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Is there a statute that governs product liability litigation?
Unlike the EU’s Product Liability Directive 85/374/EEC, India does not have a general product liability statute, but there are several general laws that protect consumers from defective products and, as explained above, the new Consumer Protection Act 2019 (CPA 2019) has introduced a new chapter on product liability effective from 20 July 2020. The Consumer Protection Act 1986 had provisions for a complaint to be filed in relation to goods that were hazardous to life and safety (in contravention of any standards imposed by law) or otherwise defective, defining ‘defect’ to mean ‘any fault, imperfection or shortcoming in the quality, quantity, potency, purity or standard that is required to be maintained by or under any law for the time being in force or under any contract, express or implied, or as is claimed by the trader in any manner whatsoever in relation to any goods’, but this has now been expanded under the new definition of ‘harm’ to cover more products. The definition in the CPA 2019 creates liability ‘for any harm caused by a defective product manufactured by a product manufacturer or serviced by a product service provider or sold by a product seller’, and section 83 now makes all three parties liable. There are other specific statutes that contain provisions relating to product safety, standards and regulations, such as:
A general duty is also imposed under the Sale of Goods Act 1930 whereby the sale is subject to implied conditions as to quality or fitness, merchantable quality and conformity with the sellers’ description. In some cases of goods being sold without warranty or other standard conditions in favour of the purchaser, the courts may occasionally resort to custom or trade practice to determine the normal antecedents of a sale in the relevant product. The CPA 2019 in section 2(47) defines ‘unfair trade practices' (deriving from the repealed Monopolies and Restrictive Trade Practices Act 1969) as covering any form of false or misleading representation, statement or advertisement; these are actionable through the usual consumer complaint process. Chapter VI of the CPA 2019 creates a new statutory product liability that derives from the following.
The CPA 2019 is directed at changing the law in favour of consumers by increasing the list of causes of action set out under what constitutes a complaint. It has introduced ‘a claim for Product Liability action against the product manufacturers, product seller or product service provider’ and also widens the concept of purchase to include online transactions. Consumer rights have been defined for the first time and these now include the right to be protected against ‘marketing of goods, products or services which are hazardous to life and property’ and ‘the right to be informed about the quality, quantity, potency, purity, standard and price of goods, products or services, as the case may be, so as to protect the consumer against unfair trade practices’. Interestingly, the CPA 2019 also imposes liability upon individuals who endorse an advertisement ‘which makes the consumer to believe that it reflects the opinion, finding or experience of the person making such endorsement’, thus widening the scope for action against not only the manufacturer, seller, trader and service provider but also against the person endorsing the relevant goods (such as an actor or well-known personality known as the ‘endorser’). The new definition of ‘harm’ in relation to product liability covers damage to any property other than the product itself. Thus, harm is defined to include personal injury, illness or death, mental agony or emotional distress, or any loss of consortium or services or other loss resulting from the foregoing. Injury (unlike the provisions of the Warsaw/Hague/Montreal Convention in Civil Aviation) has been specifically defined to include ‘any harm whatever illegally caused to any person, in body, mind or property’ thus covering mental agony in addition to lesions corporal or physical injury. Product liability is also defined widely in the CPA 2019 to include the responsibility of a product manufacturer or product seller to compensate for any harm caused to a consumer by any defective product manufactured or sold by that person, or any service rendered in relation thereto. All three expressions (ie, product manufacturer, product seller and product service provider) are widely defined so as to include parties connected with the sale process. The Central Consumer Protection Authority has been set up and empowered not only to regulate but also to promote, protect and enforce the rights of consumers as a class. Finally, the CPA 2019 contains the first statutory provision for the enforced recall of goods or withdrawal of services that are dangerous, hazardous or unsafe, as well as the reimbursement of the price of these goods.
What other theories of liability are available to product liability claimants?
Tort law is the foundation for non-contractual claims, but the law of tort in India has been overlaid with a rich variety of case law arising from consumer complaints, appellate decisions in the field of consumer law and recently some involvement of the Competition Commission of India in relation to conditions affecting the sale of certain products. New statutory rights and remedies will certainly affect the liability of various players and, naturally, insurance. Courts are generally guided by the principles of justice, equity and good conscience as precedent. Thus, product liability claimants have recourse to their contractual rights where there is a written contract or a printed warranty supplied with the product, in addition to consumer and tort remedies. It is also possible in some instances for an affected party to file criminal complaints against the supplier of a defective product if it has caused death or serious bodily harm; these complaints also serve to accelerate settlements, as the criminal proceedings, in most cases, are ‘compoundable’. The Drugs and Cosmetics Act 1940 also provides for criminal liability for the manufacturers and producers of medicinal products or cosmetics, etc, that do not adhere to the prescribed standards. Provisions of the Indian Penal Code are also attracted to provide punishment to offenders for false weights and measures, adulteration of goods (food and drugs, etc: six months’ imprisonment or a fine of 1,000 rupees, or both) and false property marks (one year’s imprisonment or a fine, or both).
