A INDIAN MEDICAL ASSOCIATION

v.

V.P. SHANTHA AND ORS.

NOVEMBER 13, 1995 .

B

[KULDIP SINGH, S.C. AGRAWAL AND B.L. HANSARIA, JJ.]

Consumer Protection Act. 1986.

Ss. 2(1)(o), (c), (d), (g) and 14-Scope of 'Service' in the light of the

C definition 'consumer' and other relevant provisions of the Act-Remedy

against malpractice or negligence by Medical Practitioners, hospitals and

nursing homes

in the process of consultation, diagnosis and treatment-Where

such medical

se1vices are rendered free of charge to everybody availing the

se1vices they do not fall under the definition

'se1vice'-'--But where charges are

required to be paid by eve1ybody or payable by those who could afford and

D not by those who could not such medical se1vice rendered would constitute

'Se1vice'-Payment

of token amount for registration purposes cannot be

treated as charges-Payment

of charges by insurance company or employer

for medical services rendered to insured/employee, such

se1vices would still

fall under

'se1vice'

"contract of service'~ "Contract for service''-Difference.

E between-Se1vices rendered by medical practitioners or hospitals or nursing

homes-Deficiency in-To be judged by applying the test of reasonable skill

and

care as applicable in action for damages for negligence.

F

Sections 3 and 13-Procedure followed by

the Redressal

Fomm--Speedy disposal of complaints-Complicated issues requiling record­

ing

of evidence of experts-Complainant can be directed to approach Civil

Court.

Sections 3,

JO, 13, 16 and 2o--Redressal Fomm-Associating non-legal

persons having knowledge

in other fields connected with the object of the

G Act-Decision on the basis of

maj01ity view-Technical matters arising in

complaint regarding deficiency

in se1vice-Such members need not be experts

in the subject.

T01ts:

H Negligence or malp1:actice by Medical Practitioners-Liable for

110

INDIAN MEDICAL ASSN. v. V.P.SHANTIIA 111

damages-Can be sued in contract-Failure to take reasonable skill and A

care-Not immune from liability on the ground that they are subject to

disciplinary control under Medical Council Act.

Constitution

of India,

1950 :

Article 265-T~haracteristics of-Expenses of 1wming a govem-B

ment hospital met from Consolidated Fund which is raised from taxes paid

by tax payers-'Free of charge' medical services rendere·d by the hospital to

such tax payers-Held, cannot

be treated as paid services.

Words

& Phrases :

"Service'~ "Preferential users'~ "made available'~ C

"avails of' "Hires" Meaning of-In the context of Consumer Protection Act,

1986.

Divergent views had been expressed on the question whether a

medical practitioner can be regarded as rendering 'service' under Section

2(i)(o) of the Consumer Protection Act, 1986, and whether the service D

rendered at the hospital/nursing home can be regarded as 'service' under

the said provision.

In Writ Petitions filed under Article 226 of the

Con­

stitution, the Madras High Court had held that services rendered to a

patient by a medical practitioner or by a hospital by way of diagnosis and

treatment, both medicinal and surgical, would not come within the defini­

tion of 'service' under Section 2(1)(o) of the Act and a patient who

undergoes treatment under a medical practitioner

or in a hospital by way

of diagnosis and treatment, both medicinal and surgical, cannot be

con­

sidered to be a 'consumer' within the meaning of Section 2(1)(d) of the Act

but para-medical services rendered by them would be within the definition

E

of 'service' and a person availing of such service would be a 'consumer'. F

In proceedings arising out of complaints filed under the Act the

National Consumer Disputes Redressal Commission on the other hand,

had held that the activity of providing medical assistance for payment

carried on by the hospitals and members of the medical profession falls

within the expression of 'service'

and in the event of any deficiency in the G

performance of such service, the aggrieved party can invoke the remedies

provided under the Act by filing a complaint before the Consumer

Forum

having jurisdiction. The National Commission had also held that the legal

representatives of the deceased patients who were undergoing treatment

in the hospital are consumers under the Act and are competent to main- H

112 SUPREME COURT REPORTS (1995] SUPP. 5 S.C.R.

A tain the complaint. The National Commission was, however, of the view

that if the treatment given in a nursing home was totally free of charge, it

did not constitute 'service' under the Act. As regards Government hospi­

tals the National Commission held that persons who avail themselves of

the facility of medical treatment in Government hospitals are not con-

B

sumers and the said facility cannot be regarded as service 'hired' for

'consideration'.

It was also

·held that the contribution made by the Govern­

ment employee in the Central Government Health Scheme or such other

similar scheme does not make him 'consumer' within the meaning of the

Act .

. C Appeals were filed by the petitioner in the Writ Petitions against the

judgment of the Madras High Court as well as various judgments of the

National Commission by the complainants as also the members of medical

profession

and hospitals. A Writ Petition under Article 32 was also filed

by a hospital

and a medical practitioner wherein the validity of the

provisions of the Act was challenged on the ground that the same. were

D violative of the provisions of Articles 14 and 19(1) (g) of the Constitution.

E

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On behalf of the medical profession and the hospitals, the following

contentions were urged :-

(i)

In law there is distinction between a 'profession' and an

'occupation' and while a person engaged in an occupation

renders service which falls within the ambit of Section 2(1)(o)

of the Consumer Protection Act the service rendered by a

person belonging to a profession does not fall within the ambit

of the said expression and therefore medical practitioners who

belong to

the medical profession are not covered under the

provisions of the Act.

(ii) Jn view of the words 'potential

user· in Section 2(1) (o) and the

word 'hires' in Section 2(1)(d)(ii) medical practitioners are

not contemplated by Parliament to be covered by the

provisions of the Act.

(iii) Having regard to the definition of 'deficiency' in Section

2(1)(g), a medical practitioner is excluded from the definition

of 'service' because medical services

rendered by a medical

practitioner cannot be judged on the basis of any fixed norms.

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INDIAN MEDICAL ASSN. v. V.P. SHANTHA 113

(iv) The relationship between a medical practitioner and the A

patient is of trust and confidence and therefore it is in the

nature of a contract of personal service and it is excluded

from the ambit of 'service' by the exclusionary clause in Sec-

(v)

tion 2(1)(o).

The composition

of the District Consumer Redressal Forum,

the

State Consumer Disputes Redressal Commission and the

National Commission

and the procedure to be followed by

these agencies is such

that it is not suitable for determination

of the complex questions which may arise in respect of claims

B

for negligence in respect of services rendered by medical

prnc-C

titioners.

(vi) If the provisions of the Act are so construed as being ap·

plicable to the medical profession and hospitals then the same

are violative of

the provisions of Articles 14 and 19(l)(g) of

the Constitution

of India.

· D

(vii) lf the medical profession is brought within the purview of the

Act, the consequences would

be huge increase in medical

expenditure on account

of insurance charges as well as

tremendous increase in defensive medicine and that medical E

practitioners may refuse to attend to medical emergencies and

there will be no safeguard against frivolous and vexatious

complaints

and consequent blackmail.

Refuting the abovesaid contentions, the complainants submitted

:-

F

(i) The expression "Contract of personal service" in

Section

2(1)(o) is confined to employment of domestic servants only

and does not include the employment of a medical officer.

(ii) Even though the service rendered

at a hospital, being free of

charge, does

not fall within the ambit of

Section 2(1)(o) in so G

far as the hospital is concerned, the said service would fall

within the

ambit of

Section 2(1)(o) since it is rendered by a

medical officer employed in the hospital who is

not rendering

the services free

of charge because the said medical officer

receives emoluments by way of salary for employment

in the H

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114 SUPREME COURT REPORTS [1995) SUPP. 5 S.C.R.

hospital.

(iii) Even in Government hospitals/health centres/dispensaries

where services

are rendered free of charge to all the patients,

the provisions of the Act shall apply because the expenses of

running the

said hospitals are met by appropriation from the

Consolidated

Fund which is raised from the tax paid by the

tax payers.

Disposing of the rival contentions, this Court

HELD : 1.1. The definition of 'service' in

Sectfon 2(1)(o) contains

words of wide amplitude. The word 'any' has been used in a wider sense

extending from one to all. [125-C]

1.2. Service rendered to a patient by a medical practitioner (except

where the doctor renders service free of charge to every patient

or under

D a contract of personal service), by way of consultation, diagnosis and

treatment, both· medicinal and surgical, would fall within the ambit of

'service' as defined in

Section 2(1)(o) of the Act. [146-FJ

1.3. The fact

that medical practitioners belong to the medical

profes­

sion and are subject to the disciplinary control of the Medical Council of

E India and/or State Medical Councils constituted under the provisions of

the Indian Medical Council Act would

not exclude the services rendered

by them from the ambit of the Act. [146-G]

Mason & McCall Smith; Law and Medical Ethics, 4th Edn. pp. 16~17

F. and 192 and Arizona v. Mmicopa Country Medical Society, 457 US 332 = 73

L.Ed. (2d) 48, referred to.

Lucknow Development Auth01ity v. M.K Gupta, (1994] 1 SCC 243,

relied on.

G 2. A professional person owes to his client a duty in tort as well as

in contract to exercise reasonable care in

givi~g advice of performing

service. Medical practitioners do

not enjoy any immunity and they can be

sued in contract

or tort on the ground that they have failed to exercise a

reasonable skill

and care. [128-C; E]

H

Saif Ali v. Sidney Mitchell & Co., (1980) 1 AC 198; Rees v. Sinclair,

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INDIAN MEDICAL ASSN. v. V.P .. SHAN1HA 115

(1974) 1NZLR180 and Jackson & Powell on Professional Negligence, paras A

1-04, 1-05 and 1-56, referred to.

3.1. The word 'hires' in Section 2(1)(d)(ii) has been used in the same

sense as 'avails

or and the words 'potential users' in

Section 2(1)(o) means

'availing of services'. From the use of these words

it cannot be inferred

that the services rendered by medical practitioners are not contemplated B

by

Parliament to be covered with the expression 'service' as defined in

Section 2(1)(o). [130-C; E]

Black's Law Dictionary, 6th Edn., p. 1541, referred to.

3.2. A determination about deficiency in service for the purpose of

C

Section 2(1) (g) has to be made by applying the same test as is applied in

action founded on

tort of negligence. It cannot, therefore, be said that in

view of the definition of'deficiency' as contained in

Section 2(1)(g) medical

practitioners must

be treated to be excluded from the ambit of the Act.

[131-E; 132-E] D

Bolam v. F1iers Management Committee, [1957) 1WLR582;

W1zite v.

Jordan, [1981) 1 WLR 246; Maynard v. West Midland Regional Health

Authority, [1984) 1 WLR 634 and Sidaway v. Governors of Beth/em Royal

Hospital, (1985) AC 871, referred to.

4.1. There is a

well recognised distinction between a 'contract of

service' and a 'contract for services'.

Parliament has deliberately chosen

the expression 'contract of service' instead of the expression 'contract for

service' in the exclusionary

part of the definition of 'service' in

Section

2(1)(o) for the reason that an employee cannot be regarded as a consumer

E

F

in respect of the services rendered by his employer in pursuance of a

contract of employment.

