A Class Action Lawsuit? The Legal Storm Brewing Over Ola Electric, Explained

Ola Electric may be up for tough times, as the company faces the prospect of a class action lawsuit under the Consumer Protection Act (CPA), 2019.

The Central Consumer Protection Authority (CCPA) has issued a show-cause notice to the company, accusing it of violating consumer rights, putting out misleading advertising, and engaging in unfair trade practices.

Ola has 15 days to respond to the allegations. Should the company's response fail to satisfy the ministry, a class action lawsuit will follow, Nidhi Khare, Chief Commissioner of CCPA told Financial Express on Wednesday (9 October).

“This case is fit for class action because of violation of consumer rights, unfair trade practices, misleading advertisements, and deficiency in services,” Khare said, assuring that Ola will be given a fair and reasonable time to present its case.

A class action lawsuit typically involves a group of people who have experienced the same harm, forming a class to take on a corporate entity or government in court.

The jurisprudence of the class suit is derived from the concept of representative litigation; that is, to provide access to justice to the ordinary individual against a powerful opponent.

In such suits, generally unliquidated damages are awarded that may be minuscule for an individual; however, for the group, it is a hefty amount. Class suits also streamline litigation by avoiding multiple lawsuits.

In India, such suits can be filed under laws like the CPA and the Companies Act of 2013. Specifically, the CCPA is empowered to initiate such suits on behalf of consumers under Section 10(1) of the CPA.

Furthermore, Section 18(1) of the CPA mandates the CCPA to protect, promote, and enforce consumer rights as a class, contributing to the growing use of class action lawsuits in India.

Consumers, as a collective group, now have the means to seek justice through the courts, while the CCPA also holds the authority to suo moto investigate and file class action lawsuits.

In a first such case, the CCPA launched class action proceedings against nine firms during the Covid-19 pandemic for failing to issue refunds and neglecting to display the "country of origin" on products, as reported by Times of India.

The firms included online travel agencies, a social media platform, and an e-commerce company, marking the first time class action provisions were invoked to protect consumer groups in India.

In the case of Ola, Khare highlighted that a thorough investigation will be conducted to ascertain the product issues raised repeatedly by consumers.

“Simultaneously, CCPA is also expanding its scope to cover the electric mobility sector and examine whether other companies in the segment also have similar nature and volume of consumer complaints,” Khare said.