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Case Analysis: VP Shanta v/s Indian Medical Association

In 1995, the Supreme Court delivered a historic decision in Indian Medical Association v VP Shantha which brought the medical profession within the ambit of a ‘service’ as defined in Section 2(1)(o) of the Consumer Protection Act, 1986, and clarified earlier conflicting decisions regarding this issue given by various High Courts and Consumer Forums.

This decision redefined the relationship between patients and medical professionals as contractual and recognized the right of patients to file a complaint under the Consumer Protection Act for injuries sustained in the course of medical treatment. Patients were provided with an alternative, inexpensive and speedy remedy for adjudication of medical negligence claims.

Indian Medical Association v/s Respondent – V.P. Shanta & Ors - Supreme Court Of India
Bench/Judges – Justice S.C. Agrawal , Justice Kuldip Singh , Justice B.L. Hansaria - Citation- 1996 AIR 550, 1995 SCC (6) 651 - Date of Judgement- 13 November 1995

Issues Involved
Whether a medical practitioner, hospital, or nursing home can be regarded as rendering ‘service’ under Section 2(1)(o) of the Consumer Protection Act, 1986?
Under what circumstances can the service render at a hospital/nursing be regarded as ‘service’ under Section 2(1)(o) of the Consumer Protection Act, 1986?

Brief Facts of the case
A series of decisions led to confusion and contradictions in the judiciary regarding the scope and application of the Act in cases of medical negligence.
In Dr. A.S. Chandra v. Union of India, a Division Bench of the Andhra Pradesh High Court held that service rendered for consideration by private medical practitioners, private hospitals, and nursing homes is ‘service’ for Section 2(1)(d) of the Act and the persons availing such services are ‘consumers’ within the meaning of Section 2(1)(d) of the Act.

A different view was taken in the case of Dr.C.S. Subramanian v. Kumarasamy & Anr., where a Division Bench of the Madras High Court held that the 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 be a ‘service’ and therefore a patient cannot be considered to be a `consumer’ within the meaning of the Act. It, however, recognized paramedical services as falling under the ambit of the definition of ‘service’.

Conflicting approaches were taken in various judgments of the National Commission. In its judgment and order dated December 15, 1989, it held that persons who avail themselves of the facility of medical treatment in Government hospitals are not consumers and since the payment of taxes by the public would not constitute ‘consideration’, the service would essentially be rendered free of charge falling in the exclusionary part of the definition of ‘service’ under the Act. In its judgment dated April 21, 1992, the National Commission 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’.

Owing to the lack of uniformity in judicial interpretation a series of appeals, special leave petitions, and the Writ Petitions were filed against the contradictory decisions of the High Courts and subordinate courts. These were heard together and decided by the Supreme Court in the present case of Indian Medical Association v VP Shantha.

Arguments Advanced of the Case
Issue 1. Whether a medical practitioner, hospital, or nursing home can be regarded as rendering ‘service’ under Section 2(1)(o) of the Consumer Protection Act, 1986?
The Supreme Court keeping in mind the wide amplitude of the definition of `service’ in the main part of Section 2(1)(o), held in the affirmative.

It rejected the argument put forth by the petitioners contending that services rendered by a person belonging to a ‘profession’ would not fall within the ambit of the Act. Even though medical practitioners are governed by the Indian Medical Council Act and are subject to the disciplinary control of Medical Councils of India, they are not immune from a claim for damages on the ground of negligence.

The Court was unable to agree with the submission that a determination about deficiency in medical service for Section 2(1)(g) cannot be judged based on any fixed norms. It observed that a deficiency in service may be due to obvious faults attributable to medical practitioners which can be easily established such as removal of the wrong limb or the performance of an operation on the wrong patient, etc. The Court held that a determination about deficiency in service is to be made by applying the Bolam test as laid down in the English case of Bolam v Friern Hospital Management Committee for tortious action for damages for negligence.

The Bolam test provides that a medical practitioner must bring to his task a reasonable degree of skill and knowledge and must exercise a reasonable degree of care. When consulted by a patient, he owes a duty of care in deciding whether to undertake the case, in deciding what treatment, and in the administration of that treatment. A breach of any of these duties gives a right of action for negligence to the patient.

Issue 2. Under what circumstances can the service render at a hospital/nursing be regarded as ‘service’ under Section 2(1)(o) of the Consumer Protection Act, 1986?
Holding that the definition of ‘service’ is wide enough to include services rendered by medical practitioners, the Supreme Court proceeded to consider the exclusionary part of Section 2(1)(o). The exclusionary part excludes services rendered (i) free of charge; or (ii) under a contract of personal service.

Concerning (i), it held that doctors and hospitals/nursing homes who render service without any charge to every person availing the service would not fall within the ambit of the Act. This would fall in the exclusionary part of the definition of service. However, medical services rendered on payment of consideration are included under Section 2(1)(o).

The Court further considered a situation where free medical services are provided to only those persons who cannot afford to pay off them, and held that such services would undoubtedly fall within the ambit of the Act since these expenses are met out of the income received from paying patients.

