Supreme Court of India
M/S SHETH M L VADUWALA EYE HOSPITAL versus ORIENTAL INSURANCE COMPANY LIMITED AND OTHERS on 11 December 2021
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SUPREME COURT REPORTS
[2021] 12 S.C.R.
AM/S SHETH M L VADUWALA EYE HOSPITAL
v.
ORIENTAL INSURANCE COMPANY LIMITED AND OTHERS
(Civil Appeal Nos. 7611-7634 of 2021)
BDECEMBER 11, 2021
[DR. DHANANJAYA Y CHANDRACHUD ANDA. S. BOPANNA, JJ.]
Consumer Protection: Medical negligence – Liability ofHospital – Appellant a charitable hospital conducted an eye campCand performed cataract surgeries on 112 patients – Patientscomplained of negligence in performance of surgeries by use ofnon-sterilized appliances, contaminated medicines and lenses ofan inferior quality resulting in eye infections and loss of vision –State Government appointed a Committee to enquire into the causesDwhich led, inter alia, to several patients having lost their eye-sight– Consumer complaints instituted by consumer organization againstthe hospital and the insurer – Doctors had insurance policies tocover claims of professional negligence – Doctors were not partiesto the proceedings before the District Forum though affidavits werefiled by them – District Forum held that according to the report ofEthe Expert Committee, negligence of the doctors and the staff of theappellant hospital was established and passed an award ofcompensation – District Forum held that the liability of both thehospital and the insurer would be joint and several, but the awardwould be enforced only against the insurer – Award was notFchallenged by Hospital – State Commission dismissed the insurer’sappeal – NCDRC set aside order holding the insurer liable – It,however, clarified that this would not affect the directions fasteningliability on the Hospital – In arriving at this conclusion, the NCDRCnoted that the liability has been fastened on the Hospital on thebasis of six professional indemnity policies obtained by the doctors,Gthough their business addresses were shown to be Vaduwala EyeHospital – NCDRC held that this fact could not by itself fasten theliability on the insurer, particularly in the absence of any specificallegation of negligence against any of the doctors – Instant appealsfiled by Hospital – Held: The insurance policies were obtained byHthe doctors – These were professional indemnity insurance policies COMPANY LTD.
which would cover a claim for professional negligence which wasmade against the doctors – Admittedly, finding of negligence, as itappears from the order of the State Commission, is specificallyagainst the hospital – The finding is that the hospital and its staffwere negligent in the conduct of the cataract surgeries – The specificfinding is that the equipment which was used were not properlysterilized, the staff was not properly trained and the medicines whichwere administered were not of the requisite quality and werecontaminated – The hospital was not the beneficiary of the insurancepolicies which were obtained by the doctors to cover the dischargeof their own professional obligations – A joint and several liabilitycould not have been fastened on the insurer under insurance policieswhich were not obtained by the hospital – No interference with theorder of NCDRC called for.
Dismissing the appeals, the Court
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Conclusion
Dismissing the appeals, the Court
HELD: Admittedly, the finding of negligence, as it appearsfrom the order of the State Commission, is specifically againstthe hospital. The finding is that the hospital and its staff werenegligent in the conduct of the cataract surgeries. The specificfinding is that the equipment which was used were not properlysterilized, the staff was not properly trained and the medicineswhich were administered were not of the requisite quality andwere contaminated. In this backdrop, the issue is whether thehospital could have claimed to be indemnified by the insurer. Thehospital was not the beneficiary of the insurance policies whichwere obtained by the doctors to cover the discharge of their ownprofessional obligations. There was a manifest error on the partof the District Forum as well as the State Commission. TheNCDRC had a valid basis to exercise its revisional jurisdiction.While it is true that the NCDRC has interfered in the exercise ofits revisional jurisdiction, it was justified in doing so since a jointand several liability could not have been fastened on the insurerunder insurance policies which were not obtained by the hospital.The submission of the hospital that it was the beneficiary of thoseinsurance policies does not evidently have any basis. [Paras 14,15][122-A-E]
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ACIVIL APPELLATE JURISDICTION: Civil Appeal Nos.7611-7634 of 2021.
From the Judgment and Order dated 26.02.2014 of the NationalConsumer Disputes Redressal Commission, New Delhi in RevisionPetition No.2143 of 2013 to Revision Petition No.2166 of 2013.
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Manoj Swarup, Sr. Adv., Shakti Kanta Pattanaik, Tarun KumarTiwari, Santosh Kumar, Dhruv Kiran Dave, Advs. for the Appellant.
Ms. Amrreeta Swaarup, Adv. for the Respondents.
