Even the largest cannot use misleading advertising

Established in 2006 by Baba Ramdev and Acharya Balkrishna, Patanjali Ayurved (Patanjali) is an Indian consumer goods conglomerate with a global presence. It produces an array of products, from Ayurvedic medicine and cosmetics to food items. Recently, Patanjali has been the subject of publicity for the sanctions imposed on it by the Supreme Court for misleading advertising to promote the medicinal efficacy of its products.

In August 2022, the Indian Medical Association (petitioner) filed a petition arising from advertisements released by Patanjali that criticised allopathic medicine. The petitioner contended that Patanjali and Baba Ramdev, through advertisements and press conferences, had made unsubstantiated claims that Patanjali products could provide permanent cures for ailments, including diabetes, heart disease, high or low blood pressure, obesity and asthma. The petitioner further contended that the advertisements not only undermined medical science but were also in violation of the Drugs and Magic Remedies (Objectionable Advertisement) Act, 1954 (DOMA), and the Consumer Protection Act, 2019 (CPA). Vide an order dated November 2023, Patanjali undertook not to violate any advertising or branding laws relating to its products and not to publish or make any casual statements claiming medicinal efficacy or against any system of medicine.

In February 2024, the petitioner submitted that despite the undertaking and order, Patanjali and Baba Ramdev had continued to make incorrect assertions and misrepresentations with respect to its products in the market. They described those products as a permanent solution to a number of the ailments specifically listed in the schedule to the DOMA and the rules thereunder. As a result, the Supreme Court restrained Patanjali from publishing advertisements – which claim to cure the diseases, disorders and conditions specified in DOMA and its rules – and issued notice to show cause for why contempt proceedings should not be initiated against Patanjali and Balakrishna.

Under the CPA, a misleading advertisement is defined as one that falsely describes a product or service or gives a false guarantee or is likely to mislead the consumers as to the nature, substance, quantity or quality, or conveys an express or implied representation, which would constitute an unfair trade practice, or deliberately conceals important information. The CPA designates the Central Consumer Protection Authority as the body to regulate matters relating to the violation of rights of consumers, unfair trade practices and false or misleading advertisements which are prejudicial to the interests of the public and consumers as a class. The CPA also imposes stringent penalties for false or misleading advertisements ranging from imprisonment for up to five years and a fine of up to INR5 million (USD60,000).

Meanwhile, the DOMA prohibits publishing any advertisement related to a drug if it creates a false impression about the true nature of the drug, makes any false claims or is otherwise deceptive or misleading in any significant way. Violations under the DOMA can lead to imprisonment for up to a year, a fine, or both. The Guidelines on Prevention of Misleading Advertisements and Endorsements, 2022 also aims to prevent consumers from being misled by unsubstantiated claims, exaggerated assurances, misinformation, and false claims.

Other legislation dealing with misleading claims and advertisements include the Drugs and Cosmetics Act, 1940, the Food Safety and Standards Act, 2006, the Bureau of Indian Standards (Certification) Regulations, 1988, the Advertising Code under the Cable Television Network (Regulation) Act, 1995 and the Press Council Act, 1978.

While such laws have been enacted to combat false and misleading advertisements, only the CPA empowers consumers to seek recourse against such advertisements, including compensation for any harm or loss suffered. This includes directives to cease misleading advertisements, injunctions against republication, compensation for damages, punitive measures, litigation costs and orders to correct advertising. This provision has considerable potential as a deterrent against misleading advertising. However, it appears to be underused in combating such practices. Perhaps this will change when the case is finally decided.

Ashima Obhan is a senior partner and Aastha Srivastava is an associate at Obhan & Associates.