The Legal Metrology Act, 2009, which establishes and enforces
the standard of weights and measures used in the commercial sector,
has long been subjected to censure owning to its harsh punitive
measures. In recent past, Department of Consumer affairs
released 
Stakeholder consultation on proposal of decriminalization of Legal
Metrology Act, 2009. It seems that the long awaited respite
looked forward to by Directors working under duress and trying to
dodge the noose of ‘criminality’, is a step closer to
realisation.

A brief history of the Legal Metrology Act

The trade of goods is and has been the basis of every economy.
When people bartered goods, they felt the need for uniformity which
led to the usage of coins. As coins became the standardised mode of
payment, the twin concepts of price and quantity began
crystallising. That was the time of localised markets, limited
communication and technologically restricted advertising.
Traditional modes for measuring quantity, like using pebbles in
balances soon proved inefficient as they provided a wide ambit for
trade malpractices and affected customer welfare. The need for a
standardisation of units of weights and measurement was thus felt
throughout history. As the world grew smaller, economies
interconnected, and international bodies like International
Organisations for Legal Metrology came into being, the government
enacted the Standards of Weights and Measures Act as early as 1956.
To keep up with the latest standard of units, the government
regularised these Acts in 1977 and in 1985, recognising the need
for flexibility and a dynamic approach to keep up with the rapid
changes in the economy. Globalisation brought forth its own list of
challenges as the industrialists became shrewder and customers
remained naive lambs. The Legal Metrology Act of 2009, with all its
draconian measures as enacted to protect the vulnerable party, the
customer. However, since the Act has been enacted, social media
platforms have boomed, and information creation and reception has
become effortless. One post is all it takes for bad advertising to
infect businesses. The availability of innumerable substitutes
screams that compromising with quality can result in a sudden
death. It is the era of multinational corporations and outsourcing.
The iron fist of the Act, by maligning just of one name, can now
affect the livelihoods of millions across the globe. Therefore, the
time for change has come again.

Challenges posed by the current Legislation

The Act as it exists today includes both criminal and civil
measures of tackling malpractices within its gambit. The criminal
ramifications arise mostly in cases of non-compounding of offences.
This has dual repercussions. Firstly, it raises
the standard of proof for proving the offence, hence creating an
escape route for wrongdoers. Inability to prove the commission
‘beyond reasonable doubt’- especially with the
essential ingredient of mens rea  or criminal
intention- hinders the compliance of laws.This on a micro level is
harmful to the rights of consumers and on a macro level, to the
Indian market by creating a general distrust on the authenticity of
the goods sold (suspicion on the printed date of manufacturing,
date of import, weight claimed, marketed by, etc). Interestingly,
along with being too high a standard for affixing
liability, mens rea  also leads to prosecution
in cases where the deference need not necessarily be
intentional. Secondly, the Act directly affects
ease of doing business in India,which has been evidenced by the
oscillations in its definition of the meaning of ‘person(s)
in charge of the business’, that is, from including the board
of directors from reducing it to a single nominated director, for
making them criminally liable for most of the offences under the
Act.

Proposed Amendments

Penalties and Preventive Measures

Recognising these challenges, the proposal aims at
decriminalising the provisions where there need not be
any mens reanecessarily involved and the larger
public need not be adversely affected. Thus, the proposal includes
review of the penalties in the current legislation, between
sections 26 and 53 of the Act,which govern the manufacturing or
sale of non standard weights, tampering with licenses, quoting non
standard units, using unverified weight measures, non production of
required documents, selling non standard packaging in declaration
and quantity, etc. A hiked penalty fee has been suggested as an
alternative in the range ofOne lakh to Ten lakhs but with the
caveat of cancelling licenses. Thus, the proposal seems to be
mindful about the effectiveness of the penalties as a mode of
prevention, especially as imprisonment is suggested to be done away
with.Furthermore, to reach the same end of de-criminalisation,
certain offences such as tampering with or altering weights and
measures, giving false returns and maintaining false particulars,
have been suggested to be made ‘compoundable’.

