EXPLANATOR| How class actions work in India – Express Mobility News

By Aman Avinav

Ola Electric could be facing a class action lawsuit if the consumer rights regulator is not satisfied with the electric vehicle maker’s response to its show cause notice. The author explains what a “class action” is and how the Central Consumer Protection Authority can file a complaint on behalf of injured customers

Why was a notice served to Ola Electric?

Earlier this month, the Consumer Affairs Ministry warned Ola Electric that it could initiate a class action lawsuit against it for alleged deficiency in services, false advertising, violation of consumer rights and unfair commercial practices. Following this, the Central Consumer Protection Authority (CCPA) issued a justification to the electric two-wheeler manufacturer. The National Consumer Helpline (NCH) has received over 10,000 complaints against Ola Electric in the last one year related to quality and after-sales service for its electric two-wheelers. Ola was given 15 days to respond to the notice and if the ministry was not satisfied with the response and steps taken by the company to resolve the complaints, a class action would be initiated, consumer affairs secretary Nidhi Khare said. .

On Monday, Ola Electric responded to the notice saying that 99% of complaints have been resolved to the satisfaction of consumers. It is now up to the CCPA to decide whether to close the investigation or file a class action lawsuit.

What is a class action?

A class action is a legal process in which one or more plaintiffs file a lawsuit on behalf of a larger group, known as a class. Class action litigation acts as a collective action tool, allowing for the aggregation of claims. The concept of “class action” action/claim is enshrined in Order I, Rule 8 of the Code of Civil Procedure (CPC), whereby numerous persons with the same interest in an action, one or more of these persons may, with permission of the Court, sue in the name or for the benefit of all persons so interested. What is fundamental for an action to qualify as a “collective action” under the CPC is the “sameness of interests” and not the “sameness of cause of action”.

What does the Consumer Protection Law say?

“Class Action” was permitted by the Consumer Protection Act 1986 (CPA), where multiple consumers had the same interest in the subject matter of the complaint. This position has been maintained under Section 35(1)(c) of the 2019 Act. The main objective behind allowing a class action as a complaint is to facilitate the decision of a consumer dispute in which a large number of consumers interested, without each of them having to file an individual complaint.

What is the role of the CCPA?

The CCPA is a central authority created under Section 10 of the Consumer Protection Act, 2019 to promote, protect and enforce the rights of consumers as a class and regulate all matters relating to violation of consumer rights, commercial practices unfair and false or misleading advertisements that are harmful to the interests of the public and consumers. It has an investigation wing, headed by a Director-General who is responsible for conducting inquiries or investigations under the Act.

What are the powers of the CCPA?

–Investigate cases of violation of consumer rights, unfair commercial practices and false or misleading advertisements, either suo motu or upon complaint received or on instructions from the central government. To this end, the Director General is authorized to carry out searches and seizures under Section 22 of the Act.

–Present complaints before the District Commission, State Commission or National Commission and intervene in proceedings before these forums where there are allegations of violations of consumer rights and unfair commercial practices.

–Review factors inhibiting consumer rights and make recommendations, in addition to carrying out and promoting awareness about consumer rights.

–Advise central and state ministries on consumer welfare measures.

–Issuing safety warnings and guidance necessary to prevent unfair commercial practices and protect consumer interests.

–Power to recall goods if there is evidence demonstrating violation of consumer rights or unfair commercial practices; and issue instructions and penalties against false or misleading advertisements.

–Prosecute as well as compound offenses under Sections 88 and 89.

How successful are these processes?

Class action lawsuits in India have largely been restricted to public interest litigation and consumer disputes, especially disputes between homebuyers and builders. However, traction has also been seen in corporate disputes following notification of the thresholds constituting “class” under Section 245 of the Companies Act, 2013. The success of any class action depends on the merits of the case and whether the prescribed threshold has been met , when suing under a specific statute.

The author is a partner at Phoenix Legal.

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