I INTRODUCTION TO THE PRODUCT LIABILITY FRAMEWORK[1]

In India, the recently introduced Consumer Protection Act, 2019 (CPA 2019) has defined product liability 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”.[2] Before this, the term had not been specifically defined under any statute.

There are other statutes and multiple general and sector-specific laws exist that form part of the legal framework governing product liability. In certain instances, the laws and regulations may overlap, depending on the sector and facts of the case.

Briefly, the substantive civil laws that relate to product liability in India are:

a. the Consumer Protection Act, 2019;
b. the Sale of Goods Act, 1930 (SGA); and
c. the Indian Contract Act, 1872 (ICA).

Further, given that India is a common law country, courts are influenced by principles of justice, equity and good conscience, and principles of tort law such as the duty of care, negligence and strict liability (including absolute liability in exceptional circumstances) in claims dealing with product liability. The provisions of the Indian Penal Code, 1860 (IPC), such as those relating to criminal negligence, fraud and cheating, may apply in cases of supply of defective products, if criminal intent is ascribed to the acts of the manufacturers or suppliers. Furthermore, depending on the facts of the case, criminal liability may also arise under industry-specific statutes (discussed in Section II of this chapter).

There are also regulations, such as the ones under the Bureau of Indian Standards Act, 2016 (the BIS Act),[3] which set out mandatory and voluntary standards and specifications applicable to products across different sectors and industries.

In addition to the foregoing, specific industries such as the food[4], pharmaceuticals[5], automotive[6] and electronics[7] have specific laws that govern and regulate product standards, product safety and liability in these sectors.

II REGULATORY OVERSIGHT

The regulatory authorities in India overseeing product safety fall into two categories: pan-industry regulators and industry-specific regulators. Among the pan-industry regulators, the most significant agency for product safety and development of product standards is the Bureau of Indian Standards (BIS), which was established under the BIS Act. The BIS Act allows the central government to notify certain goods, articles, processes, systems or services, or any essential requirements for such goods, articles, processes, systems or services that will need to compulsorily comply with prescribed standards and carry a standard mark. Such goods, articles, processes, systems or services will be notified by the government if it considers them necessary for:

a. public interest;
b. the protection of human, animal or plant health;
c. safety of the environment;
d. prevention of unfair trade practices; or
e. national security.

BIS develops and sets out quality standards and certification requirements for different goods in India, some of which are mandatory, while the others remain voluntary. In cases of goods where the standards are mandatory, such as cement, identified electronic goods, pneumatic tyres, steel and steel products, domestic gas stoves, and certain valves and cylinders, manufacturers, importers, distributors, retailers, sellers, lessors and any person who applies his or her trademark on such goods or service are required to ensure compliance with these standards before the goods or services are manufactured, imported, distributed, sold, leased, stored or exhibited in India. If the 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 may 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.

The CPA 2019 provides for the establishment of the Central Consumer Protection Authority (CCPA), a body to promote, protect and enforce the rights of consumers as a class. The CCPA regulates matters relating to the violation of consumers’ rights, unfair trade practices, and false or misleading advertisements. Among other things, the CCPA has the authority to refer instances of violations of consumer rights or unfair trade practices to investigating authorities, and pass orders to recall goods or withdraw services that are dangerous or hazardous, ensure reimbursement of the price for such goods or services to the purchasers, and discontinue practices that are unfair or prejudicial to consumer’s interests.

In addition to the foregoing, the drug, automotive and food industries are some of the notable sectors governed by industry-specific regulators, which are discussed below.

i. Drugs and medical devices

The Central Drugs Standard Control Organisation (CDSCO) is the central authority for discharging functions assigned to the central government under the Drugs Act. Some of the major functions of the CDSCO include regulatory control (including quality control) over imported and locally manufactured drugs and setting out standards applicable to drugs and cosmetics. The CDSCO also has the power to regulate, restrict or prohibit the manufacture, sale or distribution of drugs or cosmetics that are likely to involve any risk to human beings or animals.