The Judgment of the Court was delivered by CDR. DHANANJAYA Y CHANDRACHUD, J.
1. Leave granted.
2. These appeals arise from a judgment of the National ConsumerDisputes Redressal Commission[1] dated 26 February 2014.
D3. The appellant is a charitable hospital registered under theBombay Public Trust Act 1961. Between 21 and 23 June 2000, theappellant conducted an eye camp where cataract surgeries wereperformed on 112 patients. The patients complained of negligence in theperformance of the surgeries by the use of non-sterilized appliances,contaminated medicines and lenses of an inferior quality resulting in eyeEinfections and loss of vision. The State Government appointed aCommittee to enquire into the causes which led, inter alia, to severalpatients having lost their eye-sight.
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4. Meanwhile, twenty-four complaints were filed by a consumerorganization, Jagrut Nagrik Trust. The consumer complaints wereFinstituted against the hospital and the insurance company. The insurancepolicies were obtained by the doctors from the insurer to cover claims ofprofessional negligence. The doctors were not parties to the proceedingsbefore the District Consumer Disputes Redressal Forum, Vadodara[2],though affidavits were filed by them.
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5. The District Forum by its order dated 19 February 2010 awardedan amount of Rs 1,70,000 as compensation to each of the twenty-fourcomplainants together with a refund of registration fees (Rs 250), 1 “NCDRC“H2 “District Forum“”
compensation for mental agony (Rs 3000), costs (Rs 1500) and interestat the rate of 9% per annum. In arriving at its conclusion, the DistrictForum relied on the report of the Enquiry Committee appointed by theState Government, which had found that there was negligence. An extractof the findings of the Enquiry Committee as recorded by the DistrictForum are below:
The expert committee constituted by the Government of Gujarathas further concluded that there was total lack of asepticprecaution on the doctors and the OT staff. The operation theatreassistants were not qualified. There was lack of proper sterilizationof instruments etc. used in operations. In the machines, OT tablesinstruments etc. […] bacteria was found and the damage to theeyes of the patients was because of this bacteria […] was alsofound on Phacomachine. There was no proper fumigation andeven after fumigation bacteria was found in OT and the operationtable in O.T. The O.T staff was unqualified and it was notsupervised by doctors. There were serious lapses in Autoclave.The patients ought to have been examined on the next day ofoperation. The Committee has held responsible the doctors andthe staff for the damage to the eyes of the patient.”
6. The District Forum further rejected the argument of the insurerthat no liability could accrue to it as the doctors (who had taken theinsurance policy) had not been made parties to the proceedings and inany case, were not negligent. The Forum held that according to thereport of the Expert Committee, negligence of the doctors and the staffof the appellant hospital had been established. Thus, the District Forumheld that the liability of both the hospital and the insurer would be jointand several, but the award would be enforced only against the insurer.The award was not challenged by the hospital.
7. The insurer filed appeals against the order of the District Forumbefore the State Consumer Disputes Redressal Commission, Gujarat[3].By its judgment dated 30 November 2012, the State Commission dismissedthe appeals. For convenience of reference, the findings which werearrived at by the State Commission are extracted below:
“In connection with the aforesaid undoubted facts, it is clear thatthe cataract operation camp which was organized by the defendant 3 “State Commission”
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Ano.3 Hospital, in it the staff which was appointed for the help ofDoctors, that staff being untrained staff, could not properly sterilizethe equipments used for the purpose of operation. Moreover, themedicines which were used, were also adulterated and the patientswere examined with the Non Standard Lens. Moreover, asSidonomus (sic) lnfection was found in the operation theatre, theBpatients whose eyes were infected after the operation, the pupilof that eye were removed, otherwise there was fear of infectionin another eye also. In these circumstances, the pupils of eyes ofall the aforesaid patients were removed. The incident beingoccurred in such a huge proportion, the State Government took itsCnote and framed inquiry committee. In it the expert doctors inquiredregarding the incident, confirmed the fact of all negligence in theirreport. The Doctors who performed the surgery were questionedand cross examination of many doctors is also made by theprosecution. Therefore, it is proved that as the staff helping theDoctors for performing the cataract operation was untrained, theDcare which should have been taken was not taken, the aforesaidapplicants had to lose their eyes and in that manner the defendantno.3 Charitable Hospital, after accepting the charge of Rs.250/-towards treatment from every patient, the care which should havebeen taken was not taken and the loss of eye is caused on accountEof negligence of the Hospital and the circumstances had arrivedthat some patients had to lose their lives. As the principle of [resipsa loquitur] can be applied to such case “Circumstances speakfor themselves”. On its basis, the Consumer Forum has come tothe conclusion that the behavior of negligence is proved towardsthe patients. The Consumer Commission herein is convinced withFthat.”
