I] CPA 1 ANDHRA LAW TIMES - Gulf Oil · 3. Submission advanced by Mrs. Rachna Joshi Issar, Smt. C.K. Sucharita and Shri Atul Nanda for petitioners in three batches of revision petitions

I] CPA 1

ANDHRA LAW TIMESVol. CXXXIII Consumer Protection Act Cases [2005 (1)

2005 (1) ALT 1 (NC) (CPA)NATIONAL CONSUMER DISPUTES

REDRESSAL COMMISSION, NEW DELHI

Mr. K.S. GUPTA, PRESIDING MEMBERand Mr. B.K. TAIMNI, MEMBER

Revision Petition No. 2546 of 2003 and Batch -Decided on 24-9-2004.

Punjab Urban Development Authorityand another

v.

S. Gurjinder Singh and another

CONSUMER PROTECTION ACT, 1986,Sec. 24-A — Limitation — Complaints befiled before consumer fora within twoyears of date of accrual of cause of action— Delay beyond two years may becondoned in the discretion of fora ifcomplainant is able to satisfy that he hadsufficient cause for not filing thecomplaint within two years — Sufficiencyof cause for delay is to be examined andreasons be recorded for condoning/notcondoning the delay in question — Ascomplaint is a original case, condoningof delay be taken seriously —Condonation of delay in filing complaintsby District Forum on oral prayer duringthe course of arguments — Not legal —Complaints filed beyond the period oftwo years without making applicationsfor condonation of delay — Held asbarred by limitation.

CASES REFERRED:1. Premji Bhai Parmar and others v. D.D.A. and

others: 1980 (2) SCR 704. (Para 3)2. Bareilly Development Authority and another v.

Ajai Pal Singh and others: (1989) 2 SCC 116.(Para 3)

3. D.D.A. v. Pushpinder Kumar Jain:1994 Supp. (3) SCC 494. (Para 3)

Smt. Rachna Joshi Issar and Shri Atul Nand,Advocates for the Petitioners.

Smt. C.K. Sucharita, Advocate for theRespondents.

ORDER(Per Mr. K.S. Gupta, Presiding Member)

These 65 revision petitions filed byPunjab Urban Planning and DevelopmentAuthority and its Estate Officer, raisecommon issues and, therefore, we proposeto decide them by this common order. Theserevisions arise out of two orders dated29-4-2003 and 5-6-2003 of ConsumerDisputes Redressal Commission UnionTerritory, Chandigarh. By the order dated29-4-2003, State Commission allowed 42appeals filed against the order dated23-12-2002 of a District Forum whereby 76complaints were dismissed. StateCommission allowed 23 appeals filedagainst the order dated 4-2-2003 of a DistrictForum dismissing 49 complaints by the orderdated 5-6-2003.

2. Petitioner No. 1 floated a scheme forallotment of 784 four-storeyed MIG(S) flatssituated at Sector No. 70, Mohali. Schemewas to close on 14-9-1996. Tentative price ofeach flat was fixed at Rs. 6,30,000/- whichwas to be revised subject to enhancement/decrease in cost of construction. On beingallotted specific flats, in the demand letters,the final price was determined asRs.7,60,000/- per flat. On making paymentof this amount, the allottees were handedover possession of respective flats by thepetitioners. Thereafter complaints were filedby the original allottees/transferees seekingrefund of the amount paid over and abovethe said tentative price, interest @ 12% p.a.on the deposited amounts for delay indelivering possession of the flats and cost.

2 CPA Andhra Law Times Reports [2005

Complaints were resisted by filing writtenversions by the petitioners on a variety ofgrounds which need not be reiterated fordeciding these revision petitions includingthat of limitation. In terms of abovesaidorders dated 29-4-2003 and 5-6-2003, theState Commission directed petitioner No.1 -Authority to charge amount ofRs.6,30,000/- i.e. the advertised price pay,interest at 12% p.a. for the period of delay inhanding over possession of flats and refundthe excess amount charged with cost.

3. Submission advanced by Mrs. RachnaJoshi Issar, Smt. C.K. Sucharita and ShriAtul Nanda for petitioners in three batches ofrevision petitions was mainly two-fold. First,all the complaints out of which these revisionpetitions arise except complaint caseNo. 537 of 2002 filed by Iqbal Singh, wereinstituted much beyond period of two yearsof the accrual of cause of action and noapplications under Section 24-A ofConsumer Protection Act, 1986 (for short theAct) seeking condonation of delay inquestion were filed. Plea of complainantsbeing barred by time was specifically raisedin the written versions filed by the petitioners.District Forum, however, condoned delay onthe oral prayer made during the course ofarguments and that too on insufficientground. While opposing appeals, plea oflimitation was also raised by the counsels ofthe petitioners before State Commission butthe Commission did not consider that pleawhile passing aforesaid orders dated29-4-2003 and 5-6-2003. In support of sucha plea having not been raised in appeals,petitioner No.1-Authority has filed twoaffidavits of Shri Balwinder Singh, Advocateand one of Shri G.S. Arshi all dated6-8-2004. Second, the State Commissionacted erroneously in directing petitioner No.1to charge only amount of Rs. 6,30,000/-(tentative price) against the final price ofRs. 7,60,000/- per flat without consideringthe ratio particularly in the decisions inPremji Bhai Parmar and others v. D.D.A. and

others1, Bareilly Development Authority andanother v. Ajai Pal Singh and others2 andD.D.A. v. Pushpinder Kumar Jain3. Whilecontroverting the said submission.Shri V.S. Virk and Shri M.S. Rane forrespondents supported the aforesaid twoorders of the District Forum in condoningdelay in filing complaints and the orderspassed by State Commission allowing theappeals.

4. Coming to first limb of argument,relevant portion of the District Forum’s orderdated 23-12-2002 is reproduced below:-

“Admittedly, most of these complaintshave been filed more than two yearsafter the dates when the respectiveallottees obtained possession.However, it is submitted by the learnedCounsel for the complainants that theircase is similar to Smt. Shabnam Virk’scase and, so, under Article 14 of theConstitution, they have a right to beplaced on par with her (at least in thematter of filing their complaints). So, anoral request is made by learnedCounsel for the complainants forcondonation of delay. We have heardthe Learned Counsel for the parties.

Admittedly, the cases in hand aresimilar to Smt. Shabnam Virk’s caseand group of present cases areheading towards the Hon’ble NationalCommission or the Hon’ble SupremeCourt of India for the final forensic boutand the matter would become final onlyon Smt. Shabnam Virk’s case is finallydisposed of either by the Hon’bleNational commission or the Hon’bleSupreme Court. Therefore, we find thatthe aforesaid is by itself a valid reasonfor condoning the delay because doingso would save the parties the avoidablelitigation and residing harassment andloss of public time and the time of theadjudicating authority and the Hon’ble

1. 1980 (2) SCR 704. 2. (1989) 2 SCC 116.3. 1994 Supp. (3) SCC 494.

I] CPA 3

Commission. Therefore, the delay inlodging all these complaints is herebycondoned.”

5. Delay in filing complaints wascondoned on similar grounds by the DistrictForum by the order dated 4-2-2003 in batchof 49 complaints. At this juncture, it will beadvantageous to refer to the provisionscontained in Section 24-A of the Act whichruns thus:

”(1) The District Forum, the StateCommission or the NationalCommission shall not admit acomplaint unless it is filed within twoyears from the date on which causeof action has arisen.

(2) Notwithstanding anything containedin sub-section (1), a complaint maybe entertained after the periodspecified in sub-section (1), if thecomplainant satisfies the DistrictForum, the State Commission or theNational Commission, as the casemay be that he had sufficient causefor not filing the complaint withinsuch period.

Provided that no such complaint shallbe entertained unless the NationalCommission, the State Commission orthe District Forum, as the case may be,records its reasons for condoning suchdelay.”

