LLM Notes: The liability of public utilities in contract under Indian law

 The liability of public utilities in contract under Indian law is primarily governed by the Indian Contract Act, 1872, alongside specialized consumer protection laws. Public utilities operate under a contractual relationship with consumers that is often characterized by standard form contracts where the terms are fixed unilaterally by the utility, with little bargaining power for consumers.

Contractual Liability of Public Utilities

• Public utilities provide services through standard form contracts featuring non-negotiable, complex, and adhesive terms, often leaving consumers no real choice.

• Contract terms must be reasonable, clearly communicated, and not disadvantageous or unfair to consumers.

• Consumers have contractual rights such as the right to information, safety, and redressal against deficiencies or breach of service.

• Remedies for breach include compensatory damages, specific performance, refund, or replacement depending on the breach.

• Public utilities may be held liable for negligence and other breaches of duty in providing services, as established in cases like Haryana State Electricity Board v. T.R. Poultry Farm (1996).

Intersection with Tort and Consumer Law

• Public utilities have a duty of care toward consumers; liability can arise under tort law if services cause harm, such as contamination or hazards.

• Strict and absolute liability can apply to hazardous utility activities (e.g., electricity, gas supply) under principles from Rylands v. Fletcher and M.C. Mehta v. Union of India.

• Consumer Protection Act grants additional remedies for service deficiency, allowing consumers to approach consumer forums for speedy redressal.

• Utilities do not enjoy sovereign immunity for their commercial activities and can be sued both under contract and tort law.

Constitutional and Legal Context

• Many public utilities are considered "State" instrumentalities under Article 12 of the Constitution, making them accountable to constitutional duties and fundamental rights.

• The status as state instrumentalities affects their liability framework, enhancing accountability.

Summary

Public utilities in India are liable in contract for providing services under reasonable and fair terms, with liability extending to negligence and strict liability in hazardous cases. Consumers have multiple legal avenues for enforcing these liabilities through contract law, tort law, and consumer protection laws, ensuring comprehensive consumer protection against public utility failures or breaches.

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