Product Liability Laws in India (2020)
1 Liability Systems
1.1 What systems of product liability are available (i.e. liability in respect of damage to persons or property resulting from the supply of products found to be defective or faulty)? Is liability fault based, or strict, or both? Does contractual liability play any role? Can liability be imposed for breach of statutory obligations e.g. consumer fraud statutes?
Historically, the term ‘product liability’ had not been defined under Indian statutes. However, the term ‘product liability’ has been defined under the recently introduced Consumer Protection Act, 2019 (CPA 2019) as the “responsibility of a product manufacturer or product seller, of any product or service, to compensate for any harm caused to a consumer by such defective product manufactured or sold or by deficiency in services relating thereto”. The CPA 2019, which is set to replace the erstwhile Consumer Protection Act, 1986, has been passed by the Indian legislature in August 2019, but it is yet to be notified as law.
In India, in addition to the consumer protection laws, there exist multiple general and sector-specific laws that form part of the legal framework governing product liability in India which, in certain instances, may overlap depending on the sector and facts of the case. These substantive civil laws apply to claims of product liability in India and comprise of:
a. the Sale of Goods Act, 1930 (SGA);
b. the Indian Contract Act, 1872 (the Contract Act); and
c. the Bureau of Indian Standards Act, 2016 (BIS Act).
The CPA 2019, in a sense, codifies the principles of product liability with respect to sale or supply of defective products to consumers. An action for product liability can be initiated against the product manufacturer, product seller or product service provider under the consumer courts established under the CPA 2019 if (i) the goods supplied are defective, (ii) the consumer has been charged excessively for the goods, (iii) goods which are hazardous to life and safety are being offered by a trader who is aware of the unsafe nature of the goods and offers goods in contravention of prescribed standards, and (iv) any unfair or restrictive trade practices are adopted by the trader. However, redressal under the CPA 2019 is only available to aggrieved parties who fall under the definition of a ‘consumer’ under the CPA 2019. The definition of ‘consumer’ under the CPA 2019 includes persons who have purchased or hired goods or services for consideration and it does not extend to purchase for resale or commercial purposes. An aggrieved party who does not fall within the definition of a ‘consumer’ under the CPA 2019 would be required to seek alternate methods of grievance redressal through a civil suit for tortious or contractual liability.
The SGA governs the relationship of a seller and buyer of movable goods in India. The SGA specifically provides for implied conditions or warranties undertaken by the seller with respect to fitness and merchantable quality of the product sold; and that there is an implied warranty for the goods sold to be free from defects. A breach of such an implied warranty entitles the purchaser to the right to sue for damages. In a contractual breach, apportionment of liability is ordinarily contractually driven and may be joint or several (or both) depending on the provisions of the contract and the facts and circumstances of the case. By virtue of contractual arrangements, parties are permitted to exclude liability for indirect losses even if they were aware of such losses when they made the contract.
Further, as India is a common law country, courts are influenced by principles of justice, equity and good conscience, and principles of tort law. Courts have developed principles of fault-based liability such as negligence, and principles of strict liability, although the codification of these principles under consumer protection laws has restricted the development of jurisprudence on strict liability under principles of tort law with respect to product liability claims in India. The provisions of the Indian Penal Code, 1860 (IPC), such as those relating to criminal negligence, fraud and cheating, may apply in cases of defective products supplied if criminal intent is ascribed to the acts of the manufacturers or suppliers.
There are also regulations, such as the BIS Act, which set out mandatory and voluntary standards and specifications applicable to products across different sectors and industries. If any goods or articles do not conform to a mandatory standard, the regulatory authority under the BIS Act has the power to issue directions to stop the supply and sale, and may recall the non-conforming goods or articles. The BIS Act also provides for penal consequences, including fines and imprisonment for non-conformance, including non-conformance to prescribed standards.
In addition to the foregoing, specific areas such as the food, pharmaceuticals, automotive and electronics industries have specific laws that govern and regulate product standards, product safety and liability in these sectors, which also prescribe penalties that may be imposed for breach of statutory obligations.
1.2 Does the state operate any schemes of compensation for particular products?
The state does not operate any scheme of compensation for particular products. However, in a recent incident involving the manufacture of faulty hip implants by Johnson & Johnson Pvt. Ltd. (J&J), an expert committee was set up by the Government of India to determine the quantum of compensation payable by J&J to patients who received such faulty implants, as it related to health and safety.
1.3 Who bears responsibility for the fault/defect? The manufacturer, the importer, the distributor, the “retail” supplier or all of these?
In cases of defective products that are also contractual breaches, apportionment of liability is ordinarily contractually driven and may be joint or several between the manufacturer and seller (or both) depending on the provisions of the contract and the facts and circumstances of the case. Usually, the warranty with respect to the product is typically provided by the manufacturer alone, which is passed on by the seller/retailer to the consumer, thereby creating privity of contract between the manufacturer and the consumer.
