Note on Product Liability in India
The
concept of product liability has evolved over the years as can be seen by the
shift in maxims followed from “Caveat Emptor’ i.e. Buyer Beware to “Caveat
Venditor” i.e. Seller Beware.
DEFINITION:
“General obligation or liability of
the producer or supplier of goods and services in order to adjust for the loss
assosiated with its utilization, such as damage of property or personal injury.
Usually, the affected party need not prove that the supplier or producer was
negligent as the defect is associated with the product or service”[1]
-
Blacks Legal
Dictionary , 2nd Edition
Thus,
Products Liability, (as named in India) is the obligation imposed upon any
manufacturer, wholesalers, vendors and distributors for any damage or injury
caused to the consumer of such a good due to any defect or fault in the
product. As it the duty of such manufacturer, wholesalers, vendor and
distributor to deliver goods that are free of fault or any defect, in case
defective or faulty goods are delivered, it is their duty to make good any harm
incurred due to it.
Examples
of defective include faulty auto brakes, contaminated baby food, exploding
bottles of beer, flammable children's pyjamas or lack of label warnings and the
like.
The
concept of product liability is borrowed from the Law of Torts, and covered by
the Indian legislations under the laws enumerated later.
Law
of Torts and product liability is explained below:-
1. Negligence: the failure to exercise due and reasonable care in
the ordinary course of business. The aggrieved must prove:-
a.
Legal duty of
care upon the wrongdoer
b.
The duty was
owed to the aggrieved
c.
There was breach
of duty of care
d.
Damage incurred
by aggrieved was a result of negligence on part of wrongdoer
The Consumer Protection Act, covers negligence.
2. Fraud/Misrepresentation/Deceit: the wilful misstatement made by the defendant as a
result of which the aggrieved incurs injury or damage. Essentials :-
a.
False representation
by wrongdoer
b.
Knowledge of
falsity of statement
c.
Intention to
deceive
d.
Loss suffered by
aggrieved
Covered under the provisions of the Indian Contract
Act.
3. Strict Liability: it is the absolute liability placed upon the wrongdoer
regardless of his intention. The injury caused is enough to claim relief, the
presumption of court is in favour of the aggrieved, thus burden of proof upon
the wrongdoer to prove his innocence. In case of products liability, the
following conditions are to be fulfilled:-
a.
The wrongdoer is
the manufacturer of the defective product
b.
The product
contained defects when purchased by the aggrieved
c.
The defect
existed when the defendant sold the product
4. Warranty: The implied specifications of the product or the
minor terms of contact. The non-fulfilment of warranties cannot terminate the
contract. Warranties are assentation’s made for a product by the seller, if the
product is not up to the said assertments it is a breach of warranty. Relief in
such cases include:-
a.
Compensation
b.
Replacement of
defect
Covered under the Sale of Goods Act and the Indian
Contract Act.
5. Condition: A term of a contract on which the entire contract is
based. The non-fulfilment of such term is considered a breach. Relief in such
case is:-
a.
Termination of
contract
b.
Damages
Covered under the Sale of Goods Act
LAW REGULATING PRODUCTS LIABILITY:
As
of today, there is no one specific Act, regulating Products Liability, however
suits for products liability can be
instituted for violation of rights under the following Acts, namely:-
The Consumer Protection Act, 1986[2]: The CPA, protects “consumers”, who are final users
of a product. Commercial users, obtaining product as a raw material in
furtherance to a work in progress cannot claim under the Act. The Act provides
the manner[3]
and procedure[4] to file the complaint in
the district forum[5], or state commission[6],
or national commission[7] as follows:-
1. complaint is received by the district forum, the
district forum
2. complaint may either be admitted or rejected within
21 days
3. on admission of complaint a notice to the opposite
party mentioned in the complaint, is issued within a period of 30 days
4. the complaint is to be finally disposed of within a
period of three months to five months
5. appeal filed before the state commission or the
National Commission shall be heard and finally disposed of within a period of
90 days
6. relief can be in the nature of compensation for loss
incurred
The
limitation period[8] is fixed at 2 years from
the date of cause of action.
The Sale of Goods Act, 1930[9]: The Act, applies to every buyer and seller of a
good. The Act provides for sales to be made as per the description of the good[10]
and that there is an implied condition regarding the quality of the goods[11],
buyers right of inspection of goods[12]
(if not inspected previously), and remedy for breach of warranty[13] .
Thereby the Act presumes certain conditions in favour of the buyer.
The Indian Contract Act, 1872[14]: The Act regulates contracts entered into. Provisions
of the Act, relating to fraud[15]
and misrepresentation[16]
can be applied to the claim of products liability. The Act, pertains to
provisions for breach of contract, wherein compensation for loss of breach[17]is
provided for. Relief is in the nature of compensation for loss incurred.
Indian Penal Code, 1860[18]: The provisions pertaining to cheating[19],
false weights and measures[20],
adulteration [21](of foods and drugs),
using false property marks[22]
and trade-marks, can be applied to a suit for products liability. The Act
provides that any dishonest concealment or deception is included within the
purview of section 415 and is therefore considered cheating.
Other
Legislation regulating specific goods:
1.
Drug and
Cosmetics Act, 1940: Criminal liability imposed upon the manufacturer of drugs
and cosmetics if they do not prescribe to the laid down standards.
2.
Prevention of
Food Adulteration Act, 1954: Act lays down the food safety standards to be
followed. In case of non-fulfilment of any provisions, penalties in the form of
fine or imprisonment of both may be imposed.
3.
Essential
Commodity (supply) Act, 1955
4.
Legal Metrology
Act, 2009: The Act lays down the standards to be adhered to, for the packaging,
weight and measures of a product. If any mandatory declaration is found missing
on the package a fine is levied.[23]
5.
