Business Law Assignment

GROUP – 11

This assignment is the collaborative work of Six members of EPGP batch of 2018-2020 during second Quarter of the program.
The case study was made available on Moodle. We uploaded the same on Google Doc Link (Excel sheet with group member
inputs) for ease of access and collated everyone’s input on their experience and knowledge of each member using Google form –
which we finally compiled in this submission.

TOPIC: Advertisement as a Commercial Speech - Rights and Duties of

Business entities

1. Introduction to advertising:

What is advertising and its importance for businesses,

2. Advertisements & freedom of speech

What constitutes commercial speech, it’s rationality with freedom of speech and various
interpretations,

3. Laws and guidelines

Law & guidelines defined in Indian constitution, through regulatory bodies and respective
authorities and a few well known instances in Indian context.

4. Rights & duties of Business entities

Basic expectations and importance of self-regulation
1. Introduction
In this section of the document, we are focusing on defining what advertising is and it’s
importance for businesses.
“Give me the liberty to know, to utter, and to argue freely according to conscious, above all
liberties” –John Milton

If we go by the general understanding, Advertising is a form of communication for marketing

and is used to encourage or persuade viewers, readers or listeners to take some initiative or right
course of action. The intent is to drive consumer behavior with respective commercial offering.
Advertising which is no more than a commercial transaction, is nonetheless dissemination of
information regarding the product advertised.

To put it in another words, Advertising is a task with dual objectives – either to build positive
image in public conscious towards the brand, or to drive sales for products or set of services. The
task is achieved through various modes of public communication – primarily distributed across
print and digital. The idea is to grab attention of targeted audiences and convey your message
effectively to achieve organizational goals.

All in all, Businesses use advertising to accomplish business goals. It could be via Newspapers,
Magazines, Radio, TV, Directories or Yellow Pages, Outdoor and Transit, Emails, Catalogues
and Leaflets as well as Online. All these advertising mediums affect the growth of the business
directly or indirectly. Advertisement helps organizations achieve multiple objectives such as
Product Introduction and Awareness, Product Sale Events, Product Differentiation from
Competitors, Product Breakthroughs and Advancements and Institutional Advertising to promote
a Good Image.

Interestingly from another prespective, creativity in advertising and consumer protection are not
nemesis, but complemtry aspects of a succesful business. For a business to thrive, it should have
an impactful message conveyed thorugh it’s creative advertisements, which should reach the
masses, so everyone can avail benefit from the fetaures of the offered product/services.
At the same time, it is extrelemly important that the information is truthful, accurate and
professional as per advertising standards to ensure the trust and integrity in the offerings of the
businesses.

Techincally, advertisements are considered as Commercal speech. By definition, Commercial

speech is an expression, economic in nature, by a person or a business entity persuading the
audience to take certain action (eg: to purchase a product) with the intent of making profit.
2. Freedom of speech & advertising:

In this section, we are trying to understand as to what constitutes commercial speech and it’s
rationality with freedom of speech.
Durng our discussions, we understood that advertising which is no more than a commercial
transaction, is nonetheless dissemination of information regarding the product advertised. The
public of a country is largely benefitted by the information made available through the
advertisement .In a democratic country like ours free flow of commercial information is
indispensable. Honest and economical marketing cannot be done without educating the people
about the information disseminated through advertisements. The economic system in a
democracy would be handicapped without there being freedom of ‘Commercial Speech’ and
when examined from another perspective the public at large has a right to receive the
‘Commercial Speech’’

Indian Law right granted by Article 19(1)(a), has defined free speech as the ability to think and
speak freely and to obtain information from others through publications and public discourse
without fear of retribution, restriction, or repression by the government.
Freedom of Speech and expression means the right to express one’s own convictions and
opinions freely by words of mouth, writing, printing, pictures or any other mode. It is widely
accepted that the right to freedom of speech is the essence of free society and it must be
safeguarded at all time.

The fulfillment of the economic needs of a citizen has to be guided by the information
disseminated through the advertisements. An advertisement giving information regarding a life-
saving drug may be of much more importance to general public than to the advertisement about a
car. An advertisement is no doubt a form of speech but its true character is reflected by the object
for the promotion for which it is employed. Advertisement in most of the cases is a part of
business. Advertisement allows us to freely express our ideas and thoughts through any medium
such as print, visual and voice. Freedom of speech would be nothing if it is not possible to
propagate the ideas.