The implementation of these standards and related requirements under the Drugs Act and the rules framed thereunder are carried out by central and state authorities, including central and regional drug laboratories, drugs controllers, licensing authorities and inspectors.

The Union Ministry of Health and Family Welfare (Ministry of Health) notified the Medical Devices Rules, 2017 (Devices Rules), which came into force on 1 January, 2018. These rules apply to substances used for in vitro diagnosis and surgical materials, blood and blood component collection bags, mechanical contraceptives, disinfectants and insecticides as notified under the Drugs Act; and devices notified from time to time under the Drugs Act. Pursuant to these rules, medical device manufacturers are required to follow the essential principles of safety and performance of medical devices and conform to standards that may be specified by the Ministry of Health or the BIS, from time to time. Where no standards are notified by the Indian regulators, medical devices are required to conform to the standards laid down by the International Organisation for Standardization or the International Electrotechnical Commission, or any other pharmacopoeial standards. In the absence of these international standards, medical devices should conform to the validated manufacturer’s standards.  In 2019, the Ministry of Health has proposed to set up an online system for the registration of medical devices.

Manufacturers or suppliers that obtain licences for manufacture and distribution of medical devices are required to adhere to a number of conditions, including recall of devices. 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 also impose a general obligation on manufacturers or authorised agents to recall medical devices (manufactured or imported) that are likely to pose a risk to users’ health, indicating reasons for the recall, and 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.

ii. Automobiles

Under the MVA, the Ministry of Road Transport and Highways (MoRTH) is the primary authority for regulation of the automotive industry in India. It has overarching powers, including laying down standards on automotive safety, construction and equipment of motor vehicles, which have to be complied with by automobile manufacturers. Pursuant to these powers, MoRTH, in consultation with the Automotive Industry Standards Committee and other committees, has set out automotive technical standards and specifications to be complied with by motor vehicles manufactured or sold in India.

In 2019, the MVA was amended to permit a motor vehicle manufacturer to initiate voluntary recalls, and empower the MoRTH to order recalls. A direction to recall motor vehicles of a particular type may be made if a defect is found in the vehicle which may harm the environment, driver, occupants, or other road users, or if the defect is reported to the MoRTH by a certain percentage of vehicle owners (as decided by the MoRTH), a testing agency, or any other source. Where the defect lies in a motor vehicle component, the MoRTH may direct a motor vehicle manufacturer to recall all motor vehicles that contain such component, regardless of the type or variants of such motor vehicle. The manufacturer of the motor vehicles that have been recalled will be liable to reimburse the buyers the full amount, replace the defective motor vehicle with another motor vehicle of similar or better specifications, or pay the prescribed fines.

Further, the manufacturers or importers of motor vehicles being sold, delivered, and offered for sale or delivery or being used in a public place are required to obtain a type-approval certificate for such vehicles. However, exemption from this requirement has been provided for the vehicles only intended only for export, display, demonstration, or exhibition, being used by the manufacturer of the vehicles or for the purposes of research, data collection, or test by testing agencies inside a factory premises or in a non-public place, or that are exempted by the MoRTH.

Manufacturers who do not comply with the provisions of the MVA relating to construction, maintenance, sale and alteration of motor vehicles and its components will be liable to pay a fine which may extend to 1 billion rupees, or imprisonment of up to one year, or both. Additionally, manufacturers, importers or dealers of motor vehicles who offer to, or sell, deliver or alter a motor vehicle, or (b) any other person who sells or offers to sell, or permits the sale of a motor vehicle component notified as a critical safety component of a motor vehicle, in contravention of such provisions will be punishable with imprisonment of up to one year, or with a fine of 100,000 rupees, or both for every non-compliant vehicle or component.

iii. Food

The Food Safety and Standards Authority of India (the Food Authority) was established under the FSSA to regulate the manufacture, storage, distribution, sale and import of food to ensure the availability of safe and wholesome food for human consumption. The Food Authority has broad powers under the FSSA, including specifying and enforcing standards and guidelines in relation to food, food labelling and recalls. 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 Authority has issued guidelines to help FBOs develop a food recall plan, and also requires FBOs to maintain a recall management team. 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

a. ensure removal of food under recall from all stages of the food chain;
b. disseminate information to the consumers and customers concerned; and
c. retrieve, destroy or reprocess food under recall.

