- 1 - HC-KAR NC: 2025:KHC:32142 WP No. 34187 of 2018 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 19TH DAY OF AUGUST, 2025 BEFORE THE HON'BLE MR. JUSTICE R. NATARAJ WRIT PETITION NO. 34187 OF 2018 (GM-RES) BETWEEN: KONE ELEVATOR INDIA PVT. LTD. NO.4/1, ZENITH CHAMBERS, 2ND FLOOR, ANJANEYA SWAMY TEMPLE ROAD, 6TH CROSS, WILSON GARDEN, BANGALORE-560027 REPRESENTED BY ITS AUTHORIZED SIGNATORY, MR. ASHISH HANJURA HAVING ITS REGISTERED OFFICE AT 50-55 AND 58, VANAGARAM ROAD, AYANAMBAKKAM, CHENNAI-600095 &PETITIONER (BY SRI. SRINIVASA RAGHAVAN V., SENIOR ADVOCATE FOR SRI. NISCHAL DEV B.R., RIDHIMA, ADVOCATES) AND: THE INSPECTOR OF LEGAL METROLOGY INSPECTION SQUAD-2 NO.1, ALI ASKER ROAD, BANGALORE-560052 &RESPONDENT (BY SRI. MAHANTESH SHETTAR, ADDITIONAL GOVERNMENT ADVOCATE) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THE LEGAL METROLOGY ACT, 2009 AND THE LEGAL METROLOGY (PACKAGED COMMODITIES) RULES, 2011 ARE NOT APPLICABLE TO THE BUSINESS MODEL OF THE PETITIONER AND ETC. R Digitally signed by SUMA Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:32142 WP No. 34187 of 2018 THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE R. NATARAJ ORAL ORDER The petitioner has sought for a declaration that the Legal Metrology Act, 2009 (henceforth referred to as 'Act, 2009') and the Legal Metrology (Packaged Commodities) Rules, 2011 (henceforth referred to as 'Rules, 2011') are not applicable to the business model of the petitioner. It has also challenged a notice bearing No.LMO/PC/CN/0691392/16-17 dated 28.03.2018 issued by the respondent as well as the notice bearing No.ILM/is-2/Pro/49/17-18 dated 03.07.2018 issued by the respondent. It has also sought for a writ in the nature of mandamus to direct the respondent to return the goods seized on 28.03.2018 as per the notice of seizure dated 28.03.2018. 2. (i) The petitioner contends that it is in the business of manufacture, supply, installation and commissioning of elevators and escalators on composite indivisible work contract basis. Its manufacturing unit is situated in Chennai and has branch offices throughout India. Its business model is that the customers order for designing - 3 - HC-KAR NC: 2025:KHC:32142 WP No. 34187 of 2018 manufacturing, supply and installation and commissioning of elevator and based on such orders, the branch offices would from time to time raise their requirements and place orders with the factory at Chennai. The elevator parts are then taken for installation at site. Therefore, it is claimed that the parts which are brought from Chennai to its branches are nothing but an internal branch transfer for subsequent installation. Therefore, the petitioner claimed that whatever that is manufactured and brought to its branch offices are for captive consumption. (ii) It is claimed that in order to aid the installation of elevators, materials are directly transported to the customer's site in order to carryout installation in the building. If any materials are found to be defective, they are sent back to the branch offices for replacement and subsequently transported to the sites, where they are to be installed. It is claimed that in order to ensure timely upkeep and maintenance of the elevators, the petitioner maintain stocks to be used for carrying out such maintenance activity and that maintenance contracts entered into with the customers may require parts to be replaced, which is integral to such maintenance. It is - 4 - HC-KAR NC: 2025:KHC:32142 WP No. 34187 of 2018 specifically claimed that there is no separate sale of parts to individuals across the counter. It is also specifically claimed that the materials that are brought to the branch offices or site are never utilised by the petitioner for any retail sale but are strictly utilised for incorporation in the installation of the elevators. (iii) The petitioner contends that on 28.03.2018, the respondent entered the branch office at Bengaluru and inspected the parts of elevator stored for transportation to the customer's site. The respondent seized some of them on the ground that it violated the provisions of Act, 2009 and Rules, 2011. The respondent issued notice dated 28.03.2018 and alleged that the petitioner had not made the prescribed declarations under the Act, 2009 and Rules, 2011 and thereby had committed an offence under Section 18 of the Act, 2009 read with Rules 6(1), 6(1)(a), 6(1)(c), 6(1)(d), 6(1)(e), 6(1)(2) of the Rules, 2011. It was also mentioned that the petitioner was punishable for an offence under Section 36 of the Act, 2009. The petitioner submitted a detailed reply stating that it was not covered under the provisions of the Act, 2009, as it was not involved in retail sales and that the outer package was - 5 - HC-KAR NC: 2025:KHC:32142 WP No. 34187 of 2018 only to ensure protection of the products and was not intended to be a pre-packed commodity. The petitioner also placed all relevant information to establish that it did not do retail or wholesale sale but the parts that are packed are for captive consumption. Despite furnishing the information, the respondent issued another notice dated 03.07.2018, rejecting the submissions made by the petitioner. In the notice dated 28.03.2018, the petitioner was referred as an industrial consumer and that the petitioner had violated Rules, 2011. The petitioner therefore, being aggrieved by the initiation of the action under the Act, 2009 and Rules, 2011 as well as the notices issued by the respondent and seizure of certain goods, has filed this writ petition. 