NATIONAL LAW INSTITUTE UNIVERSITY, BHOPAL

[LL.M.]

LAW OF REGULATORY INSTITUTIONS

PROJECT ASSIGNMENT ON
ADVERTISEMENTS IN INDIA AND THEIR REGULATION

UNDER THE SUPERVISION OF

ASST. PROFESSOR AMIT PRATAP SINGH

SUBMITTED BY
MITALI KHATRI
Roll No. - 2023LLM62
TABLE OF CONTENTS
CHAPTER 1 - INTRODUCTION...................................................................................................5
REVIEW OF LITERATURE......................................................................................................6
STATEMENT OF PROBLEM....................................................................................................8
OBJECTIVES OF STUDY..........................................................................................................8
RESEARCH METHODOLOGY.................................................................................................8
HYPOTHESIS.............................................................................................................................9
SCOPE AND LIMITATIONS.....................................................................................................9
RESEARCH QUESTIONS..........................................................................................................9
CHAPTER 2 - WHY REGULATION ON ADVERTISEMENTS IS REQUIRED.....................10
CHAPTER 3 - DIFFERENT REGULATIONS ON ADVERTISEMENTS IN INDIA...............11
CHAPTER 4 - ADVERTISEMENTS OF VIRTUAL DIGITAL ASSETS AND SOCIAL
MEDIA ADVERTISEMENTS REGULATIONS........................................................................13
CHAPTER 5 - NEED FOR A REGULATORY AUTHORITY FOR ADVERTISEMENT........15
CONCLUSION AND SUGGESTIONS........................................................................................16
BIBLIOGRAPHY..........................................................................................................................17
 LIST OF ABBREVIATIONS

ABBREVIATION FULL FORM

Art/s Article/s

S./SS Section/s

Ads Advertisements

SC Supreme Court of India

DHC Delhi High Court

 INDEX OF AUTHORITIES

LIST OF STATUTES
1. The Constitution of India, 1950
2. The Consumer Protection Act, 1986
3. The Competition Act, 2002
4. The Monopolies and Restrictive Trade Practices Act, 1969
5. The Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954
6. The Trade Marks Act, 1999
7. The Cigarettes and other Tobacco Products (Prohibition of Advertisement and Regulation
of Trade and Commerce, Production, Supply and Distribution) Act, 2003

LIST OF CASES
1. Dwaipayan Bhowmick v Union of India W.P.(C) Nos.1071/2017 and 1076/2017
[Supreme Court]
2. Aayush Shukla v Ms Wazir x W.P.(C) 6496/2021 & CM APPL.20391/2021 [Delhi High
Court]
 CHAPTER 1 - INTRODUCTION
By providing customers with the knowledge they need to choose amongst accessible brands in a
simple and usable form, advertising substitutes consumer search expenses and facilitates the
operation of a market economy.

In situations where there are numerous producers of goods with various qualities, free market
theorists frequently assume that superior producers will accurately communicate to consumers
the qualities of their goods through advertising and will expose false claims made by inferior
producers. Consumers undoubtedly never receive the complete picture.

The public's faith in advertisements as a whole is crushed when service providers or

manufacturers use unethical tactics of deceptive and misleading advertising. Therefore, there is a
need to regulate such miscreants and illegal operations in order to prevent such immoral
behaviors by the advertisers and to safeguard the public interest by allowing commercials to
continue.

There are occasions when it is asserted that the government should not regulate advertisements
or should only play a very little role in doing so because there are usually sufficient market
incentives for merchants to provide accurate market information. In the few instances where
market incentives are insufficient to get fix the harm caused by deceptive advertising,
competitors or consumers may turn to the courts. However, it is also true that, prior to
government intervention, dealers never provided clients with any information that would have
been extremely important to them, such as information about tobacco, cigarettes, etc. However,
industry self-regulation might be viewed as a replacement for governmental regulations.1

1 Robert Pitofsky, ‘Beyond Nader: Consumer Protection and the Regulation of Advertising’ (1977) 90(4) The
Harvard Law Review Association 661, 663.
REVIEW OF LITERATURE

