AMAN BATHWAL

18020225
IBM-18

Case
This case talks about AB Corporation which is a drinking water bottling company in
Gurgaon. They sell the bottle of water in the name of “Aquamania” with their tag line “the
best drinking mineral water”. They also have a contract with IIC for constructing a
warehouse in KOTA. However, Jenny William Ricardo a member of Conscious Consumer an
NGO sued AB corporation on the bases of their tag line as it says “mineral water” but they
only have the license of selling drinking water. Adding on, Jenny William also focuses on the
price of the bottle of water. Discuss.

Issue
1- The function of selling is beyond the scope of functions in MOA. In other words, AB
Corporation is selling “Mineral” water which is not mentioned in their MOA and they do not
have a license for that.?
2- misleadingly advertising its product as “mineral water” when it just “drinking water”?
3- Extremely high pricing of water is against public policy?
4- contract of ICC

Rule
 The Doctrine of Ultra Vires
 Section 47 Clause (j) of the consumer protection Act – giving false or misleading
information about the goods and services.
 Related Case- Ashbury Railway Carriage and Iron Co. Ltd. v/s Riche (1878)
Evans Vs Brunner Mondand company (1921)

Analysis

In the above case of AB Corporation, their MOA specifically stated, “to collect and sell
drinking water” which counters their tag line of “the best drinking mineral water”. AB
Corporation only has a license to produce drinking water and not mineral water. Some people
might say is somewhat related to each other, however, the manufacturing process including
Treatment, distillation, and certification of mineral water and regular drinking water is
different. Therefore, ABC is providing misleading information of the product to the
consumers, this is specified in section 47 Clause (J) of the consumer protection act were
giving misleading information about the product comes under misconduct.

Adding on the price of the product is extremely high for a product that just costs 10-20
Rupees this goes against the public policy. Firms are privileged to sell their product at rates
they wish to, however, As mentioned in the case study, “drinking water can be sold only at a
price range of 10-20 Rs.” Which means 20 Rs is the maximum retail price of drinking water
set in a particular state. i.e. Kerala 13 Rs/ liter. As per Essential Commodities Act, 1955 all
the items listed under the act cannot be sold above the price notifies by the central
government, therefore, ABC is overcharging its consumers with a considerably high price
and shall be liable to that.

The Doctrine of Ultra Vires which means “beyond power”. This means whatever is not stated
in the memorandum as the object of power is prohibited by the Doctrine of Ultra Vires.
Adding on, any act which is Ultra vires is invalid. Looking at the case of Ashbury Railway
Carriage and Iron Company Ltd v/s Riche (1875) where the Railway company was
shareholders filed a case of financing the manufacturing of railway which is beyond the
power to MOA as the MOA specifies manufacturing of railway carriages, wagons, and
contract. Adding on, Evans Vs Brunner Mondand company (1921) shows that all acts that
are not in the clause are not ultra vires. The contract of ABC with ICC for constructing a
warehouse in Kota can be out of its scope of the clause, as “to meet the demand” they need a
place to store the products contracting with ICC is completely valid as its fulfills the clause of
meeting demand “and do other activity that is necessary for achieving the same”

Conclusion

To sum up, the firm AB corporation has misled the consumers by selling drinking water in
the name of mineral water. Adding to this, the firm has also overcharged the consumers
ignoring the fact that drinking water only is sold at 10-20 Rs range. ABC did not act in Ultra
Vires by getting in a contract with ICC to build a warehouse in Kota as it fulfills its objective
to “meet the demand”. ABC is liable to the overcharging and the false representation about
their product.