Automotive product safety and liability in India

Product safety and liability

What are the most relevant automotive-related product compliance safety and environmental regulations, and how are they enforced? Are there specific rules for product recalls?

The MVA read with the CMV Rules authorises the central government to notify, from time to time, Quality, Safety and Performance Standards, the standards in relation to any part, component or assembly to be used in the manufacture of an automobile. Every manufacturer is required to obtain the prototype of the part, component or assembly for which standards have been notified and approved by any agency referred to in rule 126 of the CMV Rules. After obtaining approval, every manufacturer shall also certify compliance with the statutory form prescribed under the CMV Rules.

The Ministry of Environment and Forests has laid down rules to ensure that standards for emissions of air pollutants from automobiles are kept in consonance with the international standards. Schedule IV of the Environment (Protection) Rules 1986 provides for standards for emissions of smoke, vapour, etc, from automobiles. The Bharat Stage Emission Standards (based on European regulations) are emission standards that have been set up by the central government to regulate air pollutants from internal combustion engine equipment, including motor vehicles. Currently the vehicle emissions standards adapted throughout the country are the Bharat Stage IV or BS-IV. The MVA requires every automobile owner to carry a valid PUC certificate, which is issued by the designated checking facilities to certify compliance with the prescribed emission norms. The current emission standards applicable in India are due to be updated very shortly, with the Ministry of Road Transportation and Highways, amending the CMV Rules to mandatorily require every vehicle manufactured on or after 1 April 2019 to be compliant with the new Bharat Stage VI (BS-VI) emission standard. While this shift to a new emission standard is a much-needed step in the right direction, it is bound to present a host of challenges to many existing automotive manufactures in the county going forward. Many auto manufactures have already begun redesigning the engines of existing vehicle variants to ensure that they will be BS-VI compliant.

The MVA prescribes punishment by way of a fine in the event a person is found to be driving an automobile in any public place that violates the standards prescribed in relation to road safety and pollution.

There is no statutory regulation or law in India governing the recall of vehicles. To date, all recalls in the Indian automotive sector have been made by automotive manufacturers on a voluntary basis. In 2012, the SIAM, a voluntary association of automotive manufacturers, launched the Voluntary Code on Vehicle Recall 2012 (Voluntary Recall Code). Since then, recalls of vehicles have been undertaken by automotive companies in India in accordance with the Voluntary Recall Code.

The statutory framework for recalls in the automotive sector has been proposed in the Motor Vehicle Amendment Bill 2017, an amendment to the MVA (the existing principal automotive legislation). The amendment seeks to empower the central government to direct manufacturers to recall their vehicles if they suffer from a defect that may cause harm to the environment, drivers or occupants or other road users; and in case of the defect being reported to the central government by owners, testing agencies or any other source. If it becomes law, the amendment could be one of the biggest developments in the Indian automotive sector.

Describe the significance of product liability law, and any key issues specifically relevant to the automotive industry. How relevant are class actions or other consumer litigation in product liability, product recall cases, or other contexts relating to the automotive industry?

At present, there is no legislation that deals with product liability specifically in the case of automobiles. In the event a customer suffers losses as a result of a defect in an automobile, such customer has a remedy against the manufacturer or supplier of the automobile (as the case may be) under the Consumer Protection Act 1986 (the CP Act), which is specific legislation for protection of the rights of all consumers. Claims under the CP Act can be made before various forums at the district, state and national level (consumer forums). The term ‘defect’ has been widely defined in the CP Act to include any fault, imperfection or shortcoming in the quality, quantity, potency, purity or standard which is required to be maintained by or under any law for the time being in force or under any contract, express or implied or as is claimed by the trader in any manner whatsoever in relation to any goods.

A customer or purchaser of an automobile has a remedy against the manufacturer or the supplier of an automobile (as the case may be) under the CP Act as mentioned above. The usual and bare minimum remedy granted by the consumer forums is a refund of the price of the automobile along with interest or replacement of the automobile in cases of a manufacturing defects. Further, the consumer forums often grant damages for harassment and mental harm caused to the consumer if the consumer proves that the accident and the injury and losses were as a result of the manufacturing defect.

It is within the power of the consumer forums to award damages in a case involving death or very serious permanent injury, but there is no typical range of such damages and they generally vary on a case-to-case basis. There is no limit on the damages that can be awarded and the consumer forum will take into consideration factors such as loss of income, nature of the family members dependent upon the injured or the deceased person, mental pain and harm suffered, etc.

The Civil Procedure Code 1908 provides for class actions or group actions whereby one person may, with the permission of the court, sue or defend on behalf of all persons having the same interest. The CP Act also provides for consumers as a group or class to institute a complaint against a manufacturer or supplier. However, this has not been very popular, as opposed to class action, which lies before the High Court of each state or the Supreme Court of India (the apex court) in the form of a public interest litigation (PIL) for the enforcement of public interest.

A PIL may be moved not only by an aggrieved party but also by a public-spirited individual or a social action group for the enforcement of the fundamental rights or legal rights of an aggrieved party who is unable to approach the court for reasons such as being in a disadvantaged position on account of poverty, disability or other social or economic impediment. PILs form part of the writ jurisdiction of the High Courts and Supreme Court of India and accordingly can only be filed against an aegis of the state or any other party exercising public functions. Over the past decade, there has been an increasing number of PILs filed in the court concerning several issues. For example, pursuant to a very well-known PIL filed by an environmentalist before the Supreme Court of India, the higher or stringent emission standards for automobiles were introduced by the Delhi state government. The stand taken by the auto manufacturers was that they were meeting the standards laid down under Indian laws and after the court order, the emission standards were tightened to reduce vehicular pollution.