Product Liability & Safety 2019

Last Updated July 09, 2019

India

Law and Practice

Authors



Shardul Amarchand Mangaldas & Co is one of India’s leading full-service law firms, founded on a century of legal achievement. Its mission is to enable business by providing solutions as trusted advisers through excellence, responsiveness, innovation and collaboration. The firm’s 550 lawyers, including 119 partners, provide integrated services across practice areas which include general corporate, M&A, private equity, banking and finance, insolvency and bankruptcy, competition law, dispute resolution, projects and project finance, capital markets, tax, intellectual property and venture capital. It is at the forefront of global and Indian M&A and private equity transactions, cutting-edge high-risk litigation and providing advice on strategically important matters across a spectrum of practices and industries for its multi-jurisdictional clients. The firm has a pan-India presence, with offices in New Delhi, Mumbai, Gurugram, Bengaluru, Chennai, Ahmedabad and Kolkata.

There is no consolidated/unified law on product safety in India. Instead, there is various general and sector-specific legislation. 

General Legislation

Consumer Protection Act, 1986 (CPA)

The CPA has been enacted for the protection and advancement of consumer interests. The application of the CPA is restricted to ‘consumers’, who are purchasers or users of any goods or services. However, the definition of a ‘consumer’ does not include a person who obtains such goods or services for resale or for any commercial purpose. The CPA allows consumers to file complaints regarding defective and unsafe goods before specialised quasi-judicial redressal forums. The CPA also allows consumers to file complaints for deficiency of service, unfair trade practices and hazardous services.

Bureau of Indian Standards Act, 2016 (BIS Act)

The BIS Act has established a national standard body, the Bureau of Indian Standards (BIS) as the national standards body of India. The BIS is responsible for assessing and maintaining standards for quality assurance of goods, articles, processes and systems ('Indian Standards'). The BIS makes it mandatory for goods that conform to the Indian Standards to be marked/labelled with a 'Standard Mark'. Under the terms of the BIS Act, the government is empowered to issue directives that certain goods will compulsorily have to meet the Indian Standards and have the Standard Mark labelled on them if this is considered necessary for the public interest or for the protection of human, animal or plant health, safety of the environment, prevention of unfair trade practices or national security.

Indian Contract Act, 1872 (ICA) and the Sale of Goods Act, 1930 (SGA)

The contractual law governing the sale of goods in India is the SGA and the ICA (which is the general legislation governing contractual obligations between parties). The SGA contains provisions which impose implied conditions on buyers such that:

  • the buyer shall have and enjoy quiet possession of the goods;
  • the goods will be fit for the purpose that they are sold; and
  • the goods will be of merchantable quality.

If these implied conditions are breached, the buyer of the goods has a right to sue the seller in a civil court.

Indian Penal Code, 1860 (IPC)

If criminal intent is attributed to the seller or manufacturer of unsafe goods, the IPC may be applicable. Usually, provisions concerning fraud, cheating or criminal negligence may be made applicable to sellers of unsafe products if the ingredients of the offences are present.

Sector-specific Legislations

In addition, there is certain sector-specific legislation which is applicable to certain kinds of products. These include the following.

Food Safety and Standards Act, 2006 (FSSA)

The FSSA is the legislation which regulates the manufacture, storage, consumption and sale of food in India, and imposes civil and criminal liability on manufacturers, packers, wholesalers, distributors, sellers and food business operators. The FSSA has set up regulators (the Food Safety and Standards Authority of India (FSSAI) and the State Food Safety Authority) to implement food safety standards, food safety surveillance and monitoring.

Drug and Cosmetics Act, 1940 (DCA)

The DCA regulates drugs, medicines and cosmetics in India. It restricts unsafe, adulterated, spurious and misbranded drugs and cosmetics and provides for offences for sale, manufacture and import of drugs and cosmetics in contravention of its provisions.

There is no centralised unified regulator/body that regulates matters concerning product safety apart from the BIS, which regulates Indian Standards. However, there are different sector-specific regulators established under specific legislation.