By affixing the adjective 'personal' to the word

'service' the nature of the contracts which are excluded

is not altered. The

said adjective only emphasizes

that what is sought to be excluded is

personal service only. The expression 'contract of personal service' in the

exclusionary

part of

Section 2(1)(o) excludes services rendered by an G

employee to his employer. [137·H;. 138·C·E]

Dharangadhara Chemical Works Ltd. v. State of Saurashtra, [1957)

SCR 152, relied on.

Oxford Companion to Law, p. 1134;

Simmons v. Health Laund1y Co., H

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116 SUPREME COURT REPORTS [1995) SUPP. 5 S.C.R.

(1910) 1 K.B. 543; Halsbury's Laws of England, 4th Edn., Vol.16 para 501

and Siroud's Judicial Dictionary, 5th Edn. p. 540, referred to.

4.2. The expression

'contract of personal service' contained in

Sec­

tion 2(1)(o) is not confined to employment of domestic servants only.

There can be a contract of personal service

if there is relationship of

master and servant between a doctor and the person availing his services

and in that event the service rendered by the doctor to his employer would

be excluded from the purview of the expression 'service'

under Section

2(1)(o)

of the Act. [147-C]

C 43. A 'contract of personal service' has to be distinguished from a

'contract for personal service'. In the absence of a relationship of master

and servant between the patient and medical practitioner, the service

rendered by a medical

prnctitioner to the patient cannot be regarded as

service rendered under a 'contract of personal service'. Such service is

service rendered

under a 'contract/or personal service' and is not covered

D by exclusionary clause of the definition of 'service' contained in Section

2(l)(o) of the Act. [146-H; 147-A-B]

·>!

.fl·

The High Commissioner for India v. IM. Lall, (1948) L.R. 75 I.A. 225;

Ram Kissenda:; Dhanuka v. Satya Charan Law, (1949) L.R. 77 I.A. 128 and

E. Dr. S.B. Dutt v. University of Delhi, [1959) SCR"1236, relied on.

5.1.

In the matter of constitution of the District Forums, the State

CoPJmission a.nd the National Commission the Act combines with legal

competence the merits of lay decision making by members having

knowledge and experience in dealing with problems relating to various

F _ fields which are connected with the object and purpose of the Act, namely,,

protection

of interest of consumers. [135-D-E]

G

Robin CA.

White: The Admi11istratio11 of Justice, 2nd Edn. p. 345,

referred to.

5.2. Moreover, there is a safeguard

of appeal against the order made

by the District

Forum to the

State Commission and against the order made

by the Sta~e Commission to the National Commission and further appeal

to

the Supreme Court against the order made by the National

Commis­

sion. The composition of the Consumer Disputes Redressal Agencies is,

H therefore, not such as to render them unsuitable for adjudicating on issues

INDIAN MEDICAL ASSN. v. V.P. SHANTIIA 117

arising in a complaint regarding deficiency in service rendered by the A

medical practitioner. (135-F-G]

5.3.

All complaints of deficiency in rendering service by medical

practitioner would not raise complicated questions requiring recording of

evidence of expert.

In many cases the deficiency in service may be due to

obvious faults which can be easily established. The issues arising in the

complaints in such cases can

be speedily disposed of by the procedure that

is being followed by the Consumer Disputes Redressal Agencies and in

complaints involving complicated issues requiring recording of evidence

of experts, the complainant can

be asked to approach the Civil Court for

appropriate relief.

It cannot, therefore, be said that on the ground of the

procedure that is followed

by the Consumer Disputes Redressal Agencies

in determining the issues arising before them the services rendered

by the

medical practitioners are not intended to be included to the expression

'service'

as defined in Section 2(1)(o) of the Act. [137-B-D]

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6. The provisions of the Act are not open to challenge as being D

violative of the provisions of Articles 14 and 19(1)(g) of the Constitution

on

the· ground that the composition of the Consumer Disputes Redressal

Agencies

and the procedure to be followed by such agencies is such that

they are not suitable for adjudication of complex issues arising for

con­

sideration in complaints relating to deficiency in service rendered by E

medical practitioners and hospitals. [150-F]

7.1. Doctors and Hospitals rendering services without any charge

whatsoever to every person availing the services would not fall within the

ambit of 'service' under Section 2(1)(o). The payment of a token amount

for registration purposes only would not alter the position in respect of

F

such doctors or hospitals. [139-G]

7.2. The service rendered in hospitals/nursing homes where services

J•

are rendered free of charge to everybody availing the services would

continue

to be service rendered free of charge and

wool~ be outside the G

purview of Section 2(1)(o), even though the said service is rendered by a

medical officer employed in the hospital

who receives emoluments by way

of salary for employment in the hospital. [141-F-G]

7.3. Services rendered free of charge to all patients in Government

hospjtaJs/health centres/dispensaries would not cease to be services

H

118 SUPREME COURT REPORTS (1995) SUPP. 5 S.C.R.

A rendered free of charge on the ground that the expenses for running the

said hospital are met by appropriation from the Consolidated Fund which

i!t raised from the taxes paid by the tax payers. The tax paid by the person

availing the services

at a Government hospital cannot be treated as a

consideration

or charge for the services rendered by the said hospital and

B

c

such services though rendered free of charge do not cease to be so because

the person availing the service happens to

be a tax payer. [142-C; E-F]

17ie Commissioner, Hindu Religi,ous Endowments, Madras v. S1i

Lakshmindra 17iiltha Swamiar of Sri Shirnr Mutt, [1954) SCR 1005, relied

on ..

7.4. The services rendered by doctors and hospitals providing free

service to some of the patients belonging to the poor class

and on payment

basis to the

rest of the patients would fall within the ambit of

Section

2(1)(o) even in respect of services rendered to patients free of charge. The

persons

who are rendered services free of charge by such doctors and

D hospitals are the beneficiaries and as such come within the definition of

'consumer' under

Section 2(l)(d)(ii) and services rendered to them, even

though free of charge, fall within the ambit of the expression 'service'

in Section 2(l)(o). [141 .. C-E]

E

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7 .5.

Service rendered by a medical practitioner or hospital/nursing

home cannot be regarded as service rendered free of charge,

if the person

availing the service

has taken an insurance policy for medical care

whereunder the charges for consultation, diagnosis

and medical treatment

are borne by the insurance company and such service would fall within the

ambit of 'service' as defined in

Section 2(1)(o) of the Act. [148-F]

7.6. Similarly, where, as a

part of the conditions of service, the

employer bears the expenses of medical treatment of an employee

and his

family members dependent on him, the service rendered to such

an

employee and his family members by a medical practitioner or a hospi-

G ta)/nursing home would not be free of charge and would constitute 'service'

under

Section 2(1)(o) of the Act. [148-G]

8. In the conditions prevailing in India there is no cause for the

apprehension

that if medical practitioners are brought within the purview

of the Act,

there would be huge increase in .;.edical expenditure on account

H of insurance charges as well as. tremendous increase in defensive medicine

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INDIANMEDICALASSN.v. V.P.SHANTHA[S.C.AGRAWAL,J.) 119

and that medical practitioners would refuse to attend to medical emergen· A

cies and there will be no safeguards against frivolous and vexatious

complaints

and consequent blackmail. [143-G]

Whitehouse v. Jordan & Anr.,

[1980] 1 All E.R. 650; Jackson & Powell

on Professional Liability, 3rd Edn. para 6-25 p.466; Mason & McCall Smith

: Law and Medical Ethics, 4th Edn., pp. 16, 191, 192-93, referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 688 of

1993 etc. etc.

B

From the Judgment and Order dated 21.4.92 of the National Con- C

sumer Disputes Redressal Commission, New Delhi, in F.A. No. 94of1991.

H.N. Salve, Dr. Rajeev Dhawan, P.S. Poti, C. Sitramiah, M.N. Krish­

namani, P.N. Lekhi, Rajiv Dutta, G. Prakash, L.K. Pandy, M.P. Vinod,

Pramod Kumar, Gopal Singh, Naresh Mathur, Krishan Mahajan, A.D.N.

Rao, AS. Rawat, T.G.N. Nair, Shailendra Bhardwaj, L.R. Singh, Ms. Vimla D

Sinha, Ms. Meenakshi Grover, Yunus Malik, K.R. Nambiar, R.C. Verma,

S.R. Setia, M.K. Garg, Rajiv Dhavan, P.H. Parekh, Fazl, Ms. Lucy, (Mrs.

M. Karanjawala) (NP), P. Narasiman, Gopal Singh, Rakesh Luthra,

M.K.D. Nambordri, K.J. John, Chandra Shekhar, Ms. Indu Malhotra, Anil

Makhija, G. Prabhakar, Mrs. D. Bharathi Reddy, Mrs. Rani Chabbra, E

Prashant Bhushan, K.S. Bhati, S. Balakrishnan, S. Prasad, P.V. Yogesh­

waran and Ms. Shoba R. for the appearing parties.

The Judgment of the Court

was delivered by

S.C.

AGRAWAL, J. Leave granted in

SLP (C) Nos. 18497/93 and F

21755/94. Delay condoned and leave granted in SLP(C) Nos. 18445-73/94.

These appeals, ,;pecial leave petitions and the Writ Petition raise a

common question,

viz., whether and, if so, in what circumstances, a medical

practitioner can be regarded

as rendering 'service' under

Section 2(1)(o) G

of the Consumer Protection Act, 1986 (hereinafter referred to as 'the Act').

Connected with this question

is the question whether the service rendered

at a hospitaVnursing home can be regarded as 'service' under

Section

2(1)(o) of the Act. These questions have been considered by various High

Courts

as well as by the National Consumer Disputes Redressal Commis-

sion (hereinafter referred to

as 'the National Commission'). H

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120 SUPREME COURT REPORTS (1995] SUPP. 5 S.C.R.

In

Dr. A.S. Chandra v.

Union of India, (1992) 1 Andhra Law Times

713, a Division Bench of Andhra Pradesh High Court has held that service

rendered for consideration by private medical practitioners, private hospi­

. tals and nursing homes must be construed as 'service' for the purpose of

Section 2(1)(o) of the Act and the persons availing such services are

'consumers' within the meaning of Section 2(1)(d) of the Act.

In Dr.

C.S. Subramanian v. Kumarasamy & Anr., (1994) 1 MLJ 438,

a Division Bench of the Madras High Court has, however, taken a different

view. It has been held that the services rendered to a patient by a medical

practitioner or by a hospital by way of diagnosis and treatment, both

C medicinal and surgical, would not come within the definition of 'service'

under Section 2(1)(o) of the Act and a patient who undergoes treatment

under a medical practitioner or a hospital

by way of diagnosis and treat­

ment, both medicinal and surgical, cannot be considered

to be a 'consumer'

within the meaning of Section 2(1)( d) of the Act; but the medical prac-

D titioners or hospitals undertaking and providing para-medical services of

all kinds and categories cannot claim similar immunity from the provisions

of the Act and that they would fall, to the extent of such para-medical

services rendered

by them, within the definition of 'service' and a person

availing of such service would

be a 'consumer' within the meaning of the

Act.

