Product Liability: Let the manufacturer/seller beware?

  • Raghav Sethi
  • 01:33 PM, 04 Apr 2022

The Consumer Protection Act, 2019 (CPA) [1] lays down enhanced protection for consumers. One of its features is the legal regime in relation to “Product Liability”, envisaging individual criteria for attracting product liability by the manufacturer, seller and service provider.

Expanding tentacles to safeguard consumer interests?

Prior to 2019, a product liability claim was put forth within the existing laws of contract and tort in India and derivations of such claims were founded under the Indian Contract Act, 1972, Consumer Protection Act, 1986 and Sale of Goods Act, 1930.

Chapter VI of the CPA provide a comprehensive mechanism for claiming compensation under an action for product liability. It defines product liability as the “Responsibility of a product and manufacturer or product seller, of any product or service, to compensate for any harm caused to a consumer by such defective product manufactured or sold by deficiency in services relating thereto”[2]. The Act also allows a consumer to file a claim before any of the consumer forums (which are segregated for claims viz. pecuniary jurisdictions) for purposes of claiming compensation for the harm caused to them.[3]

A corollary can be drawn with the definitions under the CPA with that of common law counterparts. Pertinently, the law also specifically defines “harm”[4] which includes damage to property, injury to person, injury to mental state/emotional state and loss of consortium. Such damage and injury should be arising out of usage of a defective product or deficient service related to such product.

Liabilities

A product manufacturer[5] shall be liable in a product liability action, if— (a) the product contains a manufacturing defect; or (b) the product is defective in design; or (c) there is a deviation from manufacturing specifications; or (d) the product does not conform to the express warranty; or (e) the product fails to contain adequate instructions of correct usage to prevent any harm or any warning regarding improper or incorrect usage. (2) A product manufacturer shall be liable in a product liability action even if he proves that he was not negligent or fraudulent in making the express warranty of a product.

From the perspective of liability of a product seller[6], the Act states that the seller will only be liable if he has exercised substantial control over the designing, testing, manufacturing, packaging or labelling of a product that causes harm and/or if he has altered or modified the product and such alteration or modification was the substantial factor in causing the harm. It also earmarks that if the product seller has made an express warranty of a product independent of any express warranty made by a manufacturer and such product failed to conform to the express warranty made by the product seller which caused the harm, then he shall be liable. Further to this, the Act stipulates that if the product seller has failed to exercise reasonable care in assembling, inspecting or maintaining such product or he did not pass on the warnings or instructions of the product manufacturer regarding the dangers involved or proper usage of the product while selling such product and such failure was the proximate cause of the harm, then he shall be liable for it.

A product service provider[7] is held liable if the service provided is deficient or inadequate in quality, nature or manner of performance which is required to be provided by or under any law for the time being in force, or pursuant to any contract or otherwise; or  there was an act of omission or commission or negligence or conscious withholding of any information which caused harm; or the service provider did not issue adequate instructions or warnings to prevent any harm; or the service did not conform to express warranty or the terms and conditions of the contract.

Evolution of jurisprudence

Roots of the concept of product liability find their genesis in common law. Caveat Venditor or “let the seller beware” juxtaposes the onus of proof on the seller, emanating the principle that a manufacturer or seller of the products shall be held responsible if a consumer has been injured. While understanding the jurisprudence that led to a comprehensive regime to recognise product liability, tort law and contract law principles vis-à-vis negligence, strict liability and warranty becomes pertinent.

In India, product liability cases have developed on principles of tort law. The Supreme Court in A.S. Mittal v. State of U.P. [8] opined that in order to determine the question of law concerning product liability, facts and evidence need to be taken into account. At an “eye-camp”, several people who were operated for Cataract became totally blind and victims were granted monetary relied payment on humanitarian grounds. Though the doctors explained that the infection occurred despite all precaution, Court stated that the highest standards of sterile conditions at all places where Ophthalmic surgery or any surgery is conducted cannot be over-emphasised, adding that merely formulation of theoretical standards is not enough but the professional commitment that flows from it to deliver the best standard of care is necessary.

