Definition of class/collective actions

A class/collective action is a lawsuit in which a single person or small group of individuals represent the interests of
a larger group before the court (see P Ramanatha Iyer, Advanced Law Lexicon, 3rd Edition, 2005, p 820). A class
action is also a procedural instrument, which enables one or more claimants to file a claim and pursue litigation on
behalf of a larger group, class or entities with common rights and grievances.

Use of class/collective actions

Although various Indian statutes provide for collective actions, such provisions are rarely used and collective action
is not a very popular civil remedy in India.

However, in writ jurisdiction representative actions or actions brought in the public interest via Public Interest
Litigation (PIL) have gained much popularity and are widely used (to the Supreme Court for the enforcement of
fundamental rights under Article 32 of the Constitution, or to the High Courts for the enforcement of fundamental
rights or any other legal right under Article 226 of the Constitution of India).

Class Action Suit under The Consumer Protection Act

In the case of Ambrish Kumar Shukla & 21 others. v. Ferrous Infrastructure Pvt. Ltd., the
national commission had the question of the legitimacy of class action suit posed in front of
it. The respondents in the case argued that even if the interest is similar, with multiple
causes of action, the provisions of 13(6) will not be binding on the case and therefore a
class action suits with multiple consumers cannot be entertained since the consumers only
really care about their cases which were different in relief and therefore it cannot be
considered to be the same interest. The National Commission rejected this argument
stating, while placing reliance on the rationale of the Supreme Court bench in the case of
Chairman, Tamil Nadu Housing Board, Madras vs. T.N Ganapathy, that provision of 13(6),
which allowed Rule 8 Order 1 of the Civil Procedure Code apply to class-action suits in
consumer disputes, and of 12(1)(c) were to facilitate decisions where a large number of
consumers were interested without recourse to each of them filing an individual complaint.
The Commission said that the intention of the legislation must be looked at the
interpretation accordingly must be done to subserve the intention of the legislation.

The intention of class action suits stipulated in Rule 8 Order 1 and by way of that, 13(6) and
12(1)(c), was to avoid multiplicity of proceedings and therefore in deciding if a class action
suit can be bought it is that particular intention which has to be kept in mind. The
commission stated that mere difference in the cause of action among the different relief
seekers will not be a bar from a class action suit if the nature of the interest asked by all of
them is the same. The commission took the example of a builder defaulting in giving the
flats to the residents even after getting paid.
The residents could have different flats such as 2BHKs and 4BHKs and 1BHKs and therefore
will have different reliefs but they all share the same interest of either getting damages
from the builder or getting possession of their flats and therefore can join together to
institute a single suit against the builder. Now, the other side to it is that the consumers
don’t have the option to only include only some of the aggrieved consumers in the
complaint. On instituting a class action suit, it is the court’s responsibility to give notice to
all consumers interested in the case to join the suit. The cost of serving notice to all the
interested parties will be done at the expense of the person who instituted the suit.
Moreover, if the person who instituted the suit has not done due diligence and is unaware of
the case facts, the commission can substitute the instituting consumers with another
interested consumer from the complaint.

SUPREME COURT ON CLASS ACTION SUITS

In Anjum Hussain & Ors v Intellicity Business Park Pvt Ltd & Ors case, 44 persons
including Anjum Hussain had booked office space in a project by Intellicity Business Park
consisting of residential units, shops and offices. As the builder failed to deliver possession
in four years, they approached the NCDRC seeking a refund of the amounts paid to the
builder along with interest and compensation.

They also filed an application seeking permission under section 12(1)(c) of the Consumer
Protection Act to institute this complaint on behalf of all such buyers of commercial units.

This application was dismissed by the NCDRC holding that the class action under section
12(1)(c) of the consumer protection act on behalf of not only the complainants but all the
allottees of the commercial units in the project is not maintainable. The NCDRC observed
that though all the appellants had a common grievance, the respondent had not delivered
possession of the respective units booked by them and thus the respondent was deficient in
rendering service, it was not shown how many of the allottees had booked the shops or
commercial units solely for the purchase of earning their livelihood by way of self-
employment.