1. In his article, D.P.S. Verma talks about the relevance of any product’s advertisement
along with the fact that how certain misleading practices deceive the consumers, lowering
the competition in the market. As a result of this, certain checks are required. He has
gone over the key sections of the legislation that govern advertisements across all media.
Drugs and Magical Remedies, the Competition Act of 2002, and the Consumer Protection
Act of 1986. The Cigarettes and Other Tobacco Products Act of 1954, which prohibits
objectionable advertising (Advertising is prohibited, and trade, commerce, production,
and supply are all governed by laws). The Indecent Representation of Women
(Prohibition) Act of 1986, the Protection and Distribution) Act of 2003 were mentioned
in the article. The author also cited the published guidelines. Lastly, he spoke about the
regulations implemented by SEBI on the advertisements to safeguard investor protection.
The ASCI's (India's Advertising Standards Council) code was also cited, which is a
governing organization for advertisements. This code was developed in a manner similar
to that of the United Kingdom's Advertising Standards Authority, which seeks to control
false and deceptive advertising that contributes to unfair business practices. According to
the author, there are still a few regulatory gaps that manufacturers are using to take
advantage of customers. A separate advertising regulating statute and body is therefore
urgently needed.2

2. The author, J.J. Boddewyn, mentioned in his work about self-regulation in cases of
advertisements and how it is becoming an alternative to other forms of regulation.
Governments frequently support, oversee, and even incorporate the standards of such
organizations into public policy. The author has looked at the advantages and
disadvantages of self-regulatory organizations, as well as how they have developed and
how the government supports them. In this system of self-regulation, business, not the
government or market forces, is in charge of regulating its own performance and
behavior. The author goes on to say that the government can have an impact on the self-

2 D.P.S. Verma, ‘Advertising And The Law’ (2006) 48(2) Indian Law Institute 257.
 regulatory structure without being "within" it. Instead, it may supplement its own
resources by using the true power of advertising self-regulation. Therefore, he claims,
self-regulation truly serves as an agent of public policy rather than merely remaining in a
kind of private government.3

3. I.C.M. Cunningham and W.H. Cunningham conducted empirical research as to the

understanding of a prudent person, finding an understanding of lower level. On this basis,
the authors reached to the conclusion and even recommended that the Federal Trade
Commerce (FTC) should try to protect the reasonable man from abuse. To protect its
residents, the government simply cannot require that all advertisements be understood by
the average person. Words and concepts can mean different things to different
individuals. This continues to be a challenge for businesses, despite their best efforts to
ensure that their message is received by all of their potential customers. They went on to
say that a big legal discrepancy would be overcome if a wise man was protected rather
than the unreasonable man. The existence of the reasonable man has long been
recognized by the American legal system, particularly the Law of Torts. Their second
suggestion was that the FTC be given enough staff and more staff as needed to
adequately defend rational beings. The vast majority, the reasonable public, should be
protected by clear rules. They also indicated the need for analyzing and defining goals for
protecting federal and local consumers.4

4. K. Kurian in his work, advocated for higher professionalism, along with education and
self-regulation. He has concentrated on the idea of central planning for development and
claims that for almost three decades, central planning has served as the cornerstone of all
of our development activities. However, in other areas of activity, growth has happened
haphazardly and unintentionally. It includes advertising. This essay's goal is to examine
the current status of advertising in India, its significance, and the problems that obstruct it
from expanding and harass its practitioners. He goes on to explain the various obstacles
in the system that prevent growth, including historical obstacles, obstacles brought on by
3 J. J. Boddewyn, ‘Advertising Self-Regulation: Private Government And Agent of Public Policy’ (1985) 4 Safe
Publications Inc on behalf of American Marketing Association 129.
4 Isabella C. M. Cunningham and William H. Cunningham, ‘Standards for Advertising Regulation’ (1977) 41(4)
Sage Publications Inc on behalf of American Marketing Association 92.
 low volume, obstacles resulting from the perception that advertising is punishment or
patronage (since it was used by the government as a tool of patronage during the
emergency), obstacles resulting from the belief that advertising is not a technical subject
(they adhere to the theory that "common sense is enough"), and obstacles resulting from
the perception that advertising is so ineffective. Even though this paper is almost a
decade old, the author has examined several Indian conditions and stressed the need for
advertising and the development of a national advertising policy.5

STATEMENT OF PROBLEM
Customers are harassed by misleading and deceptive ads. Even if there are many laws and self-
regulations, the threat of misleading investors and customers by disseminating false information
through advertisements, particularly on social media, still persists.

