The government has amended an archaic rule that so far used to hold the directors of retail companies directly liable for any violations, inconsistency or any sort of pricing mismatch on the price tags of products they sell in stores.
The Department of Consumer Affairs has now amended the Legal Metrology (General) Rules, 2011 allowing officers other than directors to be nominated as persons responsible for the business of the company. The Amendment will affect all retailers particularly private limited (Pvt. Ltd.), public limited and limited liability partnership (LLPs) companies.
Retailers have welcomed the move and said it has been their longstanding demand as directors of retailers can breathe easy as they will not be held directly accountable for such violations.
“Nominating any company officer in place of the director is in line with modern business needs, as the director is not involved in day-to-day activity,” said Kumar Rajagopalan, CEO of Retailers Association of India that has been championing the cause for a long time. “This has been a long-standing requirement from retailers across the country and shows the progressive understanding by the Consumer Affairs Ministry.”
Legal Metrology Act 2009 is an Act to establish and enforce standards of weights and measures, regulate trade and commerce in weights, measures and other goods which are sold or distributed by weight, measure or number. “The Act is applicable to all retailers on a day-to-day basis. A 100 per cent compliance of provision is a must and non-negotiable,” explained Gopal Naik, Senior Partner at Vision Law, Mumbai, and a retail law expert with over 40 years of experience working with companies like Reliance Retail and Aditya Birla Fashion Ltd.
As per sub-section 2 of section 49 of the Legal Metrology Act, 2009 companies were required to nominate any one of its directors as a person responsible for the business of the Company, who would then be prosecuted in case of a violation.
“The Act required only one director to be nominated as a responsible person. In case the company failed to nominate any one of its directors, the authorities would lodge a complaint against all the directors embroiling the company in a complex legal battle,” added Naik.
Directors would be sent notices for smallest of non-compliances such as non-declaration of statutory information like consumer care details, or date of packing or Maximum Retail Price. They would be booked even if such instances took place at a far away manufacturing facility, store or a distribution centre with no direct relationship to them.
“Companies are operating across geographical areas and it is humanly impossible for the directors to personally oversee the compliance under the Act at each unit level. It is therefore appropriate to nominate a person in charge of the unit as responsible so that he can exercise diligence and address any non compliance. Similar provisions exist under Food Safety and Standards Act 2006,” said G R Srikkanth, Senior Vice President – Legal, Spencer’s Retail Limited.
By allowing companies to nominate officers who are actually involved in day-to-day running of a business unit, the long-pending Amendment seeks to improve adherence and ease of doing business.