Lakhanpal National Ltd. v. M.R.T.P. Commission

Facts

The appellant manufactured 'Novino' dry-cell batteries in India under a technical-collaboration agreement with Matsushita Electric of Japan, the makers of 'National Panasonic'. Its advertisements stated the batteries were made 'in collaboration with National Panasonic of Japan'. The MRTP Commission held this to be a false and misleading representation amounting to an unfair trade practice and restrained it.

Issues

• When does an advertised representation about a product amount to a false or misleading statement constituting an unfair trade practice?
• By what standard is the misleading character of an advertisement to be judged?

Arguments

The appellant argued the representation was substantially true because the collaboration with Matsushita (proprietor of the National Panasonic brand) was genuine, so no consumer was deceived. The Commission contended the wording falsely suggested a tie-up with a distinct entity 'National Panasonic' and was apt to mislead buyers.

Held

The Supreme Court allowed the appeal and set aside the Commission's order. It laid down that to attract S. 36A the representation must contain a false statement and be misleading, and the test is the effect the advertisement would have on a reasonable person reading it as a whole, not on a hyper-critical or careless reading. Since the collaboration with Matsushita (which owns the National Panasonic mark) was true in substance, the statement was not false, though the Court observed it would be more proper to name Matsushita itself. The decisive question is whether a reasonable consumer would, on reading the advertisement, form a belief different from the truth.

Ratio decidendi

A trade representation is an unfair trade practice only when it is both false and likely to mislead, tested by its probable impact on an ordinary reasonable consumer reading the advertisement as a whole.

Significance

The leading Supreme Court authority on the test for misleading representations and unfair trade practices. The 'reasonable consumer' / 'effect on the common man' test it formulated has been carried forward into the unfair-trade-practice and misleading-advertisement provisions of the Consumer Protection Act 1986 and 2019, and is routinely applied by the consumer commissions and the CCPA.

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