|VOLUME 1|ISSUE 2|APRIL 2018|ISSN: 2581-3595|

SHORTCOMINGS OF PRODUCT LIABILITY LAWS IN INDIA

AUTHORED BY: VISHU SURANA, B.A.LL.B (HONS), NATIONAL LAW SCHOOL OF INDIA UNIVERSITY, BANGALORE.

INTRODUCTION:

In the present day, liberalized economic progress across the globe has set the consumers’ sovereignty as a standard. With increasing consumerism, there is an increasing need for a uniform law to govern the rights of the consumer with respect to defective products. Product liability is the responsibility of a product manufacturer or seller, of any product or service, to compensate for any harm caused to a consumer by a defect in the products or deficiency in services.[1] In India, there is no specific statute governing product liability. However, there are certain enactments such as The Consumer Protection Act, 1986; The Sale of Goods Act, 1930 and The Indian Contract Act, 1872 which indirectly govern the realm of product liability.

The recent move to place the Consumer Protection Bill 2018 (hereinafter “Bill”) in Indian Parliament, which seeks to replace the Consumer Protection Act 1986 is a cohesive approach towards the globalization and the incorporation of more democratized norms to promote an efficient market economy. The Bill contains a special Chapter on product liability, however, the Researcher submits that it does not go far enough to impose higher product liability standards. This research paper is an attempt to explore the shortcomings of the Bill with respect to the notion of product liability and suggest remedies for the same.

CONTEMPORARY CHALLENGES IN INDIA:

In India, the laws relating to product liability have been evolving due to judicial interpretations with the Courts adopting a pro-consumer approach. In National Seed Corporation Ltd v. M Madhusudhan Reddy,[2] the Supreme Court of India interpreted the definition of a ‘consumer’ comprehensively to incorporate farmers who had purchased defective seeds despite the existence of a separate law (the Seeds Act) that regulated seed sales as the Seeds Act did not provide for compensation. In the past two years, there has been a perceptible increase in the number of product liability claims in India, especially pertaining to manufacturing defects. For instance, in Ram Nath Mishra v. Bharat Krishi Corporation,[3] the Court held that the manufacturer is liable for injuries that the product causes even if the manufacturer was not negligent while making the product. This has been echoed in Clause 84(2) of the Bill. Further, the Court also states that a manufacturing defect in one which occurs when the product deviates from the original design.[4]

However, product manufacturers avoid their liabilities by pasting labels that the product carries no guarantee, no exchange, no return or that the company shall not be responsible after the product is installed. The National Consumer Disputes Redressal Commission held in a recent case that an exemption clause on the product stating that the company shall bear “no liability after the tiles are fixed” was sufficient for the manufacturer to deny any liability.[5]  Thus, this is a loophole in the present laws as the manufacturer can avoid all liability by simply pasting a label.

Moreover, the liability of the producer who is manufacturing a product which has a design defect or which could have a shortcoming based on its original design has been overlooked. In such cases, several consumers of the product will suffer damages. In cases where it is difficult to determine which of several possible producers manufactured the defective product, the claim stands dismissed.[6] What ought to be done instead is that a market share liability should be applied to ensure that the consumer does not suffer damage.

The burden is on the consumer to prove that the manufacturer failed to exercise the reasonable standard of care. Further, the consumer also needs to prove that the injury was caused due to this negligence and that the manufacturer could have foreseen the risks that led to this injury.[7] This burden of proof is unreasonable. Often the manufacturer’s design can be used to prove that a defect existed, but proving how or why the flaw occurred can be difficult for the consumer. For instance, in Royal Enfield Motor Ltd v. Kulwant Singh Chauhan,[8] the State Consumer Disputes Redressal Commission reversed the order of the District Forum to replace the defected motorcycle and directed the appellant to “make the motorcycle in perfect running condition.”[9] Thus, they refused to uphold the District Forum’s decision as the complainant did not prove a defect in the motorcycle. There have been several instances when there was an unreasonable burden on the complainant to prove that the product caused a specific injury, such as in the TELCO Case where the vehicle had to be taken to the workshop 36 times to prove the defect.[10]