OBJECTIVES OF STUDY
The primary objectives of this study are as follows -
1. To study how regulations on advertisements have historically evolved.
2. To study the relevance of regulations on advertisements.
3. To study the problem of Unfair Trade Practices w.r.t. Social media advertisements.
4. To find out an effective regulation to put a check on misleading advertisements.

RESEARCH METHODOLOGY
To carry out this research, Doctrinal approach has been adopted. Accordingly, the relevant tools
and techniques have been used.

5 K. Kurian, ‘Advertising in a Planned Economy’ (1978) 13(34) Economic and Political Weekly M87.
HYPOTHESIS
The following hypothesis has been formulated for this research -
The Advertising Standards Councils of India, with the aid of other related regulatory institutions,
is capable of regulating the misleading advertising.

SCOPE AND LIMITATIONS

The scope of this study is limited to the existing literature for understanding the main issue and
related case laws. Moreover, due to lack of sufficient resources and data, this study will merely
focus on the issue w.r.t. Indian scenario.

RESEARCH QUESTIONS
The following research questions will be addressed in this research study -
1. Why is there a need to regulate the advertising institution?
2. What have been various legal and regulatory developments w.r.t. advertisements in
India?
3. With reference to the advertisements of virtual digital assets, how are social media
advertisements being regulated in India?
4. What is the requirement and relevance of an Advertisement Regulatory Authority?
 CHAPTER 2 - WHY REGULATION ON ADVERTISEMENTS IS
REQUIRED
The high standards of living that every nation enjoys are largely sustained by contemporary
advertising, a potent creative force in business. Anyone who reads a newspaper or magazine,
watches television or listens to the radio, or even just walks down the street can legitimately
regard it as a large industry in and of itself.

Promotional activities have multiplied significantly in recent years, and concerns about the
existence of false, misleading, or otherwise undesired claims have also increased. Since common
private legal remedies were quickly found to be inadequate at setting real limits, government
organizations and business entities started to concentrate on the subject of control.6

By setting a price on or making a certain behavior illegal, regulation aims to control or influence
private behavior in the desired direction. Regulation also refers to the use of rules or regulations
to control human or societal behavior. It can also refer to a rule or order issued by an executive
authority or regulatory agency of a government and having the force of law. Regulation can have
a substantial impact on both private incentives and economic efficiency; hence, it is often only
justified under exceptional conditions. All private or public behavior that can be detrimental to
society or governmental interests is regulated, but the scope of regulation varies from country to
country.7

The market's failure to effectively disseminate product-related information and the effectiveness
of potential substitute methods for ensuring accurate and pertinent advertising point to the
necessity of some type of governmental regulation of the advertising process.8

6 Columbia Law Review, ‘The Regulation of Advertising’ (1956) 56(7) Columbia Law Review Association Inc
1018, 1019.
7 Vijay Vir Singh, ‘Regulatory Management and Reform in India’ CUTS International
<https://www.oecd.org/gov/regulatory-policy/44925979.pdf> accessed 16 October 2023.
8 Robert Pitofsky, ‘Beyond Nader: Consumer Protection and the Regulation of Advertising’ (1977) 90(4) The
Harvard Law Review Association 661, 669.
 CHAPTER 3 - DIFFERENT REGULATIONS ON ADVERTISEMENTS IN
INDIA
Nearly every medium used to communicate information to consumers is subject to a variety of
rules that control advertisements.9

