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Protection and Enforcement of the Rights of Consumers as a "Class" in India

Suvarna Mandal & Namrata Dubey

"Consumerism" as a concept is universal and has been in existence since the origin of trade and commerce in human civilisation. Every individual is or has the potential to be a "consumer" irrespective of age, social order, gender or region. Consumer protection around the world has come a long way from a time when merchants and traders engaged in gross unethical, arbitrary and exploitative practises with the consumer having no redress or remedy against such practises. In contrast, presently, consumers, and consumers as a "class", around most parts of the world have defined statutory rights and remedies and feel confident to seek redressal by inter alia filing lawsuits; such as a 2014 US lawsuit of 'false and misleading advertisement' against a company which claims that it’s energy drinks "gives you wings" when in fact the consumer complained that it did not. The said company had to pay $13 million to settle the lawsuit .

One of the species of consumer protection which has recently gained traction in India is the "Class Action" lawsuit. A class/collective action is a lawsuit in which a single person or small group of individuals represent the interests of a larger group before the court . Class Action lawsuits findsits basis under the Civil Procedure Code ("CPC") under Order 1 Rule 8 and is statutorily recognised under various legislations including Companies Act, 2013, Competition Act, 2002, and the Consumer Protection Act, 1986 (“CPA”) and now the Consumer Protection Act 2019 ("CPA 2019").

The Supreme Court in the matter Chairman, Tamil Nadu Housing Board, Madras v TN Ganapathy while deciding on the question of maintainability of a suit in a representative capacity under Order 1, Rule 8 of the CPC, held that "The provisions of Order 1 of Rule 8 have been included in the Code in the public interest so as to avoid multiplicity of litigation. The condition necessary for application of the provisions is that the persons on whose behalf the suit is being brought must have the same interest. In other words, either the interest must be common, or they must have a common grievance which they seek to get redressed". This judgement laid down that the cause of action need not be the same and all that is required for application of said provision is that the persons concerned must have common interest or common grievance. This in fact was recently affirmed by the Supreme Court in Anjum Hussain & Others v. Intellicity Business Park Pvt. Ltd. & Others.

While the jurisprudence pertaining to Class Action lawsuits under the CPA was stillin the process of developing, on 9 August 2019 the CPA 2019 received the assent of the President of India and was published in the official gazette,which will be repealing the CPA in entirety. The Central Government will notify the date of the coming into force of the CPA 2019. However, the available jurisprudence under the CPA for class action lawsuits may not be impeded by the CPA 2019. Section 35 (1) (c) of the CPA 2019 is in effect Section 12 (1) (c) of the CPA pertaining to filing a "complaint" by "one or more consumers, where there are numerous consumers having the same interest" with the permission of the District Forum ("District Commission" under the CPA 2019). Consequently, any jurisprudence pertaining to this category of consumer matters under the CPA will continue to be binding and have precedentiary value.

The essentials of a Class Action and its maintainability under Section 12 (1) (c) ofthe CPA was decided by the National Consumer Disputes Redressal Commission ("NCDRC"), New Delhi in the case Ambrish Kumar Shukla v. Ferrous Infrastructure Pvt. Ltd.

"16. Before parting with the references, we would like to emphasise that considering the binding effect of a decision rendered in a complaint under Section 12(1)(c) of the Consumer Protection Act, on all the consumers, on whose behalf or for whose benefit such a complaint is filed, even if they chose not to join as a party to the complaint, it is necessary to exercise due care and caution while considering such a complaint even at the initial stage and to grant the requisite permission, only where the complaint fulfils all the requisite conditions in terms of Section 12(1)(c) of the Consumer Protection Act read with Order I Rule 8 of the Code of Civil Procedure; as interpreted in this reference. It would also be necessary for the Bench to either give individual notices or an adequate public notice of the institution of the complaint to all the persons on whose behalf or for whose benefit the complaint is instituted. Such a notice should disclose inter-alia (i) the subject matter of the complaint including the particulars of the project if the complaint relates to a housing project/scheme, (ii) the class of persons on whose behalf or for whose benefit the complaint is filed, (iii) the common grievance sought to get redressed through the class action, (iv) the alleged deficiency in the services and (v) the reliefs claimed in the complaint.

It will also be necessary to hear the opposite party, before taking a final view on the grant or otherwise of the permission required in terms of Section 12(1)(c) of the Consumer Protection Act."

The decision of the NCDRC in the above stated Ambrish Kumar case lays down the fundamentals of instituting a consumer protection class action lawsuit and will apply mutatis mutandis to Section 35 (1) (c) of the CPA 2019.

The CPA 2019 appears to further strengthen the rights of consumers as a class since it empowers the Central Consumer Protection Authority ("Central Authority") under Section 18 (1) (a) to "protect, promote and enforce the rights of consumers as a class". Under the CPA 2019 the Central Authority will have the power to initiate a class action lawsuit before the appropriate Consumer Commission, and, investigate and inquire into matters pertaining to violation of consumer rights of a class.

The CPA 2019 will effectively lead to an increase in the institution of class action lawsuits since not only will "consumers as a class" be able to approach the appropriate forum for redressal and enforcement of its rights, the Central Authority may also suo moto (or on being approached by the consumer class) be able to investigate and file class action lawsuits.The question of damagaes awarded in such class action cases however will depend upon facts and circumstances of each case. The culture of damages awarded in class action litigation in India is not defined and it remains to be seen whether Indian courts adopt an approach of awarding high damages to consumers as a class for egregious parctises.Considering the rapidly changing socio-economic environment, and expansive technological advancements, only time will tell if the CPA 2019 will succeed in being effective, purposeful and provide speedy redressal to the consumers.


1. Philip Kotler, also known as the "Father of Marketing", describes consumerism as "a social movement seeking to augment the rights and powers of the buyers in relation to the sellers"
2. Source: https://www.bevnet.com/news/2014/red-bull-to-pay-13-million-for-false-advertising-settlement
3. P Ramanatha Iyer, Advanced Law Lexicon, 3rd Edition, 2005, p 820
4. (1990) 1 SCC 608
5. MANU/CF/0711/2018
6. 2016 SCC OnLine NCDRC 1117

Authors

Suvarna Mandal, Associate Partner | suvarna@saikrishnaassociates.com

Namrata Dubey, Associate | namrata@saikrishnaassociates.com

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