Although no statute defines the term ‘cause of action’ per se, different statutes define the trigger for initiating any action if a product/good/article is found to be defective or faulty. The factors determining the cause of action arise from harm or injury caused to the purchaser, on the basis of which the purchaser takes appropriate legal recourse as loss has been caused to the purchaser.

A cause of action under the CPA 2019 can arise on the following grounds: (a) there is a presence of one or more defect in the good or product; (b) the good or product contravenes safety standards; or (c) the good or product is unsafe for public usage. If one of the above conditions is met, a complaint for product liability will be available and reliefs can be granted by the commissions. The burden of proof in a product liability action lies with the aggrieved party.

In India, an aggrieved party has the locus standi (right to bring an action to the court) to initiate product liability claims in cases pertaining to loss or injury resulting from the defective or faulty products.

The CPA 2019 has provided an exhaustive definition of a complainant, which includes an individual, a consumer association, central/state government, a central authority, a class of consumers, etc.

Under Indian law, the burden of proof of establishing his/her case ultimately lies with the aggrieved person who seeks the indulgence of the courts/forums.

The Limitation Act of 1963 lays down the predominant time for filing a suit/proceeding before a court of law, which is a three-year period from the date when the cause of action arose; however, specific statutes have set out their own time limits as to when a claim can be initiated.

Under the CPA 2019, a complainant must file a complaint within two years from the date when the cause of action arose. Such delay can be condoned by filing an application of condonation of delay, provided the complainant satisfactorily demonstrates that there was a sufficient cause for the delay.

In addition to the above, in the Food Safety and Standards Act, the time limit for prosecutions is stated as one year, which may be extended to three years uponbeing satisfied that there were legitimate reasons that caused the delay.

Jurisdiction for Civil Suits

The Code of Civil Procedure 1908 lays down the requirements for institution of a suit/proceeding in India. Section 19 of the Code states that suits filed for compensation for wrongs to a person or moveable property can be filed either at the place where the wrong occurred or at the place where the defendant resides or carries on business or personally works for gain.

Jurisdiction Under CPA 2019

The CPA 2019 also outlines the pecuniary jurisdiction (jurisdiction based on the value of the suit) of the tripartite mechanism of consumer commissions established under the Act depending upon the value of goods or services paid as consideration. This is as follows:

• District Commission: Up to INR50 lakhs.
• State Commission: More than INR50 lakhs up to INR2 crores.
• National Commission: More than INR2 crores.

There are no mandatory pre-action procedures or requirements to be undertaken for product liability claims; however, it is always advisable to tender a legal notice demanding that the opposite party take remedial action, failing which appropriate legal recourse can be pursued in the forums stipulated under the law.

There are no specific rules governing the preservation of documents and other evidence which apply to product liability claims in India; however, the regulators established under various pieces of legislation possess the power to seizie and retain products/articles which are found to be faulty/defective or unsafe towards public health.

The powers of search and seizure are defined under Section 22 of the CPA 2019, which empowers the regulator to seize any document, record, article or other evidence if it has reason to believe that any person has violated a consumer right or has been carrying out an unfair trade practice.

The powers pertaining to search and seizure also find their reference in the Bureau of Indian Standards Act 2016.

It should also be mentioned that under Indian criminal law, a criminal court possesses the power to summon any evidence/document before itself, and if any person destroys or obliterates any document/evidence or renders any part of the said document/evidence ineligible, then the said person will be liable for punishment under Section 204 of the Indian Penal Code 1860.

The principles/rules governing discovery of information/documents are primarily governed by the Code of Civil Procedure 1908 for civil cases and the Code of Criminal Procedure 1973 for criminal cases. The said pieces of legislation afford the courts inherent powers to call for any document/information in the possession of the parties.

There is no discovery process per se to follow under Indian law as compared to the much more detailed discovery process followed in the United States, which usually takes months and can in some cases take years to be completed.

Since, over the years, courts in India have followed the adversarial system of adjudication, the process of disclosure of documents/evidence/information is primarily party-driven.

According to the CPA 2019, the consumer commission, if required, can appoint an individual, organisation or an expert to assist it to decide complaints where the larger interest of consumers is involved.

The Hon’ble Supreme Court in In re CN Anantharam v Fiat India Ltd and Ors (AIR 2011 SC 523) categorically held that if an independent technical expert held that there were inherent manufacturing defects in a vehicle then the complainant will be entitled to a full refund of the price of the vehicle and lifetime tax and equated monthly instalments, along with interest at 12% per annum.

The civil courts in India also have the power to appoint experts where they deem fit in order to form an opinion on a technical or scientific issue. The courts also have the power to appoint commissioners to examine certain technical aspects during the pendency of a matter.