C.A. Nos. 4664-65/94 and Civil Appeal arising out of SLP(C) No.

E 21775/94 filed by the complainants and Civil Appeals arising out of SLP( C)

Nos. 18445-73/94 filed by the Union .of India are directed against the said

judgment of the Madras High Court.

The National Commission by its judgment and order dated Decem-

F ber 15, 1989 in First Appeal No. 2of1989 has held that persons who avail

themselves of the facility of medical treatment in Government hospitals are

not "consumers" and the said facility offered in the Government hospitals

cannot be regarded

as service "hired" for "consideration". It has been held

that the payment of direct or indirect taxes

by the public does not con­

stitute "consideration" paid for hiring the services rendered in the Govern-

G ment hospitals. It has also been held that contribution made by a

Government employee in the Central Government Health Scheme or such

other similar Scheme does not make him a "consumer" within the meaning

of the Act.

Civil Appeal arising out of

SLP(C) No. 18497/93 has been filed

by Consumer Unity Trust Society, a recognised consumer association,

H against this judgment of the National Commission.

INDIANMEDICALASSN.v. V.P.SHANTHA[S.C.AGRAWAL,J.) 121

By judgment dated April 21, 1992 in First Appeal Nos. 48 and 94 of A

1991, the National Commission has held that the activity of providing

medical assistance for payment carried on

by hospitals and members of the

medical profession

falls within the scope of the expression 'service' as

defined in Section 2(1)( o) of the Act and that in the event of any deficiency

in the performance of such service, the aggrieved party can invoke the

remedies provided under the Act

by filing a complaint before the

Con­

sumer Forum having jurisdiction. It has also been held that the legal

representatives of the deceased patients

who were undergoing treatment

B

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in the hospital are 'consumers' under the Act and are competent to

maintain the complaint.

C.A. Nos. 688/93 and 689/93 filed by the Indian

Medical Association and SLP (C) Nos. 6885 and 6950/92 filed by Mis

Cosmopolitan Hospital are directed against the said judgment of the

National Commission. The said judgment dated April

21, 1992 was

fol­

lowed by the National Commission in its judgment dated November 16,

1992 in First Appeal No. 97 of 1991 (Dr. Sr. Louie & Anr. v. Smt. Kanno/ii

Pathumma & Anr.). S.L.P. No. 351/93 has been filed by Josgiri Hospital D

and Nursing Home against the said judgment of the National Commission.

By judgment dated May 3, 1993 in O.P. No. 93/92, the National

Commission has held that since the treatment that

was given to the

complainant's deceased husband in the nursing home belonging to the

opposite party

was totally free of any charge, it did not constitute 'service'

as defined under the Act and the complainant was not entitled to seek any

relief under the Act. C.A.

No. 254/94 has

Leen filed by the complainant

against the said judgment of the National Commission.

Writ Petition No. 16 of 1994 has been filed under Article 32 of the

Constitution

by Cosmopolitan Hospital

(P) Ltd., and Dr. K. Venogopalan

Nair (petitioners in SLP (C) Nos. 6885 and 6950/92) wherein the sa;rl

petitioners have assailed the validity of the provisions of the Act, insofar

as they are held to be applicable to the medical profession,

as being

violative of Articles

14 and 19(1)(g) of the Constitution.

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F

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Sllrl~P\lfasaran, Shri Harish Salve, Shri A.M. Singhvi, Shri Krish­

namani and Shri S. Balakrishnan have addressed the court on behalf of the

medical profession and the hospitals and Shri Rajeev Dhavan has

presented the case of the complainants. Before

we proceed to deal with

their contentions

we would briefly take note of the background and the H

122 SUPREME COURT REPORTS [1995] SUPP. 5 S.C.R.

A scheme of the Act.

B

c

On April 9, 1985, the General Assembly of the United Nations, by

Consumer Protection Resolution No. 39/248, adopted the guidelines to

provide a framework for Governments, particularly those of developing

countries, to use in elaborating and strengthening consumer protection

policies and legislation. The objectives of the said guidelines include assist-

ing countries in achieving or maintaining adequate protection for their

population

as consumers and encouraging high levels of ethical conduct for

those engaged in the production and distribution of goods and services to

the consumers. The legitimate needs which the guidelines are intended to

meet include the protection of consumers from hazards to their health and

safety and availability of effective consumer redress. Keeping in

view the

said guidelines, the Act

was enacted by

Parliament to provide for the better

protection of the interests of consumers and for that purpose to make

provision for the establishment of consumer councils and other authorities

D for the settlement of consumers' disputes and for matters connected there­

with. The Act sets up a three-tier structure for the redressal of consumer

grievances.

At the lowest level, i.e., the District level, is the Consumer

Disputes Redressal Forum known

as 'the District Forum'; at the

next·

higher level, i.e., the State level, is the Consumer Disputes Redressal

E

F

Commission known as 'the State Commission' and at the highest level is

the National Commission. (Section 9). The jurisdiction of these three

Consumer Disputes

Redressal Agencies is based on the pecuniary limit of

the claim made by the complainant.

An appeal lies to the State Commission

against an order made by the District Forum (Section

15) and an appeal

lies to the National Commission against an order made by the State

Commission on a complaint filed before it or in an appeal against the order

passed

by the District Forum. (Section 19). The State Commission can

exercise revisional powers on grounds similar to those contained in Section

115

CPC in relation to a consumer dispute pending before or decideJ by

a District Forum [Section 17(b)] and the National Commission has similar

revisional jurisdiction in respect of a consumer dispute pending before or

G decided by a

State Commission. [Section 21(b)]. Further, there is a

provision for appeal to this Court from an order made

by the National

Commission on a complaint or on an appeal against the order of a

State

Commission. (Section 23). By virtue of the definition of complainant in

Section 2(1)(c), the Act affords protection to the consumer against unfair

H trade practice or a restrictive trade practice adopted by any trader, defect

--

-

INDIAN MEDICAL ASSN. v. V.P. SHANTIIA [S.C. AGRA WAL,).] 123

in the goods bought or agreed to be bought by the consumer, deficiency in A

the service hired or availed of or agreed to be hired or availed of by the

consumer, charging by a trader price in excess of the price fixed by or

under any law for the time being in force or displayed on the goods or any

package containing such goods and offering for sale to public, goods which

will be hazardous to life and safety when used, in contravention of the

provisions of any law for the time being in force requiring traders to display

information in regard to the contents, manner and effect of use of such

goods. The expression "complainant",

as defined in Section 2(1)(b), is

comprehensive to enable the consumer as well as any voluntary consumer

association registered under the Companies Act,

1956 or under any other

B

c law for the time being in force, or the Central Government or any

State

Government or one or more consumers where there are numerous con­

sumers having the same interest, to file a complaint before the appropriate

Consumer Disputes Redressal Agency and the consumer dispute raised in

such complaint

is settled by the said agency in accordance with the proce­

dure laid down in

Section 13 of the Act which prescribes that the District D

Forum (as well as the State Commission and the National Commission)

shall have the same power

as are vested in a Civil Court under the Code

of Civil Procedure in respect of summoning and enforcing attendance of

any defendant or witness and examining the witness on oath; discovery and

production of any document or other material object producible as

evidence; the reception of evidence on affidavits; the requisitioning of the

report of the concerned analysis or test from the appropriate laboratory or

from any other relevant source; issuing of any commission for the examina-

tion of any witness; and any other matter which may be prescribed.

Section

14 makes provisions for the nature of reliefs that can be granted to the

complainant on such a complaint. The provisions of the Act are in addition

to and not in derogation of the provisions of any other law for the time

being in force.

(Section 3).

E

F

In this group of cases we are not concerned with goods and we are

only concerned with rendering of services. Since the Act gives protection G

to the consumer in respect of service rendered to him, the expression

"service" in the Act has to be construed keeping in

view the definition of "consumer" in the Act. It is, therefore, necessary to set out the definition

of the expression 'consumer' contained in Section 2(1)(

d) insofar as it

relates

to services and the definition of the expression 'service' contained

in

Section 2(l)(o) of the Act. The said provisions are as follow: H

1

A

B

c

D

E

124

SUPREME COURT REPORTS [1995) SUPP. 5 S.C.R.

"Section 2(1)(d) "consumer" means any person who, -

(i) omitted

(ii) hires (or avails of)

any services for a consideration which has

been

paid or promised or partly paid and partly promised, or under

any system of deferred payment and includes any

beneficiary of

such services other than the person who hires (or avails of) the

service for consideration paid or promised, or partly paid and

partly promised, or under any system of deferred payment, when

such services are availed of with the approval of the first mentioned

person.

Explanation. -

Omitted"

"Section 2(1)(o) : "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, amuse­

ment 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;"

The words "or avails of' after the word "hires" in Section 2(1)( d)(ii)

and the words "housing construction"

in

Section 2(1)(o) were .inserted by

the Act 50 of 1993.

The definition of 'service' in Section 2(1)(o) of the Act can be split

F up into three parts -the main part, the inclusionary part and the exclusion­

ary part. The main part is explanatory in nature and defines service to mean

service

of any description which is made available to the potential users.

The inclusionary part expressly includes the provision of facilities in con­

nection with banking, financing, insurance, transport, processing, supply of

G electrical or .other energy, board or lodging or both housing construction,

entertainment, amuseinent or the purveying of news or other information.

The exclusionary part excludes rendering of any service free of charge or

under a contract of personal service.

The definition of 'service' as contained in

Section 2(1)(o) of the Act

'.H has been construed by this Court in Lucknow Development Authority v.

...

... INDiANMEDICALASSN.v. V.P.SHANTHA[S.C.AGRAWAL,J.) 125

M.K Gupta, [1994) 1 SCC 243. After pointing out that the said definition A

is in three parts, the Court has observed :

"The main clause itself is very wide. It applies to any service made

available to potential users. The words 'any' and 'potential' are

significant. Both are of wide amplitude. The word 'any' dictionarily

B

means; one or some or all'. In Black's Law Dictionary it is ex-

plained thus, "word 'any' has a

div~rsity of meaning and may be

employed to indicate 'all'

or 'every' as well as 'some' or 'one' and

its meaning in a given statute depends upon the context and the

subject-matter of the statute". The use of the word 'any' in the

context it has been used in clause ( o) indicates that it has been

c

used in wider sense extending from one to all. The other word

'potential'

is again very wide. In

Oxford Dictionary it is defined as

'capable of coming into being, possibility'. In Black's Law Diction-

ary it

is defined "existing in possibility but not in act. Naturally and

probably expected to come into existence at some future time,

D

though not now existing; for example, the future product of grain

or trees already planted, or the successive future instalments or

payments on a contract or engagement already made."