In cases of tort, the Indian courts recognise the principle of joint and several liability and multiple parties may be held jointly liable in respect of any tortious claim by an affected person in the event that (i) the parties have, acting in concert, committed a wrongful act resulting in loss or damage to the affected person, or (ii) when not acting in concert, have, by their individual wrongful acts, caused loss or damage to the affected person. In exceptional cases, courts have apportioned the liability between multiple tortfeasors on the basis of material evidence available on record, indicating the degree of liability of each tortfeasor.
The CPA 2019 sets out specific instances in which action can be initiated by a complainant against a product manufacturer, product service provider or product seller, who may be held jointly or severally liable for any harm caused to him due to the defective product. Further, a product manufacturer may be held liable under the CPA 2019 even in cases where it is established that there was no negligence or fraud in making the express warranty of a product.
In cases where the goods or articles sold do not conform to the standards set under the BIS Act, the licence holder or certified body or their representatives may be held liable to compensate the consumer for the injury caused by such non-conforming goods or articles. In addition, the Food Safety and Standards Act, 2006 (FSSA), the Motor Vehicles Act, 1988 (MVA) and the Drugs and Cosmetics Act, 1940 (the Drugs Act) also impose liability on manufacturers, sellers, distributors, importers or other parties for non-compliance.
1.4 May a regulatory authority be found liable in respect of a defective/faulty product? If so, in what circumstances?
While regulatory authorities prescribe compliance standards and implement enforcement of legislation, there is no statutory liability against a regulatory authority with respect to a defective or faulty product.
1.5 In what circumstances is there an obligation to recall products, and in what way may a claim for failure to recall be brought?
There is no single designated regulatory body that governs product safety reporting or recalls in India; however, sector-specific statutes do envisage and provide for recall procedures for defective products.
Recall under the CPA 2019:
In order to regulate matters relating to violation of consumers’ rights and to curb unfair trade practices, the CPA 2019 provides for the establishment of a central consumer protection authority (CCPA). The CCPA has the power to investigate violation of consumer rights or unfair trade practices and also has the power to direct the recall of goods which are found to be dangerous, hazardous or unsafe.
Recall under the MVA:
Until the amendment to the MVA in 2019, there were no regulations for motor vehicle recall in India, and motor vehicle manufacturers would voluntarily initiate strategic actions to limit potential liability due to defective products (usually under the Voluntary Code of Vehicle Recall – a guideline issued by the Society of Indian Automobile Manufacturers, the industries self-regulatory body).
The MVA was amended in 2019 to empower the Ministry of Road Transport and Highways (MoRTH) to direct a motor vehicle manufacturer to recall a particular type or variant of motor vehicles if a defect: (i) is found in a vehicle which may harm the environment, driver, occupants, or other road users; or (ii) is reported to the MoRTH.
If a component of a motor vehicle is found to be defective, the MoRTH may order the motor vehicle manufacturer to recall all motor vehicles which contain such component. If an order for recall has been passed by the MoRTH, the manufacturer will be liable to (i) reimburse the buyers, (ii) replace or repair the defective motor vehicle, or (iii) pay fines that may be prescribed.
The MVA also now permits motor vehicle manufacturers to initiate voluntary recalls, and in such cases, the manufacturer will not be liable to pay any additional fines.
Recall under the BIS Act:
If the Bureau of Indian Standards (BIS) is convinced that goods or articles bearing standard marks do not conform to the requirements of the relevant standard, it has the power to direct the certified body or licence holder or its representative to stop the supply and sale, and recall the non-conforming goods or articles. The BIS Act also provides for penal consequences, including fines and imprisonment for non-conformance with prescribed standards and other acts of non-compliance.
Recall under the Drugs Act read with the Medical Devices Rules, 2017:
Manufacturers or distributors that obtain licences for the manufacture and distribution of drugs and medical devices are required to adhere to a number of conditions, including the recall of devices that do not meet specified standards. The relevant licensing authority also has the power to order recall of devices that do not conform to the prescribed standards. In addition, the rules framed under the Drugs Act impose a general obligation on manufacturers or authorised agents to (i) recall drugs and medical devices (manufactured or imported) that are likely to pose a risk to users’ health, indicating reasons for the recall, and (ii) inform the competent authority of the relevant details. Contravention of the provisions could result in penal consequences, including fines, imprisonment, cancellation, suspension or debarment of the licence holder.