Agricultural
Produce (Grading and Marketing) Act
6.
Indian Standards
Institution (Certification Marks) Act
The
above mentioned laws impose criminal liability upon the manufacturer in the
form of fine and or imprisonment for the violation of set standards of specific
goods.
RELEIF AVAILABLE:
1. Compensation as a civil remedy
2. Refund as a civil remedy
3. Fine under the criminal law
4. Imprisonment under the criminal law
CASE LAW:
Gladys Escola, Respondent, v. Coca
Cola Bottling Company of Fresno (a Corporation)[24]
The
landmark case on negligence. The case was decided by the Supreme Court of
California. Herein the aggrieved was a victim of a coke bottle bursting in her
hand, as a result of which she suffered grievous injuries to the hand. Ordinarily
a well-sealed bottle would not burst on its own unless the sealing method was
defective. The Court held the respondent liable for negligence as there were no
extraneous factors affecting the bottle, and negligence in packaging resulted
in the injury.
Malay Kumar Ganguly v Dr. Sukumar
Mukherjee and Ors.[25]
The
husband of the deceased wife, brought a medical negligence suit against the
doctor involved in the treatment of the deceased alleging that the treatment
given resulted in the death of his wife.
Case
of medical negligence, wherein the Hon’ Supreme Court of India held that:-
“For criminal prosecution of a
medical professional for negligence, it must be shown that the accused did
something or failed to do something which in the given facts and circumstances
no medical professional in his ordinary senses and prudence would have done or
failed to do”
PRODUCT LIABILITY AND THE DEFENCE
SECTOR:
The
Ministry of Defence (MoD) regulates the product procurement by and for the
purposes of defence. There is a Defence Product Procedure (DPP), laid down for
every such procurement, which is revised annually.
As
per the 2013 DPP format, the following provisions impose product liability on
vendors:
25a.
‘Buy and Make (Indian)’: (xi) The Indian vendors participating in such cases
shall remain liable to achieve mandatory indigenous content requirements for
this category as laid down under paragraph 4(c) of the DPP.
Vendor
Responsibility: 5.1 The Vendor of the equipment under the main
procurement contract will be responsible for the fulfillment of offset
obligations. The Vendor may allow his Tier-1 sub-vendors under the main
procurement contract to discharge offset obligations, to the extent of their
work share (by value), on behalf of the main/prime vendor. However, overall
responsibility and liability for the full discharge of offset obligations shall
continue to remain with the main/prime vendor. Any shortfall by the Tier-1
sub-vendor shall be made good by the main/prime vendor, failing which the
vendor shall be liable for penalty and debarment as stipulated in the offset
guidelines
General
requirements 10. In Service Life/Shelf Life: The In Service Life/Shelf Life of
the equipment (as applicable) shall be stipulated in the offer. In case of shelf
life the relevant storage conditions should be clearly specified. The vendor is
required to give details of reliability model, reliability prediction and its
validation by designer/ manufacturer to ensure reliability of stores throughout
shelf life. The efficacy of reliability model/prediction/validation would be
verified during technical and environmental evaluation as indicated in Para 24
(b)
Technical
Parameters 33. Before the contract is finalized, the vendor would
be required to provide Quality Assurance Plans (QAP) i.e. tests undertaken to
assure quality & reliability and provide the Standard Acceptance Test
Procedure (ATP). Director General of Quality Assurance (DGQA)/DGAQA/DGNAI (or
the concerned Quality Assurance agency, as applicable) reserves the right to
modify the ATP if necessary. The equipment supplied by the vendor would be
accepted subject to evaluation and clearance by the DGQA. The vendor would be
required to provide all test facilities at OEM premises for acceptance
inspection by the DGQA team as also train their team. The details in this
regard will be coordinated during the negotiation of contract
REPAIR
AND MAINTENANCE PHILOSOPHY Spares 5. On Board Spares (OBS). The Bidder is
required to provide sufficient OBS for all equipment for on board repairs,
scheduled servicing & maintenance of all equipment falling due till (as
specified) years of the operation of the vessel after warranty, along with the
delivery of the vessel in conformity to the requirement of spares/ tools/ jigs
stipulated in the exploitation/ maintenance document of respective equipment/
system. To this purpose, the Seller is required to provide Manufacturer’s
Recommended List of On board Spares (MRL-OBS) in format provided at Enclosure
4A. The Seller shall satisfy himself of the suitability and sufficiency of the
MRL-OBS. The Seller shall establish the range and depth of spares required to
support the ship level repair and maintenance for the prescribed period. The
Seller shall also be fully liable in respect of the quality and quantity of the
recommended spares and must supply any shortfall of spares without any
financial responsibility or liability to the Buyer. A certificate of
sufficiency for MRL-OBS has to be submitted by the bidder along with the
technical bid.
[3]
Section 12
[4]
Section 13
[5]
Section 11
[6]
Section 17
[7]
Section 21
[8]
Section 24A
[9] http://comtax.up.nic.in/Miscellaneous%20Act/the-sale-of-goods-act-1930.pdf,
last visited 14/05/2015
[10]
Section 15
[11]
Section 16
[12]
Section 41
[13]
Section 59
[14] http://comtax.up.nic.in/Miscellaneous%20Act/the-indian-contract-act-1872.pdf,
last visited 14/05/15
[15]
Section 17
[16]
Section 18
[17]
Section 73 and 74
[18] lawcommissionofindia.nic.in/101-169/Report156Vol2.pdf,
last visited 14/05/2015
[19]
Section 415
[20]
Section 265
[21]
Section 272 and 274
[22]
Section 481
[23] as
per Rule 39 of the Standards of weights and measures packaged commodity rules
[24] 24
Cal.2d 453
[25] (2010)2SCC(Cri)299
Comments
Post a Comment