March 30, 2020
Black-marketing is an economic activity takes place outside the government sanctioned channels in order to avoid government price controls and taxes. Regulating Black-market has become very crucial amidst the Coronavirus (COVID-19) outbreak. Authorities in Nepal recently forfeited lakhs of face masks that were hoarded so that it would create artificial scarcity and seller could ultimately sell face masks at a higher price outside the government sanctioned channels. Internationally countries have taken severe measures to control black-market. For instance, in Iran one could face death penalty if the person is guilty of hoarding COVID-19 related supplies. The Indian government has declared masks and hand sanitisers as an essential commodity until the end of June 2020. Black-marketing face mask and sanitizer can attract seven (7) years of imprisonment under India’s Essential Commodity Act, 1955.
In Nepal black-marketing is considered a serious offence and is regulated under the Black-Marketing and Some Other Social Offences and Punishment Act, 2032 (1975) (the “Act”). The authorities under the Act are empowered to search and arrest any person if there is a reasonable suspicion.
The Act envisages the following provisions:
1.1. Selling goods at a higher price in contravention to the price prescribed by the Government of Nepal and the producer, importer or main distributor of the goods constitutes black-marketing.
1.2. Punishment for black marketing is imprisonment for a term of one (1) year and NRs.10,00,000/- ( Amount in words Nepali Rupees Ten Lakh) fine. Price received from the black-marketed goods will be returned and the goods will be forfeited.
1.3. Further, the Act also regulates scenarios where scare goods are being distributed through coupons. If a person has received goods that are not easily available in the open market with or without getting an order or coupon for personal consumption and sells such goods, order or coupon at a higher price with or without receiving commission or gives the same in any other manner, than he/ she will be punished with one (1) year imprisonment or fine of NRs. 2,50,000 (Amount in words Nepali Rupees Two Lakh Fifty Thousand) or both can be levied. The goods will also be forfeited. However, giving small quantity to one’s near person or neighbor for personal consumption is not considered as offence. The goods can also be given away after obtaining written consent of the coupon holder if it is not necessary or the coupon can be returned to the authority if the goods has not been collected.
2.1. Except in circumstances where the price of the goods has been prescribed by the Government of Nepal, if a trader makes more than 20% (twenty percent) of profit or receives undue profit by taking advantage of shortage situation it will be considered as profiteering.
2.2. Profiteering is punished with imprisonment for a term of one (1) year or NRs. 2,50,000/- Amount in words Nepali Rupees Two Lakh Fifty Thousand) fine or both imprisonment and fine can be levied.
2.3. This will not be applicable if the exporter is selling his/her goods in a manner so as to redeem the loss of importing goods.
3. Hoarding and Artificial Shortage
3.1. Hoarding goods with an intention to receive undue profit by creating an artificial shortage in the market is punishable with imprisonment for a term of one (1) year or NRs. 2,50,000/- Amount in words Nepali Rupees Two Lakh Fifty Thousand) fine or both imprisonment and fine can be levied.
3.2. If producer, distributor, importer, dealer or any agent hoards essential goods prescribed by the Government of Nepal then they will be punished with imprisonment for a term of one (1) year or NRs. 10,00,000/- (Amount in words Nepali Rupees Ten Lakh) fine or both imprisonment and fine can be levied.
4. Adulteration in Medicine and sale of Adulterated Medicine
Any person with an intention of getting any medicine sold or used as of pure medicine, adulterates medicine to make it non-effective, less effective, changes it, makes it injurious or with a knowledge that there is a possibility of sale or use of such medicine sells or attempts to sell such medicine with a knowledge that such medicine is adulterated or its date is expired or keeps it for sale or gives it to anyone for treatment or causes anyone, who does not have information on adulteration to consume such medicine, such person shall be punished as follows-
5. Additional Sanctions for the Above Offences Under the Act
5.1. The concerned accused can be publicly condemned under the Act.
5.2. The concerned accused will not be able to serve, obtain contract or license from the Government of Nepal for Five (5) years of serving punishment depending on the severity of the offence.
Despite having proper legal mechanism in place to combat black-marketing, it is still a reoccurring phenomenon amidst the COVID-19 outbreak. It is very essential to spread awareness and implement these laws in order to deter people from committing black-marketing in Nepal.
**DISCLAIMER: This document is prepared for general understanding and should not be taken for any legal purpose without consulting legal professionals. ** The copyright of the document is vested with PLA.**