In other

words service which

is not only extended to actual users but those

who are capable of using it are covered in the definition. The clause

is thus very wide and extends to any or all actual or potential users." E

(p.255)

The contention that the entire objective of the Act

is to protect the

consumer against malpractices in business

was rejected with the observa-

tions:

F

"The argument proceeded on complete misapprehension of the

purpose

of Act and even its explicit language. In fact the Act

requires provider of service to be more objective and caretaking."

(p.256).

Referring to the inclusive part of the definition it was said :

G

-.. "The inclusive clause succeeded in widening its scope but not

exhausting the services which could be covered in earlier part. So

?ny service except when it is free of charge or under a constraint

of personal service is included in it." (p.257) H

A

B

c

126 SUPREME COURT REPORTS [1995] SUPP. 5 S.C.R.

In that case the Court was dealing with the question whether housing

construction could be regarded as service under Section 2(1)(o) of the Act.

While the matter

was pending in this Court, "housing construction" was

inserted in the inclusive part by

Ordinance No. 24 of 1993. Holding that

housing activity

is a service and was covered by the main part. of the

definition, the Court observed :

" ......... the entire purpose of widening the definition is to include

in it not only day to day buying and selling activity undertaken by

a common man but even such activities which are otherwise not

commercial in nature yet they partake of a character in which some

benefit

is conferred on the consumer." (p.256)

In the present case the inclusive part of the definition of

"service" is

not applicable

and we are required to deal with the questions falling for

consideration in the light of the main part and the exclusionary part of the

D definition.

The exclusionary part will require consideration only if it is

found that in the matter of consultation, diagnosis and treatment a medical

practitioner or a hospital/nursing home renders a service falling within the

main part of the definition contained in Section 2(1)(o) of the Act. We

have, therefore, to determine whether medical practitioners and hospi­

tals/nursing homes can· be regarded as rendering a "service" as con-

E templated in the main part of Section 2(1)(o). This determination has to

be made in the light of the aforementioned observations in

Lucknow

Development Authority

(supra). We will first examine this question in

relation to

medic~l practitioners.

F It has been contended that in law there is a distinction between a

profession and an occupation and that while a person engaged in an

occupation renders service which

falls within the ambit of Section 2(1)(o)

the service rendered by a person belonging

to a profession does not fall

within the ambit of the said provision and, therefore, medical practitioners

G who belong to the medical profession are not covered by the provisions of

the Act.

It has been urged that medical practitioners are governed by the

provisions of tlie Indian Medical Council Act,

1956 and the Code of

Medical Ethics made

by the Medical Council of India, as approved by the

Government of India under

Section 3 of the Indian Medical Council Act,

1956 which regulates their conduct as members of the medical profession

H ; and provides for disciplinary action by the Medical Council of India and/or

...

..

-

INDIANMEDICALASSN.v. V.P.SHANTHA(S.C.AGRAWAL,J.) 127

State Medical Councils against a person for professional misconduct. A

While expressing his reluctance to propound a comprehensive defini­

tion of a 'profession', Scrutton L.J. has said '"profession' in the present use

of language involves the idea of an occupation requiring either purely

intellectual skill, or of manual skill controlled,

as in painting and sculpture,

or surgery, by the intellectual skill of the operator,

as distinguished from

an occupation which

is substantially the production or sale or arrangement

for the production or sale of commodities. The line of demarcation may

vary from time to time. The word 'profession' used to be confined to the

three learned professions, the Church, Medicine and Law.

It has now, I

think, a wider meaning"

(See : Commissioners of Inland Revenue v. Maxse,

1919 1 K.B. 647 at p.657).

According to Rupert M. Jackson and John L.Powell the occupations

which are regarded

as professions have four characteristics, viz.,

B

c

(i) the nature of the work which is skilled and specialized and a substantial D

part is mental rather than manual;

(ii) commitment to moral principles which

go beyond the general duty of

honesty and a wider duty to community which

may transcend the duty to

a particular client or patient;

E

(iii) professional association which regulates admission and seeks to uphold

the standards of the profession through professional codes on matters of

conduct and ethics; and

(iv) high status in the community. F

The learned authors have stated that during the twentieth century an

increasing number of occupations have been seeking and achieving

"profes­

sional" status and that this has led inevitably to some blurring of the

features which traditionally distinguish the professions from other occupa-

G

tions. In the context of the law relating to

Professional Negligence the

learned authors have accorded professional status to seven specific occupa­

tions, namely, (i) architects, engineers and quantity surveyors, (ii) sur­

veyors, (iii) accountants, (iv) solicitors, (v) barristers, (vi) medical

practitioners and (vii) insurance brokers. (See : Jackson & Powell on

Professional Negligence, paras 1-01and1-03, 3rd Edn.). H

.. ' . ,., '.:~··

128 SUPREME COURT REPORTS (1995] SUPP. 5 S.C.R.

A In the matter of professional liability professions differ from other

occupations fcir the reason that professions operate in spheres where

success cannot

be achieved in every case and very often success or failure

depends upon factors beyond the professional man's control.

In devising a

rational

approach to professional liability which must provide proper

B. protection to the consumer while allowing for the factors mentioned above,

the approach of the courts is to require that professional men should

possess a certain minimum degree

of competence and that they should

exercise reasonable

care in the discharge of their duties. In general, a

professional man owes to his client a duty

in tort as well as in contract to

exercise reasonable care in giving advice or performing services.

(See :

C Jackson & Powell (supra), paras 1-04, 1-05 and 1-56). Immunity from suit

was enjoyed by certain professions

on the grounds of public interest. The

trend is towards narrowing of such inimunity and it is no longer available

to architects in

respec;t of certificates negligently given and to mutual

valuers. Earlier, barristers were. enjoying complete immunity

but now even

D for them the field is limited to work done in court and to a

small category

of pre-trial work which is directly related to what transpires in court. (See

: Jackson & Powel~ (supra), para 1-66; Saif Ali v. Sidney Mitchell & Co.,

(1980) 1 AC. 198; Rees v. Sinclair, (1974) 1 N.Z.L.R. 180 and Giamiarelli

v. Wraith, (1988) 81 A.L.R. 417). Medical practitioners do not enjoy any

immunity

and they can be sued in contract or tort on the ground that they

E have failed to exercise reasonable skill and care.

F

It would thus appear that medical practitioners, though belonging to

the medical profession, are not immune from a claim for damages on the

ground of

negligence. The fact that they are governed by the Indian

Medical Council Act and are subject to the disciplinary control of Medical

Council

of India and/or

State Medical Councils is no solace to the person

who has suffered due to their negligence and the right of such person to

seek redress is not affected.

Referring to the changing position with

regard to the relationship

G between the medical practitioners and the patients in the

United Kingdom,

it has been said :

"Where, then, does the doctor stand today in relation to society?

To some· extent, he is a servant of the public, a public which is

H widely (though not always well) informed on medical matters.

..

INDIANMEDICALASSN.v. V.P.SHANIBA[S.C.AGRAWAL,J.] 129

Society is conditioned to distrust paternalism and the modern A

medical practitioner has little wish to be paternalistic. The new

talk

is of 'producers and consumers' and the concept that 'he who

pays the piper calls the tune'

is established both within the profes-

sion and in its relationships with patients. The competent patient's

inalienable rights to understand

his treatment and to accept or B

refuse it are now well established." (pp. 16-17)

"Consumerism is now firmly established in medical practice and

this has been encouraged on a wide scale

by government in the

United Kingdom through the introduction of 'charters'. Complaint

is central to this ethos -and the notion that blaine must be C

attributed, and compensated, has a high priority." (p.192)

(Mason & McCall Smith : Law and Medical Ethics, 4th Edn.)

In

Arizona v. Maricopa County Medical

Society, 457 US 332 = 73

L.Ed. (2d.) 48, two Arizona county medical societies formed two founda-D

tions for medical care to promote fee-for-service medicine and to provide

the community with a competitive alternative to existing health insurance

plans and

by agreement amongst the doctors established the schedule of

maximum fees that participating doctors agreed to accept as payment in

full for services performed for patients insured under plans.

It was held E

that the maximum fee agreement, as price fixing agreements, are per se

unlawful under the Sherman Act. It was observed :

"Nor does the fact doctors -rather than non-professionals -

are.

the parties to the price-fixing agreements support the respondents'

position

..... The respondents claim for relief from the per se rule F

·

is simply that the doctors' agreement not to charge certain insureds

more than a fixed price facilitates the successful marketing of an

attractive insurance plan. But the

claim that the price restraint will

make it easier for customers to pay does not distinguish the

medical profession from any other provider of goods or services."

G

(pp.

348~49, 61-62)

We are, therefore, unable to .subscribe to the view that merely

because medical practitioners belong to the medical profession they are

outside the purview of the provisions of the Act and the services rendered

by medical practitioners are not covered

by

Section 2(1)(o) of the Act. H

A

B

c

130 SUPREME COURT REPORTS [1995] SUPP. 5 S.C.R.

Shri Harish Salve, appearing for the Indian Medical Association, has

urged that having regard to the expression 'which

is made available to

potential users' contained in Section 2(1)(o) of the Act, medical prac­

titioners are not contemplated by

Parliament to be covered within the

provisions of the Act. He has urged that the said expression

is indicative

of the kind of service the law contemplates, namely, service of an institu­

tional type which

is really a commercial enterprise and open and available

to all

who seek to avail thereof. In this context, reliance has also been

placed on the word 'hires' in sub-clause (ii) of the definition of 'consumer'

contained in Section 2(1)(d) of the Act. We are unable to uphold this

contention

.. The word 'hires' in Section 2(1)(d)(ii) has been used in the

same sense

as 'avails of as would be evident from the words 'when such

services are availed

of in the latter part of Section 2(1)(d)(ii). By inserting

the words 'or

avails of after the word 'hires' in

Section 2(1)( d)(ii) by the

Amendment Act of

1993,

Parliament has clearly indicated that the word

'hires' has been used in the same sense

as 'avails of. The said amendment

D only clarifies what was implicit earlier. The word 'use' also means 'to

avail.

oneself of. (See : Black's Law Dictionary, 6th Edn., at p, 1541).

1 The. word

'user' in the expression 'which

is made available to potential users' in the

definition of 'service' in Section 2(1)(o) has to be construed having regard

to the definition of 'consumer' in Section 2(1)( d)(ii) and,

if so construed,

E

it means 'availing of services'. From the use of the word 'potential users' it

cannot, therefore, be inferred that the services rendered

by medical

prac­

titioners are not contemplated by Parliament to be covered "within the

expression 'service'

as contained in Section 2(1)(o).

Shri Harish

· Salve has also placed reliance on the definition of the

p expression 'deficiency' as contained in Section 2(1)(g) of the Act which

provides

as follows :

"Section 2(1)(g) : "deficiency" means.

any fault, imperfection,

shortcoming or inadequacy in the quality, nature and manner of

performance which

is required to be maintained by or under any

law for the time being in force

·or has been undertaken to be

performed by a person in pursuance of a contract or otherwise in

.relation to any·.service;"

The submission of Shri Salve is that under the said clause the

Hi deficiency with tegard to fault, imperfection, shortcoming. or inadequacy in

.,...

