The High Court of Karnataka at Bengaluru Bench has clarified that contractual retention of ownership could not exclude the devices from the Standards of Weights and Measures Act, 1976, and the Standards of Weights and Measures (Packaged Commodities) Rules, 1977, and required prescribed package information, particularly the price. Accordingly, the Court held that the 1976 Act and 1977 Rules applied to Airtel’s pre-packaged SIM cards and GSM Fixed Wireless Phones (FWPs) in this case.
The Court rejected reliance on contractual ownership terms to establish that no sale was involved, and also attached significance to the absence of a declaration that lost or damaged devices would be replaced free of cost. The Court held that the right to use the devices amounted to sale. It further reasoned that, even if they were not intended for sale, the principal display panel had to contain the required information, particularly the commodity’s price, in view of the legislation’s consumer-protection purpose.
Further, the Court rejected the objection concerning the absence of an adjudicatory mechanism, holding that Airtel would have a reasonable opportunity to present its contentions before the jurisdictional Magistrate if proceedings followed non-compounding.
Briefly, Bharti Airtel challenged legal metrology action concerning its packaged SIM cards and GSM Fixed Wireless Phones (FWPs). Following an inspection at its agent’s premises in Hubli on 13 March 2007, the Inspector seized a packaged GSM FWP and issued a notice alleging non-compliance with Section 39 of the Standards of Weights and Measures Act, 1976 and the Packaged Commodities Rules, 1977. Airtel maintained that the devices were supplied only to enable telecom services, remained its property and were not independently sold to subscribers. The Single Judge accepted its case and quashed the challenged notice and proceedings, prompting the State’s appeal.
The Division Bench comprising Justice Jayant Banerji and Justice T.M. Nadaf rejected the argument that retaining ownership of the devices under the subscriber agreement excluded them from packaged-commodity requirements. It held that the right to use the SIM cards and GSM FWPs amounted to sale and that, even if the devices were not intended for sale, the required information, particularly their price, had to appear on the principal display panel.
The Court stressed the legislation’s consumer-protection purpose and noted the absence of a declaration promising free replacement of lost or damaged devices. It also held that Airtel could raise its objections before the jurisdictional Magistrate if prosecution followed non-compounding of the alleged offence.
The Court further held that a contractual term retaining ownership with the service provider could not override statutory requirements or, by itself, establish that no sale was involved. Reading Rule 2(l) in light of the legislation’s consumer-protection object, the Court rejected Airtel’s claim that supplying the devices as part of telecom services removed the obligation to make the prescribed package declarations, including the price.
