Prelude

1.  Prior to August 2019, there was no specific provision dealing with recalls in India. Absent a specific legal regime, vehicle manufacturers followed their own internal procedures and were guided by the ‘Voluntary Code on Vehicle Recall’ introduced by the Society of Indian Automobile Manufacturers (“SIAM Code”). As the name suggests, this Code was voluntary; and it contained guidelines to deal with cases where manufacturers or importers became aware of the existence of safety defects (as defined in the SIAM Code) in vehicles.

2.  On 9 August 2019, the Indian legislature introduced some important amendments to the existing Motor Vehicles Act, 1988 (“MV Act”). One key amendment pertained to insertion of specific provisions dealing with the issue of recall of motor vehicles^¹. On the same date (i.e. 9 August 2019), the new Consumer Protection Act, 2019 was also enacted, which too contained a specific provision dealing with recalls^². 

3.  The key changes brought about by the above legislations are summarized in this article. 

Amendments brought about by the Motor Vehicles (Amendment) Act, 2019

4.   The Motor Vehicles (Amendment) Act 2019 (“2019 Amendment”) inserted Section 110A in the principal Act of 1988 i.e. MV Act, to provide the procedure governing recall of motor vehicles. 

Power to order recall

5.  Section 110A provides that the Central Government may, by order, direct a manufacturer to recall motor vehicles of a particular type or its variants if there are any of the following defects:^³

• A defect that may cause harm to the environment or to the driver or occupants of the vehicle or to other road users; 
• A defect which has been reported to the Central Government by: 

a. Such percentage of owners as the Central Government may specify,^⁴ or 

b. A testing agency, or 

c. Any other source.

6.  Section 110A(2) further empowers the Central Government to direct recall of all motor vehicles (regardless of its type or variant) if a particular component in those motor vehicles is defective (i.e. it contains any of the defects mentioned in the preceding paragraph). 

7.  The Central Government is also empowered^⁵ to authorize any officer to investigate in the matter of recall of motor vehicles. 

Duties of manufacturer whose vehicles are recalled

8.   A manufacturer whose vehicles are recalled shall^⁶: 

• Reimburse the buyers for the full cost of the motor vehicle, subject to any hire-purchase or lease-hypothecation agreement; or 
• Replace the defective motor vehicle with another motor vehicle of similar or better specifications or repair it; and 
• Pay such fines and other dues as may be prescribed by the Central Government. 

Disclosure Requirement if the manufacturer notices a defect 

9.  If a manufacturer notices a defect in a motor vehicle manufactured by it, it shall inform the Central Government of the defect and initiate recall proceedings on its own. If the manufacturer has taken this approach, it shall not be liable to pay any fine.^⁷  

Rules to regulate recall of motor vehicles

10.  Section 110A(6) provides that the Central Government may make rules for regulating the recall of motor vehicles. In exercise of this power, in May 2020, the Central Government (Ministry of Road Transport and Highways) released certain draft rules to amend the Central Motor Vehicles Rules, 1989 (“CMV Rules”). The Final Rules (after considering comments from all stakeholders) were notified by the Central Government (Ministry of Road Transport and Highways) on 11 March 2021, to be effective from 1 April 2021 (“Amended Rules”).^⁸  These Amended Rules deal, inter alia, with recall of vehicles. 

Overview of the Amended Rules

11.  Broadly, the Amended Rules contain detailed procedures which are to be followed in two situations. First, when a recall is directed by the Central Government and second, when there is a voluntary recall proceeding. 

12. Rule 127C of the Amended Rules provides for an all-encompassing mechanism concerning ‘Defective Motor Vehicles and Recall Notice’. Further, a detailed procedure for managing voluntary vehicle recalls is elaborated in Annexure XII to the CMV Rules.  

Complaint regarding defective motor vehicle

13. Briefly, under Rule 127C, the owner of a motor vehicle, testing agency or any other person (as may be notified by the Central Government) can make an application (“Application”) to the Designated Officer (Joint Secretary, MVL, Ministry of Road Transport & Highways)^⁹  praying that a particular vehicle should be designated as a ‘defective motor vehicle’.^¹⁰  

14.  The Application referred to above has to be made through the Vehicle Recall Portal^¹¹, which has been set up by the Ministry of Road Transport & Highways, Central Government for this purpose. 

15.  Additionally, the Designated Officer is also empowered to suo motu issue a Recall Notice, in situations where it has reasonable grounds to believe that (i) a motor vehicle is a ‘defective motor vehicle’; (ii) such defect exists in a group of vehicles of the same design or manufacture; and (iii) such defective motor vehicle has been made available to consumers. 

