Product Liability Law: When Companies Must Pay

What is Product Liability?

Product liability refers to the legal responsibility of manufacturers, sellers, and service providers for harm caused by defective products. Under Section 2(34) of the Consumer Protection Act, 2019, "product liability" means:

> "the liability of a product 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 or by deficiency in services relating thereto."

Key Definitions Under CPA 2019

Product (Section 2(37)):

• •Any article or goods manufactured or produced, either industrially or otherwise
• •Includes components, raw materials, and any article which has been manufactured
• •Covers both movable and immovable goods

Product Defect:

A product is considered defective when it does not provide the safety that a person is entitled to expect, taking into account:

• •The manner in which it was marketed
• •Instructions or warnings provided
• •The use to which it could reasonably be expected to be put
• •The time when it was supplied

Harm:

Damage to any property (movable or immovable) or personal injury, illness, or death caused by defective products.

Who Can Be Held Liable? (Section 84)

The CPA 2019 expanded liability beyond just manufacturers. The following parties can be held responsible:

1. Product Manufacturer

A manufacturer is liable if:

• •The product contains a manufacturing defect
• •The product has a design defect
• •There is inadequate warning or instruction about proper use
• •The product does not conform to an express warranty

Who qualifies as a manufacturer?

• •Any person who makes or assembles products
• •Persons who put their name, trademark, or brand on the product
• •Importers of products for sale or distribution
• •Persons involved in packaging or labeling the product

2. Product Seller

A seller can be held liable in the following circumstances:

• •The seller has exercised substantial control over the design, manufacture, or packaging
• •The seller altered or modified the product
• •The seller made an express warranty independent of the manufacturer
• •The manufacturer is not identified or is judgment-proof
• •The seller failed to exercise care regarding the product

3. Product Service Provider

Service providers can be liable when:

• •The service provided is defective or deficient
• •The service causes harm due to negligence
• •There is a breach of warranty regarding the service
• •The service provider failed to exercise reasonable care

Types of Product Defects

Product liability claims typically fall into three categories:

1. Manufacturing Defects

These occur when a product deviates from its intended design during the manufacturing process, making it dangerous.

Examples:

• •A batch of pressure cookers with faulty safety valves that cause explosions
• •Motorcycles with improperly installed brakes
• •Pharmaceutical products contaminated during production
• •Electronic devices with loose wiring causing short circuits

Indian Case Example:

In several cases involving pressure cooker explosions, manufacturers like Hawkins and Prestige have been held liable when defects in gaskets, safety valves, or pressure regulators caused accidents resulting in severe burns and property damage. Courts awarded compensation ranging from ₹2 lakhs to ₹10 lakhs depending on injury severity.

2. Design Defects

These exist when the product's design is inherently dangerous or flawed, even if manufactured correctly.

Examples:

• •Electric vehicles with battery packs prone to thermal runaway and fires
• •Children's toys with small detachable parts posing choking hazards
• •Motorcycles that lack proper stability features
• •Appliances with inadequate insulation causing electric shocks

Indian Case Example:

Several electric scooter manufacturers in India faced liability claims in 2022-2023 when multiple vehicles spontaneously caught fire. Companies like Ola Electric, Okinawa, and PureEV were investigated for design defects in battery management systems. The government ordered recalls, and affected consumers claimed compensation under product liability provisions.

3. Failure to Warn (Marketing Defects)

Products may be properly designed and manufactured but still dangerous if adequate warnings or instructions are not provided.

Examples:

• •Medicines without proper dosage instructions or side-effect warnings
• •Chemical products without hazard labels
• •Electrical equipment without voltage specifications
• •Hair dye products without allergy test warnings

Indian Case Example:

In cases involving hair dye allergic reactions, courts have held manufacturers liable when products lacked adequate warnings about conducting patch tests. Compensation of ₹2-5 lakhs has been awarded to consumers who suffered severe allergic reactions and permanent scarring.