6. It may be seen that sub-section (1)puts a complete bar on admitting a complaintif it is filed beyond two years of the date ofaccrual of cause of action. Undersub-section (2), in the discretion ofDistrict Forum/State Commission/NationalCommisison, as the case may be, delaybeyond two years may be condoned if thecomplainant is able to satisfy that he hadsufficient cause for not filing the complaintwithin the period of two years. Proviso tosub-section (2) pre-supposes the disclosureof cause (for not filing complaint within twoyears period), the sufficiency whereof is tobe examined while recording reasons for

condoning/not condoning the delay inquestion. Obviously, disclosure of cause hasto be made in the application to be filed withthe complaint. It is not in dispute that all thecomplaints were filed beyond the period oftwo years of the accrual of cause of actionand in none of them except complaint caseNo. 537 of 2002 instituted by Iqbal Singhapplicant(s) under Section 24-A seekingcondonation of delay in question had beenfiled. The District Forum could not havelegally condoned the delays on oral prayermade during the course of arguments. It maybe noticed that a suit filed in a Civil Courtafter the period of limitation prescribed underthe Limitation Act 1963 has to be dismissedas there is no provision for condoning delayon ground of any sufficient cause beingshown for not filing it within the period oflimitation. Aforesaid sub-section (2) is adeparture to the general law of limitation andcondoning of delay in filing a complaint has,thus, to be taken seriously. Reason forcondoning delay in filing complaints asrecorded by the District Forum in said twoorders was totally insufficient. Aforesaidaffidavits filed by Shri Balwinder Singh andShri G.S. Arshi, Advocates appearing forpetitioner No.1 - Authority before the StateCommission, notice that though point oflimitation which was also adopted byShri Sanjeev Pandey and Shri Rajan Gupta,other counsel for the authority wasspecifically raised but it was not consideredin said two orders by the State Commission.In this backdrop, revision petitions deserveto be allowed on ground of complaintsexcept complaint case No. 537 of 2002 asbeing barred by limitation. Having reachedthis conclusion, second limb of argumenttouching the merits of the case need not begone into.

7. For the foregoing discussion,aforementioned revision petitions exceptingRP No. 2596 of 2003 are accepted andorders passed by fora below set aside andcomplaints dismissed. No order as to cost.

Punjab Urban Development Authority v. S. Gurjinder Singh(K.S. Gupta, Presiding Member)





Revision Petition No. 2088 of 2001 -Decided on 22-9-2004.

Haryana State through Civil Surgeon, Hissarand another

v.

Smt. Guddi

CONSUMER PROTECTION ACT, 1986,Sections 21 and 2 (1)(d) and (o) —Consumer — Claimant underwentsterilization operation in GovernmentGeneral Hospital which was notsuccessful — She became pregnantagain and gave birth to a child —Awarding of compensation to her byDistrict Forum treating her as consumerwithout recording a finding whetherservices in General Hospital wereprovided free of charge or on payment ofcharges — Erroneous.

CASES REFERRED:1. Indian Medical Council v. V.P. Shantha and

others: (1995) 6 SCC 651. (Para 2)2. State of Haryana v. Smt. Shantra:

JT 2000 (5) SC 34. (Para 4)

Shri J.B. Mudgil, Advocate for the Petitioners.Ms. Sonia Sharma Amicus Curiae , for the

Respondent.

ORDER(Per Mr. K.S. Gupta, Presiding Member)

This revision is directed against the orderdated 28-5-2001 of Consumer DisputesRedressal Commission Haryana,Chandigarh dismissing appeal against theorder dated 15-6-1998 of a District Forumwhereby petitioners/opposite partieswere directed to pay total amount ofRs.1,43,000/- to the respondent/complainant.

2. Facts giving rise to this revision lie in anarrow compass. Respondent, who did not

want another child, underwent sterilizationoperation on 3-2-1994 in General Hospital,Hissar. Respondent alleged that she wastold by petitioner No.2/opposite party No.2that her operation was successful. She paidamount of Rs. 200/- as consideration for theoperation to petitioner No.2 in addition topaying token money to petitioner No.1/opposite party No.1 for registration. It wasfurther alleged that respondent againbecame pregnant and gave birth to a femalechild on 6-9-1997. In General Hospital,Hissar, indoor facility is available to bothmale and female patients and they aretreated for consideration in private wards. Byreferring to the decision in Indian MedicalCouncil v. V.P. Shantha and others1, it wasstated that respondent is a ‘consumer‘ withinthe meaning of Consumer Protection Act,1986 (for short the Act). Alleging deficiencyin service, respondent filed complaintclaiming amount of Rs. 2, 16 lakhs being theexpenses for upbringing the female childupto the age of 18 years, Rs. 5,000/- spenton delivery and Rs. 79,000/- towardsphysical and mental agony against thepetitioners. Petitioners contested thecomplaint by filing written versions. By wayof preliminary objection, it was alleged thatsterilization cases are done under theNational Family Welfare Programme andmoney including diet, etc. is paid by theGovernment of India and respondent beingnot a ‘consumer’, the complaint is notmaintainable. On merits, it was admitted thatsterilization operation of the respondent wasdone on 3-2-1994. Same was performed byDr. R.S. Dalal, then medical officer,Government Hospital, Hissar, who has donethousands of cases successfully. Amount ofRs. 130/- was paid to the respondent afterthe operation was over. It was denied thatamount of Rs.200/- was charged from therespondent. It was alleged that GeneralHospital, Hissar is 200-bedded Hospitalhaving outdoor and indoor facilities. In case

1. (1995) 6 SCC 651.

I] CPA 5

5. In para 43 of the said decision,Supreme Court observed that medicalpractitioners/government hospitals/ nursinghomes and private hospitals/ nursing homesfall in three categories (i) where services arerendered free of charge to everybodyavailing of these services, (ii) where chargesare required to be paid by everybody availingof the service and (iii) where charges arerequired to be paid by person availing ofservices but certain categories of personswho cannot afford to pay, are renderedservice free of charge. After dealing withthese categories separately, the Apex Courtreached the conclusions as culled out inabove para 55. To be noted that DistrictForum without recording finding if theservices in General Hospital, Hissar wereprovided free of charge and/or on paymentof charges, jumped to the conclusion thatrespondent is a ‘consumer’ falling in saidcategory (10) above. In the absence offinding to that effect, the District Forum erredin awarding Rs.1,40,000/- treating therespondent as a ‘consumer’. StateCommission also fell in error in dismissingappeal filed by the petitioners relying onSmt. Shantra’s case (2 supra). Orders of forabelow, thus, deserve to be set aside andcase remanded to the District Forum forcomplaint being decided afresh on merits.

6. Accordingly, while accepting revision,aforesaid orders passed by fora below areset aside and case remanded to the DistrictForum for complaint being decided afresh onmerits after affording opportunity to theparties to lead further evidence, in the light ofobservation made in proceeding para of theorder. No order as to costs.

Parties will appear before the DistrictForum for direction on 4-11-2004.

Haryana State v. Smt. Guddi (K.S. Gupta, Presiding Member)

of FW acceptors, cases are treated free ofcost under the said programme. It wasdenied that any claim was made by Dr. Dalalregarding success of the case. It was furtherstated that in case the respondent did notwant child, she should have taken theservices of MTP in Government Hospital,Hissar free of cost. Liability to pay theclaimed amount was emphatically denied.

3 We have heard Shri J.B. Mudgil forpetitioners and Ms. Sonia Sharma, AmicusCuriae for respondent.

4. To be noted that against DistrictForum’s order, petitioners filed FA No. 18 of1998 while respondent filed FA No. 1607 of1998. In latter appeal, the respondent soughtenhancement of compensation. Appeal filedby the petitioners was dismissed withoutexamining the District Forum’s orderobserving that case was squarely coveredby the decision in State of Haryana v.Smt. Shantra2. Appeal of respondent wasdismissed holding that there was no scopefor further enhancement of compensation. Inthis backdrop, merit of the order of DistrictForum (copy at pages 3-12) assumessignificance. District Forum after noticing thesubmissions advanced by the parties’learned counsel, reproduced the conclusionat Serial No. (10) in para No. 55 inV.P. Shantha’s case (1 supra) which is asunder:-

“Service rendered at a governmenthospital/health center/dispensarywhere services are rendered onpayment of charges and also renderedfree of charge to other persons availingof such service would fall within themeaning of the expression ‘service’ asdefined in Section 2(1)(o) of the Act,irrespective of the fact that the servicerendered free of charge to persons whodo not pay for such service. Freeservice would also be ‘service’ and therecipient a ‘consumer’ under the Act.’

2. JT 2000 (5) SC 34.




Mr. M.B. SHAH, PRESIDENT andMrs. RAJYALAKSHMI RAO, MEMBER


A.S. Arunachalam

v.

Chief Manager, State Bank of India

CONSUMER PROTECTION ACT, 1986,Sections 21 and 2(1)(g) and (o) —Deficiency in Bank service — Stickerpasted on safe deposit locker hired bycomplainant that he is dead — No effortmade by Bank to explain the said act — Itappears to be a mischief and does notappear to be inadvertent mistake —Sticker created mental shock and agonyto complainant — It created hindrance tohim to access the locker — Bank alsorejected his request to see LockersAccess Register saying that it is aconfidential document — Locker AccessRegister not a secret document aspleaded by Bank — Complainant wantedto look into it to find out whether hislocker was operated by anyone elseduring the period of three years in whichperiod he did not operate it — The saidconduct of Bank held to be deficiency inservice and directions given to permitcomplainant to look into the saidRegister and also to open it in thepresence of complainant and anindependent person — Petition allowedwith costs of Rs.5,000/-.

Petitioner-in-Person.Mr. R.K. Dikshit, Advocate for the Respondent.