  • The BIS, established under the BIS Act, is responsible for assessing and maintaining the Indian Standards for quality assurance of goods, articles, processes and systems. The BIS also appoints certification officers who conduct search and seizure of goods not complying with the Indian Standards.
  • The FSSAI regulates the manufacture, processing, distribution, sale and import of food. It issues regulations on a number of subjects, specifying standards and guidelines in relation to food, food labelling standards, quality control for import of food, etc. Along with the state-level Food Authorities, the FSSAI is required among other things to monitor and verify that all relevant requirements are fulfilled by food business operators at all stages of the food business. 
  • The DCA provides for a number of regulatory functions to be exercised by the central government. The Central Drugs Standard Control Organisation (CDSCO) is the central drug authority established for discharging functions assigned to the central government under the DCA. The CDSCO is responsible for regulatory control over the import of drugs, approval of new drugs and clinical trials, and for approval of licences for drugs.

There are obligations to commence corrective actions in certain cases under general as well as sector-specific legislation in India.

Corrective Actions Under General Legislation Such as the CPA and BIS

Under the CPA, consumer forums are empowered to issue a corrective advertisement to neutralise the effect of a misleading advertisement, the cost of which is to be borne by the party responsible for issuing the misleading advertisement. Consumer forums may also direct the opposite party/the party at fault to withdraw hazardous goods from being offered for sale.

There are different rules/regulations/manuals under the BIS, under which a licensee is obliged to undertake corrective actions for non-conformities/non-compliance with the standards prescribed under the BIS Act or with the directions/recommendations of the competent authority. Also, if a product bears a Standard Mark but does not actually conform to the Indian Standards, the BIS has the power to stop the sale of non-conforming products and to recall them.

Corrective Actions Under Sector-specific Legislation Such as the FSSA and DCA

In the case of misbranding of food products, the adjudicating officer under the FSSA may issue directions to the person found guilty to take corrective actions so as to rectify the misbranding or require that the article of food be destroyed. In the case of food products, if a food business operator believes that a food which is processed, manufactured or distributed by him/her is not in compliance with the FSSA or its rules or regulations, then he/she is required to initiate recall and withdrawal of the food from the market. He/she is also required to inform the relevant authority as well as the consumers of the food. The Food Safety and Standards (Food Recall Procedure) Regulations, 2017 ('Food Recall Regulations') require all food business operators engaged in the manufacture or importation or wholesale supply of food to also maintain a detailed food recall plan. The Food Recall Regulations also clarify that a recall may be initiated because of complaints by consumers or by an order of relevant authorities such as the Food Safety Commissioner.

Similarly, under the DCA Rules, 1945, a manufacturer of drugs and cosmetics is required to take corrective actions to eliminate the causes of non-conformities in drugs and to ensure prevention of recurrence. As part of a manufacturer’s self-inspection and quality audit mechanism, a manufacturer is also obliged to adopt and document/record the corrective measures as suggested by its self-inspection team. A manufacturer/licensee is required to devise/establish a product recall system of defective products and make the information available to all concerned stockists, wholesalers, suppliers and retailers.

Under the Medical Devices Rules, 2017 (MDR) framed under the aegis of the DCA, if a manufacturer or importer of medical devices believes that a medical device which is imported, manufactured or distributed by him/her is likely to pose a risk to the health of a user or patient, then he/she is required to initiate recall and withdrawal of the medical device from the market indicating the reasons for withdrawal. He/she is also required to inform the relevant authority as well as the affected patients.

There is no general trigger for notification to authorities in respect of product safety issues in India. However, the FSSA and the Medical Devices Rules, 2017 provide that authorities are to be notified in certain cases. 

The FSSA and the Food Recall Regulations impose an obligation on the food business operator to inform the relevant authority, as well as the consumers, if the food business operator has reason to believe that a food product is not in compliance with the FSSA or is unsafe for consumption. The food business operator has to provide information under Schedule I to the Food Recall Regulations to the authority immediately, but not exceeding 24 hours from the time that the non-compliance comes to the food business operator’s notice. Food business operators also have to send status reports regarding the recall process as per Schedule II to the Food Recall Regulations. Once a recall is complete, the food business operator is required to send a notice terminating the recall under Schedule III to the Food Recall Regulations.

