The Allahabad High Court has clarified that penalties for misbranding under the Food Safety and Standards Act, 2006, cannot be imposed without evaluating the accused’s lack of knowledge, absence of financial gain, and non-repetitive conduct. This ruling reinforces the statutory mandate under Section 49 to tailor penalties to individual circumstances, not impose blanket punishments.
Background & Facts
The Dispute
The appellant, Sanjeev Gupta, a small retail vendor operating Rajiv Kirana Traders in Badaun, was charged with misbranding under the Food Safety and Standards Act, 2006, after two cartons of vermicelli purchased from a wholesaler were found to have defective labelling. The adjudicating authority imposed a penalty without examining whether the appellant had knowledge of the mislabelling or derived any gain from it.
Key Facts
- On 02.08.2017, the appellant purchased two cartons of vermicelli from Gaurav Brothers, Shyamatganj, Bareilly, a registered wholesaler
- The product was not manufactured, stored, or repackaged by the appellant
- No allegation was made that the appellant altered packaging, forged labels, or engaged in deceptive practices
- The appellant is a small-scale retailer, not a manufacturer or distributor
- The wholesaler was initially identified as a necessary party but was not impleaded in the proceedings
- The appellant had no prior history of violations
- The appellant voluntarily deposited Rs. 60,000/- prior to filing the appeal
Procedural History
- 02.08.2017: Purchase of vermicelli from wholesaler
- 2006/2018: Case initiated by Food Safety Department against Sanjeev Gupta
- 27.07.2020: Order passed by Additional District Magistrate (Finance)/Adjudicating Officer, Badaun, imposing penalty for misbranding
- 74/2020: Regular Civil Appeal filed by appellant before Food Safety Appellate Tribunal, Moradabad
- 02.01.2026: Appellate Tribunal dismissed the appeal, upholding the penalty
- 08.01.2026: First Appeal From Order (FAFO No. 853 of 2026) filed before Allahabad High Court
Relief Sought
The appellant sought modification of the penalty order, arguing that the penalty of Rs. 60,000 already deposited was sufficient and that no further penalty should be imposed given the absence of knowledge, gain, or repetition.
The Legal Issue
The central question was whether Section 49 of the Food Safety and Standards Act, 2006 mandates that adjudicating authorities consider the accused’s lack of knowledge, absence of quantifiable gain, and non-repetitive nature before imposing a penalty for misbranding under Section 52.
Arguments Presented
For the Appellant
Learned counsel argued that Section 49 requires adjudicating officers and tribunals to consider five specific factors before determining penalty: (a) gain or unfair advantage, (b) loss caused, (c) repetitive nature, (d) whether contravention was without knowledge, and (e) any other relevant factor. The appellant, as a small retailer, had no knowledge of the mislabelling, derived no financial benefit, and had no prior violations. The wholesaler, who manufactured and supplied the product, was not impleaded, violating principles of natural justice. The penalty imposed was arbitrary and disproportionate.
For the Respondent
The State did not file a detailed written submission. The court noted that the adjudicating authority and appellate tribunal failed to record any reasoned findings on the applicability of Section 49, particularly regarding knowledge, gain, or repetition.
The Court's Analysis
The Court examined the statutory framework under Section 49, emphasizing that it is not a discretionary provision but a mandatory checklist for penalty imposition. The judgment noted that neither the Adjudicating Officer nor the Appellate Tribunal addressed any of the five factors enumerated in Section 49.
"The Adjudicating Officer has not recorded any finding on whether the contravention was without the knowledge of the appellant, whether any gain was made, or whether the act was repetitive. This omission renders the penalty order legally unsustainable."
The Court distinguished between manufacturers/distributors and small retailers, holding that the latter cannot be held to the same standard of diligence. The appellant’s role was purely as a purchaser and seller of pre-packaged goods. The failure to implead the wholesaler, who was the source of the mislabelled product, further undermined the fairness of the proceeding.
The Court also noted that the penalty under Section 52 may extend up to Rs. 3 lakh, but such maximum is not automatic. The statutory intent is proportionality, not deterrence through severity. The fact that the appellant had already deposited Rs. 60,000 indicated a willingness to comply and mitigate consequences.
The Verdict
The appellant succeeded. The High Court set aside the impugned order dated 02.01.2026 and modified the penalty to Rs. 60,000, which had already been deposited. The Court held that this amount is sufficient and proportionate, given the absence of knowledge, gain, repetition, or harm. No further penalty or corrective action is directed. The order is final.
What This Means For Similar Cases
Knowledge Is a Critical Mitigating Factor
- Practitioners must now insist that authorities record explicit findings on whether the accused had knowledge of the violation
- In cases involving small retailers or distributors, lack of knowledge must be treated as a decisive factor under Section 49
- Failure to address this renders the penalty order void for non-application of statutory mandate
Penalty Must Be Tailored, Not Standardized
- Authorities cannot impose maximum penalties without evaluating gain, loss, or repetition
- Even for technical violations like mislabelling, proportionality is constitutionally required
- Deposit of penalty amount prior to appeal may be considered as a mitigating circumstance
Wholesalers Must Be Impleaded in Supply Chain Cases
- When mislabelling originates from upstream suppliers, the primary party must be joined
- Failure to implead the manufacturer or wholesaler violates principles of natural justice
- Courts may set aside penalties where the real offender remains beyond the scope of proceedings
