In a class-action suit, a group of people having the same or similar concerns and injuries against one person, brings the alleges to the court of law, collectively, represented by one or more than one person(s). However, this can also be called a Representative Action. In layman’s terms, a class-action suit is referred to as multiple people having the exact claim against one person who collectively alleges their grievances in the court of law. The reasoning behind such a suit is to primarily protect the interests of a member of a class who is scattered geographically and to deduct the replication of the litigation as it combines several proceedings started in various parts with the same clauses of action.
What exactly is Class Action Suit?
Class Action suits initially originated in the United States of America where the Equity Rule 48 gave the citizens the right to file such suits. Nonetheless, it was later amended in 1966.
A class action is especially filed by a large number of people or a group who have all suffered the same or similar kind of injury. A class action accords people to collect alleges, and pundit evidence and pay the legal costs together.
Why is even Class Action important?
There’s no spoon-fed or full-proof definition to this question but let us take the help of an illustration to support the answer.
Generally, if one has a locus standi (the right to take up action before the court), they can only file a suit or bring any action.
For example, on one fine day, A and B end up having a heated argument where A ends up saying certain unparliamentary abusive slang to B, defaming B in public. Here, B has a cause of action against A. B may go to the court of law and ask for damages against A. This is a right of B. Nonetheless, if C, a third person who was just standing nearby this entire incident and saw the entire thing happening. He cannot go to the court and file any suit against A since he has no locus standi here, but he has a cause of action.
Generally, no one can file a suit on behalf of others but in class action suits it is however possible in law.
In a class-action suit, where suppose an entire crowd of the public is affected due to certain disturbances, it is humanely impossible for each person to file their own separate case or suit, if ever that happens by any chance, the justice may not be as early as a person may need, and not to mention the well-known fact Justice Late is Justice Denied. Hence, the class action suit accords a self-elected representative of such people to file a suit against the claimed perpetrators on behalf of the crowd.
Various Statues or Class Action Suits
Under the Companies Act, 2013:
U/s 37 of the act, a suit or any other action may be filed by one person or a group of people affected by any single or similar statement or the inclusion or omission of any kind of matter in the prospectus u/s 34 (Criminal Liability for misstatement in the prospectus), Section 35 (Civil Liability for misstatement in the prospectus) and Section 36 (punishment for fraudulently inducing persons to invest money).
Under the Code of Civil Procedure:
True to mention, there are no limits on the subject matter except for actions that cannot be filed in a civil court I.e., mismanagement suits. Each / every person having a similar or same injury in the suit may make an application for the class action suit.
Under the Competition Act:
A class might discourse an agreement that causes a substantial adverse effect on competition inside India or abuse of ascendant position by an enterprise. Any such person or consumer or their association may bring the action, I.e., Price Fixing.
Under the Consumer Protection Act:
However, this act limits certain things in order to file a suit, e.g., disputes arising out of goods and services that are sold or provided or agreed upon to be sold or provided or delivered. The aggrieved Consumers of the goods or services may bring an action under the act.
Against whom a Class Action Suit can be filed?
A Class Action Suit may be filed against:
- A company
- Any of the directors of the company
- Auditors, including the audit firm
- Expert or advisor or consultant or any other person
In case of any alleges against an audit firm, the burden of accountability is not only on the firm but also on each and every member or partner who was equally involved in making any derogatory or improper, or misleading statement of particulars in an audit report or who acted in a fraudulent, unlawful or wrongful manner.
By now you must have surely understood the meaning and scope of the Class Action Suits in India. However, the need for the class-action suit was highly needed in the Bhopal Gas Tragedy case. Around 37,000 people of Bhopal, Madhya Pradesh died from the leak of gas in the factory owned by a US-based company, Union Carbide. Unfortunately, there were no such statutes as “Class Action Suits” back then and three class-action suits were filed against Union Carbide in the United States, and all the three alleges got dismissed either. Further, the government of India had to file cases on behalf of all the people who had to face the injury, and sadly enough, they received only one-seventh of the desired claim. The perpetrators were not even given stern punishment or anything as such. Hence, class action suits are actually a need of the hour as of the growing population and the problems they demand.
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