As a matter of practice, even the parties can rely upon expert evidence in their pleadings; however, the courts are not bound by the opinion of the expert and have to arrive at a judgment independent from the expert’s opinion.

Under the law, the onus to prove the case lies with the person aggrieved from the defective/faulty product. In Indian law, there is a vast difference between the standards of burden of proof in a civil case and those in a criminal case. In a civil matter, the principle of preponderance of probabilities is followed by courts, which means the “more probable and rational view of the case”, whereas in a criminal matter, the principle of proof beyond reasonable doubt is followed.

While dealing with the issue of burden of proof in cases where defective goods or materials are supplied, the Delhi High Court in the case of Hindalco Industries Ltd. v Midi Extrusions Ltd., 2017 SCC OnLine Del 11931, held that it is unequivocally the duty of the plaintiff to produce conclusive evidence regarding liability of the defendant for any defective item supplied to it. Also, in the case of Banta Ram v Jai Bharat Beej Company and PHI Seeds Ltd, (2013) CPJ 617(NC), the National Commission upheld the findings of the District and State Commissions that the plaintiff was not able to prove that the seeds supplied by the respondents were of an inferior quality and did not meet the standard requirements.

In India, cases are adjudicated by judges and not a jury. The jury system was abolished in 1973.

The courts in which product liability claims can be filed are as follows:

• High Courts: Aggrieved from an order of any regulatory authority or an inaction of any statutory authority, the aggrieved person can directly approach the High Court under the writ jurisdiction of the High Courts.
• Civil Courts: Any aggrieved persons can also file suits for damages on account of loss, harm or injury caused due to a faulty/defective product. There is no upper threshold of damages in these courts.
• Consumer forums under the CPA 2019: A complainant can approach the tripartite mechanism of consumer forums established under the CPA 2019 for redressal of its grievance.
• Arbitration tribunal: In case of a contractual dispute containing an arbitration clause, the aggrieved party can also move before the arbitral tribunal or the arbitrator, so designated under the contract.

There are no procedural requirements for product liability cases in India. Any aggrieved person can approach the above forums for redressal of his/her grievance.

The remedies for appeal are governed differently under each separate piece of legislation, which are as follows:

CPA 2019

Any person aggrieved with an order of the District Commission can file an appeal before the State Commission within a period of 45 days from the date of such order.

However, a caveat regarding the above is that in order to file an appeal before the State Commission, a person will have to deposit 50% of the amount which he/she is required to pay as per the impugned order. 

Further, if aggrieved from the order of the State Commission, a person can file an appeal before the National Commission within a period of 30 days, and within the same time limit before the Supreme Court having been aggrieved from the order of the National Commission.

The State Commission and the National Commission are required to endeavour to finally decide the appeal within a period of 90 days from the date of its admission.

Appeal in Civil Cases

If the subordinate court decrees against any person, then within a time period of 90 days from the date of such decree, the person can approach the High Court against such decree. 

There are certain defences available for product manufacturers, suppliers and dealers provided under the CPA 2019.

• A product liability action cannot be brought against the product seller if the product has been misused, altered or modified.
• With respect to claims based on failure to provide adequate warnings, the product manufacturer will not be liable for: (i) products purchased by an employer for use by employees at the workplace if the product manufacturer provided warnings or instructions to the employer; (ii) products forming a component of an end product where harm was caused by the use of the end product and the product manufacturer provided warnings or instructions to the purchaser of the component; (iii) products meant to be used by experts when the product manufacturer has provided warnings or instructions to the experts; and (iv) the use of a product under the influence of alcohol or a non-prescription drug.
• A product manufacturer will not be liable for failure to instruct or warn about a danger which is obvious or commonly known to the users of such product.

Apart from the above exceptions and defences, parties can also make the following objections:

• jurisdictional issues;
• time-barred claims; and
• no locus standi of the aggrieved person.

Although sector-specific legislation and standardisation set clear standards for product sellers, manufacturers and distributors, there is no bar in instituting an action against them for faulty or defective products.

If satisfied that the goods complained about by the aggrieved party are defective and faulty, a consumer commission under the CPA 2019 can order the following: 

• To return to the complainant the price or the charges paid by the complainant along with reasonable interest.
• To provide for adequate costs to parties. 
• To provide quantum compensation to the complainant as the commission deems fit. 

In general practice pertaining to consumer laws, parties tend to recover their litigation costs from the opposite party in the reliefs claimed. However, the legislation as such does not deal with the litigation costs.

Third Party Funding in India

The jurisprudence regarding third party funding and contingency fees has been developed by the courts recently. The Supreme Court in Bar Council of India v A.K. Balaji and Ors (AIR 2018 SC 1382) held there is no restriction on third party funding in India and furthermore there are no prohibitions on lawyers being paid success fees after the outcome of the litigation. 