The MDR imposes an obligation on a manufacturer or importer of medical devices to inform the relevant authority, as well as the affected patients, if he/she has reason to believe that a medical device which is imported, manufactured or distributed by him/her is likely to pose a risk to the health of a user or patient. Additionally, he/she is required to initiate recall and withdrawal of the medical device from the market, indicating the reasons for withdrawal.

The CPA stipulates imprisonment for a maximum term of three years along with a fine of up to INR10,000 for a person who fails to comply with the orders/direction of the consumer courts. For non-compliance with the standards as prescribed by the BIS and manufacturing/selling of products without the ISI Mark, the BIS prescribes imprisonment of up to two years along with a fine which may extend up to ten times the value of the good or article produced or sold.

The FSSA provides for penalty of up to INR200,000 (approximately USD2,884) for failure to comply with the directions of the Food Safety Officer or for any other contravention in respect of which no specific penalty has been provided under the FSSA. If a food business operator fails to comply with its obligation to recall food products or notify authorities, a penalty of up to INR200,000 (approximately USD2,884) may be imposed.

There are no penalties for breaching the obligation to recall defective or dangerous medical devices or for failure to inform the regulator under the DCA. However, breaching the obligation under the MDR and the DCA Rules, 1945 could lead to cancellation of the licence granted to a manufacturer or importer of medical devices.

Product liability claims in India can be filed:

  • before the consumer commission under the CPA;
  • before a civil court in case of a contractual claim under the ICA and relevant provisions of the SGA; or
  • before a civil court in cases of tortious liability.

Causes of Action Under the CPA

Under the CPA, a consumer can file a complaint before the consumer commission when the goods/products sold to him/her are defective, unsafe or do not conform to standards relating to safety of such goods/products as required. The CPA defines 'defect' as any fault or shortcoming in the quality or quantity of the product which is required to be maintained under law, or terms of contract or trade.

The remedies available under the CPA can be sought against the manufacturer as well as the distributor/seller of the goods or products.

Causes of Action Before the Civil Court

If there is a contract between the buyer and seller of the product, a civil suit before the relevant civil court can be filed for breach of contract and damages on the basis of the terms and conditions of the contract.

Apart from the express terms of the contract, a cause of action may also arise from breach of implied conditions on buyers under the SGA, such as:

  • the buyer's right to have and enjoy quiet possession of the goods;
  • the goods being fit for the purpose for which they are sold;
  • the goods being of merchantable quality.

If these implied conditions as set out in the SGA are breached, the buyer of the goods has a right to sue the seller in a civil court.

Causes of Action Before the Civil Court for Tortious Liability

An aggrieved person can also bring a tortious claim before a civil court. The principles of tort law are recognised under Indian law. A manufacturer/seller may be held liable if the good/product poses a threat to the health or safety of the consumer. Under tort law, the remedy may be sought from the manufacturer as he/she owes a duty of care to the consumer. However, this is not a remedy ordinarily pursued in India in independent civil actions. Tort law principles are often considered by consumer forums while deciding cases such as medical negligence.

Standing Under the CPA

The CPA defines the term 'consumer' to include a person who buys any goods or hires or avails themselves of any services, but does not include a person who obtains such goods/services for resale or for commercial purposes. Any consumer, recognised customer association, one or more than one consumers having the same interest, or the central or the state government, either in its individual capacity or in a representative capacity, has the standing to file complaints before the consumer courts in relation to any defect/deficiency in goods or products.

Standing Before Civil Courts

In the case of contractual claims, the buyer of the products/goods has a right to sue a seller or any other person with whom there is a contractual relationship. A third party who is a stranger to the contract does not ordinarily have a right to sue. In tortious claims, all persons who may be affected by the tort have the capacity to sue under tort.

The time limit for bringing a product liability claim would depend upon the law under which the remedy is being pursued.

The time limit prescribed under the CPA is two years from the date on which the cause of action arises.

