Internationally, class action suits have proven to protect and empower consumers for ensuring higher standards of governance. In India however, the full potential of class action remains untapped for a variety of reasons, which include lack of public awareness and empowerment.

In India, class action faces significant hurdles including the overlap of jurisdiction between courts and the tendency to choose wrong forum for relief. This leads to confusion, inefficiency and undermining the very purpose of class action litigation. For instance, home-buyers initiating representative action against builders before bodies like RERA, Consumer Forums or the National Company Law Tribunal. Unfortunately, the essence of these causes often gets diluted due to the complex legal framework these cases must navigate.

The major hindrances to initiation of class action suits are lack of awareness, practical difficulties in class formation as well as “litigation fatigue” given the time taken in Indian courts for decisions. In fact, ensuring that the litigants stay together to take a class action to its logical conclusion in itself is a tedious and time-consuming exercise which many are not willing to undertake.

Manifold expenses

Cost of litigation is another factor which discourages initiation of class action suits. The suits often involve significant costs that extend well beyond the initiation of legal action. These expenses include not only legal fees, expert witness fees, and administrative costs but also the ongoing financial burden of managing the case until its resolution. In India, this is compounded by the fact that court cases, particularly complex ones like class actions, can take years or even decades to be resolved due to the slow judicial process.

When it comes to initiating representative actions before specific tribunals, the Companies Act stands out as the only legislation that explicitly recognises the term “Class Action.” However, initiating such action requires meeting certain minimum thresholds and procedural requirements, which in fact act as a barrier.

Besides the Companies Act, the consumer laws, effective July 24, 2020, empower the Central Consumer Protection Authority to regulate matters relating to violation of rights of consumers, unfair trade practices and false or misleading advertisements which are prejudicial to the interests of the public and consumers and to promote, protect and enforce the rights of consumers as a class.

Unlike India, class action suits are common in the US, where they have been in existence since 1983 and extensively used by individuals or small communities, aggrieved by the wrongdoings of larger entities. In the US, a class action suit can be brought where one or more persons may sue a large corporation as representative parties on behalf of all the class members.

The US has a well-established class action jurisprudence over the last four decades, creating a well-defined framework that has enabled collective legal action to succeed in various fields, such as consumer protection, environmental law, and corporate malfeasance. This evolution has set a precedent for other nations, including India, where class action suits are still in their early stages. However, with time and increased awareness, class actions in India could become popular amongst group of similarly-placed customers.

Anand is Partner, and Vij is Principal Associate, JSA Advocates & Solicitors