3. The learned Senior Counsel for the petitioner submitted that the petitioner is involved in the business of installation and commissioning of elevators which comprises of various parts. He submits that the petitioner has a manufacturing facility at Chennai and that all the parts are brought to various branches in the States where they are utilised for installation at the customers site. Therefore, he contends that there is no sale of any pre-packaged commodity - 6 - HC-KAR NC: 2025:KHC:32142 WP No. 34187 of 2018 as such, but the package is meant only to protect it from damage and not for retail sale. He therefore contends that the impugned proceedings initiated by the respondent is outside the provisions of the Act, 2009 and Rules, 2011. In support of his contentions, he referred to the judgment of Hon'ble Apex Court in the case of Kone Elevator India Private Limited Vs. State of Tamil Nadu [(2014) 7 SCC 1] which arose out of liability to pay Value Added TAX (VAT) on works contract undertaken by the petitioner. The learned Senior Counsel referred to paragraph Nos.48 and 70 of the said judgment and contended that nature of work of the petitioner is neither retail nor wholesale sale of the products but is in the nature of work contracts and the parts are incorporated into the elevators that are installed at the customer site. He therefore, contends that the provisions of the Act, 2009 are clearly not applicable to the petitioner and hence, the impugned proceedings initiated is outside the provisions of the Act, 2009 and Rules, 2011. 4. Per contra, the learned Additional Government Advocate submitted that the petitioner had pre-packed the retro-kits, DC eliminator transformer. He submits that when once these products were packed, the Rules, 2011 would come - 7 - HC-KAR NC: 2025:KHC:32142 WP No. 34187 of 2018 into play and the petitioner is bound to make necessary declarations as provided under Rule 6 of Rules, 2011. He contends that the non-declaration of the mandatory declarations is an offence in view of Section 36 of the Act, 2009. He contends that the contentions urged by the petitioner in this writ petition is a defence available to it in proceedings before the appropriate authority and therefore, this Court should refrain from exercising jurisdiction under Article 226 of the Constitution of India. He contends that the impugned proceedings is only a notice issued by the respondent calling upon the petitioner to compound the offence and hence, contends that no indulgence is warranted with the impugned proceedings. He also contends that judgment relied upon by the learned senior counsel for the petitioner arose out of the VAT and not under the provisions of Act, 2009. 5. I have considered the submissions made by the learned senior counsel for the petitioner and the learned Additional Government Advocate for the respondent. 6. A pre-packed commodity is defined as per Section 2(l) of the Act, 2009 as follows: - 8 - HC-KAR NC: 2025:KHC:32142 WP No. 34187 of 2018 (l) <pre-packaged commodity= means a commodity which without the purchaser being present is placed in a package of whatever nature, whether sealed or not, so that the product contained therein has a pre- determined quantity." 7. Section 18 of the Act, 2009 mandates the declaration to be made on a pre-packaged commodity and reads as follows: "18. Declarations on pre-packaged commodities.4(1) No person shall manufacture, pack, sell, import, distribute, deliver, offer, expose or possess for sale any pre-packaged commodity unless such package is in such standard quantities or number and bears thereon such declarations and particulars in such manner as may be prescribed. (2) Any advertisement mentioning the retail sale price of a pre-packaged commodity shall contain a declaration as to the net quantity or number of the commodity contained in the package in such form and manner as may be prescribed." 8. Section 36 of the Act, 2009 reads as follows: - 9 - HC-KAR NC: 2025:KHC:32142 WP No. 34187 of 2018 "36. Penalty for selling, etc., of non-standard packages.4(1) Whoever manufactures, packs, imports, sells, distributes, delivers or otherwise transfers, offers, exposes or possesses for sale, or causes to be sold, distributed, delivered or otherwise transferred, offered, exposed for sale any pre-packaged commodity which does not conform to the declarations on the package as provided in this Act, shall be punished with fine which may extend to twenty-five thousand rupees, for the second offence, with fine which may extend to fifty thousand rupees and for the subsequent offence, with fine which shall not be less than fifty thousand rupees but which may extend to one lakh rupees or with imprisonment for a term which may extend to one year or with both. (2) Whoever manufactures or packs or imports or causes to be manufactured or packed or imported, any pre-packaged commodity, with error in net quantity as may be prescribed shall be punished with fine which shall not be less than ten thousand rupees but which may extend to fifty thousand rupees and for the second and subsequent offence, with fine which may extend to one lakh rupees or with imprisonment for a term which may extend to one year or with both." - 10 - HC-KAR NC: 2025:KHC:32142 WP No. 34187 of 2018 9. A packer is defined under Rule 2(g) of the Rules, 2011 as follows: (g) "packer" means a person who, or a firm which pre-packs any commodity, whether in any bottle, tin, wrapper or otherwise, in units suitable for sale whether wholesale or retail." 