The demand notice failed to clarify whether the alleged violation was a first, second, or subsequent offence.
• Reliance was placed on the Karnataka High Court’s decision in M/s Dabur India Ltd. v. State of Karnataka (2023), which emphasized that penalties must strictly conform to the statutory limits.
• Since the applicants had already expressed willingness to compound the matter under Section 48, the imposition of ₹3,20,000/- was not sustainable.

Court’s Observations

Justice Vikas Budhwar observed:

• The demand notice lacked clarity on whether the violation was the first or a subsequent offence.
• Section 36 clearly caps the penalty for a first offence at ₹25,000, and compounding under Section 48 cannot exceed this statutory maximum.
• The respondents could not satisfactorily explain how the figure of ₹3,20,000/- was derived.

The Court’s Decision

The High Court ruled that:

1. The demand notice dated 28.05.2024 was unsustainable and was set aside.
2. The matter was remanded to the Inspector, Legal Metrology, Gautam Budh Nagar, for reconsideration in light of Sections 36 and 48 of the Act.
3. Until a fresh order was passed, no coercive action would be taken against the applicants with respect to the pending complaint and summons.

Role of Atanu Saikia

In this case, Atanu Saikia represented the applicants and advanced arguments challenging the legality of the demand notice and the excessive penalty imposed. His submissions emphasized:

• The statutory ceiling on penalties under Section 36.
• The applicants’ good faith in seeking compounding under Section 48.
• The importance of judicial scrutiny when administrative authorities impose penalties exceeding statutory limits.

Through these arguments, the Court was persuaded that the demand notice required reconsideration, safeguarding both statutory compliance and the applicants’ rights.

Significance of the Ruling

This decision reinforces key principles in regulatory enforcement under the Legal Metrology Act:

• Penalty must align with statutory ceilings—authorities cannot impose arbitrary figures.
• Compounding provisions must be respected when invoked by parties.
• Judicial review ensures accountability in administrative decision-making.

By remanding the matter, the High Court struck a balance between regulatory enforcement and protection from disproportionate penalties.