Prior to the notification of the Food Recall Regulations, the Food Authority had used its inherent powers under the FSSA to recall defective or unsafe food. Under the FSSA, the manufacture, storage, sale, distribution or import of food that is unsafe for human consumption is punishable by imprisonment and fines.

III CAUSES OF ACTION

The term ‘cause of action’ is not defined under Indian statutes but has acquired a settled meaning based on judicial interpretation. It is largely a civil law concept and, generally speaking, it refers to all circumstances or sets of facts that give rise to a right to sue or, if proved or admitted, would entitle the plaintiff (the complainant) to the relief claimed by it.

Given the broad import of the term, various causes of action may arise in contractual disputes. For example, in a suit for damages for breach of contract, the cause of action may consist of the making of the contract, performance of the contract and of its breach. Under the CPA 2019, a cause of action for a claim in product liability arises when a consumer suffers ‘harm'[8] caused by a defective product manufactured by a product manufacturer or serviced by a product service provider or sold by a product seller.

A “defect” for which the consumer may file for a claim includes any fault, imperfection or shortcoming in the quality, quantity, potency, purity or standard of the product that is required to be maintained as per law.

Indian courts have cautioned against extrapolation of civil law concepts such as ‘cause of action’ onto criminal law. The criminal procedural law in India unambiguously states that every offence shall ordinarily be inquired into and tried by a court within whose local jurisdiction it was committed. Therefore, this principle will need to be borne in mind if elements of provisions of the IPC such as those relating to negligence, fraud or cheating are present in product liability cases.

IV LITIGATION

i. Forum

Depending on the facts, the goods or services involved and the category of the aggrieved party (the consumer or buyer for commercial use), there are multiple forums that an aggrieved party can approach in cases relating to loss, damage or injury resulting from defects in goods or services. These include:

a. jurisdictional consumer court or forum (depending on the claim amount) under the CPA 2019;
b. jurisdictional civil court in a case of a contractual breach or a tortious action;
c. an arbitration tribunal in accordance with an arbitration agreement executed between the relevant parties in a case of contractual breach; or
d. jurisdictional magistrate’s court in the event of a criminal offence.

In addition to the foregoing, in certain circumstances, aggrieved parties can also approach a jurisdictional high court if the distribution of defective products has resulted from a breach of duty or inaction by a statutory authority.

Further, in 2015, the Indian Parliament enacted the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (the Commercial Courts Act), which seeks to streamline and fast-track commercial disputes (including disputes arising out of agreements related to the sale of goods or provision of services). The Commercial Courts Act was amended in 2018, and provides for the constitution of:

a. commercial courts at a district level, though in areas where the high court exercises ordinary original civil jurisdiction the state government may specify the limits of the commercial courts’ pecuniary jurisdiction; and
b. commercial divisions and commercial appellate divisions in all high courts having ordinary civil jurisdiction.

These have been constituted for the adjudication and speedy disposal of commercial disputes:

a. of a specified value of not less than 300,000 rupees or such other value as notified; and
b. within the limits of the relevant territorial jurisdiction.

Although the Commercial Courts Act has come into force, commercial courts are still in the process of commencing proceedings across various Indian states.