10. Retail package is defined under Rule 2(k) as follows: (k) "retail package" means the packages which are intended for retail sale to the ultimate consumer for the purpose of consumption of the commodity contained therein and includes the imported packages: [Provided that for the purpose of "retail food package", the definition of the same contained in the rules or regulations made under the Food Safety and Standards, Act, 2006 (34 of 2006) shall apply." 11. The purpose of Act, 2009 and Rules, 2011 is to ensure that a retail purchaser or a wholesale purchaser is aware of the contents of package without actually opening it. Therefore, the Act, 2009 contains provisions requiring a manufacturer who intends to ultimately "sell" either through a - 11 - HC-KAR NC: 2025:KHC:32142 WP No. 34187 of 2018 retailer or a wholesale dealer, a product in packaged form to make declarations on the outer cover of the package. The Rule, 2011 provide in detail the nature and manner of making of such declarations. In order to ensure that the declarations made on the package conform to the contents in the package, Section 36 of the Act, 2009 makes it a cognisable offence if the declarations made on the package do not correspond with the contents of package. Therefore, the underlining purpose of the Act, 2009 and Rules, 2011 is to ensure that whenever there is sale of a pre-packaged commodity, the customer or the consumer should be able to discern the contents of the package as well as the date of its manufacture, the details of the manufacturer, maximum retail price, the number of units or weight, consumer grievance number, etc., In the case on hand, the petitioner is a company which is in the business of installation and commissioning of elevators and escalators on work contract basis. It is common knowledge that before an elevator is installed in a building, several factors have to be taken into consideration, such as the dimensions of the well, the carrying capacity of the cabin, the features that are required etc. Therefore, there cannot be a retail sale of an - 12 - HC-KAR NC: 2025:KHC:32142 WP No. 34187 of 2018 elevator but has to be customized based on the needs of a customer. The fact that the petitioner undertakes installation of these elevators on work contract basis is recognized by the Hon'ble Supreme Court of India in the case of Kone Elevator India Private Limited (referred supra). Thus it goes without saying that whatever parts that are manufactured and brought by the petitioner and stored at its regional/branch offices are meant for its captive consumption and not for retail or wholesale sale. The provisions of the Act, 2009 and the Rules, 2011 came into play only when the pre-package is meant for either retail or wholesale sale. 12. The notice dated 28.03.2018 shows that what was seized from the Bangalore office of the petitioner was Retro Kit - two numbers, D C eliminator - three numbers, transformers - two numbers. The violations of Rule, 2011 were that there were no mandatory declarations on the package. It is understandable that if the products are meant for captive consumption, then the petitioner is exempt from making any declaration as the petitioner has not packaged these products for retail or wholesale sale. Mere placing the commodity in a package for ensuring protection of the commodity does not result in the - 13 - HC-KAR NC: 2025:KHC:32142 WP No. 34187 of 2018 package being treated as a pre-packaged commodity as defined under the Act, 2009 or the Rules, 2011. Therefore, the petitioner cannot be accused of violation of Act, 2009 and Rules 2011, so long as the petitioner uses the products for captive consumption. It is not the case of the respondent that the petitioner has exhibited these products for sale at its regional offices or branch offices. It is also not the case of the respondent that it has seized any invoices indicating that the petitioner has been selling the products either on retail or wholesale basis. Therefore, as rightly contended by learned senior counsel for the petitioner, the provisions of the Act, 2009 are clearly not applicable to the petitioner, as the products which are placed in the package are not meant to be sold but are meant for captive consumption. 13. Under the circumstances, the impugned proceedings initiated by the respondent deserve to be set at nought. Consequently, this writ petition is allowed. It is hereby declared that so long as the petitioner uses the pre- packed product for its captive consumption and not exposes it for retail or wholesale sale, it is outside the scope of Act, 2009 and Rules, 2011. - 14 - HC-KAR NC: 2025:KHC:32142 WP No. 34187 of 2018 14. Consequently, the impugned notices issued by the respondent dated 28.03.2018 bearing No.LMO/PC/CN/0691392/16-17 and 03.07.2018 bearing No.ILM/is-2/Pro/49/17-18 are quashed. Resultantly the respondent is directed to forthwith return the goods seized from the custody of petitioner on 28.03.2018. Sd/- (R. NATARAJ) JUDGE HJ List No.: 1 Sl No.: 35