Recall under the FSSA:
The Food Safety and Standards (Food Recall Procedure) Regulations, 2017 (the Food Recall Regulations) framed under the FSSA, contain detailed provisions and procedures for the removal of food that is unsafe, including by way of recalls, and require all food business operators (FBOs) engaged in the manufacture, import or wholesale supply of food to have an up-to-date recall plan. The Food Safety and Standards Authority of India (the Food Authority) is required to monitor the progress of a recall and assess the effectiveness of the action taken by the FBOs. Under the provisions of the Food Recall Regulations, the Food Authority can (i) ensure removal of food under recall from all stages of the food chain, (ii) disseminate information to the consumers concerned and customers, and (iii) retrieve, destroy or reprocess food under recall. Prior to the notification of the Food Recall Regulations, the Food Authority has used its inherent powers under the FSSA to recall defective or unsafe food.
1.6 Do criminal sanctions apply to the supply of defective products?
Criminal sanctions, including imprisonment, have been prescribed under various sector-specific laws, such as the FSSA, the Drugs Act, and MVA for the manufacture and supply of defective goods. The CPA 2019 and the BIS Act also impose penalties and prescribe imprisonment for supply of defective products.
Further, if criminal intent can be attributed to the offence committed, the breaching party can be held liable on various degrees under the IPC.
2.1 Who has the burden of proving fault/defect and damage?
In India, the aggrieved party bears the burden of proof, in a claim under contract or tort. Under the Indian Evidence Act, 1872, liability to prove the existence of facts is upon the person asserting those facts, i.e. the claimant/plaintiff. Any party seeking the court’s intervention as to enforcement of its legal rights must prove the facts that establish and substantiate its claim.
In a criminal case involving product liability or product defect, the burden of proof generally lies on the prosecution, except where statutes provide otherwise. Statutes such as the Drugs Act (as applicable in some Indian states) and the FSSA, in certain circumstances, create a presumption of an offence or violation and, therefore, in such cases, the burden of proof is on the person charged with an offence to prove that the offence was not committed.
2.2 What test is applied for proof of causation? Is it enough for the claimant to show that the defendant wrongly exposed the claimant to an increased risk of a type of injury known to be associated with the product, even if it cannot be proved by the claimant that the injury would not have arisen without such exposure? Is it necessary to prove that the product to which the claimant was exposed has actually malfunctioned and caused injury, or is it sufficient that all the products or the batch to which the claimant was exposed carry an increased, but unpredictable, risk of malfunction?
In claims relating to defects in products, depending on the factual circumstances, the aggrieved party should have suffered a loss to claim damages from the breaching party. However, in some cases, the manufacturer or importer will be liable to recall all defective products, rectify the defect, replace the defective part or product, or pay compensation if such rectification or replacement is not possible, without actual loss having being suffered by every claimant, if a product defect has been discovered or admitted by such manufacturer or importer. Although judicial precedents are lacking on this aspect, we believe that a claimant will not be entitled to damages on account of merely being exposed to an increased risk known to be associated with a defective product.
2.3 What is the legal position if it cannot be established which of several possible producers manufactured the defective product? Does any form of market-share liability apply?
In India, consumer products/packaged commodities are required to mandatorily specify details of the manufacturer and, if applicable, the importer. Therefore, it is unlikely that a claimant cannot establish the manufacturer of a defective product. In any event, such instances (i.e. where it is not possible to establish which of several possible producers manufactured the defective product) have not been tested in the Indian scenario and the legal position on this has yet to evolve.
However, under the FSSA, a wholesaler or distributor can be held liable if the manufacturer of the food article cannot be identified, and a seller can be held liable if the manufacturer or distributor cannot be identified.
2.4 Does a failure to warn give rise to liability and, if so, in what circumstances? What information, advice and warnings are taken into account: only information provided directly to the injured party, or also information supplied to an intermediary in the chain of supply between the manufacturer and consumer? Does it make any difference to the answer if the product can only be obtained through the intermediary who owes a separate obligation to assess the suitability of the product for the particular consumer, e.g. a surgeon using a temporary or permanent medical device, a doctor prescribing a medicine or a pharmacist recommending a medicine? Is there any principle of “learned intermediary” under your law pursuant to which the supply of information to the learned intermediary discharges the duty owed by the manufacturer to the ultimate consumer to make available appropriate product information?
Mandatory labelling requirements typically include specifications of use and statutory warnings of the product. In addition, the CPA 2019 holds the product manufacturer and product service provider liable in case of non-issuance of adequate instructions or warnings to prevent any harm which may be caused by the product. Further, under the CPA 2019 a product seller is liable if it does not pass on the warnings or instructions given by the product manufacturer regarding the dangers involved or proper usage of the product to the consumer and such failure to inform was held to be the proximate cause of the harm.
While as a general principle the concept of ‘learned intermediary’ is not specifically recognised in the Indian context, the CPA 2019 proposes the following specific instances in which a product manufacturer will not be held liable:
(i) the product was purchased by an employer for use at the workplace and warnings or instructions of usage had been communicated to the employer;
(ii) the product was sold as material to be used in another product, warnings or instructions of usage had been communicated to the purchaser and harm is caused by the end product; or
(iii) the product is legally meant to be used under supervision of an expert and reasonable means have been employed by the product manufacturer to communicate the warnings or instructions of usage to those experts.