Some states in India, such as Karnataka, Maharashtra and Gujarat, have made their respective state amendments to the Code of Civil Procedure 1908 and included financiers of litigations as parties to the suit.

Contingency Fees

The concept of contingency fees has received a hostile response from Indian courts over the years and is generally frowned upon by the courts. The Bombay High Court in the case of High Court of Bombay v K.L Gauba (AIR 1958 Bom 478) held, as regards contingency and success fees, that a fee dependent on the outcome of the litigation gives a lawyer an interest in the subject matter and undermines the status of the profession. The Supreme Court went one step further and held in the case of ‘G’ Senior Advocate, In re (AIR 1954 SC 557) that such a claim made by an advocate on the outcome of the litigation is pure professional misconduct on the part of the advocate.

Class action or representative proceedings are an available remedy under Indian law which also finds its reference in most statutes.

Under the CPA 2019, a collection of individuals or association of persons, regardless of whether they are incorporated or registered, can file a complaint before a consumer commission since they fall under the ambit of a person and a complainant as per the Act.

In the case of Ambrish Kumar Shukla v Ferrous Infrastructure Pvt. Ltd. (2017) 1 CPJ 1 (NC), the National Commission held that Order I Rule 8 (when one person may sue on behalf of all in the same interest) will be applicable to consumer protection cases as well as where complainants with similar interests have filed a single complaint. The Commission, while observing the dictum laid down in the case of The Chairman, Tamil Nadu Housing Board, Madras v T.N. Ganapathy (1990) 1 SCC 608, reiterated that the reduction in the number of consumer complaints will be beneficial not only to the courts but also to the consumers.

Some notable cases in recent times are listed below.

Jose Philip Mampillil v Premier Automobiles Ltd. and Anr (Appeal (Civil) 3611 of 2002)

The complainant had purchased a premier car worth INR1.38 crore from the respondent car manufacturer; however, the car turned out to be defective as a consequence of which it was sent for numerous repairs. The District Commission, after appointing an inspector to comprehensively examine and inspect the car, passed an order in favour of the complainant, and ordered the entire replacement of the defective vehicle with a new vehicle along with a refund of total value with 24% interest. The car manufacturer went to appeal before the State Commission, which ruled against the complainant, following which the complainant approached the National Commission, which again summarily dismissed his revision petition. However, the Supreme Court, setting aside the orders of the State and National Commissions, held as follows:

“…it is shameful that a defective car was sought to be sold as a brand new car. It is further regrettable that, instead of acknowledging the defects, the 1st Respondent chose to deny liability and has contested this matter…”

Johnson & Johnson Private Limited v Union of India (W.P. (C) 13395/2018)

This leading case involved faulty hip implants that were sold by Johnson & Johnson to more than 4,500 Indian patients, which resulted in a product liability action being initiated against the company. The Delhi High Court passed an interim order affirming the terms of the voluntary offer made by Johnson & Johnson as petitioner to pay a sum of INR2.5 million to the persons who underwent revision surgeries for the faulty hip implants. This voluntary offer was submitted after the CDSCO had directed Johnson & Johnson to pay INR10 million as compensation to the victims. The matter is currently pending a final settlement amount to be agreed upon.

Nestle India Ltd. v The Food Safety and Standards Authority of India (AIR 2016 (NOC 225) 98)

The FSSAI imposed a nationwide ban on Nestlé from selling its largest-selling noodles brand in India, namely “Maggi”, as it contained excess amounts of lead and monosodium glutamate (MSG), thereby misleading the consumers. Nestlé had to recall all Maggi-related products from the market and destroy more than USD50 million worth of Maggi noodles.

Tata Motors Limited v Navin Nishchal [2012] NCDRC 474

When there was a manufacturing defect in the engine of a vehicle sold by Tata Motors Ltd., even though the car was going to be replaced by the plaintiff, the National Commission directed the plaintiff to pay compensation of INR40,000 to the consumer for suffering mental agony, physical harassment and unnecessary expenditure.

Tata Motors v Rajesh Tyagi (2014 (1) C.P.C. 267)

The National Commission held that that the large number of visits by the consumers to the workshop due to a manufacturing defect was clear and sufficient evidence to draw the conclusion that a vehicle was not only defective in nature but also suffered from manufacturing defects.

Some recent trends as regards the product liability regime in India are listed below.

CPA 2019

The CPA 2019 has entirely revolutionised the product liability sphere in India by, firstly, incorporating a new section into the Act pertaining to the applicability and procedure governing product liability and, secondly, recognising the need to incorporate principles surrounding product liability in the digital marketplace by introducing the E-Commerce Rules 2020 (described in detail below).