1. If advertisements use any unfair commercial practices or restrictive trade practices, they
are subject to regulation under the Consumer Protection Act, 1986 (CPA). 10 False
advertising, phony discounts, phony sales, and exhibitions are examples of unfair trade
practices. Basically, it should deceive the public on the items or services or their prices.
Under this act, an advertiser who engages in illegal advertising or unfair practices may be
subject to sanctions such as punitive penalties, compensation, jail, etc. in an effort to
dissuade them. Additionally, public coverage of these incidents could damage his or her
company's reputation. As a result, this law is both consumer-friendly and sufficiently
regulates unfair advertising.
2. Another is the Competition Act of 2002 11, which seeks to stop anti-competitive behavior
in order to promote market competition, serve consumer interests, and guarantee freedom
of commerce. This act would regulate any excessive advertising expenditures that fall
within the category of anti-competitive practices. Furthermore, this act forbids and
regulates the abuse of the dominant position by any firm. Prior to this, we had the
Monopolies and Restrictive Trade Practices Act of 1969,12 which has since been repealed.
This law made it clear that any verbal or written statements or overt displays that mislead
the public about the goods or services of another person constitute unfair trade practices.
3. The Drugs and Magic Remedies Act of 195413 regulates marketing for drugs and
medications. Because these commercials did not disclose the side effects of the
pharmaceuticals, they encouraged the poor and uneducated to self-medicate. This law
forbids such unethical and illegal advertising of drugs that make magical claims, such as
preventing miscarriage, conceiving, curing impotence, curing leprosy, etc.
9 D.P.S. Verma, ‘Advertising And The Law’ (2006) 48(2) Indian Law Institute 257.
10 The Consumer Protection Act, 1986 (68 of 1986).
11 The Competition Act, 2002 (12 of 2003).
12 The Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969).
13 The Drugs and Magic Remedies(Objectionable Advertisements) Act, 1954 (21 of 1954).
 4. The Trade Marks Act of 199914 prohibited using trademarks in ads with the express
purpose of confusing consumers between different businesses.
5. Advertisements showing or encouraging the use of tobacco products are prohibited by the
Tobacco Act, also known as The Cigarettes and other Tobacco Products (Prohibition of
Advertisement and Regulation of Trade and Commerce, Production, Supply and
Distribution) Act, 2003.15 Before the Tobacco Bill 2003's implementation in May 2004
but following its passage, cigarette manufacturers are employing a range of strategies that
could help to assure the successful marketing of their products even after the advertising
restriction. Brand imagery can also be used to convey information without specifically
mentioning cigarettes.
6. The Securities and Exchange Board of India published a list of guidelines for
corporations providing shares and debentures to the general public in order to protect
investors against unethical and illegal actions.16
7. The Advertising Standards Council of India (ASCI) was established in 1985 with the goal
of promoting self-regulation in the advertising industry and ensuring the protection of
consumer interests. Commercials must abide by ASCI's Code for Self-Regulation, which
it actively enforces. ASCI members are obligated to abide by its rulings. An offensive
commercial for Sunsilk Fruitamin Shampoo, for instance, was listed in a complaint filed
with the Consumer Complaints Council in 1998. When the firm was unable to
demonstrate that the fruit-derived vitamins in the shampoo promote hair growth, the
ASCI ordered the advertisement to cease. Another intriguing complaint was made over
Colgate's commercial, which claimed there were no cavities and no germs but was unable
to provide any supporting evidence and was therefore deceptive. The corporation had to
take the advertisement down.

14 The Trade Marks Act, 1999 (47 of 1999).

15 The Cigarettes and other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and
Commerce, Production, Supply and Distribution) Act, 2003 (34 of 2003).
16 The Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 Chapter IX.
CHAPTER 4 - ADVERTISEMENTS OF VIRTUAL DIGITAL ASSETS AND
SOCIAL MEDIA ADVERTISEMENTS REGULATIONS
From January to May 2022,17 ASCI received more than 400 complaints about violations of its
"Virtual Digital Assets" (VDA) guidelines, which also included violations of the criteria relating
to "influencers advertising on social media". Influencers should be banned and barred from
promoting things without having a proper comprehension of the implications of what they are
saying to people and encouraging in public.

Over the top (OTT) and other social media platforms were deluged with adverts for
cryptocurrency startups last year during the bull market. Additionally, prominent Bollywood
actors like Ayushmann Khurrana and Ranveer Singh promoted Coin DCX and CoinSwitch
Kuber during the ICC T20 World Cup and the Cash-rich Indian Premier League, respectively.

Concern was expressed by experts from the legal and financial divisions because the
commercials teetered precariously between "puffery" and "misrepresentation." Such
advertisements may tempt Indians, particularly the younger generation, to invest in volatile price
fluctuations while having little to no knowledge of the risks involved. In reality, these influencer
advertisements run without any disclaimers or disclosures and don't even display any warnings.