Person in charge of the conduct of business

Targeting section 49 of the Act, which requires a director to be
nominated as a ‘person in-charge of conduct of
business’, the proposals suggest that nominations be made on
the managerial level instead.The rationale behind this is that it
is Managers not Directors who are in-charge of day to day business
operations. Section 49 of the 2009 Act had corrected the fallacy in
the 1976 Act, by providing for the nomination
of one Director or Partner (as opposed
to all in the latter) against whom
criminal proceedings can be initiated. The proposal wants to go a
step further and absolve the directors of liability by putting
managers in the line of fire.

Selling above MRP – Section 36 (1) A

Finally, the proposal suggests the addition of section 36 (1) A
to target the sale of commodities above MRP.As yet, it is only
under section 32(3) of the
Legal Metrology (Packaged Commodities) Rules, 2011, as amended
in 2013, that selling above MRP is governed, which deems it a
compoundable offence punishable with a fine of Rs. Two Thousand in
case of a wholesaler or a retailer, and Rs. Five Thousand in case
of a manufacturer or an importer. This has been strengthened by the
2018 amendment whichholds the declaration of dual MRPs as a
contravention to law. If section 36 (1) A is introduced, the
penalty will increase such that it will between Rs. Five Thousand
and Twenty Five for first time offenders but shall hike up to a
minimum of Fifty Thousand and One Lakh for respective
repetitions.

Analysis and Conclusion

Hiked fines

The proposals tackle challenges posed by the Act without
ignoring the aims sought to be fulfilled by it. Given that many
wrongdoers get away with their malpractices because of a higher
standard of proof, strictly enforced monetary penalties and
cancellation of license as measures of compliance would be, at
least, equally efficient as imprisonment and would also help punish
them through hefty fines, preventing them from escaping using the
stringent mens rea requirement. Incorporation of
such proposals would also reduce burden on courts because with a
subsequent increase in compoundable offences, offenders may plead
guilty and agree to pay fine, thereby eliminating the need for
application of a judicial mind.

Cancellation of Licenses

Cancellation of licensesas a penalty for most of the provisions
may not be right approach and must be considered carefully. With an
incentive for decriminalisation being reduction on the burden on
courts, it seems absurd to introduce such a penalty as it would
actually reverse this benefit by increasing litigation. Moreover,
it would have a major impact on stakeholders tied to the business,
who, though innocent, would end up paying for another’s
wrongs. A good example of this is that of businesses having
multi-location presence, where default at once place could lead to
cancellationof thelicenses for all the units. This would certainly
be against the spirit of law and equity and ease of doing business
would also worsen.

Nomination of Managers

Regarding the second focal-point of the proposal, while
directors do not look into day to day workings of a company, they
should bear consequences for non performance as they get a share in
profit as compared to managers who merely get a salary. Today,
since the Board is involved, the industry takes these compliances
seriously. However if the onus of the charge is entirely dropped on
the Manger, the purpose of this amendment may really get
defeated.While the entire board of directors should not be
affected, there must be some mechanism to ensure liability on their
part.

Introduction of Section 36(1)A

While decriminalisation is desirable in some aspects, it is not
a ‘one size fits all’ mantra for improvement. Some
offences are of such a nature that they require a harsher form of
atonement, namely, imprisonment. Sale of commodities above the MRP
is a gross infringement of consumer rights and a blight in
transparency and clean business operations. It is the Coronavirus
of day-to-day business malpractices, that is, highly communicable
across sectors and business structures. Paying puny lakhs would not
be taken seriously in swindles of crores. The Government must
ponder and strategise to introduce necessary stringent punishments
to prohibit such practises.

In Sum

The digitalization scrutiny under the Act is also much awaited
and its ignorance in the proposal has left many issues unaddressed.
The government must consider digitalization of the entire process
under the Act. To this regard, the future already seems bright.
With a recent notificationdated October 13, 2020, notifying the
development of an online system of nomination of directors and
mandating online request for the same, the government is
alreadydisplaying eagerness to improve efficiency and transparency
through digitalisation.

Thus, while there are some loose ends left to be tied, the
proposal seems like a light at the end of the tunnel.

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