Is there a consumer protection statute that provides remedies, imposes duties or otherwise affects product liability litigants?
The CPA 2019 contains provisions that impose new statutory duties and it has been formulated to allow for complaints against defective goods or services or goods that will be hazardous to life and safety when used or offered for sale to the public, as well as false and misleading advertisements or for storing, selling, distributing or importing adulterated products or spurious goods. The general provisions of the CPA 2019 cover faults, imperfections and shortcomings in the quality, quantity, potency, purity or standards that ought to be maintained under any law for the time it is in force or under any contract, express or implied. Depending on the claimed amount, the district commissions, state commissions and the National Consumer Disputes Redressal Commission (NCDRC) are adequately empowered under the CPA 2019 to provide any of the following relief in the case of defective goods or products:
Can criminal sanctions be imposed for the sale or distribution of defective products?
Chapter VII of the CPA 2019 contains reference to some new offences and criminal penalties punishing an accused person for false or misleading advertisement, punishing an accused person for manufacturing for sale or storing, selling or distributing or even importing products containing adulterants or that are spurious. The Act also imposes criminal penalties for non-compliance with orders of the district commission or state commission or NCDRC: the punishments may range from a fine to three years’ imprisonment, which is similar to the penalty for disobedience regarding the orders of the Central Consumer Protection Authority. Several other laws impose criminal sanctions in the form of punishments for a violation of standards, adulteration or for the sale of unsafe, hazardous or spurious products.
There have also been instances of the ordinary criminal law being applied for product safety cases: if a product was made negligently in such a manner as to cause death or endanger the personal safety of others, or if a product caused death because of a negligent act of another (operator, manufacturer or repair person), criminal proceedings could be commenced by the state. In some instances, provisions relating to cheating have been used with regard to the sale of spurious or defective products. The Indian Penal Code contains provisions for the fraudulent use of weights and measures and provisions in relation to the adulteration of food and drink, drugs, etc, so that punishment (imprisonment or a fine, or both) can be imposed in these cases. The Food Safety and Standards Act 2006 provides for imprisonment for life and a heavy fine to discourage the manufacture, storage, sale, distribution or import of any article of food for human consumption that is unsafe, as well as for similar wrongful conduct. Some other interesting statutes can occasionally cause unexpected consequences, such as the Drugs and Magic Remedies (Objectionable Advertisements) Act 1954, which provides for imprisonment as a result of an advertisement for a product claiming to cure any of the ailments specified in the Act (such as appendicitis, arteriosclerosis, cancer or blindness).
Are any novel theories available or emerging for product liability claimants?
With the advent of a new product liability law imposing liability for defective products, novel approaches will certainly be employed by product liability claimants. Indian law is, however, dynamic and often driven by equitable considerations, with all the civil courts having an equitable jurisdiction recognised by the Supreme Court. The Union Carbide cases involving the Bhopal gas leak disaster, arising out of a product that was not on the market and was in fact part of a manufacturing process, also gave rise to significant pronouncements (and some novel theories) in the field of tort and general dangerous products liability. We have avoided detailed reference to this case on account of the uncommon circumstances; however, this case also eventually prompted Parliament to enact the Civil Liability for Nuclear Damage Act 2010. The Regulations on Food Recall Procedures enforced from 2013 require ‘reasonable efforts’ to be made by the Food Safety and Standards Authority of India (FSSAI) to communicate with the end user or customer with specific reference to electronic media (emails, telephone calls and press announcements), and it is yet to be seen how these affect the relevant product sales and how the recall provisions and powers in the CPA 2019 will be given effect to.
What breaches of duties or other theories can be used to establish product defect?
