Class Action Suit in India

Context: Incidents such as the recent Oil and Natural Gas Corporation Limited (ONGC) barge disaster underline the absence of effective class action suits/lawsuits in India.

• The families of 71 people who were killed after Cyclone Tauktae battered ONGC’s barge vessels off Bombay High have received compensation up to Rs 2 lakh from ONGC and between Rs 35 lakh and Rs 75 lakh from Afcons, which was assigned the project contract.
• A surviving engineer has filed a case of criminal negligence against the deceased captain of barge P-305, which sank.
• Neither ONGC nor Afcons have taken responsibility for the loss of lives.

What is the problem?

• For over 35 years, India’s laws for negligence and liability have not been strengthened, in order to force safety and prevention measures, and to minimise such incidents.
• In the ONGC matter, there is little the families can do in terms of personal injury suits, or class action suits.
• Both these legal options are weak in India, and not considered a worthwhile exercise.
• However, they are necessary if India is to improve its ease of doing business rankings, especially in disaster prevention and risk of life.

What are class action suits?

• A class action suit is a legal action or claim that allows one or many plaintiffs to file and appear for a group of people with similar interests. Such a group forms a “class”.
• A class action suit derives from representative litigation, to ensure justice to the ordinary individual against a powerful adversary.
• It were formally incorporated into law in the United States in 1938 under the Federal Rules of Civil Procedure.
• Over the years, class action has become so successful at curbing negligence, that it is now a part of US corporate and consumer laws, environmental litigation, etc.
• The ubiquity of representative litigation in the US has given rise to a class of lawyers called “ambulance chasers” — those who solicit for clients at an accident or disaster site, largely for personal injury cases.
• They get financial compensation for their clients from the perpetrator, a percentage of which they keep. While such soliciting violates professional legal conduct in the US, it has helped hold people and corporations accountable.

Difference between Class Action Suit and PIL

• The plaintiff need not have a personal interest or claim in the matter for filing a public interest litigation (Article 32 or Article 226 of the Constitution).
• The PIL must serve a matter of public interest.
• Unlike a class action suit, a PIL cannot be filed against a private party.

Challenges
Underdeveloped system of torts

• Tort law has not developed sufficiently in India for a number of reasons, primarily due to the high cost and time-consuming nature of litigation.

Lack of contingency fees

• The rules of the Bar Council of India do not allow lawyers to charge contingency fees, i.e., a percentage of the damages claimants receive if they win a case.
• This disincentives lawyers from appearing in time-consuming cases that class action suits inevitably are.

Lack of Third-party financing mechanisms for litigants

• Since litigation costs are high, class action suits can be made easier by allowing external parties to fund or sponsor the cost of litigation.
• Some states like Maharashtra, Gujarat, Madhya Pradesh, and Karnataka have made changes in the Civil Procedure Code to allow this.

Road Ahead

• Class action suits are necessary if India is to improve its ease of doing business rankings, especially in disaster prevention and risk of life.
• India should move in the direction of such accountability, which is taken seriously in developed economies, and which makes them better abodes for employment and business.