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This article is written by Satya Vrat Yadav, a student of University Of Petroleum and Energy Studies. 

Indian Market has noticed a significant growth in its e-commerce sector since its introduction. A report about the future prospects of e-commerce industry in India was presented by Forrester Research in 2012; this report revealed that in coming days, revenue of e-industry will notice some serious increment in revenue in comparison to that of revenue in 2012.  Report claimed that, by 2016, revenue in the e-commerce industry will be five times to the revenue in 2012[1]. Reports claimed the revenue increment up to USD 8.8 million in 2016 which was USD 1.6 million in 2012[2].

Indian e-market lived up to the expectation and noted down some phenomenal growth in the field of e-commerce. Indian shoppers primarily used these online portals for the services like traveling, software, books. Banks have upgraded their facilities their business method, providing privilege to do business online. Now a days, some of the e-commerce organizations claims to sell the goods of every utility.

Product and services put into use create some rights for the buyer i.e. consumer while liabilities on part of seller as well as manufacturer. The checks and measures on these rights and liabilities are well imposed by Common law principles and also by a number of statutes, such as, Sales of goods act 1930, Indian Contract Act 1872, but in case of any grievance, cognizance is taken under the Consumer Protection act 1986 on the complaint made by the consumer.

An acute case of e-commerce and Consumer Protection laws

If the sales of goods act 1930 and Indian Contact Act 1986 are interpreted with respect to the e-market, then it becomes clear that these statues can perfectly regulate online market as well. Sales of Goods Act, lays down the conditions of how sales shall be made which also replicate manner in which the goods are sold online.  One basic difference of practical market and e-market is that:

  • In case of e-commerce, goods are sold on the basis of their description, while in case of physical market buyers can try the product before they buy it.

Sale of Goods Act 1930, provide buyer with ample opportunity to check the product before taking delivery, if buyer has not examined it before[3]. If buyers are not given sufficient chance to examine the goods, buyer always has right to reject the goods[4].

Indian legislature has not enacted any separate statute for the product and services provided online instead, all such transactions done in lieu of goods and services provided online are governed by the consumer protection laws and principles of justice equity and good conscience. Also, cases of negligence in service can be claimed under Tort Law, with reference to principle of strict liability laid down by House of Lords in landmark case Donoghue vs. Stevenson[5]

Who are Consumers and Manufacturers?

This part of the article, discusses who are considered as complainant and manufacturer with reference to the definition clause in Consumer Protection Act 1986. According to definition of complainant[6] given in Consumer Protection Act 1986; any consumer, the voluntary consumer association, central/ state government, one or more aggrieved person having same interest or if the consumer is dead then his legal representative can file a complaint in case of any grievance.

A consumer if aggrieved in the manner given in Consumer Protection Act 1986 can compliant to the competent Dispute Redressal Forum established under the act. Grounds on which a consumer can approach the forums are[7]:

  • Unfair trade practice of the service provider.
  • Goods bought by consumer, suffers defect.
  • Services hired or availed suffer deficiency of any kind.
  • Trader charging for the service, excess to the price i) price fixed by any law ii) price printed on the goods package iii) agreed by consent of both the parties.
  • Services hazardous to the life and public safety.
  • Goods provided to public are in contravention to laws regulating standard of product.

Consumer Protection Act defines consumer as a person who buys any goods for some consideration, or any person who uses that goods with the permission of person buying the goods[8]. Manufacturer, as per the definition given in CPA 1986 is a person who manufacture the goods or any person who assemble the parts manufactured by some other person[9].

Any transaction done whether online or in normal markets can be regulated by the laws prevalent in Indian. Online market describes the goods to the buyer and if buyer likes the specifications of the goods so described, they order the goods it to be delivered to the address so given by the buyer. Once product is ordered, a contact is formed between the buyer and seller. If seller fails to deliver the product as per the contact, that amounts to deficiency in service. To tackle the problem arising on the situation discussed above, Court took stand and ruled that “If somebody does not perform his part of the contract, it amount to deficiency in service.[10]

Online portals mostly act as a mediator between the manufacturer and the consumers or in some cases, they buy the product of manufacturer and then sell it to the ultimate consumers and hence an e-commerce hub becomes consumer with respect to manufacturers.

In case the of Raj Kumar vs. S.C Verma[11]  honorable court held that “If  a person buy goods either for re-sale or for the large scale profit making activity will not be considered as consumers and will not be protected under Consumer Protection act 1986”. Hence theses online hubs can’t claim protection for the rights been violated as a consumer to manufacturers under Consumer Protection Act 1986.

Application of Consumer Protection Laws

Consumer protection laws and product liability jurisprudence in India are still evolving, through enactments amendments and judicial interpretations. Consumer Protection Act, 1986 is sufficient proof to depict the importance of consumer rights. In the cases before consumer forums, consumers can be mooted as privileged because consumer courts adopt pro-consumer approach to award compensation to aggrieved person.

Criminal laws may also be used in cases to regulate defective products. For Example: In case of creation of misconception in the minds of people through advertisement, though the manufacturer will carry tortious liability but manufacturer can also be prosecuted under Cheating[12] and Fraud under Indian Penal code 1860.

In case of Wheels World vs. Pradeep Khurana[13], aggrieved party, complained about poor service for not repairing a technical fault, in his new case which occurred during the warranty period of car and then not delivering the car for 4 years. National Consumer Dispute Redressal Forum, punished, the accused with imprisonment, in addition to the damages paid to the plaintiff by the accused.

