Product Liabillity

Consumer Forum

India has progressive consumer welfare legislation in the form of Consumer Protection Act, 1986 establishing effective machinery to resolve the disputes between the manufacturers and service providers and the consumers with regard to product defects, deficiency in service as well as matters pertaining to restrictive and unfair trade practices. The legislation envisages establishment of District, State and National level disputes redressal fora to adjudicate over such disputes. Each of these Fora has jurisdiction commensurate with the value of claims.

Each of these Fora is empowered to pass orders and direct the offending party to

Indian Companies can hire services of foreign technicians and make remittances for technical services fees subject to certain conditions regardless of the duration of engagement of foreign nationals in any calendar year.

• remove the defect from the product

• replace the defective goods

• return the price paid or costs incurred by the consumer

• pay compensation to the consumer

• withdraw hazardous goods, if any, from sale in the market

• discontinue with the alleged restrictive/unfair trade practice.

Act provides for penalty to be paid by the consumer in case it is found that the complaint by him is of vexatious in nature.

Monopolies & Restrictive Trade Practices

In line with the global practices in the anti-trust domains, India too has enacted Monopolies & Restrictive Trade Practices, 1969 which went through revisions in the year 1984 and 1991 keeping pace with changing market scenario globally.

When major industrial reforms were introduced in India in the year 1991 the provisions pertaining to monopolies under the said Act lost relevance. The Act provides for establishment of MRTP Commission which regulates restrictive and unfair practices being employed by corporates with regard to minimum price maintenance; preventing & restricting competition; curbing free flow of products and services and practices amounting to misleading consumers regarding benefits and uses of products and services and false representations.

The Director General of Registration & Investigation appointed under the provisions of the Act assists the Commission in investigation and proceedings against the companies violating the code.

The Commission is empowered to :

• direct the guilty undertaking to discontinue with the alleged restrictive and unfair practice;

• pass cease & desist orders so as to restrain the guilty undertaking from adopting such restrictive and unfair practice;

• remove the restrictions and stopping unfair trade practices

• award compensation for the loss suffered or injury sustained by the aggrieved consumers to be paid by the guilty undertaking.

The Competition Act

As a first blush in the post-reforms regime, the Government of India felt necessary to provide for effective machinery in the form of Competition Commission of India to regulate acquisition of large businesses so as to ensure no one corporate player assumes dominant role; and to prohibit use of such dominant position to restrict competition which activities would be prejudicial to public interest. In order to regulate such emergent situation, the Government of India brought-in Competition Act in the year 2002 substituting the MRTP Act, 1984.
The dominant features of this Act are to prohibit certain Agreements, abuse of dominant position and Regulation of combinations, such as :

• certain agreements between enterprises or association of enterprises or person or association of persons in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services which causes or is likely to cause an appreciable adverse effect on competition within India, which also :

  • directly or indirectly determines purchase or sale prices,

  • limits or controls production, supply, markets, technical development, investment or provision of services,

  • shares the market or source of production or provision of services by way of allocation of area of market, type of goods or services or number of customers in the market,

  • directly or indirectly resulting in bid rigging or collusive bidding.

• Prohibit agreements amongst enterprises or persons for tie-in arrangement; exclusive supply agreement; exclusive distribution agreement; refusal to deal; and resale price maintenance.

• Prohibit abuse of dominant position whereby an enterprise directly or indirectly, imposes unfair or discriminatory condition in purchase or sale of goods or services or price in purchase or sale of goods of service; limits or restricts production of goods or provision of services or market therefor or technical or scientific development; or indulges in practice resulting in denial of market access; use of its dominant position in one relevant market to enter into or protect other relevant market.

• Prohibit acquisition of one or more enterprises by one or more persons or merger or amalgamation of enterprises resulting in acquisition, control of shares or voting rights or assets to the value of more than Rs 1000 Crores or turnover of more than Rs 3000 Crores in India; OR in India or outside India, in aggregate the assets of the value of more than US$ 500M or turnover of more than US$ 500M to a similar parameters to the maximum of to the tune of Rs 4000 Crores or turn over of more than Rs 12,000 Crores or in India or outside India to US$ 2bn or turnover more than US$ 6bn.

Many provisions of this Act have still not been made effective inasmuch as establishment of the regulator namely Competition Commission of India is yet to be done. The Government intends to transfer the powers and authority of MRTP Commission in the matter of restrictive and unfair trade practices to the already established Consumer Disputes Redressal Fora.
The Government is, however, yet to issue requisite notifications in this regard to make effective the provisions of this Act.

TOP