Motor Vehicles (Amendment) Act 2019

In a recent amendment to the Act, recall of products has been incorporated whereby the Central Government has been empowered to set out rules governing product recall. The Central Government can by an order direct a manufacturer to recall a vehicle if it is defective in nature regardless of the type and variant of the motor vehicle or if the vehicle may cause harm to the environment, the driver or another occupant. In addition to the above, the amendment also incorporates a requirement for vehicle manufacturers/importers to obtain type approval certificates, which would be issued by testing agencies after testing the prototypes submitted by the manufacturers/importers.

E-Commerce Rules 2020 and Consumer Protection

With the introduction of the E-Commerce Rules 2020 under the consumer protection regime, the government is empowered to act against unfair trade practices by entities selling goods in the digital marketplace. The Rules prohibit sellers and e-commerce entities from engaging in unfair trade practices. A duty is cast upon the sellers and e-commerce entities to provide a definite and timely refund to consumers, and a further restriction is imposed on charging consumers cancellation fees in cases where no actual charges are borne by the sellers and e-commerce entities.

It will be interesting to see how the E-Commerce Rules and the jurisprudence in regard to product liability will intertwine with each other and share a complementary relationship. Given that earlier, product liability actions were limited to only physical marketplaces, and with the e-marketspace rapidly growing day by day, it is imperative for the product liability regime to expand its reach into the e-commerce platforms as well.

AI and Product Liability

One glaring challenge to the product liability regime in India would be the relationship between product liability and intelligent machines. Artificial intelligence (AI) still has not settled itself into the Indian tech sector in its entirety; however, it is an area from which there is tremendous societal benefit to be derived.

The question that arises is who will be liable for such technologies and whether the principal-agent relationship or the strict liability principle will apply to such law and technology conundrums. Going by the above discussions, in an ideal product liability regime the manufacturer will be held liable in cases of technical defects. On similar lines it was considered in the cases of O’Brien v Intuitive Surgical, Inc. (Case No. 1:2010cv03005, order dated 25-7-2011) and Mracek v Bryn Mawr Hospital (Case No. 09-2042 dated 28-1-2010) by the courts in the United States that any person who had a role in the development of that machine and helped to lay out its decision-making would be held liable for any injury caused by that machine, whether negligently or intentionally.

It is evident from the decisions that the manufacturer will be facing the brunt. The law does not currently address such concerns, and it is anticipated over the next few years that there will be legislative attempts to regulate such issues and the courts will have to broaden the ambit of the term ‘product’ to also include AI products. However, such challenges are still to be posed before the Indian courts and it will be intriguing to see how the judiciary will respond to such legal dilemmas. The courts must also evaluate the principle of presumption of causality so that the burden of proof of harm/injury caused is easier to trace out in relation to complex AI systems and cybersecurity vulnerabilities.

It will also be interesting to see the apportionment of liability in cases where AI medical devices are at fault, as the dependency of medical professionals on AI medical devices is growing rapidly.

National Medical Device Policy 2022

Recently, the Department of Pharmaceuticals under the Ministry of Chemicals released an approach paper on promulgating a National Medical Device Policy 2022 to ensure the following:

• Streamlining the regulatory processes and harmonising the Indian medical sector with best global standards to ensure public safety and health.
• Providing local infrastructure such as testing agencies to ensure mitigation of defective and faulty medical products.
• Achieving the overall objectives of accessibility, affordability, safety and quality of medical devices in India.

Possible AI Directives in the Consumer Protection Regime

It is pertinent to carve out possible AI-related directives in the Indian legislation, more specifically in the CPA 2019. The author feels that the Indian product liability regime could take a cue from the European model of placing AI directives for governing contentious issues surrounding attribution of liability in AI-related product liability actions.

With the increasing cybersecurity vulnerabilities and the ever-expanding concept of ‘Internet of Things’, it is essential for the Indian product liability regime to address such issues appropriately.

Impact of COVID-19 and Reliefs Granted by Courts

The impact of COVID-19 and related disruptions have been challenging for many businesses. The Supreme Court, while recognising the adverse impact created by COVID-19, exercised its suo motu cognisance and passed interim orders from 2020 to 2022, thereby extending the period of limitation for filing of cases and applications before courts and tribunals. In 2022, the court conclusively held that the period from 15 March 2020 to 28 February 2022 will be excluded from the calculation of the limitation period for filing cases before the courts. 

Subsidising Product Liability Insurances

Although there is no statute governing the aspect of product liability insurance, it is a voluntary matter for the seller or vendor to take such insurances to protect its own business interests. Such type of insurance safeguards the seller from any liability arising from a third party suffering any accidental injury, illness or death as a consequence of using the products sold by the seller.

It is imperative for the Central Government to introduce subsidies for sellers, manufacturers and distributors to take such insurances in order to better protect their business interests and also ensure protection from future contingencies.