EXPLANATORY| How Class Action Suits Work in India – Express Mobility News

By Aman Avinav

Ola Electric may be looking at 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 aggrieved customers.

Why was notice sent to Ola Electric?

Earlier this month, the consumer ministry warned Ola Electric that it may file a class-action lawsuit against it for alleged service deficiency, misleading advertising, violation of consumer rights and unfair trade practices. Following this, the Central Consumer Protection Authority (CCPA) issued a show cause notice to the electric two-wheeler manufacturer. The National Consumer Helpline (NCH) had received more than 10,000 complaints against Ola Electric in the last one year related to the quality and after-sales service of its electric two-wheelers. Ola had been given 15 days to respond to the notice and in case the ministry was not satisfied with the response and steps taken by the company to address the complaints, a class action lawsuit would be initiated. lesson, said consumer secretary Nidhi Khare. .

On Monday, Ola Electric responded to the notice saying that 99% of the complaints had been resolved to the satisfaction of the 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 lawsuit?

A class action is a legal proceeding 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 class action tool, allowing the aggregation of claims. The concept of “class action” suit/suit is incorporated in Order I, Rule 8 of the Code of Civil Procedure (CPC), whereby many persons having the same interest in a suit, one or more of these persons may, with the leave of the Court, sue in the name or for the benefit of all the persons concerned. What is critical for an action to be considered a “class action” under the CPC is “same interest” and not “same cause of action.”

What does the Consumer Protection Act say?

The Consumer Protection Act 1986 (CPA) allowed “class action” where many 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 purpose of authorizing a class action as a complaint is to facilitate the resolution of a consumer dispute in which a large number of consumers are interested, without each of them presenting 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 to regulate all matters relating to the violation of consumer rights, unfair trade practices and false or misleading advertisements that are harmful to the interests of the public and consumers. It has an investigation section, headed by a director general who is responsible for conducting the investigation or inquiry 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 on its own motion or by complaint received or by instructions from the central government. For this, the director general is authorized to carry out the search and seizure in accordance with article 22 of the Law.

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

–Review the factors that inhibit consumer rights and make recommendations, as well as undertake and promote awareness of consumer rights.

– Advise central and state ministries on consumer welfare measures.

– Issue security notices, and the necessary guidelines to prevent unfair commercial practices and protect the consumer’s interest.

–Power to withdraw goods, if there is evidence that demonstrates the violation of consumer rights or unfair commercial practice; and issue instructions and penalties against false or misleading advertisements.

– Prosecute as well as compound crimes under sections 88 and 89.

How successful are these lawsuits?

Class actions in India have largely been restricted to public interest litigation and consumer disputes, particularly disputes between home buyers and builders. However, there has also been traction in corporate disputes following the notification of the thresholds for what constitutes a ‘class’ under section 245 of the Companies Act, 2013. The success of any class action depends on the merits of the case and if the established threshold has been met. , by suing under a certain statute.

The author is a partner, Phoenix Legal.

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