The CPA 2019 defines ‘defect’ and ‘design’ in a manner that broadly covers fitness for purpose and express or implied standards. The usual civil law remedies (such as a suit in a court of original jurisdiction seeking damages on account of a defective product, damages for breach of warranty (within the warranty period) and even prayers for mandatory injunctions to compel the defendant to repair, replace, recall or otherwise mitigate the damage caused by a defective product) have been effectively pursued in Indian courts, though sometimes the remedy can take far longer than a normal commercial process could easily tolerate. Certain products carry warnings about the type of use they are intended for so as to bypass the implied fitness for purpose provisions of the Sale of Goods Act, 1930, and most warranties contain similar language so as to limit the manufacturer’s liability for damages, replacement or repair. Interestingly, consumer courts in India, being generally inclined to favour the evidence of a consumer, treat technical defences adopted by manufacturers with some disdain and rarely allow reliance upon long-winded warranty clauses, especially if they are incorporated by reference into a manufacturer’s standard warranty.
The National Consumer Disputes Redressal Commission (NCDRC) has also laid down, in this regard, that if standards prescribed under some law are not maintained, the product shall be construed as hazardous (see Asia Tea Company and Ors v On behalf of Commissioner, Civil Supplies and Consumer Protection Department, I (2017) CPJ 461 (NC)). Occasionally, the consumer courts treat a complainant’s case with suspicion when it is apparent that the product has already been well used without complaint (see the General Motors India Pvt Ltd v GS Fertilizers, 2013 SCC Online NCDRC 126). Expiry of the warranty period may not prevent a court from awarding damages when the cause of action is stated to have occurred during the warranty (see Ashok Leyland Ltd v Gopal Sharma & Others [II (2014) CPJ 394 (NC)]), and in some cases the consumer forum may even extend the warranty for the period of distress (see Balaji Motors v Devendra and Another, II (2013) CPJ 534 (NC)).
By what standards may a product be deemed defective and who bears the burden of proof? May that burden be shifted to the opposing party? What is the standard of proof?
There is no clear objective standard for a product to be deemed defective, except when it is covered under the definition of the word ‘defect’ appearing in the definition clause and where specific rules have been set out by a statutory authority such as the Bureau of Indian Standards, the Food Safety and Standards Authority, the Bureau of Energy Efficiency or the Export Inspection Council. A court may grant damages to the affected party if it considers a product as defective on account of proven facts. Ordinarily, the burden of proof lies on the claimant (subject to common law evidentiary rules that sometimes cast the burden on the other side), and the standard of proof is the normal civil standard: namely, the preponderance of evidence or balance of probabilities to be decided by the adjudicating officer or court, but in certain cases, it can be shifted onto the manufacturer as well. In Tata Motors v Rajesh Tyagi and HIM Motors Show Room-II, 2014 (1) CPC 267, the NCDRC held that:
We have also taken a view that onus shifts to the manufacturer to show that the vehicle does not suffer from manufacturing defect once complainant has proved and discharged the initial onus that the vehicle was defective on the basis of large number of job cards showing that vehicle was taken on many occasions for removing one defect or the other.
Who may be found liable for injuries and damages caused by defective products? Is it possible for respondents to limit or exclude their liability?
The law provides that any person who trades in goods or provides services in any manner, such as the manufacturer, seller, importer, distributor, wholesaler, packer, retailer, etc, may be held liable for injuries or damage, or both, caused by defective or spurious products. However, the courts have tended to fix liability for defective products predominantly on the manufacturer. In Ram Shankar Yadav v JP Associates Ltd [I (2012) CPJ 110] the NCDRC observed: ‘In any case, it is settled law that for any manufacturing defect in a product, it is the manufacturer and not the dealer who could be held liable’. In reviewing the definitions of ‘complaint’, ‘defect’, ‘deficiency’, ‘product manufacturer’, ‘product seller’ and ‘product service provider’ contained in the CPA 2019 along with the new Chapter VI, one may find the foregoing statement of law to be inconsistent with the new statute. Nevertheless, in our view this should be read in the context of a normal dispute where both the manufacturer and the seller or dealer are made parties and, where the manufacturer is unavailable or out of India, the complaint would lie only against the seller and the action would not fail against a seller who has imported defective products. Similarly, if fault cannot be pinned onto the manufacturer on account of bad presale storage conditions (for example, in the sale of cement or chocolates), then the manufacturer, dealer and even the retailer may be jointly liable (see Bhopal Steels v Govind Lal Sahu & Others [III (2008) CPJ 89 NC]). Thus, more than one party may be held liable in respect of the same damage, but again the apportionment of liability will depend on a finding of fault (see the case of Mrs Rashmi Handa & Ors v OTIS Elevator Company (India) Ltd & Others [I (2014) CPJ 344 (NC)]). The CPA 2019 provides for liability of the manufacturer or producer resulting from defects in the manufacture, construction, design, formula, preparation, assembly, testing, service, warnings, instructions, marketing, packaging or labelling of a product.