Concerning (ii), the court reiterated the distinction between a ‘contract of service’ and a ‘contract for service’. The fundamental difference is that in the former, the employer enjoys a degree of control over the work of the employee whereas in the latter, the independent contractor so employed is not subject to the control of the employer and is free to exercise discretion. The court held that the contract between the medical practitioner and his patient cannot be treated as a contract of personal service as a master-servant relations are absent. It would be a contract for services and therefore, will not be covered by the exclusionary part.

The Court finally concluded that 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, both medicinal and surgical, would fall within the ambit of ‘service’ as defined in Section 2(1) (o) of the Act.

Law applied
Section 2 (1) (0) and Section 2 (1) (d) of the Consumer Protection Act , 1986.
Section 2 (1) (0) defines service.
service means service of any description which is made available to potential 19 [users and includes, but not limited to, the provision of] facilities in connection with banking, financing insurance, transport, processing, supply of electrical or other energy, board or lodging or both, [housing construction,] entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service; "spurious goods and services" mean such goods and services which are claimed to be genuine but they are actually not so.

Section 2 (1) (d) defines who is consumer.
consumer means any person who:
  1. buys any goods 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 user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment, when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or
     
  2. 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 services 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 but does not include a person who avails of such services for any commercial purpose.

Ratio Decidendi

The ratio decendi of the case is medical negligence. Medical negligence is basically the misconduct by medical practitioner by not providing enough care resulting in breach of their duties and harming the patients which are consumers. They also argued whether this was the case of negligence in Torts or IPC, later on it was decided that any negligence in medical field would be determined under CPA, 1986. The Supreme court also stated that a medical practitioner, nursing home or a hospital can be regarded as rendering service under CPA, 1986.

Analysis of the Case
Due to the increasing number of medical negligence cases, numerous complaints were filed before the consumer courts seeking compensation under the Consumer Protection Act, 1986. There was ambiguity on the issue of whether doctors, hospitals, and medical practitioners fall within the ambit of ‘service’ as defined in Section 2(1)(o) of the Act, thereby recognizing patients as ‘consumers’ and giving them the right to approach the consumer courts to seek compensation.

Section 2(1) (o) of the Act defines ‘service’ as:
service of any description which is made available to potential (users and includes the provision of facilities in connection with banking, financing insurance, transport, processing, the supply of electrical or other energy, board or lodging or both, housing construction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service.

Neither does the definition expressly include or does it exclude medical services. In the exclusionary part of the definition, an interpretation could be adopted which brought medical services not rendered free of charge under the ambit of ‘service’. Another question to be considered was whether such services are provided under a ‘contract of personal service’ to be excluded or not.

These issues were subject to consideration in a series of decisions delivered by various High Courts and National Consumer Courts, which gave contrasting and conflicting interpretations. Many Writ Petitions and Special Leave Petitions were then filed before the Supreme Court against these decisions and judgments.

In 1995, the Supreme Court delivered a historic decision in the case of Indian Medical Association v VP Shantha which brought the medical profession within the ambit of a ‘service’ as defined in Section 2(1)(o) of the Consumer Protection Act, 1986 and clarified the earlier decisions.

As a result of this judgement , medical profession has been brought under the Section 2(1) (0) 0f CPA , 1986 and also , it has included the following categories of doctors/hospitals under this Section:
  1. All medical / dental practitioners doing independent medical / dental practice unless rendering only free service.
  2. All hospitals having free as well as paying patients and all the paying free category patients receiving treatment in such hospitals.
  3. Medical / Dental practitioners and hospitals paid by an insurance firm for the treatment of a client or an employment for that of an employee.
This landmark decision brought in a significant interpretation of medical negligence liability, by subjecting the medical profession to the Consumer Protection Act. Patients’ rights were recognized through the conferring of consumer status, allowing them to file complaints in cases of deficiency in rendering medical services.

However, this decision has received criticism from the community of medical practitioners for making the medical profession vulnerable to excessive suits, many of which are filed to harass doctors or to evade the payment of medical bills. While it is important to protect the integrity of this profession, the growing cases of medical negligence are a matter of concern. The interpretation of ‘service’ by the Supreme Court seeks to safeguards the interest and welfare of patients, which is paramount.

References:
  • Indian Kanoon https://indiankanoon.org/
  • Talha Abdul Rahman, Medical negligence and doctors’ liability, Indian Journal of Medical Ethics https://ijme.in/articles/medical-negligence-and-doctors-liability/?galley=print#:~:text=In%201995%2C%20the%20Supreme%20Court,Act%2C%201986%20(5).&text=They%20are%20contracts%20for%20service,sued%20in%20Consumer%20Protection%20Courts.
  • Joga Rao S V. Medical negligence liability under the consumer protection act: A review of judicial perspective. Indian J Urol 2009 http://www.indianjurol.com/article.asp?issn=0970-1591;year=2009;volume=25;issue=3;spage=361;epage=371;aulast=Joga

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