Under the general law on limitations which is governed by the Limitations Act, 1963 (LA), the time limit prescribed for instituting suits for compensation for breach of contract is three years from the date on which the cause of action arises.

In cases of tortious liability, the limitation period varies from one to three years depending upon the tort.

However, courts as well as consumer forums are empowered to extend the time or condone the delay beyond the stipulated time period for instituting suits or filing consumer claims, if the applicant is able to demonstrate that a sufficient cause existed for not instituting the suit or filing the complaint within the stipulated time period.     

Under the FSSA, a court cannot take cognisance of an offence under the FSSA after the expiry of the period of one year from the date of commission of an offence. However, the Commissioner of Food Safety may, for reasons to be recorded in writing, approve prosecution within an extended period of up to three years.

In order to institute a product liability claim, an aggrieved person has two options: either to file a civil suit or to file a complaint before the appropriate consumer court under the CPA.

Jurisdiction Under the CPA

Under the CPA, a three-tier consumer dispute redressal mechanism ('consumer courts') has been established consisting of District Forum, State Commission and National Consumer Disputes Redressal Commission ('National Commission'). The jurisdiction of all these three consumer forums are based on territorial (situated within geographical limits of court) as well as pecuniary jurisdiction (ie, it depends upon the amount claimed by the complainant).

The District Forum has power to hear claims of not more than INR2 million (approximately USD28,848) within its territorial jurisdiction. The State Commission deals with claims between INR2 million (approximately USD28,848) and INR10 million (approximately USD144,240) within its territorial jurisdiction. The National Commission has jurisdiction over claims which are more than INR10 million rupees (approximately USD144,240)

A claim would be within the territorial jurisdiction of the District Forum or State Commission if:

  • the opposite party, ie, the seller, resides, carries on business or has a branch office within the commission/forum’s territorial jurisdiction; and/or
  • the cause of action wholly or in part arises within that jurisdiction.

The National Commission and the State Commission also have the power to hear appeals from the commission/forums subordinate to them.

Jurisdiction under Civil Suits

A civil suit for product liability is required to be filed either:

  • at the place/residence of the defendant, ie, the seller;
  • at the defendant’s or seller’s principal place of business; or
  • where the cause of action arose.

The jurisdiction of courts in relation to civil suits also depends upon the relevant pecuniary limit, which varies across the country. 

There are no mandatory pre-action procedures and requirements prescribed under specific legislation for product liability claims.

The CPA does not mandatorily prescribe sending a notice as a pre-requisite for filing a complaint before the consumer court. However, it may be advantageous to send a legal notice to the opposite party before triggering legal proceedings. If there are numerous consumers having the same interest in a complaint under the CPA, a complainant must mandatorily send a notice of the institution of the complaint to all the affected/interested consumers either by personal service or, where such service is not reasonably practicable by reason of the number of persons or any other cause, by public advertisement.

There are no specific rules for preservation of documents and other evidence in product liability cases. However, under the CPA, if the consumer forum has any ground to believe that any commodity or document which may be required to be produced before the consumer forum is being or may be destroyed or altered, it has the power to authorise any officer, to exercise the power of entry and search/seize documents or commodities as required under the CPA. An appropriate application may be made by the petitioner in relation to any such information. 

Under the BIS, the FSSA and the DCA, authorised officers have the power of search and seizure of documents as well as products; however, there are no rules requiring the preservation of documents and products.

The IPC provides that the destruction or alteration of any document or electronic record which a person may be lawfully compelled to produce as evidence before a court is punishable with imprisonment of up to two years and a fine. Therefore, if documents which are likely to be used in evidence for a product liability claim in a civil court are destroyed, there may be criminal liability.

The rules for production and disclosure of documents/other evidence are provided under the Code of Civil Procedure, 1908 (CPC), which are applicable to civil suits as well as to consumer complaints filed in product liability cases. The civil court or the appropriate consumer forum is permitted to order production of any document which is relevant for determining any matter in question in such a suit or complaint. However, discovery is not to be ordered when the court or forum is of the opinion that it is not necessary for disposing of the complaint fairly or for saving costs.