In India, dispute resolution through adjudication by courts and arbitration are completely distinct and independent processes that rarely overlap. If disputes are adjudicated before a civil court or a specially constituted tribunal, the matter is presided over by judges or presiding officers, as the case may be. India does not follow a jury system of trial. In a case of arbitration proceedings, the claims are adjudicated by the arbitral tribunal appointed by the parties in accordance with their arbitration agreement or in the manner set out in the rules of arbitration elected by the parties. Having said that, it is very common for parties to an arbitration agreement to appoint retired judges as arbitrators. Mediation, as a method of alternate dispute resolution is also gaining popularity in India. The recent amendment to the Commercial Courts Act makes pre-institution mediation mandatory in all cases where the parties do not require immediate intervention by courts.

ii. Burden of proof

The Indian Evidence Act, 1872 (Evidence Act) sets out the law relating to burden of proof for civil and criminal cases. As a general rule, any party seeking the court’s intervention as to enforcement of its legal rights must prove the facts that establish and substantiate its claim.

To establish causation in product liability cases under Indian law, every fact establishing the elements of a cause of action must be proved by the plaintiff or the aggrieved party. Therefore, in claims relating to defects in products, depending on the factual circumstances, the burden of proof will be on the aggrieved party to prove:

a. the presence of a defect in the goods;
b. breach of warranty or condition (implied or expressed); or
c. breach of duty of care and resulting damage (in instances involving negligence).

In some cases, however, the Indian courts have held that the existence of the defect per se is proof of negligence.

In a criminal case involving product liability or product defect, the burden of proof generally lies on the prosecution, unless specific statutes expressly provide otherwise. Furthermore, 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 accused to prove that the offence was not committed.

iii. Defences

The defence typically available to manufacturers, distributors or sellers in product liability claims include the following:

a. the product being compliant with requisite statutory standards prescribed;
b. the product not being ‘defective’ as defined under the CPA 2019;
c. the purchaser of the product is not a ‘consumer’ as defined under the CPA 2019;
d. loss or injury is owing to negligence or misuse by the consumer or buyer, including contributory negligence;
e. the consumer or buyer had examined the goods prior to purchase and accepted it, being satisfied of its quality or specification; or
f. contractually agreed disclaimers or limitations on warranties in terms of scope, period, recourse and amount.

A product liability action cannot be brought against a product seller, if at the time of harm, the product was altered, misused or modified. A product manufacturer will not be liable for failure to instruct or warn about a danger that is obvious or commonly known to the user, taking into account the characteristics of the product. Additionally, the product manufacturer will also not be liable for failure to provide adequate warnings or instructions if:

a. the product was purchased by an employer for use at workplace and warnings or instructions of usage had been communicated to the employer;
b. 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;
c. the product is legally meant to be used under supervision of an expert and reasonable means have been employed by the manufacturer to communicate the warnings or instructions of usage to those experts; or
d. the consumer under the influence of alcohol or any prescription drug not prescribed by a medical practitioner.

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. Limitation on filing of suits in India is governed by the Limitation Act 1963. 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. Further, in addition to the general law on limitation, some specific statutes regulating certain products expressly set out applicable periods of limitation. For example, the FSSA provides for a limitation period of one year from the date of commission of an offence, extendable up to three years at the discretion of the relevant authorities. The CPA 2019 provides for a limitation period of two years from the date of the cause of action; however, the CPA 2019 gives the consumer court the discretion to entertain complaints filed beyond the limitation period if it is satisfied with the reasons for the delay.

iv. Personal jurisdiction

Usually, a civil court will have jurisdiction to adjudicate a claim if the cause of action, wholly or in part, arises within its jurisdiction. Further, the Code of Civil Procedure (CPC), which sets out the relevant provisions relating to the jurisdiction of courts in civil cases, gives the plaintiff discretion to file a suit for compensation for damage done to persons or movables, in the jurisdictional court of the local limits where the cause of action took place, in part or full, or the court within the local limits where the defendant resides, or carries on business, or personally works for gain.