The Supreme Court has not yet made a decision on this question, 18 but in the interim, the Delhi
High Court gave notice to the SEBI, 19 the Center, and other parties in a case that asked for
guidelines or norms for television commercials relating to domestic crypto currency trading. 20

On April 1, 2022, ASCI, a self-regulatory agency, took action and produced a set of 12 point
guidelines. Although they are not legally binding, if someone breaches them, ASCI can publicize

17 Apoorva Mittal, ‘More than 400 ads on crypto violated guidelines: Ad council’ Economic Times (27th June
2022) <https://economictimes.indiatimes.com/tech/technology/more-than-400-ads-on-crypto-violated-
guidelines-ad-council/articleshow/92490134.cms> accessed 16 October 2023.
18 Dwaipayan Bhowmick v Union of India W.P.(C) Nos.1071/2017 and 1076/2017.
19 Aayush Shukla v Ms Wazir x W.P.(C) 6496/2021 & CM APPL.20391/2021.
20 Saumya Tewari, ‘Delhi HC issues notice in plea seeking advertising norms for crypto exchanges’ Livemint
(New Delhi, 14th July 2021) <https://www.livemint.com/news/india/delhi-hc-issues-notice-in-plea-seeking-
advertising-norms-for-crypto-exchanges-11626264330663.html> accessed 16 October 2023.
their names and submit them to the relevant government regulator. ASCI rules state that
advertising should refrain from using the terms "currency," "securities," and "deposits" when
promoting VDA products and services.

Thus, it is clear how, in the absence of tougher laws, such advertisements without the required
disclaimers could endanger or undermine the interests of consumers. Internet access and
television viewing have evolved into basic daily demands in the twenty-first century; as a result,
an unregulated arena or place can provide numerous risks and issues.

As a result, the ASCI recommendations, which the violators are also responding favorably to,
can serve as a respite. According to CoinSwitch creator and CEO Ashish Singhal, “The ASCI
guidelines are a step in the right direction to standardize advertisements within the VDA space.
The VDA industry is supportive of all efforts towards investor protection, however, there are
nuances that need to be addressed as the space is ever evolving. We will continue to work
together with ASCI and other stakeholders to refine them further.”21

In order to co-regulate deceptive advertisements, such as those in the Ayush sector in January
2017 (Ministry of Ayush), JAGO GRAHAK JAGO (Inter-Ministerial Monitoring Committee set
up by the Department of Consumer Affairs), and other areas, the government of India has
promoted and supported ASCI by signing the MoU with ASCI self-regulatory body. ASCI's
Code of Self-Regulation in Advertising is annexed to the Press.22

21 Tech Desk, ‘ASCI releases guidelines for crypto ads: Disclaimer and advertiser details must’ Indian Express
(New Delhi, 24th February 2022) <https://indianexpress.com/article/technology/crypto/crypto-advertisements-
guidelines-asci-reactions-from-industry-7787543/> accessed 16 October 2023.
22 Press Council of India’s Norms of Journalistic Conduct, (2010 Edn) Appendix II 60.
 CHAPTER 5 - NEED FOR A REGULATORY AUTHORITY FOR
ADVERTISEMENT
The creation of such a committee would be a pointless and unnecessary process after reviewing
several legislation that exclusively deal with the regulation of advertisements. There are already
many rules and provisions in place to protect consumers' interests, so adding another one would
only add to the headaches and complexity of the process.

Regulations are unquestionably significant and essential to ensuring and guaranteeing a level
playing field in the market, despite what is said. In India, there are three different types of
regulations: those that are economic, those that serve the public good, and those that are
environmental. Regulation pertaining to advertising would fall under the public interest since it
must take the health and safety of the general population into account.

Although regulations do safeguard consumers, they are not free; instead, customers must fork up
a sizable fee in exchange for a symmetrical flow of information, openness, and accountability.
As a result, India does not now require an advertising regulatory authority. Last but not least, the
judiciary is always present to protect the interests of the general public.
 CONCLUSION AND SUGGESTIONS
CONCLUSION
There are numerous rules regarding deceptive advertising, hence the need for a new regulatory
body for advertisements is unnecessary because there are already enough restraints in place. As a
result, the researcher's theory is established.