Defenses Available to Manufacturers and Sellers (Section 87)

The CPA 2019 provides specific defenses that manufacturers and sellers can raise to avoid liability:

1. Compliance with Legal Standards

The defendant can avoid liability by proving:

• •The product conformed to existing mandatory safety standards under any law
• •The defect was due to compliance with statutory regulations
• •The product met all BIS (Bureau of Indian Standards) certifications

Important Note: Simply having BIS certification does not automatically absolve liability. Courts examine whether compliance was genuine and whether additional safety measures should have been taken.

2. Product Not in Stream of Commerce

Liability can be avoided if the defendant proves:

• •The product was not manufactured for commercial sale or distribution
• •The product was not sold or distributed for profit
• •It was a sample, prototype, or donated item

3. Non-Existence of Defect

The manufacturer or seller can argue:

• •The alleged defect did not exist when the product left their control
• •The defect arose due to consumer misuse or negligence
• •The product was tampered with after leaving the manufacturer

4. Consumer Knowledge of Defect

If the defendant proves the consumer knew about the defect at the time of purchase and still chose to use the product, liability may be avoided.

5. Development Risk Defense

The defendant can claim that:

• •The state of scientific and technical knowledge at the time did not allow detection of the defect
• •The defect could not have been discovered even with the best available technology

Limitation: This defense is rarely successful in India. Courts have held that manufacturers must continuously update their knowledge and implement available safety measures.

6. Contributory Negligence

If the consumer's own negligence contributed to the harm, compensation may be reduced proportionally. For example:

• •Using a product despite visible damage
• •Ignoring safety warnings and instructions
• •Modifying the product improperly
• •Using the product for unintended purposes

Burden of Proof in Product Liability Cases

Consumer's Burden

The consumer (complainant) must establish:

• 1
  Purchase and use: That they purchased or used the product
• 2
  Defect exists: That the product was defective
• 3
  Causation: That the defect caused the harm
• 4
  Damages: The extent of harm suffered (medical bills, property damage, loss of income, etc.)

Manufacturer's/Seller's Burden

Once the consumer establishes a prima facie case, the burden shifts to the manufacturer or seller to prove:

• •One of the defenses under Section 87 applies
• •They exercised reasonable care
• •The harm was caused by factors outside their control

Standard of Proof

Unlike criminal cases requiring proof "beyond reasonable doubt," product liability cases follow the preponderance of probabilities standard - the consumer must show it is more likely than not that the defect caused the harm.

Types of Compensation Available

Under the CPA 2019, consumers can claim various forms of compensation:

1. Medical Expenses

• •Actual medical bills incurred for treatment
• •Future medical expenses for ongoing treatment
• •Rehabilitation and therapy costs
• •Cost of assistive devices (wheelchairs, prosthetics, etc.)

2. Loss of Income

• •Past loss of earnings due to inability to work
• •Future loss of earning capacity if permanently disabled
• •Loss of business or professional opportunities

3. Property Damage

• •Cost of repairing or replacing damaged property
• •Loss of use of property during repair period
• •Diminution in property value

4. Pain and Suffering

• •Physical pain endured
• •Mental trauma and emotional distress
• •Loss of enjoyment of life
• •Permanent disability or disfigurement

Typical Awards: Indian consumer forums typically award ₹1-5 lakhs for moderate pain and suffering, with severe cases commanding ₹10-25 lakhs or more.

5. Punitive Damages

In cases involving:

• •Willful negligence or reckless disregard for consumer safety
• •Concealment of known defects
• •Fraudulent conduct
• •Repeated violations

Consumer forums can award punitive damages to punish the manufacturer and deter similar conduct. These can range from ₹5 lakhs to ₹50 lakhs depending on the severity and the company's conduct.

6. Costs and Interest

• •Legal costs incurred in pursuing the claim
• •Interest on the awarded amount from the date of complaint filing
• •Expert witness fees and other litigation expenses

BIS Standards and Product Liability

The Bureau of Indian Standards (BIS) establishes mandatory quality and safety standards for various products under the BIS Act, 2016.