8. A revision was filed before the NCDRC by the insurer. TheNCDRC by its impugned order dated 26 February 2014, set aside theorders of the consumer fora holding the insurer liable. It, however, clarifiedthat this would not affect the directions fastening liability on the hospital.GIn arriving at this conclusion, the NCDRC noted that the liability hasbeen fastened on the hospital on the basis of six professional indemnitypolicies obtained by the doctors, though their business addresses wereshown to be Vaduwala Eye Hospital. The NCDRC held that this factcould not by itself fasten the liability on the insurer, particularly in theHabsence of any specific allegation of negligence against any of the doctors.
9. Assailing the judgment of the NCDRC, the hospital is in appeal.During the pendency of the proceedings, an interim order was passedby this Court on 20 February 2015. The order reads as follows:
“On condition of depositing the amount of Rs.42,00,000/- (RupeesForty Two Lakhs) by the petitioner before the District ConsumerForum, Vadodara within four weeks, the proceedings for executionof the order dated 19.2.2010 passed in Consumer ComplaintNos.307/2000 to 309/2000, 311/2000 to 326/2000, 356/2000 and358/2000 to 360/2000 passed by the District Consumer Forum,Vadodara shall remain stayed. On such deposit, the claimantswould be entitled to withdraw the same.”
10. In pursuance of the above order, the appellant has depositedan amount of Rs 42 lakhs before the District Forum and the amount hasbeen withdrawn by the claimants.
11. Mr Manoj Swarup, learned senior counsel has appeared onbehalf of the appellant while Ms Amrreeta Swaarup, learned counselappears on behalf of the first respondent.
12. Mr Manoj Swarup, learned senior counsel has made an earnesteffort to challenge the order of the NCDRC while submitting that thehospital was entitled to lay a claim against the insurer as a beneficiary ofthe insurance policies and, consequently, the NCDRC was not justifiedin reversing the findings of the District Forum and the State Commissionin revision. Learned senior counsel has principally relied upon theobservation of the NCDRC that there was no finding of negligence onthe part of the doctors and has assailed it on the ground that the doctorshad participated in the proceedings by filing affidavits in which event, itwas open to the District Forum to fasten joint and several liability on thehospital as well as the insurer.
13. On the other hand, it has been submitted on behalf of the firstrespondent that there was no privity of contract between the insurer andthe hospital and the professional indemnity policies were obtained by thedoctors. There was no insurance cover in respect of the hospital or thestaff. Hence, it has been submitted that the NCDRC was justified inentertaining the revision and directing that the insurer would not be liableto indemnify the hospital.
14. From the record, it emerges that the insurance policies wereobtained by the doctors. These were professional indemnity insurance AB
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Apolicies which would cover a claim for professional negligence whichwas made against the doctors. Admittedly, the finding of negligence, asit appears from the order of the State Commission, is specifically againstthe hospital. The finding is that the hospital and its staff were negligentin the conduct of the cataract surgeries. The specific finding is that theequipment which was used were not properly sterilized, the staff wasBnot properly trained and the medicines which were administered werenot of the requisite quality and were contaminated. In this backdrop, theissue is whether the hospital could have claimed to be indemnified by theinsurer. The hospital was not the beneficiary of the insurance policieswhich were obtained by the doctors to cover the discharge of their ownCprofessional obligations. There was a manifest error on the part of theDistrict Forum as well as the State Commission. The NCDRC had avalid basis to exercise its revisional jurisdiction.
15. In this backdrop, and for the above reasons, no fault can befound with the ultimate findings of the NCDRC. While it is true that theDNCDRC has interfered in the exercise of its revisional jurisdiction, itwas justified in doing so since a joint and several liability could not havebeen fastened on the insurer under insurance policies which were notobtained by the hospital. The submission of the hospital that it was thebeneficiary of those insurance policies does not evidently have any basis.
E16. In the circumstances, we see no reason to entertain the appeals.However, all that needs to be clarified is that the dismissal of the appealsshall not come in the way of the appellant working out its equities orrights in law by adopting suitable proceedings against any other persons,who according to them may also be negligent in the discharge of theirduties, on which this Court makes no observation or finding of factFwhatsoever. Since the amount was deposited in pursuance of the interimorder and has been permitted to be withdrawn by the patients, it alsoneeds to be clarified that this aspect shall stand confirmed while disposingof the appeals. If any amount has not been disbursed to the originalclaimants, this shall be done expeditiously.G17. The appeals are disposed of in the above terms.
18. Pending applications, if any, stand disposed of.
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Devika Gujral