Justice for All: No MRP on bottled water in hotels A retrograde step

A chain of restaurants in Chennai displayed a board ‘prohibiting’ discussions on politics, business and real estate. While I was initially unsure of what was lost on the management - 2017 or Article 19(1)(a) of the Constitution on free speech, I later gathered that it was to prevent property brokers and small traders from ordering just a coffee and using the restaurant for hours on end for their business deals. If the Supreme Court's recent judgment giving hotels and restaurants a carte blanche to price bottled water as they please, above the maximum retail price (MRP) is seen in a similar context, the justification, from a hotel's standpoint, may be clear. 

In its order, much to the dismay of consumer activists, the apex court in Federation Of Hotels & Restaurant Associations of India Vs Union of India held that Section 36 of the Legal Metrology Act, 2009 that prescribed a fine of upto a lakh or a one year jail term for not conforming to the declaration on the package, in this case, the MRP, was not applicable to hotels and restaurants. 

Is the transaction in a hotel predominantly of a service or of the sale of drinking water among other items? The apex court ruled that it was a composite transaction. It relied on Rule 3 of the Legal Metrology (Packaged Commodities) Rules, 2011. Under clause (b) of Rule 3, “institutional consumers” of packaged commodities were out of its ambit. Guests at hotels fall under this bracket. Considerable legal hair-splitting over what exactly constitutes a 'sale', as specified in the old Standards of Weights & Measures Act of 1976, the enactment in 1985, the 46th Constitution Amendment Act contained in Article 366 led to the conclusion that there can be only one indivisible contract of service coupled with the sale of food and drinks. 

The Supreme Court in State of Punjab Vs Associated Hotels of India had distinguished a ‘contract of sale’ from a ‘contract of work’ holding that “the transaction between a hotelier and a visitor to his hotel is thus one essentially of service in the performance of which and as part of the amenities incidental to that service, the hotelier serves meals...” A more lucid explanation came from the Delhi High Court in the Federation of Hotels case. “When the customer uses a fan in the room, there is surely no sale of electricity, nor a hire of the fan. Such amenities, including meals, are part and parcel of service which is in reality, the transaction between the parties. It may well be that a client would order nothing beyond a bottle of water or a beverage, but his direct purpose in doing so would clearly be to enjoy the ambience available.” 

From a consumer's perspective, it's bad enough that a litre of packaged drinking water costs about twenty rupees. The reason customers opt for bottled water is because of the State’s failure to supply pure drinking water without disease causing bacteria. That has led to the proliferation of packaged, purified water. Two questions emerge. If hotels and restaurants do not supply safe drinking water that is boiled or filtered, would it amount to a ‘defect’ or  ‘deficiency’, defined as “any fault, imperfection, shortcoming or inadequacy in the quality or purity” covered squarely under Section 2 (1) (f) and (g) of the Consumer Protection Act?  If safe drinking water is not provided, necessitating the purchase of  purified bottled water, would that constitute an ‘unfair trade practice’, “for the purpose of sale, use or supply of any goods” as defined  under Section 2(1) (r) of the Consumer Protection Act? 

Did you know that according to an archaic law - the Sarais Act, 1887, anyone can walk into a hotel for a glass of water or to use the restroom?! How many customers walk into a hotel only to buy a bottle of water? Usually, it is one of the items ordered. The need to charge twice or thrice the MRP for the ambience and service should not arise. And what is service charge for? The possibility of dual MRP - one for general retailers and another for hotels has been prohibited by a recent amendment to the Packaging Rules. The owners of hotels do have a point. For genuine consumers, the thirst for a fair deal has not been quenched.