Civil courts and consumer forums are permitted to appoint scientific or technical experts to form an opinion on defects or other technical matters which cannot be determined without proper analysis or tests. If deemed necessary, courts are also permitted to issue a commission to an expert for carrying out scientific investigation which may not be conveniently performed before the court. However, courts are not bound by the opinion of experts and are required to form their own judgment based on the information and reasons provided by the expert for arriving at a particular conclusion. Parties can also tender expert evidence in support of their case.

The burden of proof lies with the person who wants a court or tribunal to believe in the existence of the fact. Therefore, the burden of proof will be on the complainant or plaintiff who approaches the court or the tribunal alleging that a product is defective or unsafe.

In order to institute a product liability claim before a consumer forum, the complainant would be required to prove that the product was defective, ie, that there was fault or a shortcoming in the quality/quantity of the product which the manufacturer/seller is required to maintain under law, contract or trade. In a civil suit, the standard of proving liability of the defaulting party will be construed on the basis of the terms and conditions provided under the contract. A claim for a defective or unsafe products is also maintainable for breach of implied warranty or condition under the provisions of the SGA.

An aggrieved person has the choice of approaching the civil courts or the appropriate consumer forum for determination of its claims in the case of product liability issues. Separately, manufacturing companies may seek to challenge orders of FSSAI or any other regulator/government bodies, by writ proceedings before appropriate high courts. The jury system has been abolished in India and, therefore, all cases are decided by judges.

A civil suit may be filed before the district court or the High Court (exercising original civil jurisdiction) depending on the applicable territorial limits provided under the CPC. There is no upper limit specified for damages that may be claimed in product liability cases, although this is subject to the pecuniary jurisdiction of the concerned court. However, there is an increasing trend of high damages being awarded depending on the gravity of the situation and its peculiar facts and circumstances.

There are no specific procedural requirements that apply only to product liability cases.

In civil suits, an aggrieved party has the option of filing an appeal before the High Court against an unfavourable decree passed by a subordinate court. In appeal cases to a high court against a decree passed by a lower court in civil suit, the time prescribed is 90 days from the date of decree or order. For appeal to any other court, the prescribed time limit is 30 days from the date of decree or order.

Under the CPA, the National Commission and the State Commission also have the power to hear appeals from the commission/forums subordinate to them. An appeal may be filed before the State Commission or the National Consumer Disputes Redressal Forum within 30 days of it being passed by the District Forum or the State Commission respectively. An appeal against the orders of the National Consumer Disputes Redressal Forum may be filed before the Supreme Court within 30 days of the order.

The State Commission and the National Commission are required to make an endeavour to finally decide the appeal within a period of 90 days from the date of its admission. However, this is not usually followed in practice and appeals may take a much longer time to be decided.

There are a number of defences available to sellers or manufacturers of products. Depending on the facts and circumstances, the seller/manufacturer may be entitled to defences such as:

  • contributory negligence of the buyer;
  • buyer’s consent to the associated risks; and/or
  • the alleged losses to the buyer not being attributable to the product.

Parties may also object to such claims on account of procedural irregularities, such as:

  • no locus standi of complainant;
  • time-barred complaint; and/or
  • no pecuniary or territorial jurisdiction of the forum/court.

In the case of contractual claims in a civil court, a seller can also rely on provisions of the SGA which provide for some implied conditions as to quality or fitness of the good/product. A seller can defend a claim on the ground that the defects in the product were apparent and could have been revealed by mere inspection or examination. Sometimes, parties agree to inspection procedures in the contract itself; in such cases, the results of the inspection may serve as a good defence.

If a complaint is filed on the ground that a product is not compliant with a requirement to be maintained under law, adherence to regulatory requirements would be a relevant consideration in any case filed against the manufacturer/seller. However, even if the product adheres to regulatory requirements, this would not preclude a complaint from being filed.

Additionally, a claim may be filed in civil court if the product does not meet the terms of the contract, regardless of the product’s adherence to regulatory requirements.

As there is no special law governing product liability, there is no specific provision providing for recovery of legal costs in respect of an action preferred for damages for product liability. In general matter, however, successful parties do press for legal costs. The courts would generally consider awarding reasonable costs and not actual costs.