ORDER(Per Mrs. Rajylakshmi Rao, Member)

The Revision Petitioner in this case is theoriginal Complainant in complaint No.O.P.No. 64/2002 in District Forum,

Tirunelveli, wherein his complaint wasallowed. Appeals Nos. 367 and 387 of 2003by both the parties were decided by theState Commission, Tamil Nadu at Chennai ,by a common order dated 20-2-2004.Aggrieved by the order of dismissal of hisappeal, the Complainant Shri Arunachalamis here, in Revision Petition. The facts of thiscase are quite simple.

2. The Revision Petitioner,A.S. Arunachalam, aged 66, hired a safedeposit locker No. A-31 in the Bank of India(Respondent) in 1966 and has been payingthe annual rent regularly and in time. It isadmitted that the Locker itself was usedinfrequently. He went to the bank foroperation of the locker on 6-6-2001 at 12.55p.m. He made an entry in the Locker AccessRegister and along with a bank official wenttowards the Locker, when he realised that onthe door of the Locker, there was a stickerwith a declaration “A-31 deceased”. Upsetand shocked with this, the Complainant didnot want to operate the locker on that day,made an entry to that effect again in theLocker Access Register and demanded fromthe bank to know how exactly the stickerannouncing his death was placed on theLocker Door.

3. The Petitioner appeared in person andargued his case. He has expressed hisdoubts about the safety of the Locker; and,because of the said sticker, he felt thatothers might have had access to his Locker,or could access the Locker. As there was nosatisfactory explanation, he insisted onseeing the entries in the Locker AccessRegister. This was rejected by the bank onthe ground that the Locker Access Registeris a confidential document.

4. It is this indifference and apathy of theBank that made him to file a complaint in theDistrict Forum which was decided in hisfavour by holding that there was deficiency inservice on the part of the Bank. The DistrictForum awarded a compensation of

I] CPA 7

Rs.25,000/- and costs of Rs.2,000/-. Inappeal by the bank, the State Commissionwhile sympathising with the Complainantand holding that the bank has caused painand agony to him, however, held that sincehe was forced to access the Locker anytime, and since there is no evidencetampering with the Locker, there was nodeficiency in service and set-aside the orderof the District Forum. The Complainant hascome in revision here.

5. We have carefully gone through therecord and heard arguments by both theparties. The Revision Petitioner is obviouslya consumer as he paid for the service ofbeing provided with a Safe Locker. Thereare two aspects relating to the use of SafeLocker in a Bank Firstly, it is the bank’sresponsibility to look after the safety of theLocker. It is required to guard it very carefullyand prevent entry of unauthorised personsinto the Locker Room so as not to giveoccasion to tamper with the lockers. Theother aspect is that they should provide ahassle free access to the holder of the lockerto operate the same. Obviously somebodyother than the Revision Petitioner stuck thatnote saying “A-31 deceased”.

6. If it is done by a bank employee eithermischievously or inadvertently, it is for thebank to clearly and properly explain thecircumstances especially when the bank issuch a renowned organisation as the StateBank of India. The bank has made no effortwhatsoever in explaining at any stage as tohow this sticker got pasted on the Locker. Toour mind, it does not appear to be aninadvertent mistake clearly saying “A-31deceased” and pasting it on A-31 Locker,clearly shows that it is a mischief. Thissticker certainly created mental shock andagony to the Complainant and thus could besaid to have created hindrance in theprocess of accessing the Locker. To thatextented is certainly a deficiency in service.Perhaps the gravity of this could have been

reduced had the bank satisfactorilyexplained after a proper in-house enquiry asto how this has happened. If any one of theother locker holders actually died, the Bankshould have mentioned so to theComplainant. There is no need for secrecyabout this.

7. The second request made by theComplainant is to see the Locker AccessRegister of the Bank. It appears that theLocker Access Register is different from theLocker Register, the latter being mainregister. As explained, the Locker AccessRegister is a subsidiary register, which isused when a locker holder wants to accesshis locker. The only entries there in are thelocker number and signature of the bankofficial. The Bank official signs after verifyingthe signature of the holder by comparing itwith the signature in main register.

8. It is on record that the RevisionPetitioner had not operated the locker after5-5-1998 till he visited the bank on 6-6-2001i.e. for a period of 3 years though every yearhe visited the bank to pay the lockercharges. Even on 6-6-2001 because of thecircumstances narrated above, he did notoperate the Locker. So there is everyjustification for him to find out as to whetheranyone else has operated the locker during3 years period especially when the sticker onthe locker says that he is dead.

9. Obviously, his purpose in requesting tosee the Locker Access Register is; (a) to findout whether the locker was operated byanyone else during that period; and (b) tofind out how the bank came to believe thathe is dead. We think that the RevisionPetitioner was perfectly justified in asking tolook at the Locker Access Register which wedo not think is a secret document as pleadedby the bank. At the most they could haveallowed access to him to the Register in thebank premises or in the presence of a bankofficial.

A.S. Arunachalam v. Chief Manager, State Bank of India(Rajyalakshmi Rao, Member)


10. In the circumstances of the case, weset aside the order of the State Commission,We direct the Respondents to permit theRevision Petitioner to see the Locker AccessRegister. In the alternative, they may providehim an extract of entries of the said registerfor the period 5-5-1998 to 6-6-2001 asrelates to Locker A-31 and the locker beopened in the presence of Complainant andone independent person. Thus the RevisionPetition is allowed with the above directions.The Respondents to pay Rs. 5,000/- ascosts.

2005 (1) ALT 8 (A.P.) (CPA)ANDHRA PRADESH STATE CONSUMERDISPUTES REDRESSAL COMMISSION,

HYDERABAD

I. VENKATANARAYANA, J., PRESIDENTand Mrs. M. SHREESHA, MEMBER

F.A.Nos. 471 and 472 of 2000 -Decided on 22-3-2004.

Senior Area Manager, Indane Area Officeand another

v.

S. Subbarayudu

CONSUMER PROTECTION ACT, 1986,Section 17 — Explosion of gas cylinder— Award of compensation — Gascylinder exploded getting ablaze of entirehouse destroying several valuablearticles and clothes resulting in heavydamage to property and causing injury tofamily members of complainant — Gascylinder supplied by opposite party No.1was defective — It was manufactured andmarketed by appellants-oppositeparties 2 and 3 and insured with oppositeparty No.4 — Accident taken place due toinherent defect in cylinder supplied —Order of District Forum in holdingopposite parties 2 to 4 as jointly andseverally liable to pay compensation tocomplainant — Sustainable.

CASE REFERRED:1. AIR 1979 (SC) II 1863: (Para 8)

Mr. R.R. Raghunandan, Advocate for theAppellants.

Mr. V. Gourishankar Rao, Advocate for theRespondent.

ORDER(Per I. Venkatanarayana, J., President)

Opposite parties 2 and 3 are theappellants in FA No. 471/2000 and oppositeparty No. 4 is the appellant in FA.No.472/2000. Aggrieved by the order of theDistrict Forum, Kurnool in O.P.No. 183/1997dated 5-8-1999, the present appeals havebeen filed.

2. The factual matrix leading to the filingof these appeals are set out hereunder.

3. The complainant is a consumer ofopposite parties 1 to 3 and opposite partyNo. 4 is the insurer of opposite party No. 1On 2-4-1996 at about 5.00 a.m. the gascylinder supplied by opposite party No. 1suddenly exploded getting ablaze entirehouse, destroying several articles like Mixie,T.V., new clothes resulting in heavy damageto the property and causing injury to thefamily members of the complainant. As theclaim of the complainant was not settled bythe opposite parties, the complainant hasfiled the complaint.

4. Opposite party No. 4, filed its writtenversion which was adopted by oppositeparties 1 to 3 by means of a memo. It isprimarily stated that the complainant is notan insured covered by the policy while thefirst opposite party is only insured withopposite party No. 4. It is further stated thatthere is no direct connection or privity ofcontract between the complainant andopposite party No.4. As per the policy theinsured and its customer should follow all thestandard procedure prescribed for safetymeasures in the supply and usage of LPGcylinders. It is further stated that the oppositeparties 1 to 3 will supply or instal the cylinderand regulator and if any accident arises due

I] CPA 9

to these installations i.e., the cylinder andregulator, the policy cover the liability ofopposite party No.1. As per the report of theSurveyor of Oriental Insurance Company,who inspected the scene of accident alongwith the officials of Indian Oil Corporation, ithas been found that the accident took placedue to leakage of gas from rubber tube andbecause of spark from the refrigerator whichwas kept in the kitchen. In short each of theopposite parties blames the other one andfinally opposite party No. 4 repudiated theclaim.