INDIANMEDICALASSN.v. V.P.SHANTIIA[S.C.AGRAWAL,J.] 131

respect of a service has to be ascertained on the basis of certain norms A

relating to quality, nature and manner of performance and that medical

services rendered

by a medical practitioner cannot be judged on the basis

of

any fixed norms and, therefore, a medical practitioner cannot be said to

have been covered by the expression

"service" as defined in Section 2(1)(o).

We are unable to agree. While construing the scope of the provisions of B

the Act in the context of deficiency in service it would be relevant to take

note of the provisions contained in Section 14 of the Act which indicate

the reliefs that can be granted on a complaint filed under· the Act. In

respect of deficiency in service, the

following reliefs can be granted :

(i) return of the charges paid by the complainant. [Clause (c)]

(ii) payment of such amount

as may be awarded as compensation to the

consumer

for any loss or injury suffered by the consumer due to the

negligence of the opposite party.

[Clause (d)]

c

(iii) removal of the defects or deficiencies in the services in question. D

[Clause (e)]

Section 14(1)(d) would, therefore, indicate that the compensation to

be awarded is for loss or injury suffered by the consumer due to the

negligence of the opposite party. A determination about deficiency

in E

service for the purpose of

Section 2(1)(g) has, therefore, to be made by

applying the same test as is applied in an action for damages for negligence.

The standard of care which

is required from medical practitioners as laid

down

by McNair J. in his direction to the jury in Bolam v. Friers Hospital

Management Committee,

(1957) 1 WLR 582, has been accepted by the F

House of Lords in a number of cases.

(See: 'Whitehouse v. Jordan, (1981)

1 WLR 246; Maynard v. West Midlands, Regional Health Authority, (1984)

1 WLR 634 and Sidaway v. Governors of Bethlem Royal Hospital, 1985 AC

871). In

Bolam (supra) McNair J has said :

"But where you get a situation which involves the use of some G

special skill or competence, then the test as to whether there has

been negligence or not

is not the test of the man on the top of a

Clapham omnibus, because he has not got this special

skill. The

test

is the standard of the ordinary skilled man exercising and

professing

to have that special skill. A man need not possess the H

132

A

SUPREME COURT REPORT~ [1995] SUPP. 5 S.C.R.

highest expert skill; it is well established law that it is sufficient if

he exercises the ordinary skill of an ordinary competent man

exercising that particular art." (p.

586)

In an action for negligence in tort against a surgeon this Court, in

Laxman

Balalai§}ma Joshi v. Trimbak Bapu Godbole & Anr., {1969] 1 SCR

B 206, has held :

c

D

E

F

G

"The duties which a doctor owes

to'his patient are clear. A person

who holds himself out ready to

give medical advice and treatment

impliedly undertakes that he

is possessed of skill and knowledge

for the purpose. Such a person when consulted

by a patient owes

him certain duties,

viz., a duty of care in deciding whether to

undertake the case, a duty of care in deciding what treatment to

give or a duty of care

1n the administration of that treatment. A

breach of any of those duties

gives a right of action for negligence

to the patient. The practitioner must bring to his task a reasonable

degree of skill and knowledge and must exercise a reasonable

degree of care. Neither the very highest nor a very

low degree of

care and competence judged in the light of the particular cir­

cumstances of each case

is what the law require. (p.213)

It is, therefore, not possible to hold that in view of the definition of

"deficiency"

as contained in Section 2(1)(g) medical practitioners must be

treated to be excluded from the

ambit of the Act and the service rendered

by them is not. covered under Section 2(1)(o).

Another contention that has Seen urged by learned counsel appear­

ing f9r the medical profession to exclude medic~l practitioners from the

ambit of the Act

is that the composition of the District Forum, the State

Commission

_and the National Commission is such that they cannot fully

appreciate the complex issues which may arise for determination and

further that the

proceduE! that is followed by these bodies for determina­

tion of issues before them

is not suitable for the determination of the

complicated questions which arise in respect of claims for negligence in

respect of the services rendered

by medical practitioners. The provisions

with regard to the composition of the District Forum are contained

in

Section 10 of the Act which provides that the President of the Forum shall

be a person who is or who has been or

is qualified to be a District Judge

H and the other two members shall be persons of ability, integrity and

INDIAN MEDICAL ASSN. v. V.P.SHANTHA[S.C.AGRAWAL,J.] 133

standing, having adequate knowledge or experience or, or having shown A

capacity in dealing with, problems relating to economics, law, commerce,

accountancy, industry, public affairs

or administration and one of them

shall

be a woman. Similarly, with regard to the composition of

the· State

Commission, it is provided in Section 16 of the Act that the President of

the Commission shall

be a person who is or who has been a Judge of a

High Court appointed by the

State Government in consultation with -the

Chief Justice of the High Court and that the other two members shall be

persons

of ability, integrity and standing, having adequate knowledge or

experience of, or having shown capacity in dealing with, problems relating

to economics, law, commerce, accountancy, industry, public affairs

or

administration, and one of them shall be a woman. The composition of the

National Commission is governed by

Section 20 of the Act which provides

B

c

that the President of the Commission shall be a person who is or who has

been a Judge of the Supreme Court to be appointed by the Central

Government after consultation with the Chief Justice

of India and four

other members shall

be persons of ability, integrity and standing having D

adequate knowledge or experience of, or having shown capacity in dealing

with, problems relating

to economics, law, commerce,

account;incy, in­

dustry, public affairs

or administration and one of them shall be a woman.

E

F

It will thus be seen that the

President of the District Forum is required to

be a person who is or who has been or is qualified to be a District Judge

and the President of the State Commission is required to be a person who

is

or who has been the Judge of the High Court and the

President of the

National Commission is

required to be a person who is or who has been a

Judge

of the

Supreme Court, which means that all the Consumer Disputes

Redressal Agencies

are headed by a person who is well versed in law and

has considerable judicial or legal experience. It has, however, been sub­

mitted that in case there is difference

of opinion, the opinion of the

majority is to prevail and, therefore, the

President may be out-voted by the

other members

and that there is no requirement that the members should

have adequate knowledge

or experience in dealing with problems relating

to medicine.

It is no doubt true that the decisions of the District Forum as G

well as the

State Commission and the National Commission have to be

taken by majority and it may be possible in some cases that the President

may be in minority. But the presence of a person well versed in law as the

President will have a bearing on the deliberations of these Agencies and

their decisions. As regards the absence of a requirement about a member H

134 SUPREME COURT REPORTS (1995] SUPP. 5 S.C.R.

A having adequate knowledge or experience in dealing with the problems

relating to medicine it may be stated that the persons to be chosen as

members are required to have knowledge and experience in dealing with

problems relating to various fields connected with the object and purpose

of the Act,

viz., protection and interests of the consumers. The said

B

knowledge and experience would enable them to handle the consumer

disputes coming up before them for settlement in consonance with the

requirement of the Act. To

say that the members must have adequate

knowledge or experience in the field to which the goods or services, in

respect of which the complaint

is made, are related would Jead to impos­

sible situations.

At one time there will be two members in the District

C Forum and they would have knowledge or experience in two fields which

would mean that complaints in respect of goods or services relating to

other fields would be beyond the purview of the District Forum. Similarly

in the

State Commission there may be members having knowledge or

experience in fields other than the fields in which the members of the

D District Forum have knowledge or experience. It

,would mean that the

goods or services in respect of which the District Forum can entertain a

complaint

will be outside the purview of the

State Commission. Same will

be the position in respect of the National Commission. Since the goods or

services in respect of which complaint can be filed under the Act may

relate to number of fields it cannot be expected that the members of

the

E Consumer Disputes Redressal Agencies must have expertise in the field to

which the goods or services in respect of which complaint

is filed, are

related.

It will be for the parties to place the necessary material and the

knowledge and

exper'ience which the members will have in the ~elds

indicated in the Act would enable them to arrive at their findings on the

F basis of that material. It cannot, therefore, be said that since the members

of the Consumer Disputes Redressal Agencies are not required to have

knowledge and experience in medicine, they are not in a position to deal

with issues which

may arise before them in proceedings arising out of

complaints about the deficiency in service rendered

by medical prac­

titioners.

G

Discus~ing the role of lay persons in decision making, Prof. White

has referred to two divergent

views.

One view holds that lay adjudicators

are superior to professional judges in the application of general standards

of conduct, in their notions of reasonableness, fairness and good faith and

H that they act as 'an antidote against excessive technicality' and 'some

1,

INDIAN MEDICAL ASSN. v. V.P. SHANlHA [S.C. AGRAWAL, J.) 135

guarantee that the law does not diverge too far from reality'. The other A

view, however, is that since they are not experts, lay decision makers

present a very real danger that the dispute may not be resolved in accord­

ance with the prescribed rules of law and the adjudication of claims may

be based on whether the claimant

is seen

as deserving rather than on the

legal rules of entitlement. Prof. White has indicated his preference for a

Tribunal composed of a lawyer,

as Chairman, and two lay members.

Such

a Tribunal, according to Prof. White, would present an opportunity to

develop a model of adjudication that combines the merits of lay decision

making with legal competence and participation of lay members would lead

to general public confidence in the fairness of the process and widen the

social experience represented

by the decision makers.

Prof. White says

that apart from their breadth of experience, the key role of lay members

would be

in ensuring that procedures do not become too full of mystery

and ensure that litigants before them are not reduced to passive spectators

in a process designed to resolve their disputes.

(See : Prof Robin CA.

White: The Administration of Justice, 2nd Edition, p. 345).

In the matter of constitution of the District Forum, the State Com­

mission and the National Commission the Act combines with legal com­

petence the merits of lay decision making by members having knowledge

and experience in dealing with problems relating to various fields which

are connected with the object and purpose of the Act, namely, protection

and interests of the consumers.

Moreover, there

is a further safeguard of an appeal against the order

made by the District Forum to the

State Commission and against the order

made

by the

State Commission to the National Commission and a further

appeal to this Court against the order made

by the National Commission.

It cannot, therefore, be said that the composition of the Consumer Dis­

putes Redressal Agencies

is such as to render them unsuitable for ad­

judicating on issues arising in a complaint regarding deficiency in service

rendered

by a medical practitioner.

As regards the procedure to be followed

by these agencies in the

matter of determination of the issues coming up for consideration it

may

B

c

D

E

F

G

be stated that under

Section 13(2)(b), it is provided that the District Forum

shall proceed to settle the consumer disputes (i) on the basis of evidence

brought to its notice

by the complainant and the opposite party, where the H

136 SUPREME COURT REPORTS (1995) SUPP. 5 S.C.R.

A opposite party denies or disputes the allegations contained in the com­

plaint, or (ii) on the basis of evidence brought to its notice by the com­

plainant where the opposite party omits or fails to take any action to

represent his case within the time given by the Forum.