Process to be followed by the Designated Officer

16.  On receipt of an Application^¹² or upon initiation of a suo motu action, the Designated Officer shall issue a show cause notice to the manufacturer or importer or retrofitter of the motor vehicle^¹³. The response to the show cause notice must be furnished within 30 days.

17.  Upon receipt of the response (or if no response is received) within the period of 30 days, the Designated Officer will investigate whether the motor vehicle is a ‘defective motor vehicle’.^¹⁴ 

18.  If the Designated Officer finds that the vehicle is a ‘defective motor vehicle’, and a Recall Notice is required to be issued, it will direct the manufacturer, importer or retrofitter to:                                                                              

• Produce all documents and necessary information on the manufacture of the defective motor vehicle; 
• Produce all information in their possession regarding sale of all such defective motor vehicles; and
• Give such other information as may be required for issuance of the recall notice. 

19.   The Designated Officer will then issue a recall notice requiring the manufacturer or importer or retrofitter to take various actions, including:

• Contacting the purchasers of the defective motor vehicle to inform them of the recall; 
• Publishing notice pertaining to the defect in the motor vehicle, the risk posed by such defect and the fact of recall; 
• Arranging for the collection or rectification of the defective motor vehicle; and
• Imposition of fines within the limits prescribed. 

Appeal from Recall Notice

20.   An appeal against a Recall Notice can be made before the High Court within 90 days from the receipt of such notice. 

Vehicle Recall procedure 

21. Rule 127D of the Amended Rules provides that every manufacturer, importer, or retrofitter shall have in place a procedure for regulating the recall of motor vehicles as specified in Annexure XII, and also an organization procedure to enable them to comply with the procedure for recall. Such recall procedure may be reflected in the organization’s quality manual.

Other obligations of Manufacturers, Importers or Retrofitters 

22.   Sub-rules 2 and 3 of Rule 127D set out various other obligations that have been cast upon manufacturers, importers or retrofitters such as conducting investigations, safety checks and monitoring of recall related complaints. They are also required to comply with the various requirements set out in Annexure XII. If, on the basis of information in their possession, they know that a motor vehicle poses risks to the consumers and is a potentially ‘defective motor vehicle’, they are required to immediately inform the Designated Officer giving various details, including of steps taken to prevent risk to the consumer.

23.  Annexure XII^¹⁵  provides that the determination of a defect requires a proper risk assessment based on factors such as probability of occurrence of failure, severity of consequences of a potential failure as well as controllability by the driver of the vehicle. To determine whether there is a defect and if so, the nature of the defect and the products potentially affected by the defect, a manufacturer, importer or retrofitter has to conduct an investigation. If the investigation does not lead to a conclusion that the safety defect exists, the manufacturer, importer or retrofitter may decide that the vehicle is ineligible for recall action and will continue to monitor the product. If, however, as a result of the investigations, a defect is found to exist, they are required to conduct a recall. In case they are starting a voluntary recall, they must give a notice in writing to the Designated Officer within 7 days of such commencement in the format prescribed under Form A of Annexure XII.   

24.  Additionally,^¹⁶ the manufacturer, importer or retrofitter will, without undue delay identify the recall products by unique numbers and determine the manner in which the recall products are to be rectified. Having regard to the nature of the defect and/or urgency for rectification, they will determine steps which have to be taken to notify customers of the safety recall. 

25.  Sub-rule 5 of Rule 127D provides that a manufacturer, importer or retrofitter is required to notify to the consumers regarding the initiation of recall action, existence of defect and evaluation of its risk to the safety of occupants and road users. This notification can be given on their website and/or through post, email or other written communication. This notification shall also inform consumers regarding available remedies and how to avail them^¹⁷. 

26.  After notifying the consumers, if the manufacturer, importer or retrofitter do not get a satisfactory response, they have to send at least one more communication. If there is still no response from the consumer, they will not be held liable for not completing the recall process in such cases. The recall process can be closed within one year of the recall release date and in any case, it shall be deemed to have become inactive after 3 years from the recall release date. 

27.  For each recall, a manufacturer, importer or retrofitter is required to maintain various information as provided in Forms A and B of Annexure XII (till the recall process becomes inactive), and thereafter, such information has to be submitted with the Designated Officer.

28. Annexure XII also sets out certain situations^¹⁸ where a manufacturer, importer or retrofitter would not be under an obligation to conduct a safety recall. These include: 

• If the defect is identified in the motor vehicle prior to the delivery of the vehicle to the customer; 
• If the owner’s manual has not been followed for the purpose of timely repairs, maintenance, and good upkeep of the motor vehicle or if the vehicle has any defects following fitment or alteration by an agency not authorized by the vehicle manufacturer; 
• If the vehicle has been used for a purpose other than that for which it was designed or approved; and
• Defects which have developed due to force majeure events. 

