Advertising Standards Council of India: Is it time for the paper tiger to roar?

The Indian economy is amongst the rapidly growing economies of the world, creating an immensely competitive environment for its sellers, for whom, advertising becomes critical to popularise their products. The result is a considerable rise in misleading and false advertisements.

Almost all major countries have a self-regulatory organization (“SRO”) burdened with the function of regulating advertisement section. For example, in the UK, the Advertising Standards Authority, ensures that advertisements in the country follow the applicable rules. Similarly, in Spain, the Jury of Autocontrol, monitors adherence to advertising regulations and settles conflicts using the alternative dispute resolution process. At an international level, the International Council for Ad Self-Regulation promotes effective advertising self-regulation. Its members include SROs and various other renowned bodies that work to ensure that advertising and marketing communications are lawful and appropriate. India too has an SRO to promote fair and honest advertisements, i.e., the Advertising Standards Council of India (“ASCI”). This article examines the powers that the organization holds vis-a-vis its members and non-members and highlights the need to enhance the powers of ASCI.

ASCI - An overview:

Registered as a “Not for Profit Company” under the Companies Act, 1956, ASCI is a self-regulatory organization established in 1985, to regulate the advertising industry and protect consumer rights.

ASCI has adopted its own Code (“ASCI Code of Self-Regulation in Advertising” or “ASCI Code”), which deals extensively with misleading advertisements and releases various corresponding guidelines to promote fair advertising.

Applicability of ASCI Code on members and non-members:

Bombay High Court versus Delhi-based courts

The Bombay Hight Court in Century Plyboards (India) Ltd. v. ASCI [1], considered ASCI to be a company governed by the provisions of the Companies Act, and its members to be bound by the directions of the Board. The same court in Teleshop Teleshopping v. ASCI [2] held that ASCI is neither a statutory body nor a governmental regulator, therefore, it lacks the power to restrict commercial advertisements of sellers, especially non-members.

However, Delhi’s Tis Hazari court in Primordial Systems Private Limited vs. ASCI held that if ASCI makes a recommendation, in pursuance of which an advertising agency refuses to publish the advertisement, they would be entitled to do so, making the recommendations indirectly applicable to non-members as well [3]. Recently, the Delhi High Court in M/s Kent RO Systems Ltd v. ASCI [4] also recognized the requirement of extending ASCI's jurisdiction to include non-members as well.

Compliance with ASCI Guidelines - A mandate or an option?

The Supreme Court remains silent on this matter, therefore, the judgements given by different High Courts hold relevance:

1. Violations of ASCI guidelines upon being reported gain momentum and become a matter of public importance, creating trouble for any known personality associated with the advertisement. For instance, in 2021, a famous Indian cricketer, Virat Kohli made a social media post praising Lovely Professional University for their Olympic selections, however, the post failed to use the paid partnership tag, violating ASCI guidelines. This sparked public outrage, forcing him to edit his post and put a paid partnership tag.

2. Second, despite lacking the penal power to enforce its Code, ASCI has significant governmental support. For example, ASCI’s guidelines for celebrities in advertising were backed up by the Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022 released by the Central Consumer Protection Authority (“CCPA”). The Ministry of Consumer Affairs, Food, and Public Distribution also issued a set of guidelines called the “Endorsements Know-how” in 2023. These guidelines issued by the governmental authorities show the support provided to the organization, not directly, but surely indirectly.

Conclusion

The importance of ASCI in the Indian advertisement industry is noteworthy, however, its applicability to non-members in some form, is the need of the hour.

An organization with remarkable potential and governmental support if deemed merely as an ordinary company, negatively impacts the consumer interest in the nation. To improve the scenario, recently, the CCPA collaborated with ASCI to strengthen advertising regulation in India and refer any advertisements that (i) are non-compliant with its Code; and (ii) could potentially breach the Consumer Protection Act, 2019, to the CCPA for appropriate action[9]. This can be considered indirect support provided by the CCPA to the organization. However, its sufficiency to strengthen the ASCI Code, and how CCPA will tackle the large list of violators is a question that can only be answered in the near future.

References:

1. 2000 (1) BOMCR 136.
2. 2015 SCC OnLine Bom 8777.
3. Press Release, ASCI, August 19th, 2019. Available at: https://www.ascionline.in/wp-content/uploads/2022/09/asci-press-release-19th-aug-2019.pdf.
4. 2024 SCC OnLine Del 376.
5. (2017) 240 DLT 119.
6. 2017) 238 DLT 585.
7. (1999) 3 Mah LJ 543.
8. ASCI, May 2023, Annual Complaints Report 2022-23. Available at: https://www.ascionline.in/wp-content/uploads/2023/05/Annual-Complaints-Report-2022-23.pdf.
9. Press Release, ASCI, March 26th, 2014. Available at: https://www.ascionline.in/wp-content/uploads/2024/03/CCPA-ASCI-Press-release.pdf