In

Section 13( 4) of

the Act it

is further provided that the District Forum shall have the same

B

c

D

E

powers as are vested in the civil.court under the Code of Civil procedure

while trying a suit in respect of the following matters :

"(i) the summoning and enforcing attendance of any defendant

or witness and examining the witness on oath;

(ii) the discovery and production of any document or other

material object producible

as evidence;

(iii) the reception of evidence

on affidavits;

(iv) the requisitioning of the report of the concerned analysis or

test from the appropriate laboratory or from any other

relevant source;

(v) issuing of any commission for the examination of any witness

and

0

(vi) any other matter which may be prescribed."

The same provisions apply to proceedings before the State Commission

and the National Commission.

It has been urged that proceedings involving

negligence in the matter of rendering services by a medical practitioner

would raise complicated questions requiring evidence of experts to

be

F recorded and that the procedure which is followed for determination of

consumer disputes under the Act is summary in nature involving trial

on·

the basis of affidavits and is not suitable for determination of complicated

questions.

It is no doubt true that sometimes complicated questions requir­

ing recording of evidence of experts may arise in a complaint about

deficiency in service based on the ground

of negligence in . rendering

G medical services by a medical practitioner; but this would not be so in all

complaints about deficiency in rendering services by a medical practitioner.

There may

be cases which do not raise such complicated questions and the

deficiency in service

may be due to obvious faults which can be easily

established such

as removal of the wrong limb or the performance of an

H operation on the wrong patient or giving injection of a drug to which the

I,NDIANMEDICALASSN. v. V.P.SHANTI:IA[S.C.AGRAWAL,J.] 137

patient is allergic without looking into the out patient card cont::tining the A

warning (as in Chinkeow v. Government of Malaysia, (1967) 1 WLR 813

P.C.) or use of wrong gas during the course of an anesthetic or leaving

inside the patient swabs or other items of operating equipment after

surgery. One often reads about such incidents in the newspapers. The

issues arising in the complaints in such cases can be speedily disposed of B

by the procedure that is being followed by the Consumer Disputes Redres-

sal Agencies and there is no reason

why complaints regarding deficiency

in service in such cases should not

be adjudicated by the Agencies under

the Act.

In complaints involving complicated issues requiring recording of

evidence of experts, the complainant can be asked to approach the Civil

Court for appropriate relief.

Section 3 of the Act which prescribes that the C

provisions of the Act shall be in addition to and not in derogation of the

provisions of any other law for the time being in force, preserves the right

of the consumer to approach the Civil Court for necessary relief. We are,

therefore, unable to hold that on the ground of

compo~ition of the Con­

sumer Disputes Redressal Agencies or on the ground of the procedure D

which is followed by the said Agencies for determining the issues arising

before them, the service rendered by the medical practitioners are not

intended to

be included in the expression 'service' as defined in

Section

2(1)(o) of the Act.

Keeping in view the wide amplitude of the definition of 'service' in

E

the main part of

Section 2(1)(o) as construed by this Court in Lucknow

Development Authority

(supra),

we find r.o plausible reason to cut down

the width of that part so as to exclude the services rendered by a medical

practitioner from the ambit

of the main part of

Section 2(1)(o).

We may now proceed to consider the exclusionary part of the defini­

tion to see whether such service is excluded by the said part. The exclusion­

ary

part excludes from the main part service rendered (i) free of charge;

or (ii) under a contract of personal service.

F

Shri Salve has urged that the relationship between a medical prac- G

titioner and the patient is of trust and confidence and, therefore, it is in

the nature

of a contract of personal service and the service rendered by

the medical practitioner to the patient

is not 'service' under

Section 2(1)(o)

of the Act. This contention of Shri Salve ignores the well recognised

distinction between a 'contract

of service' and a 'contract for services'.

(See H

A

B

c

138

SUPREME COURT REPORTS [1995] SUPP. 5 S.C.R.

: Halsbury's Law of England, 4th Ecln., Vol. 16, para 501 and Dharangad­

hara Chemical Works Ltd. v. State of Saurashtra, [1957] SCR 152 at p. 157).

A 'contract for services' implies a contract wh~reby one party undertakes

to render services

e.g. professional. or technical services, to or for another.

in the performance of which he

is not subject to

detailed direction and

control but exercises professional or technical skill and uses his own

knowledge and discretion. (See : Oxford Companion to Law, p. 1134). A

'contract of service' implies relationship of master and servant and involves

. an obligation to obey orders in the work to be performed and as to its

mode and manner of performance. (See :

Stroud's Judicial Dictionary, 5th

Edn.,

p.

540; Simmons v. Heath Laundry Co., (1910) 1 K.B. 543 and

Dharangadhara Chemical Works (supra) at p. 159). We entertain no doubt

that Parliamentary draftsman was aware of this well accepted distinction

between "contract of service" and "contract for services" and has deliberate­

ly chosen the expression 'contract of service' instead of the expression

'contract for services', in the exclusionary part of the definition

of 'service'

D in Section 2(1)(o). The reason being that an

employer cannot be regarded

as a consumer in respect of the services rendered by his employee in

pursuance of a contract of employment. By affixing the adjective 'personal'

to the word "service" the nature of the contracts which are excluded is not

altered. The said adjective only emphasizes that what is sought to be

E

F

excluded is personal service only. The expression "contract of personal

service" in the exclusionary part of Section 2(1)(o) must, therefore,

be

construed as excluding the services rendered by an

employee to his

employer under the contract of personal service from the ambit of the

expression "service".

It is no doubt true that the relationship between a

medical prac-

titioner and a patient carries within its certain degree of mutual confidence

and trust and, therefore, the services rendered by the medical practitioner

can

be regarded as services of personal nature but since there is no relationship of master and servant between the doctor and the patient the

contract between the medical practitioner and his patient cannot be treated

G as a contract of personal service but is a contract for services and the

service rendered by the

medical practitioner to his patient under such a

contract

is not covered by the exclusionary part of the definition of 'service'

contained in Section 2(1)(o) of the Act.

H Shri Rajeev Dhavan has, however, submitted that the expression

I

-

INDIANMEDICALASSN.v. V.P.SHANTHA(S.C.AGRAWAL,J.] 139

'contract of personal service' contained in Section 2(l)(o) of the Act has A

to be confined to employment of domestic servants only. We do not find

any merit in this submission. The expression 'personal service' has a well

known legal connotation and has been construed in the context of the right

to seek enforcement of such a contract under the Specific Relief Act. For

that purpose a contract of personal service has been held to cover a civil

B .

servant, the managing agents of a company and a professor in the

Univer-

sity. (See : The High Commissioner for India v. l.M La/4 (1948) L.R. 75

I.A. 225; Ram Kissendas Dhanuka v. Satya Charan Law, (1949) L.R. 77 I.A.

128 and Dr. S.B. Dutt v. University of.Delhi, [1959] SCR 1236). There can

be a contract of personal service if there is relationship of master and

servant between a doctor and the person availing his services and in that

C

event the services rendered by the doctor to his employer would be

excluded from the purview of the expression 'service' under Section 2(1)(o)

of the Act

by virtue of the exclusionary clause in the said definition.

The other part of exclusionary clause relates to services rendered

"free of charge". The medical practitioners, Government hospitals/nursing D

homes and private hospitals/nursing homes (hereinafter called "doctors and

hospitals") broadly fall in three categories

:-

(i) where services are rendered free of charge to everybody

availing the said services,

(ii) where charges are required to

be paid by everybody availing

the services, and

E

(iii) where charges are required to be paid by persons availing

services but certain categories of persons who cannot afford

F

to pay are rendered service free of charges.

There

is no difficulty in respect of first two categories. Doctors and

hospitals who render service without any charge whatsoever to every

person availing the service would not fall within the ambit of

"service" under

Section 2(1)(o) of the Act. The payment of a token amount for registration

G

purposes only would not alter the position in respect of such doctors and

hospitals.

So far as the second category is concerned, since the service is

rendered on payment basis to all the persons they would clearly fall within

the ambit of Section 2(1)(o) of the Act. The third category of doctors and

hospitals do provide free service to some of the patients belonging to the

H

140 SUPREME COURT REPORTS (1995] SUPP. 5 S.C.R.

A 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 undoub­

tedly fall within the ambit of Section 2(1)(o) of the Act.

B

c

The question for our consideration is whether the service rendered

to patients fee of charge

by the doctors and hospitals in category (iii) is

excluded by virtue of the exclusionary clause in Section 2(1)(o) of the Act.

In our opinion the question has to be answered in the negative. In this

context it

is necessary to bear in mind that the Act has been enacted "to

provide for the protection of the interests of "consumers" in the background

of the guidelines contained in the Consumer Protection Resolution passed

by the

U.N. General Assembly on April 9, 1985. These guidelines refer to

"achieving or maintaining adequate protection for their population as

consumers" and "encouraging high levels of ethical conduct for those

D engaged in the protection and distribution of goods and services

to· the

consumers". The protection that

is envisaged by the Act is, therefore,

protection for consumers

as a class. The word "users" (in plural), in the

phrase 'potential users' in Section 2(1)(o) of the Act also

gives an indica­

tion that consumers

as a class are contemplated. The definition of

E

F

'complainant' contained in Section 2(b) of the Act which includes, under

clause (ii),

any voluntary consumer association, and clauses (b) and (c) of

Section

12 which enable a complaint to be filed by any recognised con­

sumer association or one or more consumers where there are numerous

consumers, having the same interest, on behalf of or for the benefit of all

consumers so 'interested, also lend support to the

view that. the Act seeks

to protect the interests of consumers

as a class. To hold otherwise would

mean that the protection of the Act would

be available to only those who

can afford to pay and such protection would

be tlenied to those who cannot

so afford, though they are the people who need the protection more. It is

difficult to conceive that the legislature intended to achieve such a result.

Another consequence of adopting a construction, which would restrict the

G protection of the Act to persons who can afford to pay for the services

availed by them and deny such protection to those

who are not in a position

to pay for such services, would be that the standard and quality of service

rendered at an establishment would cease to

be uniform. It would be of a

higher standard and of better quality for persons

who are in a position to

H pay for such service while the standard and quality of such se.rvice would

INDIANMEDICALASSN. v. V.P.SHANTHA[S.C.AGRAWAL,J.) 141

be inferior for person who cannot afford to pay for such service and who A

avail the service without payment. Such a consequence would defeat the

object of the Act. All persons

who avail the services by doctors and

hospitals in category (iii), are required to be treated on the same footing

irrespective of the fact that some of them pay for the service and others

avail the same free of charge. Most of the doctors and hospitals work on

B

commercial lines and the expenses incurred for providing services free of

charge to patients

who are not in a position to bear the charges are met

out of the income earned

by such doctors and hospitals from services

rendered to paying patients. The Government hospitals

may not be

com­

mercial in that sense but on the overall consideration of the objectives and

the scheme of the Act it would not be possible to treat the Government

C

hospitals differently. We are of the view that in such a situation the persons

belonging to "poor

class" who are provided services free of charge are the

beneficiaries of the service which

is hired or availed of by the "paying class".