5. Based on the affidavits and thedocuments filed, the District Forum foundthat the 4th opposite party, InsuranceCompany, was not justified in repudiating theclaim and directed the opposite parties 2 to4 to pay a sum of Rs.1,00,000/- to thecomplainant. The claim against oppositeparty No.1 was dismissed.

6. Aggrieved by the order of the DistrictForum, the appellants preferred the presentappeals.

7. Mr. R. Raghunandan, the learnedCounsel appearing for appellants/oppositeparties 2 and 3 in F.A.No. 471/2000 contendthat the appellants do not manufacture eithercylinders or the regulators and the same arepurchased by Indian Oil Corporation.Whereas Mr. Alluri Krishnam Raju, thelearned Counsel appearing for appellant/opposite party No. 4 in F.A.No. 472/2000submits that the insured and its customershould follow the standard procedureprescribed in supply and usage of LPGcylinders and in the eventuality the damageis caused despite complying the standardprocedures, the Insurance Company is liableto pay the amount under the policy. Hefurther submits that there is no deficiency inservice on the part of Insurance Companyand justifies the repudiation of the claim.

8. The District Forum has conducted adetailed inquiry and found that the

appellants/opposite parties tried to avoid theliability merely by throwing and shifting theliability on each other thereby disowning theliability. We have gone through the recordand we are of the opinion, that the cylindersupplied by opposite party No. 1,M/s. Srisaila Gas Service was defectivewhich was manufactured and marketed byappellants/opposite parties 2 and 3 in F.A.No. 471/2000 and was insured with oppositeparty No. 4. Taking into consideration thetotality of the facts and circumstances of thecase and the documents that have beenfiled, we hold that the accident in questiontook place due to the inherent defect in thecylinder supplied. The conduct of oppositeparty No. 1 i.e., M/s. Srisaila Gas Service inaddressing appellant/opposite party No. 4 inF.A. 472/2000 to indemnify and make goodthe loss shows that there is no negligence onthe part of opposite party No.1. Hence theDistrict Forum has rightly held thatappellants are jointly and severally liable topay the compensation to the respondent/complainant. The District Forum went intodetails and followed the judgment reported inAIR 1979 (SC) II 18631, wherein it was heldthat there is no justification for the InsuranceCompany to repudiate the claim in a routinefashion. The District Forum has rightlyawarded a sum of Rs. 1,00,000/- towardsthe value of the goods lost and we do notsee any ground to interfere with the wellconsidered order of the District Forum.

9. The appeals, therefore, fail and theyare accordingly, dismissed, Time forcompliance six weeks.

Senior Area Manager, Indane Area Office v. S. Subbarayudu(I. Venkatanarayana, J., President)

1. AIR 1979 (SC) II 1863.


2005 (1) ALT 10 (CPA) (SC)IN THE SUPREME COURT OF INDIA

B.N. AGRAWAL and A.K. MATHUR, JJ.Civil Appeal No. 4024 of 2003 -

Decided on 12-10-2004.

Smt. Savita Garg

v.

Director, National Heart Institute

CONSUMER PROTECTION ACT, 1986,Sections 22 and 13 — ConsumerProtection Rules, 1987, Rule 14 (1)(b) —Non-joinder of necessary parties —Medical negligence — Complaint filedagainst National Heart Institute cannot bedismissed on the ground of non-joinderof the Doctor of the Institute who treatedthe deceased as necessary party —Provisions of CPC applicable toconsumer fora only to a limited extent —Complainant has to give the name ofopposite party/parties as can beascertained under Rule 14 of the Rules —Petition filed only against Institute inwhich deceased was admitted fortreatment — Maintainable — Even if theconcerned Doctor is not impleaded evenafter direction by Commission, it cannotresult in dismissal of petition — In privateHospitals, it is difficult for thecomplainant to implead the Doctor whoattended on the deceased — Oncecomplainant discharges initial burdenthat hospital was negligent, burden shiftsto Hospital to prove that there is nonegligence by examining the Doctor whotreated the deceased — Hospital orInstitute is responsible not only for theacts of permanent nursing staff but alsoof Doctors whose services aretemporarily requisitioned for treatment ofpatients depending on their disease —Act applies to Medical Profession even ifDoctors render services free of charge inGovernment hospitals — Private Doctorsalso come within the purview of the Act

— Institute cannot absolve of itsresponsibility and liability on the groundof non-impleadment of concerned Doctoras necessary party.

Held: Summary dismissal of the originalpetition by the Commission on the question ofnon-joinder of necessary parties was not proper.In case, the complainant fails to substantiate theallegation, then the complaint will fail but not onthe ground of non-joinder of necessary party. Butat the same time the hospital can discharge theburden by producing the treating doctor indefence that all due care and caution was takenand despite that patient died. The hospital/Institute is not going to suffer on account of non-joinder of necessary parties and Commissionshould have proceeded against hospital. Evenotherwise also the Institute had to produce theconcerned treating physician and has to produceevidence that all care and caution was taken bythem or their staff to justify that there was nonegligence involved in the matter. Therefore,nothing turns in not impleading the treating doctoras a party. Once an allegation is made that thepatient was admitted in a particular hospital andevidence is produced to satisfy that he diedbecause of lack of proper care and negligence,then the burden lies on the hospital to justify thatthere was no negligence on the part of thetreating doctor/or hospital. Therefore, in any case,the hospital which is in better position to disclosethat what care was taken or what medicine wasadministered to the patient. It is the duty of thehospital to satisfy that there was no lack of careor diligence. The hospitals are institutions, peopleexpect better and efficient service, if the hospitalfails to discharge their duties through their doctorsbeing employed on job basis or employed oncontract basis, it is the hospital which has tojustify and by not impleading a particular doctorwill not absolve the hospital of theirresponsibilities. (Para 18)

MEDICAL SERVICE — Contract ofservice and contract for service —Distinction — Acts of permanent staff ofhospital come under contract of serviceand those of Doctors temporarilyrequisitioned for the treatment of patientscome under contract for service.

(Para 16)

CASES REFERRED:

I] CPA 11

1. Gold and others v. Essex County Council:(1942) 2 All E.R. 237. (Para 13)

2. Collins v. Hertfordshire County Council andanother: (1947) 1 All E.R. 633. (Para 13)

3. Cassidy v. Ministry of Health: (1951) 2 K.B. 343.(Para 15)

4. Indian Medical Association v. V.P. Shantha andothers: AIR 1996 SC 550. (Para 16)

5. Achutrao Haribhau Khodwa and others v. Stateof Maharashtra and others: (1996) 2 SCC 634.

(Para 17)6. Spring Meadows Hospital and another, v. Harjol

Ahluwalia through K.S. Ahluwalia and another:(1998) 4 SCC 39. (Para 17)

M/s. Dinesh Kumar Garg and Manzoor Ali Khan,Advocates for the Appellant.

Mr. Rajshekhar Rao, Advocate for Mr. NikhilNayyar, Advocate for the Respondent.

JUDGMENT(Per A.K. Mathur, J.)

This appeal is directed against the orderpassed by the National Consumer DisputesRedressal Commission (hereinafter to bereferred to as ‘the Commission’), New Delhiwhereby the Commission has dismissed theoriginal petition of the appellant on theground of non-joinder of necessary parties.

2. Brief facts which are necessary fordisposal of this appeal are as follows.

3. The appellant is the wife of onedeceased A.K. Garg who was admitted tothe National Heart Institute (hereinafterreferred to as ‘the Institute’) for medicaltreatment and because of the negligence ofthe doctors of the Institute he could not getproper medical treatment and ultimately hedied. The deceased A.K. Garg wasemployed as Electrical Engineer in I.D.P.L.,Vir Bhadra (Rishikesh). The deceased wasdrawing a salary of Rs. 8000/- per month atthe time of his death. He left behind hisfamily members namely; (i) Smt. Savita Garg(wife), (ii) Smt. Sushila Garg (mother),(iii) Shri Ankul Garg (son), (iv) Miss. Ruchi(Daughter), (v) Shri Sauragh (son) and(vi) Anoop Garg (brother). Prior to theadmission of the deceased, A.K. Garg in theInstitute he was being treated at G.B. Pant