In cases involving foreign parties, Indian courts favour the common law principle of comity. Therefore, if the facts and circumstances indicate that a foreign court has jurisdiction (e.g., if the parties have agreed to subject themselves to the exclusive jurisdiction of a foreign court), subject to certain exceptions, Indian courts are reluctant to interfere and tend to direct the aggrieved party to seek redress before the relevant foreign court. Having said that, Indian courts can ignore the choice of jurisdiction of the contracting parties if, among others, it is in the interests of justice to do so or if, by contract, the parties have vested jurisdiction in a court that originally lacks jurisdiction.

Further, if it can be demonstrated by the aggrieved party that the situs of the contract or the cause of action (wholly or in part) arises in India, the Indian courts may assume jurisdiction, if considered appropriate to do so.

Indian law recognises the doctrine of privity of contract and, consequently, third parties are not ordinarily entitled to benefit from or sue for the breach of a contract to which they are not a party. Applying this principle to a case relating to product defects, where cause of action (wholly or in part) arises in India, a manufacturer or seller would not be liable for damages under breach of contract unless the claimant can establish existence of a valid contractual relationship with the manufacturer or seller.

However, in a considerable deviation from the position relating to contractual claims, in certain cases where aggrieved parties have alleged the tort of negligence, Indian courts have applied the principle in Donoghue v. Stevenson,[9] where a duty of care is imposed on a party with regard to any person who would be affected by the first party’s actions or who the first party should have considered while directing its acts or omissions (irrespective of whether any contractual relationship exists), and have assumed jurisdiction over the first party upon the request of the aggrieved party. Therefore, exercising such jurisdiction, Indian courts have attached tortious liability to sellers and distributors in addition to manufacturers in cases of defective products.

v. Expert witnesses

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 Evidence Act sets out the circumstances in which a court can rely on experts and these include instances when the court must 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 (CrPC). Further, under the CPA 2019, the consumer courts have the power to appoint experts to examine defective products manufactured, sold or distributed if  the defect cannot be determined without proper analysis or testing of the goods. The consumer courts may also appoint experts to assist them if such courts are of the opinion that an issue involves the larger interest of consumers.

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.

vi. Discovery

The procedure governing the discovery of documents or information under Indian law is principally governed by the CPC for civil matters and CrPC for criminal cases. Indian courts (including consumer courts) have inherent powers to call for the production of documents or information that are in the power or possession of a party to the proceeding or a third party at any time during the pendency of proceedings. Indian law does not, however, permit discovery of evidence or information prior to initiation of legal proceedings.

Discovery of information is permitted through an order for discovery of documents or through interrogatories in civil cases, or through summons in criminal cases. The granting of an order permitting discovery of information (including production of documents) is completely at the discretion of the court and, ordinarily, discovery will not be permitted unless the court is satisfied that it is necessary either for disposing of the matter fairly or to save costs. If the information or documents are not produced before the court and no legitimate reason is provided for this failure, the courts may draw an adverse inference against the party that has failed to comply.

In criminal cases, the court has the power to issue summons or a written order requiring a person to produce any document or thing believed to be in its possession or power for the purpose of any investigation, inquiry, trial or other proceeding.

vii. Apportionment

Under Indian law, a decree passed in respect of payment of compensation or damages in a suit for breach of contract or tortious claims may be passed by a civil court only against persons named as defendants in the suit.

In cases of defective products that are also contractual breaches, 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. In cases of tort, the Indian courts recognise the principle of joint and several liability. Under this principle, multiple parties may be held jointly liable in respect of any tortious claim by an affected person if the parties have, acting in concert, committed a wrongful act resulting in loss or damage to the affected person or, 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. Further, in consumer complaints under the CPA 2019, the relevant forum has upheld the principle of joint and several liability and held the manufacturer and dealer to be jointly and severally liable for sale of defective products.

