Saturday, 1 August 2020

Supreme Court: Hospital which is giving free medical treatment to some patients and charging others for providing services are liable under consumer protection Act

While evaluating the submission which has been urged by Mr R S
Suri, it is necessary, at the outset, to have regard to the principles which
have been laid down in the judgment of this Court in Indian Medical
Association. In the judgment of this Court, the provisions of Section 2(1)

(o) of the Act fell for interpretation. Section 2(1)(o) provides as follows:
“"service" means service of any description which is
made available to the potential users and includes
the provision of facilities in connection with banking,
financing, insurance, transport, processing, supply
of electrical or other energy, board or lodging or
both, [housing construction], entertainment,
amusement or the purveying of news or other
information, but does not include rendering of any
service free of charge or under a contract of
personal service;"
10 Interpreting the above provision, a three judge Bench of this Court
held that it is only where a hospital provides medical services free of
charge across the board to all patients that it would stand outside the
purview of the Act. The Court held that a hospital which renders free
services to a certain category of patients, while providing for services
which are charged to the bulk of others would not lie outside the purview of
the jurisdiction of the consumer fora. This principle is evident from the
following extract from the decision of this Court:
“43...The third category of doctors and hospitals do provide
free service to some of the patients belonging to the poor
class but the bulk of the service is rendered to the patients on
payment basis. The expenses incurred for providing free
service are met out of the income from the service rendered
to the paying patients. The service rendered by such doctors
and hospitals to paying patients undoubtedly fall within the
ambit of Section 2(1) (o) of the Act.”
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal No 2823 of 2020

Union of India Vs  N K Srivasta 

Dr Dhananjaya Y Chandrachud, J
Dated:July 23, 2020

1 Leave granted.
2 The appeal arises from an order of the National Consumer Disputes
Redressal Commission1 dated 7 October 2016. The Union of India,
through the Secretary in the Ministry of Health and Family Welfare, and
Safdarjung Hospital have challenged the order of the NCDRC. The first
respondent was the original complainant in a consumer complaint2
instituted before Consumer Disputes Redressal Forum – II3, New Delhi.
The complaint alleged medical negligence against Sarvodaya Hospital and
Safdarjung Hospital. The NCDRC allowed the revision of Sarvodaya
Hospital. While exonerating it of the finding of medical negligence, it held
1 NCDRC
2 Case No. 55/2005
3 District Forum

Safdarjung Hospital liable to pay the compensation of Rs 2 lakhs imposed
by the State Consumer Disputes Redressal Commission4.
3 The spouse of the complainant who was pregnant, was admitted to
Sarvodaya Hospital in a medical emergency at about 5 am on 9 March
2004. She delivered a baby at about 8 am, a few hours after admission.
The baby was delivered prematurely and, according to the complainant,
required medical care in a Nursery ICU. The complainant and his spouse
were referred to Safdarjung Hospital for admission of the child for
emergency medical care. The grievance against Sarvodaya hospital was
that prior to the delivery, it had been represented that the Hospital was
fully equipped with a Nursery ICU and that when the complainant came to
realise that this was not the case, he felt cheated. The complainant
proceeded to Safdarjung Hospital with his spouse and child between 12
and 1 pm on 9 March 2004. The grievance of the complainant was that at
Safdarjung Hospital, the baby was not placed in a Nursery ICU, but was
initially admitted to the General Ward and thereafter to a General ICU.
The child died in the last week of April 2004. A complaint was presented
before the District Forum seeking damages against Sarvodaya Hospital
and Safdarjung Hospital.
4 The District Forum dismissed the consumer complaint. As regards,
Sarvodaya Hospital, it arrived at the finding that there was no
misrepresentation of fact and that the Hospital had an independent facility
of a Nursery and ICU available. The District Forum held that the spouse of
the complainant was operated upon in an emergency to save the lives of
4 SCDRC