Recall under the Consumer Protection Act, 2019^¹⁹ 

29.  Under the Consumer Protection Act, 2019 (“CPA 2019”), there is now a specific provision dealing with recalls. In this regard, CPA 2019 has empowered the Central Consumer Protection Authority (“CCPA”), constituted under CPA 2019, to order recall of goods.

30.  Section 20 of CPA 2019 states that where the CCPA is satisfied on the basis of investigation that there is sufficient evidence to show violation of consumer rights or unfair trade practice, it may pass an order directing (i) recall of goods considered dangerous, hazardous or unsafe; (ii) reimbursement of the price of goods recalled; and (iii) discontinuation of practices which are unfair and prejudicial to the interests of consumers.

31.  In case of motor vehicles, it is unclear if a recall ordered under Section 20 of CPA 2019 must also follow the procedure prescribed under the MV Act (as amended by the 2019 Amendment) and the Amended Rules. Regardless, the fact that there is now a specific provision dealing with recalls under CPA 2019 (and also a chapter dedicated only to provisions concerning product liability) shows that India is keen to adopt the best practices followed in more developed jurisdictions.  

Conclusion

32.  The codification of the law on vehicle recalls in India is a progressive move. It has provided a defined framework and much needed clarity and certainty to all the stakeholders viz., manufacturers, consumers as also the authorities. 

A step-by-step procedure on management of vehicle recalls brings our jurisdiction at par with some of the more developed jurisdictions around the world.  SIAM Code (though voluntary and non-binding) also provided that manufacturers must notify vehicle owners and the Government if there was any voluntary vehicle recall being planned. This Code, however, did not provide a step-by-step guide (by setting out timelines etc.) for management of a recall. This is now taken care of under the new regime. 

With defined parameters, it is encouraging and convenient for the manufacturers to ensure compliance. Additionally, there are clearly identified situations and exceptions where a manufacturer, importer or retrofitter would not be under an obligation to conduct a safety recall. These situations will ensure that frivolous and unwarranted complaints are not entertained. At the same time, for the success of the systems which are put in place and their effective implementation, manufacturers must familiarize themselves with the new regime. This will guarantee that consumer safety and protection get the primacy it deserves.

References

^¹  These new provisions came into force w.e.f. 1 April 2021.

^²  These provisions came into force w.e.f. 24 July 2020. 

^³  Section 110A(1).

^⁴  These percentages are specified in the Notification dated 11 March 2021, S.O. 1232 (E). 

Section 110A(5)

Section 110A(3)

Section 110A(4) 

 Reference may be made to the Notification dated 11 March 2021, G.S.R. 173 (E). 

https://vahan.parivahan.gov.in/vehiclerecall/vahan/forms/vehiclerecallFAQ.pdf

 The defects are those which are spelt out in Section 110A; and include a defect in the software. Additionally, the defect should be such which poses or is likely to pose undue risk to road safety or environment and it should exist in a group of vehicles of the same design or manufacture.

As per Annexure XII, ‘Vehicle Recall Portal’ means the data base of the safety recall or recalls created, uploaded and maintained by or on behalf of the Ministry of Road Transport and Highways or the Designated Authority (referred to in Rule 127C). The link to the Vehicle Recall Portal is 

- https://vahan.parivahan.gov.in/vehiclerecall/vahan/welcome.xhtml. 

The Designated Authority will initiate the procedure envisaged in the rule only if there exist a certain percentage of owners (as may be notified) who have made a complaint regarding a particular defect in the motor vehicle on the Vehicle Recall Portal.

The recall envisaged is limited to vehicles which are less than seven years old from the date of manufacturing, import or retro fitment.

The cost or fees of any tests conducted on the motor vehicle or its constituent part or software would be borne by the manufacturer, retrofitter or importer.

Clause 4

Clause 5(3) of Annexure XII

If the nature of defect and/or urgency for rectification of the recall products requires immediate action, the manufacturer, importer or retrofitter shall make the owners of the relevant product aware of the safety defect through electronic and/or print media, disseminating such information as is necessary to inform them of the recall products and the actions which such owners would need to take immediately.

Clause 5(2)

Unlike the amendments introduced under the MV Act (which is a special legislation dealing with motor vehicles), the provision concerning recall in CPA 2019 is a more general provision. It does not give any guidance as to how a recall must be managed.