viii. Mass tort actions

India does not have a codified system of tort law. Under the 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, if 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. Additionally, the CPC also 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 recognises the right of the CCPA to initiate a class action, including enforcing recall, refund and return of products when necessary, in order to prevent detrimental effects to the consumer’s interests. The definition of a ‘complainant’ under the CPA 2019 includes 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. The complainants are required to obtain prior permission from the relevant forum for adjudication of disputes under the CPA 2019 before instituting such proceedings. Additionally, the CPA 2019 provides the district, state and national fora the power to grant relief to several consumers who are unidentifiable. This power is typically exercised in the event of loss or injury being suffered by a large number of consumers as a result of defective goods or services, and where the consumers cannot easily be identified.

ix. Damages

The general law of economic damages in the Indian context is covered under the SGA, Contract Act, the 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.

Further, damages under contract may be either liquidated or unliquidated. Liquidated damages are such as have been agreed upon and fixed by the parties in anticipation of a breach whereas unliquidated damages must be assessed and quantified. In either case, the courts have broad discretion in the assessment of damages. Applying the reasonableness test, the court usually awards the actual amount of loss proved to have been suffered by the aggrieved party as a direct result of the breach of the contract by the defaulting party; however, if the parties have stipulated liquidated damages in the contract, the courts, subject to the stipulated amount being a genuine pre-estimate of the loss, will not grant damages in excess of the stipulated amount.

Unlike in the case of a contract where the function of damages is primarily to compensate the aggrieved party for losses sustained by it owing to breach of contract, the function of damages in tort is to put the injured in the position in which it would have been had the tort not been committed. Further, the Indian courts have held that remedy by way of damages in tort extends to a negligent manufacturer causing monetary loss by the supply of a sub-standard product and is not restricted merely to loss of life or property of the user.

In contractual disputes, Indian courts do not normally award punitive or exemplary damages. However, applying principles of tort law, such as strict and absolute liability, exemplary damages have been awarded by the courts in cases where harm has been caused by ultra-hazardous or dangerous actions. The CPA 2019 permits awards of punitive damages in circumstances deemed fit by the consumer courts. Further under the CPA 1986, the courts have in the past awarded damages by way of compensation in exceptional cases where it has been established that the complainant suffered harassment and extreme pain and suffering as a result of the conduct of the manufacturer, supplier or distributor, pursuant to its claim. However, the amount of damages awarded under consumer protection laws or by a civil court is much lower than and not comparable with punitive damages that are awarded in other developed countries.

With regard to the assessment of damages, Indian law imposes on the plaintiff the duty of taking all reasonable steps to mitigate the loss consequent to the breach and debars the plaintiff from claiming any part of the damage that is owing to its failure to take these steps. Therefore, a court may deny a plaintiff’s claim to the extent that it finds that the plaintiff has failed to mitigate the 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. Courts are also able to pass an interim order attaching the assets of a defendant or requiring it to furnish security in certain circumstances.

V YEAR IN REVIEW

Two major milestones in Indian product liability law in 2019 were the enactment of the CPA 2019, which includes a chapter on product liability, and the amendment of the MVA.

The Food Authority recently initiated recall, and passed orders to stop the production of packaged food that contained a toy in it that posed a choking hazard to children. Further, the Food Authority is also exploring the possibility of setting standards for Ayurvedic food as a part of its food supplement regulation. However, no regulations have been notified in this regard.

In 2019, drug manufacturer GlaxoSmithKline voluntarily initiated recall of the heartburn drug Ranitidine and Zinetac tablets (150 mg and 300 mg), which came under the radar of the CDSCO for containing carcinogenic substances. The supply of Atorvastatin was also banned in certain states in India after it was declared to be not of a standard quality by the CDSCO.