Hospital and he did not improve there,therefore, his case was referred to theInstitute by his employer, IDPL. Thedeceased was admitted for angiography on4-7-1994 and a sum of Rs. 14,000/- wasdeposited for his treatment. He wasdischarged on 5-7-1994 after angiography.Again he was admitted on 2-8-1994 at11.15 a.m. and remained there till 9-8-1994and ultimately died at the Institute. It wasalleged that on 3-8-1994 he was operatedand was brought to the Intensive Care Unitof the Institute. No attendant was allowed tosee the patient except through the glasswidows of I.C.U. The deceased wasoperated twice by Dr.O.P. Yadav of theInstitute for his treatment. It is further allegedthat Dr.O.P. Yadav was too much worriedand perturbed after the deceased’soperation. On the said day i.e. on 3-8-1994,8 bottles of blood were transfused in thebody of the deceased and even on 4-8-1994another 8 bottles of blood were demandedby the Doctors of the Institute and the samewas somehow arranged. The deceased issaid to have developed jaundice may bebecause of wrong transfusion or extratransfusion of blood. It is further alleged thatthe deceased developed septic and as theseptic in the bone became incurable,therefore a Doctor from Batra Hospital wascalled for to amputate one leg of thedeceased A.K. Garg. Thereafter, as it wasreported to be a case of kidney failure, thedeceased was put on dialysis. However, on9-8-1994 at 2.30 hours the deceased wasdeclared dead. Therefore, a complaint wasfiled before the Commission claiming a sumof Rs. 45 lakhs, the details of which havealready been given in the complaint. Theappellant has detailed the reasons for thenegligence in her original petition filed beforethe Commission. An affidavit in oppositionwas filed by the Institute and they denied theallegations of negligence and pointed outthat all proper care was taken and there is nonegligence on the part of the Institute. An

Smt. Savita Garg v. Director, National Heart Institute (A.K. Mathur, J.)


objection was also taken that the provisionsas contained in the Consumer ProtectionAct, 1986 do not satisfy the requirement of acomplaint as defined under the Act as it doesnot disclose any deficiency. The Institutealso challenged the jurisdiction of theCommission to entertain the said originalpetition.

4. A rejoinder was also filed by theappellant and it is alleged that septic wasdeveloped because of the negligence whichshows lack of care on the part of the doctors.However, when the matter came up forhearing on 12-4-2002, the Commissiondirected both the parties to file brief notes ofsubmissions on the question ofmaintainability of the complaint as well asthe effect of non-impleading the attendingdoctors against whom the medicalnegligence has been alleged and the matterwas posted to 2-5-2002 for directions.Thereafter, ultimately the matter wasdisposed of by the Commission by its orderdated 6-2-2003 holding that the originalpetition is not maintainable in the absence ofthe treating doctors being impleaded asparty. It was also observed that no effort wasmade by the appellant to implead theconcerned doctors at any stage of theproceedings. Therefore, the Commissionheld that there is no alternative but todismiss the complaint for non-joinder ofparties. The Commission however observedthat considering the age of the deceasedand the number of dependents upon him,the Institute will consider the mattersympathetically and make some ex-gratiapayment to the family members of thedeceased.

5. The question is whether non-impleading of the treating doctor as partycould result in dismissal of the originalpetition for non-joinder of necessary party.

6. It is the common experience that whena patient goes to a private clinic, he goes bythe reputation of the clinic and with the hope

that proper care will be taken by the Hospitalauthorities. It is not possible for the patient toknow that which doctor will treat him. Whena patient is admitted to a private clinic/hospital it is hospital/clinic which engagesthe doctors for treatment. In the presentcase, the appellant’s husband was admittedto the best of the hospital and it is notpossible for the appellant to find out who isthe best doctor and who is not. Normally, theprivate clinics go by the reputation andpeople look forward for best treatment whenthey are run commercially. It is theresponsibility of the clinic that they mustprovide best of the services when theycharge for the services rendered by them. Incase it is found that services rendered by theclinic or hospital, as the case may be, is notupto the mark and it involves somenegligence on their part, for which thepatients suffer, then they are bound toreimburse them. They charge fee for theservices rendered by them and they aresupposed to bestow the best care. Lookingat the present appeal, the whole claimpetition was dismissed simply on the groundthat the treating doctor was not impleaded asa party. The question is therefore, whether inthe absence of the treating doctor could theoriginal petition be dismissed on the groundof non-joinder of necessary party. As per theprovisions of Section 22 of the ConsumerProtection Act, 1986 (hereinafter referred toas ‘the Act]) the Commission has to regulatebusiness. Section 22 lays down the power ofand procedure applicable to the NationalCommission. It reads as under:

“22. Power of and procedure applicableto the National Commission.— TheNational Commission shall, in thedisposal of any complaints or anyproceedings before it, have-

(a) the power of a civil court asspecified in sub-sections (4), (5) and(6) of Section 13;

(b) the power to issue an order to the

I] CPA 13

opposite party directing him to doany one or more of the thingsreferred to in clauses (a) to (i) ofsub-section (1) of Section 14,

and follow such procedure as maybe prescribed by the CentralGovernment.”

7. According to Section 22 whateverprocedures which have been prescribedunder Section 13 for the District Forum shallbe applicable. Sub-sections (4), (5) and (6)of Section 13 which are relevant for ourpurpose read as under:

“13. Procedure on receipt ofcomplaint.-

xx xx xx

(4) For the purposes of this section, theDistrict Forum shall have the samepowers as are vested in a civil courtunder Code of Civil Procedure,1908 while trying a suit in respect ofthe following matters, namely:-

(i) the summoning and enforcingthe attendance of any defendantor witness and examining thewitness on oath,

(ii) the discovery and production ofany document or other materialobject producible as evidence;

(iii) the reception of evidence onaffidavits,

(iv) the requisitioning of the report ofthe concerned analysis or testfrom the appropriate laboratoryor from any other relevantsource,

(v) issuing of any commission forthe examination of any witness,and

(vi) any other matter which may beprescribed.

(5) Every proceeding before the DistrictForum shall be deemed to be a

judicial proceeding within themeaning of section 193 and 228 ofthe Indian Penal Code (45 of 1860),and the District Forum shall bedeemed to be a civil court for thepurposes of section 195, andChapter XXVI of the Code ofCriminal Procedure, 1973 (2 of1974).

(6) Where the complainant is aconsumer referred to in sub-clause (iv) of clause (b) of sub-section (1) of Section 2, theprovisions of Rule 8 of Order 1 ofthe First Schedule to the Code ofCivil Procedure, 1908 (5 of 1908)shall apply subject to themodification that every referencetherein to a suit or decree shall beconstrued as a reference to acomplaint or the order of the DistrictForum thereon.”

8. Sub-sections (4), (5) and (6) ofSection 13 lay down that the Forum shallhave the power to summon and enforce theattendance of any defendant or witness aslaid down in the Code of Civil Procedure.Likewise, it shall have the power to direct forproduction of material object producible asevidence, reception of evidence on affidavit;requisitioning of the report of the concernedanalysis or test from the appropriatelaboratory or from any other relevant source;issuing of any commission for theexamination of any witness and any othermatter which may be prescribed. Sub-section (5) says that every proceedingbefore the District Forum shall be judicialproceeding within the meaning ofSections 193 and 228 of the Indian PenalCode and the District Forum shall bedeemed to be a Civil Court for the purposesof Section 195 and Chapter XXVI of theCode of Civil Procedure. Sub-section (6)says that when there are more than oneconsumer, then one of them can sue asrequired under Order 1 Rule 8 of the Code ofCivil Procedure. Therefore, if there are



number of consumers, one of them canrepresent the interest of all. Therefore, as faras the commission is concerned, theprovisions of the Code of Civil Procedure areapplicable to the limited extent and not all theprovisions of the Code of Civil Procedure aremade applicable to the proceedings to theNational Forum. Rules have also beenframed under the Act, known as theConsumer Protection Rules, 1987, whereRule 14 has prescribed the procedure to befollowed by the Commission. Rule 14 saysthat the name, description and the addressof the complainant and the opposite parties,as the case may be, so far as they can beascertained, should be given. Clause (b) ofsub-rule (1) which is relevant for ourpurposes reads as under:

“(b) the name, description and addressof the opposite party or parties, asthe case may be, so far as they canbe ascertained.”

9. Therefore, according to the procedurelaid down by the Rules a complainant has togive the name, description and address ofthe opposite party or parties so far as theycan be ascertained.

10. So far as the filing of complaintdirectly before the Commission because ofhigher valuation, the procedures laid down inRule 14 of the Rules have to be followed andin that case, the name of the opposite partyhas to be given so far as they can beascertained. In the present case, theappellant filed original petition impleadingthe Institute where her husband wasadmitted as a party but she did not impleadthe treating doctors and nurses who wereattending on her husband. Though theCommission directed that necessary partiesmay be impleaded and it appears that noeffort was made to implead the treatingsurgeon or the nursing staff as a party.Therefore, the question is whether (non-impleading) the treating surgeon or a nursingstaff can be said to be necessary party and

if they are not impleaded then in that case,the original petition can result in dismissal onaccount of non-joinder of necessary party.So far as the law with regard to the non-joinder of necessary party under Code ofCivil Procedure, Order 1 Rule 9 and Order 1Rule 10 of the CPC there also even no suitshall fail because of mis-joinder or non-joinder of parties. It can proceed against thepersons who are parties before the Court.Even the Court has the power under Order 1Rule 10(4) to give direction to implead aperson who is a necessary party. Therefore,even if after the direction given by theCommission the concerned doctor and thenursing staff who were looking after thedeceased A.K. Garg have not beenimpleaded as opposite parties it cannotresult in dismissal of the original petition asa whole.