Consumer protection laws of some countries such as USA, European Union, Turkey and India mostly provide some common relief to the grievance of the customers, like in case of any flaw in the product by manufacturer, consumer can ask for the free repairing if possible or consumer may also ask for the exchange of the defective product delivered and also legal action can be brought against the party which appears to consumer to violate his consumer right. Mostly Legal action is brought against Manufacturer.

In case of products sold online, manufacturer only can be held responsible for any fault in the product, and for the bad service  (Bad services consist of Poor customer support system, Poor product delivery mechanism) of the portals, they are themselves to be blamed. In case of poor services of the online retailers, legal action can be brought against them. In case of action against the manufacturer, retailer shall also be made a party to meet the proper ends of justice.

Consumers have Right to Choose from the variety of the product, and also have the right to be informed about the product. These two rights invested with the Consumers are well reflected on the products sold online as the shoppers has all the freedom to look for each and every possible product available with retailers and then to buy it on the basis of specifications provided by the retailer. Sale of goods made on the basis of description shall correspond to the discretion if in case condition[14] is not fulfilled, and then buyer has the right to return the goods. In case of any wrong information provided to the consumer, legal action can be bought the responsible party.

Damages for Defective Product

Products bought, shall be consistent with the laws regulating the quality and standard, thus fit for the use y consumer; in case of any contradiction, action can be brought by affected party against the accused under consumer protection laws prevalent in the state.

Under consumer protection laws 1987 of England, which provide quite wide range of rights to the consumer, enforces the implementation of strict liability of in case of default, manufacturer is responsible for any kind of defect in its product. Legal action may be brought against the manufacturer and the compensation is granted to the consumer.

Concept of product liability is not absolutely applicable in India, due to which any defect in product, does not make manufacturer prima facie liable for default. For defective product, liability can either be fixed on manufacturer or retailer. Burden of proof lies on the consumer, to prove the injury suffered.

In common law scenario, landmark case of Donoghue vs. Stevenson[15] Lord Atkins, laid down the principle of neighbor, where even in the absence of direct contact between the parties compensation can be claimed in lieu of defective product hazardous to public safety. It is important to establish that manufacturer was at fault to avail the remedy available.[16]

Some of the benefits to the consumers, due to applicability of product liability are[17]:

  • Incentives to reduce product risk generated.

If consumer believes of risk in buying a product, they will avoid buying the product. For example- In mid-1980’s sales of Audi was dropped by 69% after the problem of sudden acceleration was reported[18].

  • Regulation of risk on product

Statutes set standard for the product, which are made available to the public.

For example- FSSAI Act (Regulates the safety standard for the food products available in the market.).

Product liability might lower a product risk in the absence of market force and regulation; it will turn out to be superfluous if a desirable safety precaution has already been taken because of these two factors[19]. Consider, for example, electronic stability control in automobiles, a feature that can reduce the risk of skidding and rollovers. Market pressure could lead to adoption of this feature if consumers appreciate its value, or a regulator might require it. Hence, product liability might not be necessary to induce automobile manufacturers to adopt electronic stability control- and, apparently, market forces have played a role in stimulating this improvement[20].

The jurisprudence of Product liability is still under development in India. Indian consumer laws need some wide amendments, to vest some more rights with the consumers. Concept of product Liability if gets an absolute introduction in India, it will help Indian market to improve the prospects of the market, reduce the product risk and grow. Introduction of product liability might change the scenario of market product and decrease in product risk, no matter whether it is in case of regular market or on online market.

[1]‘Trends in India’s e-Commerce Market’: Report provided by Forrestor Research for ASSOCAM’s 2nd National Conference on e-Commerce 2012.

[2] Nishith Desai and associates 2015, E-Commerce in India(2015),

[3] Section 41, Sales of Goods Act 1930

[4] Ibid

[5] [1932] UKHL 100

[6] Section 2(b), Consumer Protection Act 1986

[7] Section 2(c), Consumer Protection Act 1986

[8] Section 2(d), Consumer Protection Act 1986

[9] Section 2(j), Consumer Protection Act 1986

[10] Smt. Ramala Roy  vs. Rabindra Nath Sen, 1994 (I) CPR 66

[11] 2001 (1) CPR 437

[12] Section 415 Indian Penal code 1860

[13] I (2008) CPJ 324 NC

[14] Section 15, Sales of goods act 1930

[15] [1932] UKHL 100

[16] Principles of Law of Tort, Vivienne Harpwood (2000)

[17] Mitchell Polinsky and Steven Shavell, the Uneasy Case for Product Liability, Harvard Law Review, Vol. 123, No. 6 (APRIL 2010), pp. 1437-1492

[18] Bradley A. Stertz, U.S. Study Blames Drivers for Sudden Acceleration, Wall St. J., Feb. 2, 1989

[19]   Mitchell Polinsky and Steven Shavell, the Uneasy Case for Product Liability, Harvard Law Review, Vol. 123, No. 6 (APRIL 2010), pp. 1437-1492

[20] Ibid

1 COMMENT

  1. I booked a flat. Initial payment was made by cheque Rs 18 lacs and odd in the pre launch period. Receipt of amount is admitted.There is no written agreement nor details of flat no. I am demanding the flat in the project promised orally or some other project of the builder in the vicinity. Any case law that payment by cheque is equivalent to written contract.
    Formerly Chief Commissioner of Income tax

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