3 Defences and Estoppel
3.1 What defences, if any, are available?
The defences typically available to manufacturers, distributors or sellers in product liability claims include the following:
(i) the product being compliant with requisite statutory standards;
(ii) the product not being ‘defective’;
(iii) loss or injury is owing to negligence or misuse by the consumer or buyer, including contributory negligence;
(iv) the consumer or buyer had examined the goods prior to purchase and accepted it, being satisfied of its quality or specification; or
(v) contractually agreed disclaimers or limitations on warranties in terms of scope, period, recourse and amount.
Additionally, the defences available to a product manufacturer, seller or service provider under the CPA 2019 include:
(i) the purchaser or user of the product not being a ‘consumer’ as defined under the CPA 2019;
(ii) the product not being ‘defective’ as defined under the CPA 2019;
(iii) there being no ‘harm’ caused to a consumer by the use of the defective product, as defined under the CPA 2019;
(iv) in case of a claim brought against a product seller, if it is proved that at the time of the harm, the product was misused, altered or modified;
(iv) the consumer was under the influence of alcohol or prescription drugs not prescribed by a medical practitioner;
(v) the product manufacturer failed to instruct or warn about a danger which is obvious or commonly known to the user or consumer of such product or which such user or consumer ought to have known, taking into account the characteristics of such product; or
(vi) in case of a claim brought against a product manufacturer, the exceptions to the requirement to provide adequate warnings or instructions, as detailed in our response to question 2.4, as applicable.
In addition to the foregoing, defendants (such as manufacturers, distributors or sellers) could also contend that a civil action or complaint is barred by limitation in case of belated actions.
3.2 Is there a state of the art/development risk defence? Is there a defence if the fault/defect in the product was not discoverable given the state of scientific and technical knowledge at the time of supply? If there is such a defence, is it for the claimant to prove that the fault/defect was discoverable or is it for the manufacturer to prove that it was not?
There is no state of art/development risk defence available to a manufacturer in India.
3.3 Is it a defence for the manufacturer to show that he complied with regulatory and/or statutory requirements relating to the development, manufacture, licensing, marketing and supply of the product?
Demonstrating compliance with regulatory and/or statutory requirements, prescribed standards, licensing requirements, etc., although might assist in mitigating liability, are not always an absolute shield to absolve the manufacturer from all liability in relation to a defective product.
3.4 Can claimants re-litigate issues of fault, defect or the capability of a product to cause a certain type of damage, provided they arise in separate proceedings brought by a different claimant, or does some form of issue estoppel prevent this?
The cause of action, amount of harm and type of damage dictate liability of the breaching party to a claimant. Different claimants can initiate separate litigations for their cause of action and damage against the same breaching party. Different claimants bringing in different claims for their respective cause of action does not amount to re-litigation.
3.5 Can defendants claim that the fault/defect was due to the actions of a third party and seek a contribution or indemnity towards any damages payable to the claimant, either in the same proceedings or in subsequent proceedings? If it is possible to bring subsequent proceedings, is there a time limit on commencing such proceedings?
In cases of composite negligence, an aggrieved party is entitled to recover damages from any or all of the negligent tortfeasors. Indian courts have held that a tortfeasor proceeded against has the remedy to sue the other tortfeasors to recover contribution amounts to the extent of their liability. However, such proceedings are not evidenced as much in product liability claims. Further, in cases of back-to-back indemnity agreements between the breaching party and third party for contractual liability, the breaching party may claim indemnity from the third party in subsequent proceedings, provided that the loss has been suffered by the breaching party.
Limitation on the filing of suits in India is governed by the Limitation Act, 1963 (Limitation Act). The period of limitation for a civil proceeding for monetary compensation on account of a contractual breach is three years from the date on which the breach occurs. Specific statutes may also mandate a time period within which a claim may be commenced (for example, the CPA 2019 prescribes a time limit of two years from the date on which the cause of action arises).
3.6 Can defendants allege that the claimant’s actions caused or contributed towards the damage?
Indian courts have recognised the principle of contributory negligence, i.e., the person who has suffered damage is also guilty of some negligence and has contributed towards the damage. However, where the defendant’s negligence makes the claimant less circumspective, the claimant will not be held guilty of contributory negligence.
The CPA 2019 also recognises that if at the time of harm, the product was misused, altered, or modified by the consumer, an action cannot be brought against a product seller.
4.1 In the case of court proceedings, is the trial by a judge or a jury?
Cases are adjudicated by judges as the jury system was abolished in India in 1974.
4.2 Does the court have power to appoint technical specialists to sit with the judge and assess the evidence presented by the parties (i.e. expert assessors)?