SUGGESTIONS
1. Despite the fact that there are many restrictions, customers still have a problem with their
ignorance of them. Therefore, in order to increase the effectiveness of the legislation,
more attention and focus should be given to consumer awareness.
2. The ASCI and SEBI guidelines or rules for controlling cryptocurrency exchange ads must
be supported with tougher penalties or exemplary rewards to make them legally
obligatory.
3. Instead of establishing a governmental regulatory authority, the government should assist
organizations like ASCI that self-regulate in order to shorten wait times and make the
process more approachable.
 BIBLIOGRAPHY

JOURNALS:-
1. Abernethy AM and Teel JE, ‘Advertising Regulation’s Effect upon Demand for
Cigarettes’ (1986) 15(4) Taylor and Francis Ltd
2. Bansal R, John S and Ling PM, ‘Cigarette advertising in Mumbai, India: targeting
different socioeconomic groups, women, and youth’ (2005) 14(3) BMJ
3. Boddewyn JJ, ‘Advertising Self-Regulation: Private Government And Agent of Public
Policy’ (1985)
4. Columbia Law Review, ‘The Regulation of Advertising’ (1956) 56(7) Columbia Law
Review Association Inc
5. Cunningham ICM and Cunningham WH, ‘Standards for Advertising Regulation’ (1977)
41(4) Sage Publications Inc on behalf of American Marketing Association
6. Darke PR, Ashworth L and Ritchie RJB, ‘Damage from Corrective Advertising: Causes
and Cures’ (2008) 72(6) Sage Publications Inc on behalf of American Marketing
Association
7. Dhar T and Baylis K, ‘Fast-Food Consumption and the Ban on Advertising Targeting
Children: The Quebec Experience’ (2011) 48(5) Sage Publications Inc on behalf of
American Marketing Association
8. Kurian K, ‘Advertising in a Planned Economy’ (1978) 13(34) Economic and Political
Weekly
9. Patil AR, ‘Consumers’ Protection From Second Hand Smoke’ (2009) 51(3) Indian Law
Institute
10. Pitofsky R, ‘Beyond Nader: Consumer Protection and the Regulation of Advertising’
(1977) 90(4) The Harvard Law Review Association
11. Safe Publications Inc on behalf of American Marketing Association
12. Singh VV, ‘Regulatory Management and Reform in India’ CUTS International
<https://www.oecd.org/gov/regulatory-policy/44925979.pdf> accessed 16 October 2023.
13. Verma DPS, ‘Advertising And The Law’ (2006) 48(2) Indian Law Institute
 14. Walsh G, Shiu E and Hassan LM, ‘Cross-National Advertising and Behavioural
Intentions’ (2014) 22(1) Sage Publications Inc

BOOK:-
1. Hart Studies in Comparative Public Law, Regulation in India: Design, Capacity, Performance
(Devesh Kapur and Madhav Khosla eds. 1st edn, Bloomsbury India 2019)

DICTIONARY:-
1. Merriam Webster Online Dictionary
<https://www.merriam-webster.com/dictionary/regulation> accessed 16 October 2023.

NEWSPAPER ARTICLES: -
1. Mittal A, ‘More than 400 ads on crypto violated guidelines: Ad council’ Economic Times
(27th June 2022) <https://economictimes.indiatimes.com/tech/technology/more-than-
400-ads-on-crypto-violated-guidelines-ad-council/articleshow/92490134.cms> accessed
16 October 2023.
2. Tewari S, ‘Delhi HC issues notice in plea seeking advertising norms for crypto
exchanges’ Livemint (New Delhi, 14th July 2021)
<https://www.livemint.com/news/india/delhi-hc-issues-notice-in-plea-seeking-
advertising-norms-for-crypto-exchanges-11626264330663.html> accessed 16 October
2023.
3. Tech Desk, ‘ASCI releases guidelines for crypto ads: Disclaimer and advertiser details
must’ Indian Express (New Delhi, 24th February 2022)
<https://indianexpress.com/article/technology/crypto/crypto-advertisements-guidelines-
asci-reactions-from-industry-7787543/> accessed 16 October 2023.