Third-party Funding

The legal position on third-party funding in India is not clear and is at a nascent stage. Recently, in Bar Council of India v A.K. Balaji and Ors, AIR 2018 SC 1382, while discussing and deliberating upon an unrelated issue, the Supreme Court of India made a stray observation that there appears to be no restriction on third parties (non-lawyers) funding litigation and being repaid after the outcome of the litigation. However, third-party funding is not a commonly used mechanism and there is no codified law or regulation regarding third-party funding.

Contingency Fees

Under the Bar Council of India Rules ('BCI Rules'), there is a clear prohibition on lawyers entering into contingency fee arrangements, claiming an interest in actionable claims or fomenting litigation. Relying on the BCI Rules, the Supreme Court of India has observed that funding of litigation by advocates is not permissible under Indian law.

Class actions and representative proceedings are available under Indian law.

In the case of civil suits, where there are several parties having a common interest or grievance, one or more of such parties may, with the permission of the court, pursue a class action or a representative suit on behalf of all the interested parties. The decree passed by the court in such class actions or representative suits will be applicable to all the interested parties.

Under the CPA, class actions by consumers having the same interest in the dispute may be initiated for pursuing product liability claims. This means that the consumers must be aggrieved by the same defect or deficiency and the complaint must be made against the same seller or service provider. Representative proceedings by legal heirs or representatives are also permissible before consumer forums, in the case of death of a consumer. Class action mechanisms are fairly common before the consumer forums such as the National Commission.

Following the Johnson & Johnson faulty hip implants recall in 2010 (in Johnson & Johnson Private Limited v Union of India, [W.P. (C) 13395/2018]), the Delhi High Court passed an interim order on 30 May 2019 affirming the terms of the voluntary offer made by Johnson and Johnson India Limited ('J&J') to pay a sum of INR2.5 million (approximately USD36,060) to all persons who had undergone the revision surgery for the faulty hip implants supplied by the petitioner. This voluntary offer was made by the company after it was ordered by the CDSCO to pay compensation ranging up to INR10 million to the victims of its faulty hip implant. The voluntary offer of payment was made with the condition that if any individual claimant succeeds in his/her personal suit and gets awarded a higher amount, the difference also would have to be paid by the company. Further, the court ruled that if J&J succeeds in repelling the claims made by the person affected by the faulty hip implants, the amount will not be refunded. The matter is still pending final adjudication before the Delhi High Court and J&J has not admitted its liability at this stage.

After a nationwide ban imposed on the largest-selling noodle brand in India (Maggi), in Nestle India Ltd. v The Food Safety and Standard Authority of India, AIR 2016 (NOC 225) 98, Nestle moved a writ petition before the Bombay High Court to challenge the ban on the ground that the procedure adopted by the FSSAI to conclude that the products were unsafe for consumption was not substantiated by proper evidence as was required under CPA. After analysing rival contentions, the court ruled in favour of Nestle and lifted the ban. However, the order passed by the Bombay High Court has been appealed and is currently pending adjudication before the Supreme Court of India.

Separately, the Government of India on behalf of the aggrieved customers has also filed a complaint before the National Commission seeking a compensation of approximately INR6 billion (approximately USD86,544,000) on different grounds. This matter is also pending adjudication before the National Commission. 

In Saloni Ailawadi v Volkswagen Indian Pvt. Ltd. & Ors (OA No 509 and 527 of 2015, in light of the deceptive devices installed in engines by the car manufacturer to bypass the mandatory emission limits, the National Green Tribunal (NGT) imposed a penalty of INR5 billion (approximately USD72,120,000) on the car manufacturer. The NGT based its decision on instances of product recall by the manufacturer and the penalty imposed by adjudicatory forums in different jurisdictions. However, the order has been stayed by the Supreme Court of India and is currently pending adjudication.