We are, therefore, of opinion that service rendered by the doctors and

hospitals falling in category

(iii) irrespective of the fact that part of the D

service is rendered free of charge, would nevertheless fall within the ambit

of the expression

"service" as defined in

Section 2(1)(o) of the Act. We are

further of the

view that persons who are rendered free service are the

"beneficiaries" and

as such come within the

eefinition of "consumer" under

Section 2(1)( d) of the Act.

In respect of the hospitals/nursing homes (Government and non~

Government) falling in category (i), i.e., where services are rendered free

of charge to everybody availing the services, it has been urged by Shri

Dhavan that even though the service rendered at the hospif.N, being free

E

of charge, does not fall within the ambit of Section 2(1)(o) of the Act in F

so far as the hospital is concerned, the said service would fall within the

ambit of Section 2(1)(o) since it is rendered by a medical officer employed

in the hospital who

is not rendering the service free of charge because the

said medical officer receives emoluments

by way of salary for employment

in the hospital. There is no merit in this contention. The medical officer

who

is employed in the hospital renders the service on behalf of the G

hospital administration and if the service, as rendered by the hospital, does

not fall within the ambit of

Section 2(1)(o), being free of charge, the same

service cannot be treated

as service under

Section 2(1)(o) for the reason

that it has been rendered

by a medical officer in the hospital who receives

salary

,'or employment in the hospital. There is no direct nexus between H

142 SUPREME COURT REPORTS (1995) SUPP. 5 S.C.R.

A the payment of the salary to the medical officer by the hospital administra­

tion and the person to whom service

is rendered. The salary that is paid

by the hospital administration to the employee medical officer cannot be

regarded as payment made on behalf of the person availing the service or

for his benefit so as to make the person availing the service a "consumer"

B

c

D

E

F

under

Section 2(1)( d) in respect of the service rendered to him. The service

rendered by the employee medical officer to such a person would, there­

fore, continue to

be service rendered free of charge and would be outside

the purview of

Section 2(1)(o).

A contention has also been raised that even in the Government

hospitals/health centres/dispensaries where services are rendered free of

charge to all the patients the provisions

of the Act shall apply because the

expenses of running the said hospitals are met by appropriation from the

Consolidated Fund which

is raised from the taxes paid by the tax payers.

We do not agree.

The essential characteristics of a tax are that (i) it

is imposed under

statutory power without the tax-payer's consent and the payment

is en­

forced by

law; (ii) it is an imposition made for public purpose without

reference to any special benefit to

be conferred

on the payer of the tax; and

(iii) it is part of the common burden, the quantum of imposition upon the

tax payer depends generally upon his capacity to pay. (See : The Commis­

sioner, Hindu Religious Endowments, Madras

v.

Sli Lakshmindra 171irtha

Swamiar of Sli Shimr Mutt, (1954] SCR 1005 at pp. 1040-41). The tax paid

by the person availing the service at a Government hospital cannot be

treated

as a consideration or charge for the service rendered at the said

hospital and such service though rendered free of charge does not cease

to

be so because the person availing the service happens to be a tax payer.

Adverting to the individual doctors employed and serving in the

hospitals,

we are of the view that such doctors working in the hospi­

tals/nursing homes/dispensaries/whether Government or private -belong­

G ing to categories (ii) and (iii) above would be covered by the definition of

"service" under the Act and

as such are amenable to the provisions of the

Act along with the management of the hospital, etc. jointly and severally.

There

may, however, be a case where a person has taken an in­

surance policy for medi-care whereunder all the charges for consultation,

H diagnosis and medical treatment are borne by the insurance company. In

INDIANMEDICALASSN.v. V.P.SHANTHA[S.C.AGRAWAL,J.] 143

such a case the person receiving the treatment is a beneficiary of the service A

which has been rendered to him by the medical practitioner, the payment

for which would be made

by the insurance company under the insurance

policy. The rendering of such service

by the medical practitioner cannot be

said to be free of charge and would, therefore, fall within the ambit of the

expression 'service' in Section 2(1)(o) of the Act.

So also there may be

. B

cases where as a part of the conditions of service the employer bears the

expense of medical treatment of the employee and his family members

dependent on him. The service rendered to him

by a medical practitioner

would not be free of charge and would, therefore, constitute service under

Section 2(1)(o).

Shri

AM. Singhvi has invited our attention to following observations

of Lord Denning M.R. in

Whitehouse v. Jordan & Anr., [1980] 1 All E.R.

650:

c

"Take heed of what has happened in the United States. 'Medical D

malpractice' cases there are very worrying, especially as they are

tried

by juries who have sympathy for the patient and none for the

doctor,

who is insured. The damages are colossal. The doctors

insure but the premiums become

very high : and these have to be

passed on in fees to the patients. Experienced practitioners are

known to have refused to treat patients for fear of being accused

E

of negligence. Young men are even deterred from entering the

profession because of the risks involved.

In the interests of all, we

must avoid such consequences in England. Not only must we avoid

excessive damages. We must

say, and say firmly, that, in a profes-

sional man, an error of judgment

is not negligent." (p.658) F

Relying on these observations learned counsel has painted a grim

picture that if medical practitioners are brought within the purview of the

Act the consequence would be huge increase in medical expenditure on

account of insurance charges

as well as tremendous increase in defensive

medicine and that medical practitioners

may refuse to attend to medical G

emergencies and there will be no safeguards against frivolous and vexatious

complaints and consequent blackmail. We

do not entertain such an ap­

prehension. In the first place, it may be stated that the aforementioned

observations of Lord Denning were made

in the context of substantive

law

governing actions for damages on the ground of negligence against medical H

144 SUPREME COiJRT REPORTS [1995] SUPP. 5 S.C.R.

A practitioners. There too the last sentence in the said observations that "an

error of judgment

is not negligent" has not been approved, in appeal, by

the House of Lords.

(See : [1981] 1 All E.R. 267). By holding that medical

practitioners fall within the purview of the Act no change

is brought about

in the substantive law governing claims for compensation on the ground of

B

c

negligence and the principles which apply to determination of such a claim

before the

Civil Court would equally apply to consumer disputes before

the Consumer Disputes Redressal Agencies under the Act. The Act only

provides an inexpensive and a speedy remedy for adjudication of such

claims.

An analytical study of tort litigation in

I~dia during the period from

1975 to 1985 made by Prof. Galanter reveals that a total number of 416 tort

cases were decided by the High Courts and this Court,

as reported in the

All India Reporter, out of which

360 cases related to claims under the

Motor Vehicles Act and cases relating to medical malpractice were only

three in number. (See: Upendra Baxi and 17wmes Paul, Mass Disasters and

Multinational Liability. The Bhopal case, pp. 214-218). One of the factors

D inhibiting such claims is the requirement regarding court fee that must be

paid

by the plaintiff

-in an action for damages on the ground of negligence.

Since no court fee is required to be paid on a complaint filed under the

Act it would be possible for persons

who have suffered injury due to

deficiency in service rendered

by medical practitioners or at hospitals/nurs-

E

F

G

H

ing homes to see redress. The conditions prevailing in India cannot, there­

fore, be compared with those in England and in the

United States.

As regards the criticism of the American malpractice litigation by the

British judiciary it has been said :

"Discussion of these important issues

is sometimes clouded by an

over-simplistic comparison between England and American

"malpractice" litigation.

Professor Miller noted in 1986 that

malpractice claims were brought

in the

United States nearly 10

times as often as in England, and that this is due to a complex

combination of factors, including cultural differences, judicial at­

titudes, differences in the legal system and the rules about costs.

She points to the deterrent value of malpractice litigation and

resent some of the criticisms of the American system expressed

by

the British judiciary. Interestingly, in 1989 the number of medical

negligence claims and the size of medical malpractice insurance

premiums started to fall in New York, California and many other

INDIANMEDICALASSN.v. V.P.SHANTHA[S.C.AGRAWAL,J.] 145

states. It is thought that this is due in part to legislation in a number A

of states limiting medical malpractice claims, an in part to im­

proved patient care as a result of litigation."

(Jackson

& Powell on Professional Liability, 3rd Edn., para 6-25,

p.

466)

Dealing with the present state of medical negligence cases in the

United Kingdom it has been observed :

B

"The legal system, then, is faced with the classic problem of doing

justice to

both parties. The fears of the medical profession must C

be taken into account while the ·legitimate claims of the patient

cannot

be ignored.

Medical negligence apart, in practice, the courts

are increasingly

reluctant to interfere in clinical matters.

What was once perceived

as a legal threat to medicine has disappeared a decade later. While

D

the court will accept the absolute right of a patient to refuse

treatment, they will, at the same time, refuse to dictate to doctors

what !reatment they should give. Indeed, the fear could

be that, if

anything, the pendulum has swung too far

in favour of

therapeutic

immunity." (p. 16) E

"It would be a mistake to think of doctors and hospitals as easy

targets for .the dissatisfied patient. -It is still very difficult to raise

an action of medical negligence in Britain; some, such as the

Association

of the Victims of Medical Accidents, would say that

it is unacceptably difficult. Not only

are there practical difficulties F

in linking the plaintiffs injury to medical treatment, but the stand-

ard of care in medical negligence cases is still effectively defined

by the profession itself. All these factors, together with the sheer

expense

of bringing legal action and the denial of legal aid to all

but the poorest, operate to inhibit medical litigation in a way in G

which the American system, with its contingency fees and its

sympathetic juries, does not.

It is difficult to single out any one cause for what increase there

has

been in the volume of medical negligence actions in the

United

Kingdom. A common explanation is that there are, quite simply, H

A

B

c

D

146 SUPREME COURT REPORTS [1995] SUPP. 5 S.C.R.

more medical accidents occurring -whether this be due to in­

creased pressure on hospital facilities, to falling standards of

professional competence or, more probably, to the ever-increasing

complexity of therapeutic and diagnostic methods." (p.

191)

"A patient who has been injured by an act of medical negligence

has suffered in a

way which is recognised by the law -and by the

public at large -

3.S deserving compensation. This loss may be

continuing and what may seem like an unduly large award may be

little more than that sum which

is required to compensate him for

such matters as loss of future earnings and the future cost of

medical or nursing care. To deny a legitimate claim or to restrict

arbitrarily the size of an award would amount to substantial injus­

tice. After all, there

is no difference in legal theory between the

plaintiff injured through medical negligence and the plaintiff in­

jured in an industrial or motor accident." (pp. 192-93)

(Mason's Law

and Medical Ethics, 4th Edn.)

We are, therefore, not persuaded to hold that in view of the conse­

quences indicated by Lord Denning in Whitehouse v. Jorden (supra) medi­

cal practitioners should be excluded from the purview of the Ac~.

E On the basis of the above discussion we arrive at the following

F

G

H

conclusions :

'

(1) Service rendered to a patient by a medical practitioner (except

where the doctor renders service free of charge to every patient

or under a contract of personal service), by

way of consultation,

diagnosis and treatment,

bot~ medicinal and surgical, would fall

within the ambit of 'service'

as defined in

Section 2(1)(o) of the

Act.