11. The Consumer Forum is primarilymeant to provide better protection in theinterest of the consumers and not to shortcircuit the matter or to defeat the claim ontechnical grounds. Reverting back to thefacts of the present case, whether non-joinder of the treating doctor, nursing staffcan result into dismissal of the claim petition.As a matter of fact, when a patient isadmitted to the highly commercial hospitallike the present institute, a thorough checkup of the patient is done by the hospitalauthorities, it is the Institute which selectsafter the examination of the patient that hesuffers from what malady and who is thebest doctor who can attend, except when thepatient or the family members desire to betreated by a particular doctor or the surgeonas the case may be. Normally, the privatehospitals have a panel of doctors in variousspecialities and it is they who choose who isto be called. It is very difficult for the patientto give any detail that which doctor treatedthe patient and whether the doctor wasnegligent or the nursing staff was negligent.It is very difficult for such patient or hisrelatives to implead them as parties in the

I] CPA 15

claim petition. It will be an impossible taskand if the claim is to be defeated on thatground it will virtually be frustrating theprovisions of the Act, leaving the claimanthigh and dry. We cannot place such a heavyburden on the patient or the family members/relatives to implead all those doctors whohave treated the patient or the nursing staffto be impleaded as party. It will be a difficulttask for the patient or his relatives toundertake this searching enquiry from theHospital and some times hospital may notco-operate. It may give such details andsometimes may not give the details.Therefore, the expression used inRule 14(1)(b), “so far as they can beascertained”, makes it clear that the framersof the Rules realized that it will be verydifficult specially in the case of medicalprofession to pinpoint that who isresponsible for not providing proper andefficient service which gives rise to the causefor filing a complaint and specially in thecase like the one in hand. The patients oncethey are admitted to such hospitals, it is theresponsibility of the said hospital or themedical institutions to satisfy that all possiblecare was taken and no negligence wasinvolved in attending the patient. The burdencannot be placed on the patient to impleadall those treating doctors or the attendingstaff of the hospital as a party so as tosubstantiate his claim. Once a patient isadmitted in a hospital it is the responsibilityof the Hospital to provide the best serviceand if it is not, then hospital cannot takeshelter under the technical ground that theconcerned surgeon or the nursing staff, asthe case may be, was not impleaded,therefore, the claim should be rejected onthe basis of non-joinder of necessary parties.In fact, once a claim petition is filed and theclaimant has successfully discharged theinitial burden that the hospital was negligent,as a result of such negligence the patientdied, then in that case the burden lies on thehospital and the concerned doctor whotreated that patient that there was no

negligence involved in the treatment. Sincethe burden is on the hospital they candischarge the same by producing that doctorwho treated the patient in defence tosubstantiate their allegation that there wasno negligence. In fact it is the hospital whoengages the treating doctor, thereafter it istheir responsibility. The burden is greater onthe Institution/hospital than that of theclaimant. The institution is private body andthey are responsible to provide efficientservice and if in discharge of their efficientservice there are couple of weak links whichhas caused damage to the patient then it isthe hospital which is to justify the same andit is not possible for the claimant to impleadall of them as parties.

12. In this connection, learned counselappearing for the respondent ably tried tomake a distinction between ‘contract forservice’ and ‘contract of service’. Hesubmitted that those persons who are oncontract for service are different from thosepersons who are on contract of service. Hesubmitted that in a contract for service thereis a contract whereby one party undertakesto render service e.g. professional ortechnical service, to or for another in theperformance of which he is not subject todetailed direction and control but exercisesprofessional or technical skill and uses hisown knowledge and discretion. A ‘contract ofservice’ implies relationship of master andservant and involves an obligation to obeyorders in the work to be performed and as toits mode and manner of performance.

13. By this learned counsel submittedthat so far as the permanent staff of thehospital is concerned, there is a contract ofservice and negligence thereof the hospitalcan be made liable and for that they neednot be impleaded as parties in respect of anynegligence of service but the doctors whocome on visit, they are on contract forservice over which the hospital has nocontrol and therefore, unless they areimpleaded as parties, no relief can be given.



He also based his submission with referenceto some of the English decisions given in thecase of Gold and others v. Essex CountryCouncil1 and Collins v. Hertfordshire CountyCouncil and another2. So far as Gold andothers v. Essex County Council1 isconcerned, in that case, the infant plaintiffwas treated by a radiographer, an employeeof the respondents at one of their countyhospitals. By reason of his failure to provideadequate screening material in givingGrenz-ray treatment the infant plaintiffsuffered injury to her face. It was proved thatthe radiographer was fully competent toadminister the treatment given to the infantplaintiff. However, it was held that as theradiographer was under a contract of serviceof the respondents, they were liable for hisnegligence under the doctrine of respondentsuperior. It was further held that if a localauthority had exercised power under thePublic Health Act, 1936, the obligationundertaken is an obligation to treat and theauthority is liable if the person employed byit to perform the obligation on its behalf actswithout due care. This was a case in whichthe radiographer was under regularemployment with the county council. This isa case in which a person was on contract ofservice and not on contract for service.Therefore, this case does not provide anyassistance to the present case.

14. In the case of Collins v. HertfordshireCouncil and another2, while undergoing anoperation, a patient in a county councilhospital was killed by an injection of cocainewhich was given by the operating surgeon inthe mistaken belief that it was procaine. Theoperating surgeon had ordered procaine onthe telephone, but the resident housesurgeon (who was then unqualified) had mis-heard “procaine” as “cocaine”, and had toldthe pharmacist to dispense a mixture whichwas, in fact, lethal. The pharmacistdispensed the mixture ‘without making

further inquiry and without requiring thewritten instruction of a qualified person, andthe operating surgeon had given theinjection without checking that it was what hehad ordered. The operating surgeon, thehouse surgeon, and the pharmacist were allthree in the full-time or part-time employmentof the council. In an action by the patient’swidow against the county council and theoperating surgeon alleging that the deathwas the result of (a) the council’s negligencein the conduct of their hospital, and (b) theoperating surgeon’s failure to exercisereasonable care. It was held as follows:

“(i) The county council, in managing thehospital, was permitting adangerous and negligent system tobe in operation, and the operatingsurgeon and the house surgeonhad failed to exercise reasonableskill and care.

(ii) the council were able to control themanner in which the residentmedical officer performed her workand, therefore, the acts of the housesurgeon done in the course of heremployment were acts for which thecouncil was responsible.

(iii) although the operating surgeon wasa part-time employee on the staff ofthe council, the council could notcontrol how he was to perform hisduties and was not responsible forhis want of care.”

15. Learned counsel submitted that inview of the above decisions since the doctorwas on part-time employment, as such hewas not responsible. With respect thisdistinction which is tried to be advanced bylearned counsel for the respondent, does notfind favour in subsequent decision renderedby the English Court in the case of Cassidyv. Ministry of Health3. In this case, the earlierdecision in the case of Gold and others v.Essex County Council (1 supra) came up for

1. (1942) 2 All E.R. 237.2. (1947) 1 All E.R. 633. 3. (1951) 2 K.B. 343.

I] CPA 17

consideration. Lord Denning, J. speaking forhimself observed that a hospital authority isliable for the negligence of doctors andsurgeons employed by the authority under acontract for service arising in the course ofthe performance of their professional duties.It was observed as follows:

“The hospital authority is liable for thenegligence of professional menemployed by the authority undercontracts for service as well as undercontracts of service. The authorityowes a duty to give proper treatment -medical, surgical, nursing and the like-and though it may delegate theperformance of that duty to those whoare not its servant, it remains liable ifthat duty be improperly or inadequatelyperformed by its delegates.

The plaintiff entered a hospital for anoperation on his left hand, whichnecessitated post-operationaltreatment. While undergoing thattreatment he was under the care of thesurgeon who perfomed the operation,who was a wholetime assistant medicalofficer of the hospital, the housesurgeon and members of the nursingstaff of the hospital, all of whom wereemployed under contracts of service.At the end of the treatment it was foundthat his hand had been rendereduseless. The trial judge dismissed hisaction for damages for negligenttreatment which he brought against thehospital on the ground that he hadfailed to prove any negligence. Onappeal it was held that in thecircumstances, the doctrine of res ipsaloquitur applied, and the onus lay onthe hospital authority to prove thatthere had been no negligence on itspart or on the part of anyone for whoseacts or omission it was liable, and thatonus had not been discharged.”