the mother and the child. Hence, there was no deficiency on the part of
Sarvodaya Hospital in referring the complainant to a specialized facility. As
regards Safdarjung Hospital, the complaint was held not to be
maintainable on the ground that treatment had been afforded free of cost
to the patient. Relying on the decision of this Court in Indian Medical
Association v V P Shantha5, the complaint was held not to be
maintainable.
5 An appeal6 was filed before the State Consumer Disputes
Redressal Commission by the original complainant. The SCDRC, by its
judgment dated 10 December 2013, came to the conclusion that
Sarvodaya Hospital was guilty of medical negligence and directed it to pay
a sum of Rs 2,00,000 as compensation and costs quantified at Rs 20,000.
However, the complaint was held not to be maintainable against
Safdarjung Hospital. The SCDRC relied upon an affidavit of Dr K C
Aggarwal who deposed in support of the plea that the treatment had been
provided free of cost without charging any fees. Finding that there was no
denial of this assertion and relying on the decision of this Court in Indian
Medical Association, the complaint was rejected as against Safdarjung
Hospital. However, the SCDRC had also found negligence on the part of
Safdarjung Hospital.
6 A revision7 was filed against the judgment of the SCDRC by
Sarvodaya Hospital before the NCDRC. The NCDRC, by its judgment
dated 7 October 2016, allowed the revision and came to the conclusion
5 (1995) 6 SCC 651
6 FA-429/07
7 Revision Petition No 1299 of 2014

that Sarvodaya Hospital was not guilty of medical negligence. The finding
of fact was that the spouse of the complainant had been admitted to the
hospital in a precarious condition and was a high risk patient. Relying on
the progress notes of the hospital, the NCDRC noted that the hospital had
referred the patient to a specialized facility after taking the consent of the
complainant. The finding was to the following effect:
“19. A brief perusal of the prescription shows that the patient
was admitted in the First Opposite party Hospital in a
precarious condition of umbilical cord collapsing through the
vagina; a gross risk of survival of the baby inside the womb;
the risk of the blood supply being cut off and high chances of
the baby being born asphyxiated. The progress notes show
that all due care and caution was taken which was required
under the standard practice of normal medical parlance by
the First Opposite party Hospital in delivering the baby
through Caesarian Section and hence, no deficiency can be
attributed to the first Opposite Party Hospital or its Doctors, as
there is no documentary evidence suggesting any kind of
negligence in the line of treatment rendered to the patient.
The baby was rightly referred to a higher management
Hospital, in the absence of the necessary nursery facilities
required to handle a premature baby. We hold accordingly.”
7 However, having allowed the revision that was filed by Sarvodaya
Hospital against the finding of negligence, the NCDRC elaborated on the
question as to whether Safdarjung Hospital had been correctly
exonerated. Safdarjung Hospital was a party to the proceedings before
the NCDRC and was heard in the revision that was filed by Sarvodaya
Hospital. The NCDRC noted that though Safdarjung Hospital was
exonerated by the District Forum and the SCDRC on the ground that the
treatment had been rendered free of charge and the hospital was not
amenable to the jurisdiction of the consumer fora under the Consumer
Protection Act 19868, the SCDRC had, on merits, come to the conclusion
8 Act

that though it had the facility of a Nursery with a ventilator, it had not been
made available to the child of the complainant. The baby was admitted to
Ward No 20, then to Ward No 18 and eventually in the General ICU. This
finding had attained finality. The NCDRC held that the finding of the
SCDRC that Safdarjung Hospital was not amenable to the jurisdiction of
the consumer fora was contrary to the decision of this Court in Indian
Medical Association. The NCDRC held that though the complainant had
not filed a revision against the order of the SCDRC specifically holding that
Safdarjung Hospital was not amenable to the jurisdiction of the consumer
fora, he was not precluded from challenging a finding which was adverse
to him in the revision petition. On these facts, the NCDRC sustained the
finding of medical negligence against Safdarjung Hospital and directed it to
pay compensation quantified at Rs 2 lakhs.
8 Mr R S Suri, Additional Solicitor General, has appeared in support of
the appeal filed by the Safdarjung Hospital. The submission is that no
charges across the board are levied at Safdarjung Hospital and, hence,
the finding that was arrived at by the NCDRC is unsustainable. Mr Dinesh
Kumar, learned counsel has appeared on behalf of the original
complainant and opposed the appeal. Sarvodaya Hospital has been
represented by Mr Shantanu Sagar, learned counsel.
9 While evaluating the submission which has been urged by Mr R S
Suri, it is necessary, at the outset, to have regard to the principles which
have been laid down in the judgment of this Court in Indian Medical
Association. In the judgment of this Court, the provisions of Section 2(1)