The Karnataka High Court in Airbus Industrie v. Laura Howell Linton [9], held that though the Doctrine of product liability was not presently recognised in India, the Supreme Court in the Bhopal Gas Tragedy case stated that there is a need for proper legislations whereby multi-nationals should be bound by various conditions before they commence their activities in India. The present case pertained to recovery of compensation from the aircraft manufactures, airlines and airport authority of India, where it was argued that for the claim put forth, Texas court was a more appropriate forum as there was no regime on strict product liability.  Court considered the liability basis common law concepts of causation and principles of negligence rather than strict product liability. As it was done in Charan Lal Sahu v. Union of India [10] that such antiquated acts can be drastically amended or fresh legislation should be enacted to save the situation."

Burden of Proof

The burden of proof lies on the claimant  and the burden of proof is determined basis preponderance of evidence or balance of probabilities to be decided by the adjudicating officer or court. However, the burden of proof may also be shifted to the opposite party.

In this light, it is pertinent to mention that National Consumer Disputes Redressal Commission in Tata Motors vs Rajesh Tyagi and HIM Motors Show Room-II [11] held that “onus shifts to the manufacturer to show that the vehicle does not suffer from manufacturing defect once the 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 occasion for removing one defect or the other”. The Court took note of the suffering cause to the Complainant who, by having been sold defective goods would have to incur expenses by obtaining expert opinion to show that the vehicle suffered from manufacturing defects. Court said that this would be “too much”, adding that circumstance of the vehicle having been taken for removal of defects within or after the period of warranty leaves no manner of doubt that the goods sold to the consumer is not only defective but also suffers from manufacturing defect.

It is not out of place to mention that a reading of Sections 2(34) and 2(22) of CPA tends to put the onus of the complainant to prove that a product by which harm has been caused, was defective.

The term ‘defect’ and ‘defective’ as defined by CPA implies that for a product to be defective it needs to be faulty, imperfect or of inadequate quality or standard in accordance with contract or law [12]. Thus, if construed strictly, the compensation for the harm in a product liability claim would mean that the consumer or claimant, would have to satisfy the Court that the product was inherently defective. This is a slight deviation from the concepts which have been devolved by established jurisprudence in common law according to which defective and deficient are not the sole yardsticks for good service but also proper labelling, sufficient warning and/or instructions. Thus, a harmonious [13] reading of the Act in light of Chapter VI of the CPA which makes a product manufacturer liable in product liability action if the product fails to contain adequate instructions of correct usage or warning becomes necessary.

Comprehensive legal framework

The advent of the product liability regime will streamline the concept of product liability jurisprudence in India. What is apparent is that with the advent of the CPA 2019, there is a marked shift from the principle of buyer beware to seller beware. Consumers may find it a lot easier to approach forums and put forth claims against manufacturers, sellers and service providers. This will also cast a responsibility on those in the marketplace to practice due diligence. Though the principles are still evolving in the Indian legal system, some experiences from countries such as the UK & USA can be derived in order to form a more mature product liability scheme. However, Consumer Courts must implement the provisions with caution as the welfare legislation needs to keep in mind the intent and the purpose of the Act and balance interests of the consumer as well as the marketplace.

 


  1. The Consumer Protection Act, 2019 (“Act, 2019”) has introduced a new regime of product liability and dedicated Chapter VI to further enumerate liability of a product manufacturer, product service provider or product seller.
  2. Section 2 (34), Consumer Protection Act, 2019
  3. Section 2 (35), Consumer Protection Act, 2019
  4. Section 2 (22), Consumer Protection Act, 2019
  5. Section 84, Consumer Protection Act, 2019
  6. Section 86, Consumer Protection Act, 2019
  7. Section 85, Consumer Protection Act, 2019
  8. SCR (3) 241
  9.  ILR 1994 KAR 1370
  10. 1989 SCR Supl. (2) 597
  11. (2014)(1) CPC267
  12. Section 2(10), Consumer Protection Act, 2019
  13. Sections 2(34), 2(22), 2(10) and 84, Consumer Protection Act, 2019

 

[Raghav Sethi is an Associate at L&L partners. Views expressed by the Author are entirely their own and personal. Lawbeat neither endorses, agrees or disagrees with them]