16. Therefore, as per the Englishdecisions also the distinction of ‘contract of

service’ and contract for service’, in both thecontingencies the courts have taken the viewthat the hospital is responsible for the acts oftheir permanent staff as well as staff whoseservices are temporarily requisitioned for thetreatment of the patients. Therefore, thedistinction which is sought to be pressed intoservice so ably by learned counsel cannotabsolve the hospital or the institute as it isresponsible for the acts of its treating doctorswho are on the panel and whose servicesare requisitioned from time to time by thehospital looking to the nature of thediseases. The hospital or the institute isresponsible and no distinction could bemade between the two classes of personsi.e. the treating doctor who was on the staffof the hospital and the nursing staff and thedoctors whose services were temporarilytaken for treatment of the patients. On both,the hospital as the controlling authority isresponsible and it cannot take the shelterunder the plea that treating physician is notimpleaded as a party, the claim petitionshould be dismissed. In this connection, areference may be made to a decision of thisCourt in the case of Indian MedicalAssociation v. V.P. Shantha and others4.There the question had come up before thisCourt with regard to the provisions of theConsumer Protection Act, 1986 vis-a-vis themedical profession. This Court has dealt withall aspects of medical profession from everyangle and has come to the conclusion thatthe doctors or the institutes owe a duty to thepatient and they cannot get away in case oflack of care to the patients. Their Lordshipshave gone to the extent that even if thedoctors are rendering services free of chargeto the patients in the Government hospitals,the provisions of the Consumer ProtectionAct will apply since the expenses of runningthe said hospitals are met by appropriationfrom the Consolidated Fund which is raisedfrom the taxes paid by the tax payers. TheirLordships have dealt with regard to the


4. AIR 1996 SC 550.

265


definition of “service” given in Section 2(1)(o)of the Consumer Protection Act, 1986, andhave observed as follows:

“The service rendered free of charge topatients by doctors/hospitals whethernon-Govt. or Govt. who render freeservice to poor patients but charge feefor services rendered to other patientswould, even though it is free, not beexcluded from definition of service inSec. 2(1)(o). The Act seeks to protectthe interests of consumers as a class.To hold otherwise would mean that theprotection of the Act would be availableto only those who can afford to pay andsuch protection would be defined tothose who cannot so afford, thoughthey are the people who need theprotection more. It is difficult toconceive that the legislature intendedto achieve such a result. Anotherconsequence of adopting aconstruction, which would restrict theprotection of the Act to persons whocan afford to pay for the servicesavailed by them and deny suchprotection to those who are not in aposition to pay for such services, wouldbe that the standard and quality ofservices rendered at an establishmentwould cease to be uniform. It would beof a higher standard and of betterquality for persons who are in a positionto pay for such service while thestandard and quality of such servicewould be inferior for person who cannotafford to pay for such service and whoavail the service without payment.Such a consequence would defeat theobject of the Act. All persons who availthe services by doctors and hospitalswho give free service to poor patientsbut charge fees for others, are requiredto be treated on the same footingirrespective of the fact that some ofthem pay for the service and othersavail the same free of charge. Most ofthe doctors and hospitals work on 5. (1996) 2 SCC 634.

commercial lines and the expensesincurred for providing services free ofcharge to patients who are not in aposition to bear the charges are metout of the income earned by suchdoctors and hospitals from servicesrendered to paying patients. TheGovernment hospitals may not becommercial in that sense but on theoverall consideration of the objectivesand the scheme of the Act it would notbe possible to treat the Governmenthospitals differently. In such a situationthe persons belonging to “Poor class”who are provided services free ofcharge are the beneficiaries of theservice which is hired or availed of bythe “paying class.” Service rendered bythe doctors and hospitals who renderedfree service to poor patients andcharge fees for others irrespective ofthe fact that part of the service isrendered free of charge, wouldnevertheless fall within the ambit of theexpression “service” as defined inSection 2(1)(o) of the Act.”

17. Therefore, the distinction between the‘contract of service’ and contract for service’has been very elaborately discussed in theabove case and this Court has extended theprovisions of the Consumer Protection Act,1986, to the medical profession also andincluded in its ambit the services renderedby private doctors as well as theGovernment Institutions or the non-Governmental institutions, be it free medicalservices provided by the GovernmentHospitals. In the case of Achutrao HaribhauKhodwa and others v. State of Maharashtraand others5, their Lordships observed that incases where the doctors act carelessly andin a manner which is not expected of amedical practitioner, then in such a case anaction on torts would be maintainable. TheirLordships further observed that if the doctorhas taken proper precaution and despite that

266

I] CPA 19

if the patient does not survive then the Courtshould be very slow in attributing negligenceon the part of the doctor. It was held asfollows:

“A medical practitioner has variousduties towards his patient and he mustact with a reasonable degree of skilland knowledge and must exercise areasonable degree of care. This is theleast which a patient expects fromdoctor. The skill of medical practitionersdiffers from doctor to doctor. The verynature of the profession is such thatthere may be more than one course oftreatment which may be advisable fortreating a patient. Courts would indeedbe slow in attributing negligence on thepart of a doctor if he has performed hisduties to the best of his ability and withdue care and caution. Medical opinionmay differ with regard to the course ofaction to be taken by a doctor treatinga patient, but as long as doctor acts ina manner which is acceptable to themedical profession and the court findsthat he has attended on the patient withdue care, skill and diligence and if thepatient still does not survive or suffersa permanent ailment, it would bedifficult to hold the doctor to be guilty ofnegligence. But in cases where thedoctors act carelessly and in a mannerwhich is not expected of a medicalpractitioner, then in such a case anaction in torts would be maintainable.”

Similarly, our attention was invited to adecision in the case of Spring MeadowsHospital and another v. Harjol Ahluwaliathrough K.S. Ahluwalia and another6. TheirLordships observed as follows:

“Very often in a claim for compensationarising out of medical negligence a pleais taken that it is a case of bona fidemistake which under certaincircumstances may be excusable, but a

mistake which would tantamount tonegligence cannot be pardoned. In theformer case a court can accept thatordinary human fallibility precludes theliability while in the latter the conduct ofthe defendant is considered to havegone beyond the bounds of what isexpected of the skill of a reasonablycompetent doctor.”

18. Therefore, as a result of ourdiscussion we are of the opinion thatsummary dismissal of the original petition bythe Commission on the question of non-joinder of necessary parties was not proper.In case, the complainant fails to substantiatethe allegation, then the complaint will fail butnot on the ground of non-joinder ofnecessary party. But at the same time thehospital can discharge the burden byproducing the treating doctor in defence thatall due care and caution was taken anddespite that patient died. The hospital/Institute is not going to suffer on account ofnon-joinder of necessary parties andCommission should have proceeded againsthospital. Even otherwise also the Institutehad to produce the concerned treatingphysician and has to produce evidence thatall care and caution was taken by them ortheir staff to justify that there was nonegligence involved in the matter. Therefore,nothing turns in not impleading the treatingdoctor as a party. Once an allegation ismade that the patient was admitted in aparticular hospital and evidence is producedto satisfy that he died because of lack ofproper care and negligence, then the burdenlies on the hospital to justify that there wasno negligence on the part of the treatingdoctor/or hospital. Therefore, in any case,the hospital which is in better position todisclose that what care was taken or whatmedicine was administered to the patient. Itis the duty of the hospital to satisfy that therewas no lack of care or diligence. Thehospitals are institutions, people expectbetter and efficient service, if the hospital


6. (1998) 4 SCC 39.

267


fails to discharge their duties through theirdoctors being employed on job basis oremployed on contract basis, it is the hospitalwhich has to justify and by not impleading aparticular doctor will not absolve the hospitalof their responsibilities.

19. In the result, we allow this appeal, setaside the order dated 6-2-2003 passed bythe National Consumer Disputes RedressalCommission, New Delhi in Original PetitionNo. 121 of 1995 and remit back the originalpetition to the National Consumer DisputesRedressal Commission to be decided inaccordance with law. No order as to costs.





Chairman, Meenakshi Mission Hospitaland Research Centre

v.

Samuraj and another

CONSUMER PROTECTION ACT, 1986,Section 21 — Medical negligence —Complainant’s daughter of 13 years oldadmitted in petitioner hospital for surgeryof her cleft lip — Anaesthesia given to herfor operation by two anaesthetists —Name of the person who administeredanaesthesia not given in operation notes— Necessity for the presence of twoanaesthetists inside operation theatrenot stated — Doctor who is alleged tohave administered anaesthesia and whois available in the country not examined— Reason for maintaining two progresscards for same patient — Not given —Record showing that child wasadministered anaesthesia by twoanaesthetists within an interval of half an

268

hour after which child was pulseless —She is alleged to have died of cardiac-rest due to anaesthesia — Finding ofmedical negligence reached by lowerfora — Upheld.

Mr.G. Umapathi, Advocate for the Petitioner.None appeared for the Respondent.