Indian courts cannot appoint technical experts to sit as assessors with the judges. However, the opinions of experts are admissible as evidence, and typically parties rely on such opinions for substantiating their claims. The CCPA can engage experts to assist it in the discharge of its functions. Consumer courts may also, on an application by a complainant or if the case involves the larger interest of consumers, direct an expert to assist them with the case.
4.3 Is there a specific group or class action procedure for multiple claims? If so, please outline this. Is the procedure ‘opt-in’ or ‘opt-out’? Who can bring such claims e.g. individuals and/or groups? Are such claims commonly brought?
Under the Code of Civil Procedure, 1908 (CPC), two or more plaintiffs have the right to aggregate their claims in a suit against one defendant, even if their causes of actions are separate and distinct, in the event that the right to obtain relief arises out of the same act, transaction, or series of acts or transactions, and the causes of action are of such a nature that if separate suits were filed by the plaintiffs, common questions of law or fact would arise.
The CPC allows one or more persons to file a suit against the opposing party on behalf of, or for the benefit of, numerous persons having the same interest in the suit, with the prior permission of the court in which the suit is required to be instituted. In this regard, interest is said to be similar or common when the plaintiffs have a common grievance against the defendant and the relief sought is in its nature beneficial to all persons interested in the suit.
The CPA 2019 also recognises the right of one or more consumers or a voluntary consumer association to file a complaint against a single manufacturer, dealer, distributor, etc. on behalf of, or for the benefit of, numerous consumers having the same interest. Additionally, consumer courts also have the power to grant relief to several consumers who have suffered loss or injury, but are unidentifiable. The CCPA (whose duties include the protection, promotion and enforcement of the rights of consumers as a class) and the Indian government may also file complaints before a consumer court, either in their individual capacity or as a representative of interests of the consumers in general.
With increasing access to technology and connectivity, class action suits have become a known phenomenon and have been gaining momentum in recent times.
4.4 Can claims be brought by a representative body on behalf of a number of claimants e.g. by a consumer association?
As discussed above, claims may be brought by a representative body such as a voluntary consumer association, with prior permission from the relevant court or forum for adjudication of disputes under the CPC or CPA 2019, even if the aggrieved consumer is not a member of such association.
4.5 May lawyers or representative bodies advertise for claims and, if so, does this occur frequently? Does advertising materially affect the number or type of claims brought in your jurisdiction?
The Bar Council of India, which is the regulatory body for the legal profession, does not permit lawyers to solicit work, and therefore lawyers are not permitted to advertise for claims. However, there are no prohibitions on representative bodies from advertising for claims, and these are not very infrequent in the Indian scenario. In the past, there have been instances where the government has published notices on its website notifying the public of faulty medical devices.
4.6 How long does it normally take to get to trial?
Due to the backlog of cases pending before the Indian courts, a suit would reach the trial stage within six to 12 months, provided that requisite notices have been served and the prescribed procedure has been complied with.
Most product liability claims are, however, initiated under consumer protection laws, and the CPA 2019 prescribes timelines that are required to be followed by the consumer courts. The consumer courts must endeavour to decide a complaint within a period of three months from the date of receipt of notice by the opposite party, which may extend to five months if the complaint requires analysis or testing of commodities.
4.7 Can the court try preliminary issues, the result of which determine whether the remainder of the trial should proceed? If it can, do such issues relate only to matters of law or can they relate to issues of fact as well, and if there is trial by jury, by whom are preliminary issues decided?
Yes, Indian courts do adjudicate upon preliminary issues regarding the maintainability of the claim, usually restricted to questions of law and not fact.
Findings on such preliminary matters generally determine progress of the case.
As discussed earlier, the jury system is not present in India, and therefore all issues are determined by judges.
4.8 What appeal options are available?
Generally, the hierarchy of Indian courts has district courts, high courts (with jurisdiction over states of the country) and the apex court, i.e. the Supreme Court of India. Appeals from district courts would lie before the High Court, and thereafter the Supreme Court, depending upon factors such as the nature of claim, pecuniary jurisdiction, etc. District courts typically have original jurisdiction except in certain cities where the High Court of the city has original jurisdiction, and appeals in such cases usually lie before a larger bench of judges of the same High Court.
Specific statutes also provide for appeal procedures from cases before tribunals/other quasi-judicial bodies formulated under the statute, to either an appellate tribunal and/or the High Court, and then to the Supreme Court. For example, under the CPA 2019, any person aggrieved by an order of the district consumer court may prefer an appeal to the state consumer court from which a further appeal may be preferred to the national consumer court.
4.9 Does the court appoint experts to assist it in considering technical issues and, if not, may the parties present expert evidence? Are there any restrictions on the nature or extent of that evidence?