In allowing the appeal against the NCDRC order, the Supreme Court observed that the
primary objective behind permitting a class action such as a complaint under section 12(1)(c)
of the consumer protection act was to facilitate the decision of a consumer dispute in which a
large number of consumers are interested without each of them filing individual complaints.
It is necessary that such a complaint is filed on behalf of or for the benefit of all the persons
having such a community of interest.

A complaint on behalf of only some of them, therefore, will not be maintainable. If, for
instance, 100 flat buyers in a project have a common grievance against the developer and a
complaint under section 12(1)(c) is filed on behalf of or for the benefit of say 10 of them, the
primary purpose behind permitting a class action will not be achieved since the remaining 90
aggrieved persons will be compelled to file individual complaints.

This, in the court’s view, could not have been the legislative intent. The term “persons so
interested” and “persons having the same interest” used in section 12(1)(c) mean the persons
having a common grievance against the same service provider.

In holding that the NCDRC had completely lost sight of the principles clearly laid down
by the Supreme Court in the earlier decisions, it allowed the appeal and set aside the
NCDRC’s order under appeal holding that the appellant’s application was maintainable.

CLASS ACTION UNDER CONSUMER PROTECTION ACT, 1986

There have been several instances wherein there are numerous persons complaining about the
defect in good or deficiency in service. In such a case, whether every consumer must file his or
her claims individually or a class action complaint will be maintainable on behalf of all the
consumers?

To answer this query, let us first consider the legislative framework under the Consumer
Protection Act, 1986. As per section 12 (1) (c) a complaint can be filed by one or more
consumers, where there are numerous consumers having the same interest, with the
permission of the District Forum, on behalf of, or for the benefit of, all consumers so interested.

Section 13(6) of the act states that where the complainant is a consumer referred to in sub
clause (iv) of clause (b) of subsection (1) of section 2, the provisions of rule 8 of Order I of the
First Schedule to the Code of Civil Procedure, 1908 (5 of 1908) shall apply subject to the
modification that every reference therein to a suit or decree shall be construed as a reference to
a complaint or the order of the District Forum thereon.

The NCDRC in the case of Ambrish Kumar Shukla & Ors. V. Ferrous Infrastructure Pvt.
Ltd interpreted the above mentioned provisions along with Order 1 Rule 8 of the Code of Civil
Procedure and held that class action complaint is maintainable against the complainant
company if the cause of action is same for all the consumers. The commission laid down the
following guidelines which are as follows:
 1. The interest of the persons on whose behalf the claim is brought must be common or
they must have a common grievance which they seek to get addressed.
2. The defect or deficiency in the goods purchased, or the services hired or availed of by
them should be the same for all the consumers on whose behalf or for whose benefit the
complaint is filed.
3. It is necessary that such a complaint is filed on behalf of or for the benefit of all the
persons having such a community of interest. A complaint on behalf of only some of
them therefore will not be maintainable.
4. No group of Firms, Society or Association can file such a complaint unless such group of
Firms, Society or Association itself is a consumer as defined in Section 2(1)(d) of the
Consumer Protection Act. No person who does not qualify as a consumer in terms of
Section 2(1)(d) of the Consumer Protection Act, can be party to a complaint under
Section 12(1)(c) of the Act nor can he be amongst the persons on whose behalf or for
whose benefit such a complaint is filed.

Therefore, as per the above mentioned judgment of the NCDRC, class action complaint can be
filed under the Consumer Protection Act, 1986 and it is not necessary for all the aggrieved
persons to file separate complaints. In the opinion of the author, this judgment would prevent
multiplicity of proceedings with respect to same cause of action and the relief given by the forum
would also be available to those who were not able to join the proceedings before it.

* Consumer Protection Act, 2019 provides for/recognizes class action suits/complaints or complaints
on behalf of “consumers as a class”.