In Ashok Leyland Ltd. v Gopal Sharma, [2014 (2) C.P.C. 215] the complainant had purchased a truck from the opposite party which had some defects in its engine. After having sent multiple notices to the opposite party to rectify this defect, the complainant brought an action before the consumer forum. The State Commission directed the opposite party to replace the defective engine and pay money equivalent to the price of the engine along with an interest of 9%. Further, the State Commission awarded INR100,000 (approximately USD1442 USD) and INR10,000 (approximately USD144) towards damages and litigation cost respectively. The National Commission upheld the decision rendered by the State Commission and held that the doctrine of res ipsa loqitur was applicable as the defective engine was not working from the very first day. The National Commission even imposed costs on the opposite party for filing the revision petition as being completely frivolous and vexatious. 

In Paramount Digital Colour Lab & Ors. v Agfa India Pvt. Ltd. & Ors. (2018) 14 SCC 81, the complainant had purchased a printer from the opposite party (Company 1) which was later found to be defective. It was the managing director and the general manager of the opposite party who had ensured the quality/special features of the printer and had also initiated the sale on part of the opposite party. Subsequently, Company 1 was taken over by Company 2, which continued to refrain from making any efforts to either replace the machine or rectify the defects.  The Supreme Court held that the dissolution of Company 1 would not preclude the Managing Director and the General Manager of Company 1 from facing liability for selling defective goods to the consumer. It was further held that Company 2 was also liable as it failed to redress/resolve the complainant’s grievance. 

Drugs and Cosmetics (Eleventh Amendment) Rules 2018

On 24 December 2018, the Government of India passed the Drugs and Cosmetics (Eleventh Amendment) Rules 2018 as a step to control the recent increase in the number of misleading advertisements relating to Ayurveda, Siddha and Unani (ASU) drugs. The amendment adds Rule 170(1) to the DCA Rules which prohibits manufacturers or their respective agents from advertising the usage of ASU drugs for the purpose of diagnosis, cure, mitigation, treatment or prevention of any disease, disorder, syndrome or condition. Further, under Rule 170(3), the amendment lays down the requirement to obtain a Unique Identification Number (UIN) for advertising any ASU drug for purposes other than those prohibited under Rule 170(1). This step of the government to regulate the advertisement of ASU Drugs comes as a protective step after the Ministry of Ayush (Ayurveda, Yoga & Naturopathy, Unani, Siddha and Homoeopathy) in India was informed of coming across 804 cases of misleading advertisements. http://ayush.gov.in/sites/default/files/Rule%20170%20Prohibition%20of%20Advertisement%20of%20ASU%20drugs.pdf

Food Safety and Standards (Packaging) Regulations, 2018

On 24 December 2018 the FSSAI released and notified the Food Safety and Standards (Packaging) Regulations, 2018. The regulations impose an obligation on food business operators to ensure that the packaging materials used for packing food products are in conformity with the standards prescribed under the regulations. The regulation also lays down specific requirements/criteria for packing different food products. https://archive.fssai.gov.in/dam/jcr:0c1302a2-0a5c-4e40-a124-f91ab3a45b19/Gazette_Notification_Packaging_03_01_2019.pdf

Food Safety and Standards (Advertising and Claims) Regulations, 2018

The FSSAI gave notification of the Food Safety and Standards (Advertising and Claims) Regulations, 2018 on 19 November 2018. These regulations aim at supervising how food products are advertised by food firms. To regulate this, they prescribe definitive definitions for words like 'natural', 'fresh', 'traditional', etc, and provide for a detailed guideline on how claims are to be made. These regulations are a step to curb misleading claims made by companies against the usage of various terms. They further mandate that claims made by the manufacturer should be in consonance with the information on the label and at the same time should not have words implying that the food is recommended, prescribed or approved by medical practitioners. These regulations aim at making the companies more accountable for their health and nutritional claims. A penalty of up to INR1 million (approximately USD14,420) for any act of misleading advertisement has also been included in the regulations. https://www.fssai.gov.in/upload/notifications/2018/11/5bfd09e07399aGazette_Notification_Advertising_Claims_27_11_2018.pdf

The Food Safety and Standards (Alcoholic Beverages) Regulations, 2018. 