Under Indian civil law, experts may be appointed by the court when it is necessary to form an opinion based on a technical or scientific issue. Expert opinions may be relied on by the parties to a suit or proceeding. The Indian Evidence Act, 1872 sets out the circumstances in which a court can rely on experts and these include instances when the court has to form an opinion on foreign law, science, art and handwriting. Indian criminal courts are also vested with the power to summon, examine and receive evidence from experts, including receiving reports from certain governmental scientific experts under the provisions of the Criminal Procedure Code, 1973. Consumer courts may also, on an application by a complainant or if the case involves the larger interest of consumers, direct an expert to assist the court with the case.
However, the courts are not bound by the evidence or opinions of the experts and have discretion to admit this evidence or derive their own conclusions based on these opinions.
4.10 Are factual or expert witnesses required to present themselves for pre-trial deposition and are witness statements/expert reports exchanged prior to trial?
Pre-trial deposition is not a practice in India and, therefore, factual or expert witnesses are not required to present themselves for such depositions.
4.11 What obligations to disclose documentary evidence arise either before court proceedings are commenced or as part of the pre-trial procedures?
There is no obligation to disclose documentary evidence prior to commencement of court proceedings or as a pre-trial procedure.
4.12 Are alternative methods of dispute resolution required to be pursued first or available as an alternative to litigation e.g. mediation, arbitration?
Alternate dispute resolution (ADR) mechanisms such as arbitration and mediation are gaining popularity and generally adopted as a first steps towards dispute resolution between parties, especially in case of contractual disputes. While ADR mechanisms are not mandated generally under Indian law, the Commercial Courts Act (which seeks to streamline and fast-track commercial disputes) makes pre-institution mediation mandatory in all cases where the parties do not require immediate intervention by courts. The CPA 2019 also provides for establishment of a consumer mediation cell to be attached to each consumer court, and empowers consumer courts to refer a dispute to mediation if, in its opinion, the matter may be settled outside the court and the parties consent to settle through mediation. While the CPA 2019 has not been brought into force, draft rules governing the procedure for mediation indicate that certain cases such as those involving medical negligence, serious allegations of fraud or forgery, prosecution for criminal and non-compoundable offences, and public interest may not be allowed to be referred to mediation.
4.13 In what factual circumstances can persons that are not domiciled in your jurisdiction be brought within the jurisdiction of your courts either as a defendant or as a claimant?
Claims can be instituted in India by or against a foreign party, if the cause of action of such proceeding arises in India.
5 Time Limits
5.1 Are there any time limits on bringing or issuing proceedings?
Limitation on filing of suits in India is governed by the Limitation Act. Specific statutes may also prescribe particular limitation periods for claims instituted under such statute.
5.2 If so, please explain what these are. Do they vary depending on whether the liability is fault based or strict? Does the age or condition of the claimant affect the calculation of any time limits and does the court have a discretion to disapply time limits?
Under the Limitation Act, the period of limitation for a civil proceeding for monetary compensation on account of a contractual breach is three years from the date on which the breach occurs.
The CPA 2019 prescribes a time limit of two years from the date on which the cause of action arises for a complaint to be filed. However, this period may be extended if the consumer court is satisfied with the reasons for the delay. The FSSA states that cognizance shall not be taken of any offence after a period of one year from its commission, but this may be extended up to three years with the approval in writing of the Commissioner of Food Safety.
5.3 To what extent, if at all, do issues of concealment or fraud affect the running of any time limit?
Under the Limitation Act, where a claim is based upon fraud of the defendant or its agent or where any documents necessary to establish the right of the plaintiff or applicant has been fraudulently concealed from him, the period of limitation begins after the plaintiff or applicant has discovered the fraud or could, with reasonable diligence, have discovered it.
6.1 What remedies are available e.g. monetary compensation, injunctive/declaratory relief?
The general law of economic damages in the Indian context is covered under the SGA, Contract Act, CPA 2019 and tort law. The Contract Act provides for the payment of damages or compensation by the defaulting party to the aggrieved party for any loss or damage that arose as a natural consequence of a breach; or that the parties were aware, at the time of entering into the contract, would possibly result from a breach. In this context, the Contract Act does not allow damages for remote, indirect or incidental loss.
The Indian courts have broad powers to pass interim orders prior to a full trial and at any time during the legal proceedings, when considered necessary and proper in light of the facts and circumstances of the case. Further, Indian courts are empowered to pass interim orders to prevent damage, alienation, removal or disposition of property or otherwise causing injury to the plaintiff in relation to any property in dispute in the suit. The courts are also able to pass an interim order attaching the assets of a defendant or requiring it to furnish security in certain circumstances.
Sector-specific laws may provide additional remedies such as repair or replacement of the defective goods, return of the price paid for the goods and compensation for any loos or injury suffered on account of the defective goods.
6.2 What types of damage are recoverable e.g. damage to the product itself, bodily injury, mental damage, damage to property?