Six years after the cancellation of Johnson & Johnson’s (J&J) import license for hip replacement devices that were faulty, J&J had been ordered by the Ministry of Health to pay compensation (ranging between 3 million and 12.3 million rupees) to patients who had received the faulty hip implant. A committee was formed by the Ministry of Health that calculated the compensation payable based on a formula using a person’s age and the extent of disability. J&J challenged the committee’s decision on grounds of lack of transparency and opportunity to be heard, which still remains pending before the Delhi High Court. Pending judgment, J&J has agreed to pay 2.5 million rupees each to identified patients as interim compensation. An expert subcommittee has been constituted to review and appropriately recommend provisions for compensation in case of faulty devices under the Devices Rules.  There is also a proposal by the CDSCO to include all medical devices under the regulatory provisions of the Devices Rules.

In 2019, prior to the amendment of MVA, several car companies initiated voluntary recalls of their cars owing to various defects discovered in the cars’ components, including safety issues in certain circumstances. The recall was initiated under the Voluntary Code on Vehicle Recall prescribed by the Society of Indian Automobile Manufacturers. Hyundai Motors has recalled over 16,000 cars due to a fault in the compressed natural gas filter assembled in the cars; Mahindra and Mahindra recalled a total of 16,908 cars due to improper metallurgical condition of the suspension component, and Maruti Suzuki issued for the recall for over 40,000 vehicles suspected of fuel hose fouling with metal clamp which could lead to fuel leakage. On account of the amendment to the MVA in 2019, the recalls will be now under the MVA, and will no longer be under the Voluntary Code on Vehicle Recall.

In relation to the global emission scandal involving Volkswagen, a public interest litigation (PIL) was filed against Volkswagen in India before the National Green Tribunal (NGT, which is the forum set up in India for expeditious disposal of cases relating to environmental and conservation-related issues) towards the end of 2015. The PIL sought a ban on sale of the cars in India, and Volkswagen, as part of its ongoing global recall, continued to carry out a voluntary recall of its cars affected in India. While a committee constituted by the NGT to estimate the quantum of environmental loss caused by Volkswagen recommended a fine of 1.7 billion rupees, the NGT holding Volkswagen liable under the polluter pays principle, precautionary principle and the principles of sustainable development, imposed a fine of 5 billion rupees on Volkswagen while ordering the Central Pollution Control Board to take further actions as may be required under applicable statutory regime. This penalty has been challenged before the Supreme Court of India, and an interim order has been passed directing the NGT to not take any coercive steps against Volkswagen.

Until the recent statutory framework for recall of cars, voluntary product recalls was the main mechanism adopted by manufacturers and dealers to avoid or limit liability. Voluntary product recalls have continued being carried out across several industries. In particular, pursuant to obligations such as the duty of care under tort and consumer protection laws, manufacturers, dealers and distributors across various sectors undertake these actions as strategic initiatives to limit and curb potential liability arising because of defects in products.

Authors:

Vivek Bajaj, Partner
Kaavya Raghavan, Associate
Sherien Kaul, Associate

Footnotes:

[1] Vivek Bajaj is a partner, and Kaavya Raghavan and Sherien Kaul are associates at AZB & Partners.
[2] The CPA 2019, which seeks to replace the Consumer Protection Act, 1986 (CPA 1986) has been passed by the Indian legislature, but has not been brought into force yet. It has introduced specific provisions on product liability in India, and includes specific grounds under which a product manufacturer, product service provider and product seller may be held liable.
[3] The BIS Act, 2016 has replaced the Bureau of Indian Standards Act, 1986.
[4] Food Safety and Standards Act, 2006 (FSSA).
[5] Drugs and Cosmetics Act, 1940 (Drugs Act).
[6] Motor Vehicles Act, 1988 (MVA).
[7] Electronics and Information Technology Goods (Requirements for Compulsory Registration) Order, 2012.
[8] Harm to the consumer may be proved if (a) there was damage to any property, other than the product itself, (b) the consumer suffered personal injury, illness or death, (c) the defect or personal injury due to the defect in the product caused mental agony or emotional distress, or (d) there was any loss of consortium or services, not on account of harm caused to a product itself 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.
[9] [1932] AC 562.