Hospitals Which Provide Free Services To Some Patients But Charge A Bulk Of Others Fall Under Consumer Protection Act: SC [Read Judgment]

The Supreme Court has observed that it is only where a hospital provides medical services free of charge across the board to all patients that it would stand outside the purview of the Consumer Protection Act.

A hospital which renders free services to a certain category of patients, while providing services which are charged to the bulk of others would not lie outside the purview of the jurisdiction of the consumer fora, the bench comprising of Justices DY Chandrachud, Indu Malhotra and KM Joseph said.

In this case, the complainant alleged medical negligence against Sarvodaya Hospital and Safdarjung Hospital. The District Forum dismissed this complaint against both these hospitals. As regards Safdarjung Hospital, the complaint was held not to be maintainable on the ground that treatment had been afforded free of cost to the patient. The State Commission, though upheld the non-maintainability of the complaint as against Safdarjung Hospital, found that Sarvodaya Hospital was guilty of medical negligence and directed it to pay a sum of Rs 2,00,000 as compensation.

Allowing the revision petition filed by Sarvodaya Hospital, the National Consumer Disputes Redressal Commission that the finding of the SCDRC that Safdarjung Hospital was not amenable to the jurisdiction of the consumer fora was contrary to the decision of the Supreme Court in Indian Medical Association v V P Shantha 1995 SCC (6) 651 It held that though the complainant had not filed a revision against the order of the SCDRC specifically holding that Safdarjung Hospital was not amenable to the jurisdiction of the consumer fora, he was not precluded from challenging a finding which was adverse to him in the revision petition. On these facts, the NCDRC sustained the finding of medical negligence against Safdarjung Hospital and directed it to pay compensation quantified at Rs 2 lakhs.

Referring to Section 2(1) (o) of the Act and also the judgment in Indian Medical Association, the court said:

"Interpreting the above provision, a three judge Bench of this Court held that it is only where a hospital provides medical services free of charge across the board to all patients that it would stand outside the purview of the Act. The Court held that a hospital which renders free services to a certain category of patients, while providing for services which are charged to the bulk of others would not lie outside the purview of the jurisdiction of the consumer fora.

It noted the following observations made in Indian Medical Association:

""43...The third category of doctors and hospitals do provide free service to some of the patients belonging to the poor class but the bulk of the service is rendered to the patients on payment basis. The expenses incurred for providing free service are met out of the income from the service rendered to the paying patients. The service rendered by such doctors and hospitals to paying patients undoubtedly fall within the ambit of Section 2(1) (o) of the Act."

But the court noted that there is no factual material placed on the record to enable it to decide on whether the Hospital satisfies the tests enunciated in Indian Medical Association.

Therefore, while dismissing the appeal, the court left open the issue as to whether 8 Safdarjung Hospital would be governed by the provisions of the Act, more particularly, having regard to the provisions of Section 2(1)(o), to be decided in an appropriate case. The court also left open the issue whether the NCDRC can at all exercise in revisional proceedings the powers which have been conferred on an appellate court under Order XLI Rule 33 of the Code of Civil Procedure 1908?  

Note: Though the applicable law in this case was Consumer Protection Act,1986, the new Consumer Protection Act,2019, has adapted the same definition for the term 'service'.

Case details

Case name: Union of India vs. N K Srivasta

Case no.: Civil Appeal No 2823 of 2020

Coram:Justices DY Chandrachud, Indu Malhotra and KM Joseph 

Counsel: Additional Solicitor General R S Suri, Advocate Dinesh Kumar

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