In India, law has categorised damages as ‘direct damage’ or ‘indirect damage’; ‘consequential damage’ or ‘remote damage’ (the test is whether certain damage suffered by the aggrieved party was a foreseeable consequence of an act or omission on the part of the breaching party); and ‘punitive or exemplary damage’.
Under a contract, damages may be either liquidated or unliquidated. Liquidated damages are those that have been agreed upon and fixed by the parties in anticipation of a breach, whereas unliquidated damages must be assessed and quantified. However, the Contract Act does not contemplate grant of ‘indirect damages’ or ‘remote damages’.
The damages which can be awarded in an action based on tort may be contemptuous, nominal, ordinary or exemplary. The primary object of award of damages is to compensate the aggrieved party for the harm suffered, while the secondary object is to punish the breaching party for its conduct in inflicting such harm. The secondary object is achieved in certain cases by awarding, in addition to compensatory damages, damages which are termed as exemplary, punitive, vindictive or retributory damages. In awarding punitive or exemplary damages, the emphasis is not on the injury caused, but on the defendant and its conduct. There is, however, reluctance of Indian courts to award considerably significant amounts of exemplary or punitive damages in claims under tort law.
Indian courts are generally conservative in awarding compensation or damages for tortious liabilities pertaining to mental trauma, distress, and cases where no actual damage is proven. However, damages have been awarded for non-pecuniary losses like pain and suffering consequential to injury inflicted on the plaintiff with compensation varying depending on the intensity of the pain and suffering borne by the plaintiff. The courts have also been generous (by Indian standards) in awarding damages for mental agony arising from, inter alia, cases involving negligence. A reduction in life expectancy is another non-pecuniary loss for which courts have awarded damages in cases where normal life expectancy has been shortened as a result of the injury sustained. Given the difficulties involved in assessing such damages, courts tend to award only very moderate sums. Indian courts are reluctant to grant damages for mental agony in the absence of compelling reasons in case of property damage, and where such damages are granted, the quantum of damages is nominal. Under the CPA 2019, ‘harm’ has been defined to include mental agony or emotional distress arising out of the defect in the product. Therefore, in the future, there may be claims based on mental agony.
However, the CPA 2019 does not cover damage caused to the product or any damage to the property on account of breach of warranty conditions or any commercial or economic loss (including any direct, incidental or consequential loss), and such claims cannot be instituted under consumer courts.
6.3 Can damages be recovered in respect of the cost of medical monitoring (e.g. covering the cost of investigations or tests) in circumstances where the product has not yet malfunctioned and caused injury, but it may do so in future?
In circumstances where the product is admittedly defective, such as in the case of faulty medical devices which have been implanted in humans, the compensation awarded to the aggrieved party would take into account the cost of medical monitoring. That said, these are not claims commonly seen in the Indian scenario.
6.4 Are punitive damages recoverable? If so, are there any restrictions?
In contractual disputes, Indian courts do not normally award punitive or exemplary damages, but may do so where elements of fraud, oppression or malice are established. In awarding punitive or exemplary damages, the emphasis is not on the injury caused, but on the breaching party and its conduct.
However, in product liability claims under the principles of tort law, practically there is limited jurisprudence available as aggrieved parties usually seek redressal under consumer protection laws or under the Contract Act. This is also due to reluctance of Indian courts to award considerably significant amounts of exemplary or punitive damages in claims under tort law. The CPA 2019 permits awards of punitive damages in circumstances deemed fit by consumer courts. Damages have been awarded by Indian courts under consumer protection laws in exceptional cases by way of compensation where it has been established that the aggrieved party suffered harassment and extreme pain and suffering as a result of the conduct of the manufacturer, supplier or distributor, pursuant to being notified about the defective product. However, the quantum of such damages is much lower than and not comparable with punitive damages that are awarded in other developed countries.
6.5 Is there a maximum limit on the damages recoverable from one manufacturer e.g. for a series of claims arising from one incident or accident?
There is no statutorily mandated maximum limit for damages recoverable from a manufacturer. However, by virtue of contractual arrangements, parties are permitted to exclude liability for indirect losses even if they were aware of such losses when they made the contract. The Contract Act also permits parties to agree on the quantum of liquidated damages payable by the breaching party in case of breach, thereby limiting the quantum of liability of the breaching party under contract law.
6.6 Do special rules apply to the settlement of claims/proceedings e.g. is court approval required for the settlement of group/class actions, or claims by infants, or otherwise?
Typically, terms of voluntary out-of-court settlements (which are not mandated by court) must be recorded in writing and the settlement agreement should be filed in the proceedings before the court for the terms of settlement to be taken on record. Based on the settlement reached, the court will pass a decree. That said, settlement of group/class actions and claims by minors must be made with the prior approval of the court and in accordance with the procedure set out under the CPC.