Once it is established that the product is defective, then the manufacturer must establish that it could not have arisen from the manufacturing process. Further, the doctrine of res ipsa loquitor can be invoked to transfer the burden of proof on the manufacturer.[11] Manufacturer’s knowledge of the defect should be presumed and the burden should be on the manufacturer to prove otherwise, as is the case with China’s Product Quality Control Law, 1993 and UK’s Consumer Protection Act, 1987.[12]

Furthermore, to hold the manufacturer liable there needs to be a direct link between the product defect and the injury caused. A possible novus actus intervenies can be asserted as a defense to show that the causal link between the damage caused and the manufacturer’s area of responsibility is broken.[13] Similarly, a product defect must be treated as a causa causans for the injury and not a contributing factor.[14] However, the law in this regard is detrimental to the consumers as is evident by a few unfortunate cases. In Geeta Jethani v. Airports Authority of India,[15] although the manufacturer was made a party to the litigation, it was not held liable as the owner-operator of the collapsed escalator was held to be negligent. In such cases, it can be argued that the manufacturing process should be such that there are built-in safety mechanisms to prevent the machine from becoming dangerous. In the absence of such mechanisms, there could be an obvious presumption of a defect in the manufacturing process.

Currently, the Bill only holds the product manufacturer or seller liable for any defect. However, the liability provisions should apply to any or all of the parties that are involved in the chain right from the manufacturer to retailer for any damage caused due to the product. The number of persons that constitute the distribution chain varies from product to product. For example, the distribution chain can include the manufacturer of the component part, an assembling manufacturer, importer, wholesaler, middlemen, agent, and retailer. Besides, manufacturers and importers, the chain should also technically include a manufacturer who does not manufacture on their own, but supplies their own products by repackaging, modifying and customizing the things.[16]

Moreover, in order to prevent frivolous litigation, the Bill has an inbuilt mechanism which states that the product will not be liable for mental anguish or harm when there is an absence of proof of physical injury or illness or death. Although the intention is good, this will mean that in the absence of tangible physical harm, the consumer cannot proceed against the party if he does not have proof of mental harm.

Conclusion

The point which is being emphasized here is that the Bill proposes to roll out noteworthy positive improvements to the existing regime of consumer protection law and give to the consumers the regulation of consumer protection laws in India yet the menace will undoubtedly stay unabated as the standards are not sufficiently strict. Though the notion of liability has been re-defined to a certain extent in the present Bill at the same time, we need to understand that the problem lies in the lack of rules governing all aspects of product liability. To bridge the gap there is a dire need to have a combined, consistent and concerted effort to address the concerns and cover the loopholes which can be foreseen in a concrete manner so that the bill achieves its purpose.

[1] Consumer Protection Bill, 2018 (introduced in Lok Sabha on January 5, 2018)

[2] National Seed Corporation Ltd v. M Madhusudhan Reddy (2012) 2 S.C.C. 506 (India).

[3] Ram Nath Mishra v. Bharat Krishi Corporation (2017) CPJ 135 (India).

[4] Id.

[5] H&R Johnson (India) Ltd v. Lourdes Society Snehanjali Girls Hostel (2016) S.C.C. 0849 (India).

[6] R.K. Wood and T.L. Eaton, Product Liability 2015, International Comparative Legal Guides, (May 26, 2015), http://www.iclg.co.uk/practice-areas/product-liability/product-liability-2015/update-on-u.s.-product-liability-law.

[7] Jai Prakash Verma v. JK Lakshmi Cement Ltd II (2013) CPJ 54 (India).

[8] Royal Enfield Motor Ltd v Kulwant Singh Chauhan II (2011) CPJ 489 (India).

[9] Id.

[10] Tata Engineering & Locomotive Co Ltd v. Subhash Ahuja and Another (1970) A.I.R. 1281 (India).

[11] Ashok Leyland Ltd v. Gopal Sharma II (2014) CPJ 394 (India).

[12] A. Clark, The Consumer Protection Act 1987, 50(5), The Modern Law Review 614, 618, (1987).

[13] K Madhusudhan Rao v. Air France A/3792/2008 (India).

[14] Id.

[15] Geeta Jethani v. Airports Authority of India III (2004) CPJ 106 (India).

[16] Standing Committee on Food, Consumer Affairs and Public Distribution, Lok Sabha, The Consumer Protection Bill, 2015, 51 (2016).