Tracing the historical origins of consumer protection and the provisions of Consumer Protection Act, 1986, the article tries to find out whether the 2015 Bill has redefined notions of liability in relation to consumer protection laws and policies in India
The Consumer Protection Bill, 2015(“2015 Bill”) has been introduced to remedy several shortcomings that have been noticed in administering the Consumer Protection Act, 1986 (“1986 Act”). Unfortunately, the 2015 Bill has been further delayed as a result of an extension being given to the Parliamentary Committee on Food, Consumer Affairs and Public Distribution to review and submit its report on the Bill. The Bill, among other things, seeks to make provisions for “product liability” action on account of personal injury, death, or property damage caused by or resulting from a defective product.
The British established Mayor Courts in the three presidency towns of Madras, Bombay and Calcutta that gave “judgment and sentence in accordance to justice and right”. The courts heavily relied on common law and statute law of England as found applicable to the Indian conditions to administer judgment in accordance with “justice and right”. Thus, common law principles were introduced into the law of India. By virtue of Article 372 of the Constitution of India, these common law principles continue to have force in India (Building Supply Corporation v. Union of India, AIR 1965 SC 1061).
Earlier, the notion of caveat emptor, “let the buyer beware” held sway in common law. As a result, the buyer of the product had to protect himself against obvious (patent) as well as hidden (latent) defects in the goods. Thus, no remedy could be claimed against the seller of defective goods unless there was an express warranty or condition to that effect in the contract (Raghava Menon v. Kuttappan Nair, AIR 1962 Ker.318, para.7).
In Gardiner v. Gray, the English Courts replaced the rule of caveat emptor with precisely the opposite doctrine that the seller impliedly ‘warrants’ that his products contain no hidden defects. Further, the buyer was protected against obvious defects in goods if he “had no opportunity to inspect the commodity.” Thus, the buyer could now sue the seller of defective goods without any express contractual stipulations for damages or diminution in price. However, he could not repudiate the contract and compel the seller to take back the product. This common law rule was further modified by Section 16(2) of the Sale of Goods Act, 1930 (“1930 Act”) to provide additional protection to the buyers of goods.
As per Section 16(2) of the 1930 Act, there is an implied ‘condition’ of merchantable quality for goods bought by description from the seller who deals in goods of that description. Thus, a buyer was protected against both, obvious and hidden defects in goods. Further, the buyer would lose protection against the seller for obvious defects only if actually “inspected the goods” as opposed to “a mere opportunity to inspect” being granted to him (National Traders v. Hindustan Soap Works, AIR 1959, Ranbir singh Shankar singh Thakur v. Hindusthan General Electric Corporation Ltd., AIR 1971 Bom 97, para. 11). Hence, if there was any defect in the product, the buyer could reject the goods and sue for the price of the goods. It was also open to the buyer to accept the goods and sue on the basis of warranty for damages or diminution in the price of the product. Though considerable progress was made by law of warranties in according protection to the consumers, doctrine of privity was a serious limitation with this approach. Thus, only immediate buyers of the product could sue only the immediate sellers of the product. For instance, in Winterbottom v. Wright, the driver of a stagecoach who suffered injury because of a defect in the product was refused damages as he was not a party to the contract between the seller and the buyer.
As the functions of manufacturing and retailing of goods separated in the course of industrialization during the 1800, the law of warranties proved thoroughly inadequate to address the concerns of consumers. In most of the cases, the consumers had purchased the goods from the retailers who in turn had purchased them from the manufacturer. It must also be noted that, in the modern economy, the manufacturers were in the most effective position to reduce hazards to life, health and property and hence they had to be made liable to evolve an effective mechanism for ensuring the safety of the consumers. As there was no privity of contract between the manufacturer and the consumer, the consumer could not seek any recourse against the manufacturer (Winterbottom v. Wright, (1842) 152 Eng. Rep. 402 (Ex.)). This changed drastically after the decision of the House of Lords in Donoghue v. Stevenson. In the aforesaid case, the appellant drank a bottle of ginger beer, manufactured by the respondent, which a friend had brought from the retailor and given to her. The bottle contained decomposed remains of a snail which were not, and could not be detected until the greater part of the bottle had been consumed. She suffered from shock and severe gastro-enteritis. Thus, she instituted proceedings against the manufacturer alleging that he had exhibited carelessness in the conduct of his business which resulted in damage to her. Upholding the action for tort of negligence, the House of Lords affixed liability on the manufacturer of the product on the ground that the he had failed in his duty to consumers by failing to “ensure that the [ginger beer bottle] contained no deleterious foreign matter.” Thus, the consumer who suffered damage as a result of defective goods now had two independent causes of action- one in tort against the manufacturer and other in contract against the seller of the goods (G McKenzie & Co. Ltd. v. Nagendra Nath Mahalanabish). These were the only civil remedies available to the consumer against defective goods sold to them until the enactment of Consumer Protection Act, 1986 (“1986 Act”).
On 24th December 1986, the Government of India enacted the Consumer Protect Act, 1986 to safeguard the interests of the consumers. Prior to this enactment, there was no exclusive legislation for actually safeguarding the interests of the consumers. The 1986 Act provides an inexpensive and speedy remedy to the consumers with complaints against defective goods and deficient services by establishing quasijudicial machinery at the Centre, State and District Level (C Venkatachalam v. Ajithkumar C. Shah, (2011) 9 SCC 707, para.34). Additionally, it must be noted that the remedies under the 1986 Act are in addition to any other remedies available to the consumer under other laws in force. For instance, in case of an arbitration agreement between the consumer and seller, the consumer could either seek a reference to an arbitrator or file a complaint under the 1986 Act.
As noted earlier, the 2015 Bill introduces provisions for “product liability” action for or on account of personal injury, death or property damage caused by or resulting from a product. So, if the 2015 Bill is enacted into law, the manufacturer or producer of the product will be liable to the consumer of the product if he can prove defect, injury and proximate relationship between the defect and injury caused. Most importantly, the consumer will be able to recover compensatory damages from the manufacturer without proving negligence on part of producer. Therefore, the standard of liability for recovering compensation has been altered from negligence under 1986 Act to that of strict liability under the 2015 Bill in case of defective products leading to physical injury, death or damage to property.
Secondly, it must be noted that product liability action can be maintained against the seller of the product who is not the manufacturer only if the manufacturer is not identifiable or beyond jurisdiction, or the seller has altered the product and that resulted in injury or he was negligent in his conduct. Thus, in case of consumers seeking to recover damages from sellers of the product, they will have to establish negligence as earlier.
Thirdly, it must be noted that the “product liability” regime is limited in certain aspects in scope of its application. For instance, the manufacturer of the product will be exonerated from liability if the claimant fails to prove that in light of existing scientific and technical knowledge, the manufacturer should have known of the danger caused by the product. Further, only those products produced for introduction in trade or commerce are covered under the product liability regime.
While retaining all remedies available to the consumers under 1986 Act, the 2015 Bill makes only one important change to the existing consumer laws and policies as far as the notions of liability are concerned. It requires manufacturers to pay compensation to consumers for defective products leading to physical injury, death or property damage irrespective of any fault on their part. As far as other defects are concerned, the consumers will be entitled to compensation only if they are able to demonstrate negligence on part of the manufacturer. Hence, we can conclude that the changes favour consumers and have been redefined notions of liability to a limited extent.
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