6.7 Can Government authorities concerned with health and social security matters claim from any damages awarded or settlements paid to the claimant without admission of liability reimbursement of treatment costs, unemployment benefits or other costs paid by the authorities to the claimant in respect of the injury allegedly caused by the product. If so, who has responsibility for the repayment of such sums?
We have not seen instances of this in India.
7 Costs / Funding
7.1 Can the successful party recover: (a) court fees or other incidental expenses; (b) their own legal costs of bringing the proceedings, from the losing party?
Courts may award reasonable court fees, legal costs and other incidental expenses to the successful party. The amount of costs permitted to be recovered is subject to the discretion of the court and may not necessarily equal the actual costs borne by the party.
7.2 Is public funding, e.g. legal aid, available?
The Constitution of India directs the state to provide for free legal aid for securing justice. Further, the Legal Services Authorities Act, 1987 (Legal Services Act) establishes authorities at the district, state and national level to provide free legal services to certain classes of people.
7.3 If so, are there any restrictions on the availability of public funding?
Under the Legal Services Act, only certain economically and socially weaker classes of persons defined under the Legal Services Act are entitled to free legal services, such as women, children, victims of human trafficking, people with a disability, victims of mass disaster, ethnic violence, natural disasters, socially and economically backward classes, and industrial workmen.
7.4 Is funding allowed through conditional or contingency fees and, if so, on what conditions?
The Bar Council of India, which is the regulatory body for lawyers, does not permit lawyers to charge a success fee or contingent fee.
7.5 Is third party funding of claims permitted and, if so, on what basis may funding be provided?
The Supreme Court of India held in Bar Council of India v AK Balaji and ors (AIR 2018 SC 1382) that third party funding/legal financing agreements are not prohibited in India. Practically, the funding is based on commercially agreed terms between the parties. Additionally, the Consumer Welfare Fund provides financial assistance for expenses on advocacy and class action suits, and applications may be made to it for reimbursement of legal expenses incurred by a complainant or a class of complainants upon completion of a consumer dispute.
7.6 In advance of the case proceeding to trial, does the court exercise any control over the costs to be incurred by the parties so that they are proportionate to the value of the claim?
No, courts do not exercise control over the costs incurred by parties as courts are conservative in awarding costs to a litigant.
8.1 Please provide, in no more than 300 words, a summary of any new cases, trends and developments in Product Liability Law in your jurisdiction including how the courts are approaching any issues arising in relation to new technologies and artificial intelligence.
2019 has seen significant development in product liability law in India.
The CPA 2019, which is set to replace the Consumer Protection Act, 1986, has been passed by the Indian legislature but has not been brought into force yet. It aims to strengthen consumer protection laws and the product liability framework in India, and to regulate matters relating to violation of consumers’ rights, the CCPA, a central consumer protection authority, is proposed to be established. E-commerce and electronic service providers have also been included under the ambit of the statute, and measures to prevent unfair trade and unethical business practices by e-commerce portals have also been prescribed.
The amendment to the MVA, amongst other things, has introduced a statutory framework for the recall of defective vehicles. Vehicle recall was hitherto largely self-driven by manufacturers and dealers as strategic initiatives to avoid or limit liability, and in 2019, voluntary recalls were instituted by major automobile manufacturers such as Hyundai Motors, Mahindra and Mahindra, and Maruti Suzuki.
In the wake of the global emission scandal involving Volkswagen, the National Green Tribunal (NGT, a forum set up in India for expeditious disposal of cases relating to environmental issues) held Volkswagen liable under the polluter pays principle, precautionary principle and principles of sustainable development. NGT imposed a fine of INR 5,000,000,000 (approximately USD 6,56,47,000) on Volkswagen and directed the Central Pollution Control Board to take further necessary action under the applicable statutory regime. The order has been challenged before the Supreme Court of India, which passed an interim order directing the NGT not to take any coercive steps against Volkswagen. The case is currently pending before the Supreme Court.
In the pharmaceutical sector, there were several drug-related recalls in 2019, both voluntary and upon order by the regulator for not meeting prescribed standards of quality. The scope of the regulatory framework for medical devices, which earlier governed only certain identified medical devices, has been enhanced with effect from April 1, 2020 to include all medical devices, and an online system for the registration of medical devices is to be established.
The case involving the faulty hip replacement device manufactured by J&J is ongoing in Indian courts, and pending judgement, J&J has agreed to pay INR 2,500,000 (approximately USD 33,000) each to identified patients as interim compensation.
In areas of rapid technological change, such as 3D printing and driverless cars, the existing principles of product liability in India are still not sufficiently evolved to identify and apportion liability in cases involving human and machine error. The issue of liability is even less clear in situations where the involvement of a human element is reduced and important decisions are taken by artificial intelligence systems. However, in spite of the challenges presented by such rapid change, legislators and the judiciary are continuously attempting to keep Indian laws updated.
Vivek Bajaj, Partner
Kaavya Raghavan, Associate
Sherien Kaul, Associate