0

(2) The fact that medical practitioners belong to the medical

profession and are subject to the disciplinary control of the Medi­

cal Council of India and/or State Medical Councils constituted

under the provisions of the Indian Medical Council Act would not

exclude the services rendered by them from the ambit of the Act.

(3) A 'contract

of personal service' has to be distinguished from a

'contact

for personal services'. In the absence of a relationship of

,..J

INDIANMEDICALASSN.v. V.P.SHANTHA[S.C.AGRAWAL,J.] 147

master and servant between the patient and medical practitioner, A

the service rendered by a medical practitioner to the patient cannot

be regarded

as service rendered under a 'contract of personal

service'.

Such service is service rendered under a 'contract for

personal services' and is not covered by exclusionary clause of the

definition of 'service' contained in Section 2(1)(o) of the Act.

(4) The expression 'contract of personal service' in Section 2(1)(o)

B

of the Act cannot be confined to contracts for employment of

domestic servants only and the said expression would include the

employment of a medical officer for the purpose of rendering

medical service to the employer. The service rendered

by a medical C

officer to his employer under the contract of employment would

be outside the purview of 'service'

as defined in

Section 2(1)(o) of

the Act.

(5) Service rendered free of charge by a medical pract1t1oner

attached to a hospitaVNursing home or a medical officer employed

D

in a hospital/Nursing home where such services are rendered free

of charge to everybody, would not be "service"

as defined in

Section

2(1)( o) of the Act. The payment of a token amount for registration

purpose only at the hospital/nursing home would not alter the

position.

E

(6)

Service rendered at a non-Government hospital/Nursing home

where no charge whatsoever

is made from any person availing the

service and all patients (rich and poor) are

given free service - is

outside the purview of the expression 'service' as defined in Section

2(1)( o) of the Act. The payment of a token amount for registration F

purpose only at the hospital/Nursing home would not alter the

position.

(7) Service rendered at a non-Government hospital/Nursing home

where charges are required to be paid

by the persons availing such G

services falls within the purview of the expression 'service' as

defined in

Section 2(1)(o) of the Act.

(8) Service rendered at a non-Government hospital/Nursing home

where charges are required to be paid by persons

who are in a

position to pay and persons who cannot afford to pay are rendered

H

A

B

c

D

E

F

G

148 SUPREME COURT REPORTS [1995) SUPP. 5 S.C.R.

service free of charge would fall within the ambit of the expression

'service\as defined in Section 2(1)(o) of the Act irrespective of

the fact that the service

is rendered free of charge to persons who

are not in a position to pay for such services. Free service, would

also be

"service" and the recipient a "consumer" under the Act.

(9) Service rendered at a Government hospital/health centre/dis­

pensary where no charge whatsoever

is made from any person

availing the services.and all patients (rich and poor) are given free

service -

is outside the purview of the experssion 'service' as

defined in Section 2(1)(o) of the Act. The payment of a token

amount for registration purpose only at the hospital/nursing home

would not alter the position.

(10) Service rendered at a Government hospital/health centre/dis­

pensary where services are rendered on payment of charges and

also rendered free of charge. to

o_ther persons availing such services

would fall within the ambit

·of the expression 'service' as defined

in Section 2(1)( o) of the Act irrespective of the fact that the service

is .rendered free of charge to persons who do not pay for such

service. Free service would also be

"service" and the recipient a

"consumer" under the Act.

(11) Service rendered by a medical practitioner or hospital/nursing

home cannot be regarded as service rendered free of charge, if the

person availing the service has taken an insurance policy for

medical care whereunder the'. charges for consultation, diagnosis

and medical treatment are borne by the insurance company and

such service would

fall within the ambit of 'service' as defined in

Section 2(1)(o) of the Act.

(12) Similarly, where, as a part of the conditions of service, the

employer bears the expenses of medical treatment of an employee

and his family members dependent on him, the service rendered

to such an employee and his

family members by a medical

prac­

titioner or a hospital/nursing home would not be free of charge

and would constitute 'service' under Section 2(1)(o) of the Act.

In view of the conclusions aforementioned the judgment of the

H National Commission dated April 21, 1992 in First Appeal No. 48 of 1991

-~

INDIAN MEDICAL ASSN. v. V.P. SHANTI-IA [S.C. AGRAWAL, J.] 149

(Mis Cosmopolitan Hospitals & Anr. v. Smt. Vasantha P. Nair) and the A

judgment dated November 16, 1992 in First Appeal No. 97 of 1991 (Dr. Sr.

Louie & Anr. v. Smt. Kanno/ii Pathumma & Anr.) holding that the activity

of providing medical assistance for payment carried on by hospitals and

members of the medical profession falls within the scope of the expression

'service'

as defined in

Section 2(1)(o) of the Act and that in the event of B

any deficiency in the performance of such senii.ce the aggrieved party can

invoke the remedies provided under the Act by filing a complaint before

the Consumer Forum having jurisdiction, must be upheld and Civil Appeal

Nos. 688/93 and 689/93 and S.L.P. (Civil) Nos. 6885/92, 6950/92 and 351/93

filed against the said judgment have to be dismissed. The National Com­

mission in its judgment dated May 3, 1993 in O.P. No. 93/92 has held that

since the treatment that

was given to the deceased husband of the

com­

plainant in the nursing home belonging to the opposite party was totally

c

free of any charge it does not constitute 'service' as defined in Section

2(1)(o) of the Act. The Tribunal has not considered the question whether

services are rendered free of charge· to all the patients availing services in D

the said nursing home or such services are rendered free of charge only to

some

of the patients and are rendered on payment of charges to the rest

of the patients.

Unless it is found that the services are rendered free of

charge to all the patients availing services at the nursing home, it cannot

be held that the said services do not constitute 'service'

as defined in E

Section 2(1)(o) of the Act. Civil Appeal No. 254/94 has, therefore, to be

~lowed and the matter has to be remitted to the National Commission for

!'onsideration in the light of this judgment. The judgment of the Madras

High Court in

Dr.

C.S. Subramaniam v. Kumaraswamy & Anr. (supra),

holding that the services rendered to a patient by a medical practitioner or

F

a hospital by way of diagnosis and treatment, both medicinal and surgical,

would not come within the definition of 'service' in

Section 2(1)(o) and a

patient

who undergoes treatment under a medical practitioner or a hospital

by

way of diagnosis and treatment, both medicinal and surgical, cannot be

considered to be a 'consumer' within the meaning of

Section 2(1)( d) of the

Act cannot

be sustained and Civil Appeals Nos. 4664-65/94 as well as Civil G

Appeals arising out of

S.L.P. (Civil) Nos. 21755/94 and 18445-73/94 have

to be allowed and the said judgment

of the Madras High Court has to be

set aside and the writ petitions disposed of by the said judgment have to

be dismissed. The judgment of the National Commission dated December

15, 1989 in First Appeal No. 2 of 1989 holding that services rendered in H

150 SUPREME COURT REPORTS [1995] SUPP. 5 S.C.R.

A Government hospitals are not covered by the expression 'service' as

defined

in

Section 2(1)(o) of the Act cannot be upheld in its entirety but

can be upheld only to the extent as indicated in conclusion No. 9. Civil

Appeal arising out of S.L.P. (Civil) No. 18497/93 has to be allowed and the

complaint has to

be remitted to the

State Commission for consideration in

B

the light of this judgment. S.L.P. (Civil) Nos. 21348-21349/93 have been

filed against the judgment "of the Kerala High Court dated October 6, 1993

in Writ Petitions filed on behalf of the hospitals claiming that the services

rendered by the hospitals do not fall within the ambit of Section 2(1)(o) of

the Act. The said Writ Petitions were dismissed by the High Court having

regard to the decision of.the National Commission in Cosmopolitan Hospi-

C tal (supra) and the pendency of appeal against the said decision before this

Court. Since the decision of the National Commission in Cosmopolitan

Hospital

(supra) is being upheld by us,

S.L.P. (Civil) Nos. 21348-21349/93

have to

be dismissed.

D

E

F

Writ Petition (Civil) No. 16/94 has been filed by the Cosmopolitan

Hospital (P)

Ltd. and Dr. K. Venugopalan Nair who have also filed

S.L.P.

(Civil) Nos. 6885/92 and 6950/92 against the judgment of the National

Commission

dated April 21, 1992. In the Writ Petition, the said writ

petitioners have sought a declaration that

the provisions of the Act are not

applicable to alleged deficiency in medical service and that if the said

provisions

are held to be applicable to the medical profession and hospitals

the same may be declared as unconstitutional as being violative of

Articltl

14 and 19(1)(g) of the Constitution. As regards the first part of the prayer

regarding

the applicability of the provisions of the Act to the alleged

deficiency in medical service, we have already considered the

matter and

found that the

provisiOns of the Act are applicable to deficiency in service

rendered by medical practitioners and hospitals and for the same reason

the said prayer cannot be allowed. The other prayer sought for in the Writ

Petition regarding the validity of the provisions of the Act is also without

any substance.

The ground on which the writ petitioners are seeking to

assail the validity of the provisions of the Act is that the composition of the

G Consumer Disputes redressal Agencies and the procedure to be followed

by

the said Agencies is such that it is not suitable for adjudication of the

complex issues arising for consideration. We have already considered this

grievance

urged on behalf of the medical profession and have found that

the composition of the Consumer Disputes Redressal Agencies as well as

H the procedure to be followed by them does not preclude a proper adjudica-

INDIANMEDICALASSN. v. V.P.SHANTHA[S.C.AGRAWAL,J.] 151

tion of the consumer disputes arising out

of complaints relating to deficien- A

cy in service rendered by medical practitioners and hospitals. In our

opinion, no case is made out that the Act suffers from the vice of arbitrari-

ness or unreasonableness so as to

be violative of Articles 14 and 19(1)(g)

of the Constitution. There is, therefore, no merit in the Writ Petition and

it has to be dismissed.

In the result Civil Appeals Nos. 688/93 and 689/93, and S.L.P. (Civil)

Nos. 6885/92 and

6950/92 are dismissed. The State Commission will deal

with the complaints in the light of this judgment. S.L.P. (Civil) Nos. 351/93

B

and 21348-21349/93 and Writ Petition (Civil) No. 16/94 are also dismissed.

Civil Appeal No. 254/94 is allowed and the judgment

of the National C

Commission dated May 3, 1993 is set aside and

O.P. No. 93/92 is remitted

to the National Commission for consideration in the light of this judgment.

Civil Appeals Nos. 4664-65/94 and Civil Appeals arising out

of S.L.P.

(Civil) Nos. 21755/94

and 18445-73/94 are allowed and the judgment of the

Madras High Court dated February

17, 1994 is set aside and the writ

petitions disposed

of by the said judgment of the High Court are dismissed D

and as a result the Consumer Disputes Redressal Agencies would deal with

the complaint petitions covered by those writ petitions in the light of this

judgment. Civil Appeal arising out of S.L.P. (Civil) No. 18497/93 is also

allowed

and Complaint Case No. 1 of 1988 is remitted to the

State

Commission for consideration in the light of this judgment. No order as to E

costs.

G.N. Appeal allowed.