Furthermore, the Apex court has held that advertisements, which are nothing but commercial
speech, are covered under right to freedom of speech, as described in Indian constitution, which
basically is meant to propagate information about products or services being promised by a
business entity. Having said that, it is subject to reasonable restrictions in place, such as
prohibition on derogatory or defamatory remarks or statements against any individual or entity,
statements which may affect nation’s security of foreign policy interests, or adversely affect law
& orders, contempt of court or anything against sovereignty and integrity of India.

Thus, we can say that advertising/Commercial Speech is part of Freedom of Speech under
Article 19(1)(a). Distinction would have to be made and latitude given for an advt. to gain a
purchaser or two, but doesn’t permit any misrepresentation but only a description of permissible
assertion.

All in all, the four principles which govern free speech & advertising are:
a) Advt. is commercial speech and is protected under Article 19(1) (a) of Constitution
b) It must not be false, misleading, unfair or deceptive
c) There would be some grey areas but these need not necessarily be taken as serious
representations of fact but only as glorifying one’s product
d) While glorifying its product, an advertiser may not denigrate or disparage a rival product.

3. Laws and guidelines

In this section, we discuss the law & guidelines defined in Indian constitution, through regulatory
bodies and respective authorities and a few well known instances in Indian context.

There are some reasonable restrictions on the exercise of the right to freedom of speech and
expression in the interest of’ the public on the following grounds:

a) Security of State b) Friendly relations with foreign states.

c) Public Order d) Decency or morality
e) Defamation f) Incitement to an offence Sovereignty and integrity of India.
No right can be absolute and without restrictions or else they might not act in the best interest of
the public. Advertisements are restricted when advertisers indulge in:
Deception- Violates Consumers Right to Information, Violates Consumers Right to Safety,
Violates Consumers Right to Choose.
1. Bait advertisement: Taking advantage of consumer psychology and depriving
consumers of a choice. Customers visit stores who advertise low price goods but
find the goods are of low quality and expired.
2. Advertising of harmful products: Advertisements for cigarettes, liquor, pan masala are
banned in India but in private channels, cables the ads are still being shown.
3. Puffery/Fraudulation: Puffery is considered to be an ‘opinion’ and not a ‘factual
information’.

Supreme Court has also given some guidelines for publication of Advertisement by Government.
The court had formed a drafting committee and most of the suggestions of the committee were
adopted as it is along with the guidelines of Directorate of advertising and visual
publicity(DAVP), that are currently present to govern the said issue of the governmental
advertising.
Aside to this, Supreme Court while maintaining a balance in the writ (no. 13 of 2003) allowed
the following:
 1) Advertisement highlighting completion of a fixed period of the Government
tenure

2) Advertisements announcing projects

3) Governmental Advertisement issued in the memory of great personalities

4) Advertisement announcing policies and benefits for public

However, advertisers often view these rules and regulations as violating their right to freedom of
speech.
Conceptually, as of today, there are multitude of laws and sufficient guidelines in place which
define and govern the content which is being presented through advertising. As a business, while
the entities are protected under freedom of speech, at the same time they need to ensure that their
adverts aren’t deceptive or false statement, misleading or unfair in any regards. Moreover, they
need to ensure that in order to glorify their product, they don’t denigrate or disparage offerings of
any other entity.

ASCI (Advertising standards council of India), which is the regulatory body to monitor
regulation of advertising in India. It works on the following code of conduct to assess the
complaints received by individual or organizational complainants,

Source: https://ascionline.org/index.php/ascicodes.html
Besides these code of conduct, there are multiple acts & laws which are to be govern the content
of advertisements in India, subject to their scope of legistlation:

In essence, Democracy would be handicapped without there being freedom of "commercial

speech" which is protected by Article 19(1)(a). At one end, the law guarantees freedom of speech
and expression, and it also protects the rights of an individual to listen, read and receive the said
speech. An advertisement is no doubt a form of speech but its true character is reflected by the
object for the promotion of which it is employed.
When it takes the form of a commercial advertisement which has an element of trade or
commerce it no longer falls within the concept of freedom of speech for the object is not
propagation of ideas ' social, political or economic or furtherance of literature or human thought;
but as in the present case the commendation of the efficacy, value and importance in treatment of
particular diseases by certain drugs and medicines

Currently, there are many laws imposing restrictions on Advertising, such as,
 Consumer Protection Act,
 Monopolies and Restrictive Trade Practice Act,1969
 IT Act,2000
 Cigarettes and other Tobacco Products Act,2003
 Drugs and Magic Remedies(Objectionable Advertisements) Act
 Prenatal Diagnostics Techniques(Regulation and Prevention of Misuse) Act,1994
 Transplantation of Human Organs Act,1994

Despite these, there has been multiple instances where an advertisement was found in violation
or breach of the defined guidelines, few of them are appended below:

 A washing powder advertisement which showed that the other washing powder spoilt the
hands of ladies was banned.

 The advertisement of FastTrack was banned where the cricket player Virat Kohli and
actress Genelia D’souza were shown as pilot and air hostess getting cozy in the cockpit
endangering the life of passengers on board.
  Deodorant advertisement that showed a man accompanied by scantily clad women was
banned by the government after several complaints were received from viewers about the
advertisement being offensive to family viewers.

 Advertisements of two underwear ads were banned due to vulgarity and indecency.
Objectionable content in ad is usually a reason for taking it off channels.

 A soft drink advertisement that showed a child bringing the drink for the Indian cricket
players was banned after complaints from child labor activists.

 In Bennett Coleman & Co. & Ors. vs. Union of India, 1973 2 SCR 757it was held that the
law which lays excessive and prohibitive burden which would restrict the circulation of a
newspaper will not be saved by Article 19 (2). If the area of advertisements is restricted,
price of paper goes up. If the price goes up circulation will go down. The High Court did
not accept the contention that a newspaper has a constitutional right to obtain
advertisements from the government. It, however, held that the government cannot
exercise this power or privilege to favour one set of newspapers or to show its displeasure
against another section of the press. It should not use the power over such large funds in
its hands to muzzle the press, or as a weapon to punish newspapers which criticise its
policies and actions. It has to use the funds in a reasonable manner consistently with the
object of the advertisement viz. to educate and inform the public about the activities of
the government.

4. Rights & duties of Business entities

How to remain compliant and continue day to day operations?

Consumer Protection is a Socio-economic activity that is to be carried out by government and

business with a prime interest to mprove consumer behaviour. Consumer protection has been a
part of the responsibilities of the rulers in India even before independence. But a formal
consumer protection law, which purely focuses on consumer protection. The consumer
movement that flourished in the early and middle of the 20th century made the whole world
focus on formulation of strong consumer Acts. The Consumer Protection Act, 1986 which got
enacted in 1986 aimed to provide protection to the consumer. Consumer Protection Act 1986
(CPA 1986), which was passed in Parliament in 1986, is considered as one of the best Acts for
consumer protection among its counterparts. This paper brings out the stingent path via context
through which the law regulating advertising must play out. The overral context is right to
advertise for the Good’s and services which is Fundamental Right.

In a nutshell, there exists a need for organizations, advertisers and media houses to be made
aware of current guidelines and expectation as defined by law of the land.

Despite existence of all the mechanism and guidelines, regulatory bodies and enforcement
agencies, until the very stakeholders – advertisers, organizations and media houses are aligned
with the thought of what compliant and non-offensive advertising is – we will keep getting cases
repeatedly where an advert violates one or the other applicable laws or guidelines.

Another approach could be to mandatorily train the creative individuals involved in ideation or
execution of adverts to ensure compliance is driven from conceptualization itself. As there
cannot be honest and economical marketing by the entity at large without being educated by the
information disseminated through advertisements.

References
1. https://www.freedomforuminstitute.org/first-amendment-center/topics/freedom-of-speech-
2/advertising-first-amendment-overview/ By Bruce E. H. Johnson, Contributing Writer
2. ASCI standard & learning https://ascionline.org/index.php/ascicodes.html