What is the standard by which causation between defect and injury or damages must be established? Who bears the burden and may it be shifted to the opposing party?
Causation requires a direct link between the product defect and the injury caused. A possible outside act or intervention of a third party can be asserted as a defence to demonstrate that the causal link between the loss caused and the defendant’s area of responsibility is broken. A product defect must be treated as a sine qua non or causa causans for the injury and not a contributing factor.
The law in this regard evolves from a few unfortunate cases such as one involving a defective escalator that was not serviced, which caused the death of a minor (Geeta Jethani and Others v Airports Authority of India [III 2004 CPJ 106 NC]). In Karuna Ketan Biswas v Airports Authority of India and Ors [II (2013) CPJ 37 (WB)] the Airport Authority of India was held not liable for deficiency in their services but was directed to compensate the complainant by way of an ex-gratia payment of 50,000 rupees. Although the manufacturer (Otis) was made a party to the litigation, it was not held liable, owing to the lapsed warranty and maintenance contract, so the owner-operator of the escalator alone was held to be negligent. The doctrine of res ipsa loquitur may be invoked to transfer the burden of proof onto the manufacturer. In such cases it could be argued that maintenance should only be required to ensure that the machinery functions at its optimum capacity, but the manufacturing process should be such that there are built-in safety mechanisms (such as an auto-cut mechanism for an escalator or emergency brakes in a lift) to prevent the machine from becoming hazardous, and in the absence of such safety mechanisms, there could be an automatic presumption of defect in the manufacturing process following an accident that caused death or injury such as the Jethani v AAI case. Once it is assumed that the product is defective, the manufacturer must establish that the defect (or other failure owing to bad maintenance) could not have arisen from the manufacturing process. In a manufacturing defect case, the plaintiff still bears the burden of proving that the product in question was faulty or defective. Often, the manufacturer’s design or marketing standards can be used to show that the product was defective, but proving how or why the flaw or defect occurred can be difficult for the complainant. Ordinarily, the burden of proof to demonstrate that a product caused a specific injury would be on the claimant, but where there have been several instances of defects leading to an unreasonable number of visits to the workshop (see the Tata Engineering & Locomotive Co Ltd (TELCO) v Subhash Ahuja and Anr, 2013 SCC Online NCDRC 425) the burden may be shifted onto the manufacturer. The burden of proof to show any defect in goods is always on the person who alleges the deficiency, and the cost of getting the product tested must ordinarily be borne by the party alleging the defect (see Jai Prakash Verma v JK Lakshmi Cement Ltd, II (2013) CPJ 54 (NC)), but once a product is proved to be defective, the manufacturer must be liable if it caused injury unless such injury is expressly excluded by contract or accepted by the user through the volenti non fit inuria doctrine.
What post-sale duties may be imposed on potentially responsible parties and how might liability be imposed upon their breach?
Post-sale duties are ordinarily imposed by contract in the form of a warranty, and manufacturers generally, limit the terms of the warranty so as to avoid consequential loss or damage on account of a defective product, leaving themselves liable only to repair a product that has a ‘manufacturing defect’. Provisions of the Sale of Goods Act 1930 and the CPA 2019 impose an automatic ‘fitness for purpose’ warranty, and although this can be limited by contract, consumer courts are not always open to technical limitations imposed by small-print warranties. There is now a new set of recall procedures emerging from the Food Safety and Standards Act, which require any food business operator to notify the FSSAI or initiate recall procedures if he or she discovers that the food processed, manufactured or distributed is not in compliance with the provisions of the legislation or is unsafe for consumption. Medical practitioners are now obliged to report all occurrences of food poisoning brought to their attention to a ‘food safety officer’, so designated under the Act. These and certain other statutory provisions, such as in the Drugs and Cosmetics Act, 1940 require reporting, product recall and steps to contain the distribution of a defective product and impose other positive post-sale duties. In cases where an express warranty is provided by the manufacturer as a part of its post-sales service commitment, consumer forums are not inclined to extend this period of warranty or hold the manufacturer responsible for repairs beyond the contractual period of warranty; however, expiry of the warranty period may not prevent a court from awarding damages when the cause of action is stated to have occurred during the warranty (see Ashok Leyland Ltd v Gopal Sharma & Ors [II (2014) CPJ 394 (NC)]). In cases of breach of post-sale duties, the consumer commissions, subject to the terms of the contract between the parties, can direct the manufacturer or service provider to repair or replace the goods in question or improve the service quality. The law regarding injuries caused after warranty is still not settled, it is our view that consumer products if not broken or tampered with should not injure people from product defects even after warranty.
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