The FSSAI gave notification of the Food Safety and Standards (Alcoholic Beverages) Regulations, 2018 on 19 March 2018. These regulations aim at establishing a comprehensive standard for alcoholic beverages in India. They categorise various alcoholic beverages as per their characteristics to provide an easy guide to define and implement standards for each specific product and provide specific labelling requirements. Further, the regulations mandate that liquor bottles should have a statutory warning stating that “alcohol consumption is dangerous to health.” This has been the first time that the regulator has framed such well-defined guidelines for various alcoholic beverages in India. https://fssai.gov.in/upload/uploadfiles/files/Gazette_Notification_Alcoholic_Beverages_05_04_2018.pdf

Proposed amendments/legislation includes the following. 

Consumer Protection Bill, 2018

The Consumer Protection Bill, 2018, which would replace the existing CPA, 1986 contains a separate chapter on product liability. In addition, the bill also provides for the establishment of a Central Consumer Protection Authority (CCPA). An aggrieved consumer may now even make a complaint before the CCPA in relation to any violation of consumer rights/unfair trade practices/false or misleading advertisements which are prejudicial to the interests of consumers as a class. The powers vested with the CCPA include, inter alia:

  • inquiry or investigation into matters involving violations of consumer rights or unfair trade practices;
  • to recall goods or withdraw services which are dangerous, hazardous or unsafe;
  • issuing safety notices and alerting consumers to unsafe goods or services;
  • in the case of a misleading advertisement, issuing directions to the manufacturer/trader/endorser/advertiser/publisher, as the case may be, to discontinue the advertisement or as a corrective measure to modify the same; and
  • impose penalties, which as per the proposed bill can be by way of criminal prosecution of the manufacturers and service providers who release false and misleading advertisements which are prejudicial to consumer interests. 

https://www.prsindia.org/sites/default/files/bill_files/Consumer%20Protection%20Bill%2C%202018.pdf

Motor Vehicles Amendment Bill, 2017

The Motor Vehicles Amendment Bill, 2017 also introduces separate provisions authorising the central government to order the recall of defective motor vehicles from the market. The proposed bill includes provisions under which if a manufacturer notices a defect in a motor vehicle manufactured by him/her, he/she is obliged to inform the central government of the defect and initiate recall proceedings. In cases of recall of motor vehicles, the manufacturer is liable to reimburse the buyers for the full cost of the motor vehicle, replace the defective motor vehicle and pay fines. http://164.100.47.4/BillsTexts/LSBillTexts/PassedLoksabha/214C_2016_LS_Eng.pdf

Recommended Amendments to the Medical Devices Rules, 2017

In its 81st meeting on 29 November 2018, the Drugs Technical Advisory Board (DTAB) which is established under the DCA, noticing the absence of any provision for payment of compensation for defective medical devices, recommended the amendment to the MDR to include provisions for payment of compensation by the manufacturer/importer in the case of injury or death of patients for use of notified medical devices found to be malfunctioning/unsafe/not in compliance with the licence conditions. Following the Johnson & Johnson faulty hip implants case, the government is soon going to notify such provisions under the MDR, under which a company manufacturing medical devices will have to offer compensation to patients in the case of a defective product. https://cdsco.gov.in/opencms/resources/UploadCDSCOWeb/2018/UploadCommitteeFiles/dtab29nov18.pdf

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Shardul Amarchand Mangaldas & Co is one of India’s leading full-service law firms, founded on a century of legal achievement. Its mission is to enable business by providing solutions as trusted advisers through excellence, responsiveness, innovation and collaboration. The firm’s 550 lawyers, including 119 partners, provide integrated services across practice areas which include general corporate, M&A, private equity, banking and finance, insolvency and bankruptcy, competition law, dispute resolution, projects and project finance, capital markets, tax, intellectual property and venture capital. It is at the forefront of global and Indian M&A and private equity transactions, cutting-edge high-risk litigation and providing advice on strategically important matters across a spectrum of practices and industries for its multi-jurisdictional clients. The firm has a pan-India presence, with offices in New Delhi, Mumbai, Gurugram, Bengaluru, Chennai, Ahmedabad and Kolkata.

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