Mandatory BIS Certification Products

Products requiring BIS certification include:

• •Electrical appliances (switches, wires, MCBs)
• •LPG cylinders and pressure equipment
• •Helmets and automotive safety equipment
• •Baby products (feeding bottles, pacifiers)
• •Electronic goods (chargers, adapters)
• •Steel and cement for construction

Impact on Liability

Non-compliance with BIS standards:

• •Creates a presumption of defectiveness
• •Strengthens the consumer's case significantly
• •May result in penalties under the BIS Act
• •Can lead to product recalls and market withdrawal

Compliance with BIS standards:

• •Does not automatically prevent liability
• •Provides some defense but not absolute protection
• •Courts may still find liability if additional safety measures were feasible
• •Must be genuine compliance, not just paper certification

Notable Indian Product Liability Cases

1. Pressure Cooker Explosions

Facts: Multiple cases involving pressure cookers from various brands exploding during normal use, causing severe burns, facial injuries, and kitchen fires.

Liability Finding: Manufacturers held liable for defective safety valves, improper gasket materials, and inadequate pressure release mechanisms.

Compensation: ₹2-10 lakhs awarded depending on injury severity, medical expenses, and permanent scarring.

Key Principle: Manufacturers of pressure-related equipment must ensure multiple safety mechanisms and rigorous quality testing.

2. Electric Vehicle Fires

Facts: Series of electric scooter fires in 2022-2023 involving brands like Ola, Okinawa, Boom Motors, and PureEV. Vehicles caught fire while parked, charging, or in use.

Liability Finding: Government investigations found design defects in battery management systems, inadequate thermal management, and use of substandard cells.

Action Taken: Mandatory recalls ordered, companies required to replace defective battery packs, and compensation provided to affected consumers.

Ongoing: Several consumer complaints pending before consumer forums seeking compensation for vehicle loss, property damage, and mental trauma.

3. Defective Medicines and Medical Devices

Facts: Cases involving contaminated medicines, substandard surgical implants, and defective medical devices causing serious health complications.

Liability Finding: Pharmaceutical companies and medical device manufacturers held liable for inadequate quality control, contamination during manufacturing, and failure to follow Good Manufacturing Practices (GMP).

Compensation: Substantial awards of ₹10-50 lakhs for permanent health damage, loss of organ function, and medical complications.

Key Principle: Manufacturers of medical products face enhanced liability due to the vulnerable nature of patients relying on their products.

4. Contaminated Food Products

Facts: Incidents involving foreign objects in packaged food (plastic, metal pieces), contamination with harmful substances, and food poisoning from branded products.

Liability Finding: Food manufacturers held liable under product liability provisions and Food Safety and Standards Act.

Compensation: ₹1-5 lakhs for food poisoning, medical treatment, and mental trauma. Higher compensation when permanent health damage occurred.

Key Principle: Food manufacturers must maintain strict quality control at every stage from sourcing to packaging.

How to File a Product Liability Complaint

Step 1: Document Everything

• •Preserve the defective product in its current state
• •Take photographs from multiple angles
• •Collect all packaging, receipts, and warranty documents
• •Obtain medical reports if injuries occurred
• •Get repair estimates for property damage
• •Maintain records of all expenses incurred

Step 2: Send Legal Notice

Before filing a complaint, send a legal notice to:

• •The manufacturer
• •The seller (if applicable)
• •The service provider (if applicable)

The notice should demand:

• •Acknowledgment of the defect
• •Compensation for harm caused
• •Replacement or refund
• •Medical expenses and other losses
• •A reasonable timeframe for response (typically 30 days)

Step 3: File Consumer Complaint

If the legal notice does not yield results, file a complaint with the appropriate consumer forum based on the compensation claimed:

• •District Consumer Disputes Redressal Commission: Claims up to ₹1 crore
• •State Consumer Disputes Redressal Commission: Claims between ₹1 crore and ₹10 crore
• •National Consumer Disputes Redressal Commission: Claims exceeding ₹10 crore

Step 4: Complaint Requirements

Your complaint must include:

• •Details of the complainant and opposite parties
• •Facts of the case in chronological order
• •Nature of the defect and harm caused
• •Causation between defect and harm
• •Details of compensation claimed
• •Supporting documents (medical reports, bills, receipts, expert opinions)
• •Affidavit verifying the contents

Step 5: Present Evidence

During hearings, present:

• •Expert testimony on the product defect
• •Medical evidence of injuries
• •Photographs and physical evidence
• •Witness statements
• •Technical reports or test results
• •Documentation of financial losses

Step 6: Obtain and Enforce Order

Once the consumer forum passes an order:

• •The opposite party must comply within the specified timeframe
• •If they fail to comply, you can file an execution petition
• •Non-compliance can result in penalties and interest
• •Appeals can be filed to higher forums if necessary

Statute of Limitations

Product liability complaints must be filed within 2 years from the date when:

• •The cause of action arose (typically when harm occurred)
• •The defect was discovered or should reasonably have been discovered
• •The complainant knew the product caused the harm

Exception: If the opposite party acknowledges liability or makes part payment, the limitation period may be extended.

Preventing Product Liability Issues: Consumer Tips

Before Purchase

• 1
  Research the product: Check online reviews, recall notices, and safety ratings
• 2
  Verify certifications: Look for genuine BIS marks and quality certifications
• 3
  Buy from authorized dealers: Avoid unauthorized sellers offering deep discounts
• 4
  Check manufacturing dates: Avoid old stock that may have degraded

After Purchase

• 1
  Read all instructions: Follow usage guidelines and safety warnings
• 2
  Register the product: Register warranties and recall notifications
• 3
  Maintain properly: Follow recommended maintenance schedules
• 4
  Report defects immediately: Inform the manufacturer and seller of any issues
• 5
  Keep documentation: Preserve receipts, warranties, and correspondence

If Harm Occurs

• 1
  Seek medical attention immediately: Your health is the priority
• 2
  Do not discard the product: Preserve evidence
• 3
  Document everything: Photos, medical reports, expenses
• 4
  Consult a lawyer: Get legal advice before accepting any settlement
• 5
  File complaints promptly: Do not delay beyond the limitation period

Recent Developments and Trends

Enhanced Product Liability Awareness

Following high-profile cases involving electric vehicle fires and pressure cooker explosions, Indian consumers are increasingly aware of their rights under product liability law. This has led to:

• •More complaints being filed with consumer forums
• •Greater media scrutiny of product defects
• •Increased recalls by manufacturers
• •Stronger quality control measures by companies

E-Commerce and Product Liability

With the rise of online shopping, questions arise about e-commerce platform liability:

• •Are platforms like Amazon and Flipkart "sellers" under CPA 2019?
• •Do they have liability for defective products sold through their platforms?
• •Consumer forums are developing jurisprudence on this issue
• •Platforms are increasingly being impleaded as parties in product liability cases

Stricter Regulatory Oversight

Government agencies are taking product safety more seriously:

• •BIS expanding the list of mandatory certification products
• •Faster recall mechanisms for defective products
• •Heavy penalties for non-compliance with safety standards
• •Regular market surveillance and testing programs

Conclusion

Product liability law in India has evolved significantly with the Consumer Protection Act, 2019, providing robust protection to consumers harmed by defective products. The law recognizes that manufacturers, sellers, and service providers have a responsibility to ensure their products are safe and properly designed.

Key takeaways:

• •Product liability covers manufacturing defects, design defects, and failure to warn
• •Multiple parties can be held liable - manufacturers, sellers, and service providers
• •Consumers must prove the defect, causation, and harm suffered
• •Defendants have specific defenses under Section 87 but these are not absolute
• •Compensation includes medical expenses, lost income, property damage, pain and suffering, and punitive damages
• •BIS standards are important but compliance does not guarantee immunity from liability
• •Act promptly to preserve evidence and file complaints within the limitation period

If you have been harmed by a defective product, do not hesitate to assert your rights. The law is on your side, and consumer forums are empowered to provide meaningful relief. Companies must be held accountable when their products cause harm - it not only compensates you but also protects future consumers from similar dangers.

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