(o) of the Act fell for interpretation. Section 2(1)(o) provides as follows:
“"service" means service of any description which is
made available to the potential users and includes
the provision of facilities in connection with banking,
financing, insurance, transport, processing, supply
of electrical or other energy, board or lodging or
both, [housing construction], entertainment,
amusement or the purveying of news or other
information, but does not include rendering of any
service free of charge or under a contract of
personal service;"
10 Interpreting the above provision, a three judge Bench of this Court
held that it is only where a hospital provides medical services free of
charge across the board to all patients that it would stand outside the
purview of the Act. The Court held that a hospital which renders free
services to a certain category of patients, while providing for services
which are charged to the bulk of others would not lie outside the purview of
the jurisdiction of the consumer fora. This principle is evident from the
following extract from the decision of this Court:
“43...The third category of doctors and hospitals do provide
free service to some of the patients belonging to the poor
class but the bulk of the service is rendered to the patients on
payment basis. The expenses incurred for providing free
service are met out of the income from the service rendered
to the paying patients. The service rendered by such doctors
and hospitals to paying patients undoubtedly fall within the
ambit of Section 2(1) (o) of the Act.”
11 From the record, we find that, in the present case, the only factual
foundation that was led before the District Forum was the evidence of Dr K
C Aggarwal who deposed that the patient in question had been treated free of charge. We have scrutinized the grounds of appeal in the Special
Leave Petition. Not even a single ground has been raised by Safdarjung
Hospital, challenging the factual basis of the finding that has been arrived
at by the NCDRC on the issue of jurisdiction. Nor has any other factual
material been placed on the record to enable the Court to decide on
whether it satisfies the tests enunciated in Indian Medical Association.
Hence, in the absence of a proper challenge before the District Forum, the
SCDRC or the NCDRC and, as we have seen above, even before this
Court, it would be inappropriate for this Court to render a conclusive
opinion. We ought not to do so in the absence of a factual foundation in
the pleadings and evidence. We are also mindful of the fact that the
award in the present case is in a relatively small amount of Rs 2 lakhs.
12 However, Mr R S Suri submitted that it would be appropriate for this
Court, having regard to the recurring nature of the issue, to leave the
question of jurisdiction open to be decided in an appropriate case where a
factual foundation can be laid by the Union of India and Safdarjung
Hospital, both in the pleadings and evidence. We consider this to be
appropriate so as to ensure that while we are affirming the judgment of the
NCDRC in the present case on the ground that the quantum of the claim is
small enough to not warrant the intervention of this Court, the decision of
this Court (or of the NCDRC) is not regarded as a precedent for having
decided a question of law in the generality of cases that may arise
involving Safdarjung Hospital. We therefore confine the judgment of the
NCDRC to the peculiar factual background, as we have noted in the
present case. We clarify that we have left open the issue as to whether Safdarjung Hospital would be governed by the provisions of the Act, more particularly, having regard to the provisions of Section 2(1)(o), to be decided in an appropriate case. The impugned judgment of the NCDRC
shall not be cited as a precedent. The issue, including any other issues
which may arise is left open to be adjudicated upon in an appropriate
case.
13 Another aspect which requires mention is that the SCDRC had held
that Safdarjung Hospital was not amenable to the jurisdiction created by
the Act. This was not challenged by the complainant. Sarvodaya Hospital
challenged the order of the SCDRC. The NCDRC reversed the finding on
maintainability which was in favour of Safdarjung Hospital in a revision by
Sarvodaya Hospital. It attempted to do “complete justice”, ignoring that it
is not entrusted with the jurisdiction which is exclusively conferred on this
Court under Article 142. In an appropriate case, it will have to be decided
whether the NCDRC can at all exercise in revisional proceedings the
powers which have been conferred on an appellate court under Order XLI
Rule 33 of the Code of Civil Procedure 1908. This issue is also specifically
kept open.
14 Subject to the aforesaid clarification, in the peculiar facts, which we
have noted above, we are not inclined to entertain the appeal only on the
ground of the smallness of the quantum involved. The appeal is
accordingly dismissed but with the above clarifications. The payment of Rs
2 lakhs in compliance of the order of the NCDRC shall be made to the
original complainant within a period of two months from the date of receipt of a certified copy of this order. Time to pay the amount of Rs 2 lakhs is
accordingly extended.
15 Pending application, if any, stands disposed of.
…………...…...….......………………........J.
[Dr Dhananjaya Y Chandrachud]
…..…..…....…........……………….…........J.
[Indu Malhotra]
…..…..…....…........……………….…........J.
[K M Joseph]
New Delhi;
July 23, 2020

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