ORDER(Per Mr. B.K. Taimni, Member)

Petitioner was the opposite party beforethe District Forum, where the respondentcomplainant had filed a complaint allegingmedical negligence on the part of thepetitioner.

2. Brief facts of the case are that 13 yearsold daughter of the complainant, namedSubatha was admitted in the petitionerhospital on 17-12-1995 for surgery of her‘cleft lip’. She was taken for surgery on20-12-1995 around 9:30 am and she wasdeclared dead at 10:30 PM. It is in thesecircumstances that alleging medicalnegligence a complaint was filed before theDistrict Forum, who after hearing the partiesand finding the petitioner negligent directedthe petitioner to pay Rs.3,00,000/- ascompensation and Rs. 2,000/- as costswithin a stipulated period after which interesthas to run @ 18% p.a. Aggrieved by thisorder, an appeal was filed before the StateCommission which through a very judiciousand comprehensive order dismissed theappeal with cost of’ Rs.500/-, hence thisRevision Petition before us.

3. We heard the learned Counsel for thepetitioner. Four points have been raisedunder the grounds of Revision. Firstly, thatthe District Forum and the State Commissionhas passed orders only on ‘assumption andpresumption’ which we dismiss withoutgoing into any details as we see that theorder of the District Forum and StateCommission is a detailed order and dealingwith each and every points raised by theparties.

I] CPA 21

269

4. Secondly, that the Doctors of theappellant had taken all the necessary andreasonable steps to save patients and deathof the patient occurred beyond the control ofthe doctors. The question is not of efforts tosave the patients. Both the lower forumshave fastened the responsibility on thepetitioner a hospital on the very cause ofcardiac-rest within half an hour of theadministering of Anaesthesia It is this whichresulted death of the child. It is not after carewhich is important. The whole case revolvesaround as to what caused the cardiac- restresulting in death.

5. Thirdly, no once prevented thecomplainant to take the patient forpostmortem which would have establishedthe cause and nature of death. It cannot berebutted that at the time of death what wasgiven to the wards of the patient was a twoliner stating “This is to certify thatMs. Subatha aged 13 years was admittedand expired on 20-12-1995.” The conduct ofthe petitioner hospital need to becondemned that they are so insensitive ofthe fact that the child died and they did notascribe any reason of death having all thematerial and expertise to do so. We are notto sure as to what they were trying to holdback from the parents of the child.

6. Fourthly, that the body of the child wascarried by the ambulance of the hospital. Inour view, this does not involve a case ofmedical negligence and not been made theground by both the lower forum fordetermining the case of negligence againstthe petitioner.

7. Lastly, as per said report ofAnaesthesia cardiac-rest in different childrenof different age group is not uncommon.

8. We have very carefully gone throughthe material on record and the conclusion is“Anaethesia related to cardiac-rest mostoften in patients one year of age and inpatients with severe underlying diseases”

This was not the case here as the patienthad undergone test and was found to benormal. In our view the petitioner is trying toskip the main issue. We only like toreproduce an extract from the written versionfiled by the petitioner:-

“On 20-12-1995 at 10.00 am thecomplainant’s daughter was posted forsecondary cleft lip connection and wasprovided general anaesthesia underECG Monitor and pulse Oximeter coverby Dr. Maharajan and Dr. Baskar theanaesthetists.

We also reproduce the extract of the affidavitfiled by the MD of the petitioner, hospital.

“On 20-12-1995 at 10.00 A.M. thecomplainant’s daughter was posted forsecondary cleft lip connection and wasprovided general anaesthesia underECG Monitor and pulse Oximeter coverby Dr. Maharajan and Dr. Baskar, theanaesthetists. (emphasis supplied).

9. These two statements one of which onoath by way of affidavit, leaves little doubtthat the Ananesthesia was given by twodoctors. In order to save the situation, thepetitioner has filed the affidavit of Dr.Maharajan, who was one of theanaesthetists, we reproduce the extract fromhis affidavit.

“I respectfully submit that I am theconsultant in Anaesthesia at theAdversary Hospital. Dr. Baskaran,Anaesthetist in this case is no longer inthe service of this hospital since he hasproceeded to Bangalore........”

10. It is very pertinent to note thatnowhere in any one’s affidavit filed by theManaging Director or in the Operation notesmaintained for the purpose, it come out thename of the person who administered theAnaesthesia. It is not clarified as to what twoAnaesthetists were doing inside the O.T.where was the necessity of two of thembeing there. We have very carefully gone

Chairman, Meenakshi Mission Hospital and Research Centre v. Samuraj (B.K. Taimni, Member)


through the operation notes dated20-12-1995 at 10.00 a.m. (page 77 of therecord) where it is recorded “She wasanaesthised by GA under ECG monitor andpulse oximeter cover.” Nowhere. in whole ofProgress Record, it is mentioned as to whoadministered this anaesthesia. Like the StateCommission we are also unable toappreciate as to why Dr. Bhaskaran whoallegedly had administered the anaesthesiaand available within the country, could not beproduced. We, are also unable as to howthere could be two progress cards about thesame patient on 2 separate papers,especially, after 11.30 a.m. when the childwas shifted to ICRU. (Page 77-78 and 75-76respectively). The record is quite clear thatthe child was administered anaesthesiaby two anaesthetists at 10 a.m. and at10.30 a.m., the child was pulseless. All thereasons given for the death have been dulyexamined at length with reference to themedical text and details by the StateCommission with which we are in fullagreement. This is a clear case of medicalnegligence.

11. We may mention here also thatnormally it is the doctors upon whom thespecific allegation on negligence would beattributed, but in this case all the operationnotes/progress record are silent about thenames of the doctors and it is admittedposition that it was before the surgery and noname of Anaesthetists is mentioned anywhere, hence it is the hospital which wouldbe accountable for whatever happens in thehospital. In view of this, we find no merit inthe Revision Petition filed before us. which isdismissed. No order as to costs.



Mr. S.N. KAPOOR,PRESIDING MEMBER


Life Insurance Corpn. of India and others

v.

Dr. P.S. Aggarwal, Dist. Hardwar

CONSUMER PROTECTION ACT, 1986,Section 21 — Repudiation of Insuranceclaim — Claim denied on the ground ofconcealment of disease ofbreathlessness alleged to being sufferedby deceased for the last two to threeyears in the proposal form — Onus toprove that there was materialconcealment of any disease whichdirectly proved fatal lies on InsuranceCompany to repudiate the claim —Nature of ailment not known to theinsured and also to Doctor of InsuranceCompany despite detailed examination— Plea of insurer that insured concealedmaterial fact of disease — Cannot beaccepted — Repudiation of insuranceclaim — Not legal.

CASE REFERRED:1. LIC and others v. Asha Goel: (2001) 2 SCC 160.

(Para 3)

Mr. Vinod Kumar, Advocate for the Petitioners.Mr. Ashutosh Sharma, Advocate for the

Respondent.

ORDER(Per Mr. S.N. Kapoor, Presiding

Member)

This Revision petition is directed againstorder passed by State Consumer DisputesRedressal Commission, Uttranchal, settingaside the order of the District Forum andallowing the complaint to pay the entireamount of the two insurance policies ofinsurer, Smt.Manju Rani, along with bonus

270

I] CPA 23

and profits with interest @ 12% and withcompensation of Rs.5,000/-.

2. The grievance of the petitioner is thatthe deceased was suffering from cough,expectoration, breathlessness (hoarsenessof voice) for the last 2-3 years. Policy holderdid not get these diseases recorded in theproposal form. The disease ofbreathlessness proved fatal and the cause ofdeath has been mentioned as heart-attackwith difficulty in breathing. This concealmentof fact was sought to be supported byaffidavit of Smt. Mala Rani, an officer of theinsurance company, who had just copied itscontents from the record of the ApolloHospital. It was stated in her affidavit that on1st April 1999, Smt. Manju Rani wassuffering from cough, expectoration,breathlessness (hoarseness of voice) for thelast 2-3 years. She died in December 1999.The Death Report prepared at Ramnager,Roorkee, indicated that primary causeshown was Myocardial Infraction and thesecondary cause was shown as Cardio-respiratory failure. According to the MedicalAttendant’s Certificate and according to theDeath Certificate of Vinay Nursing Home,she expired due to myocardial infraction(heart-attack). It does not indicate anysecondary cause.

3. The onus to prove that there wasmaterial concealment of any disease, whichdirectly proved fatal, was on the petitionerinsurance company. In addition to above, thepetitioner was supposed to prove that at thetime of taking policy, the person who gavethe information, knew about such a diseaseand he withheld it with an intention todefraud insurance company. In LIC andothers v. Asha Goel1, said judgment of,Mithoolal Nayak was considered:-

“In this connection, we may notice thedecision of this court in Mithoolal Nayakv. LIC of India in which the position oflaw was stated thus:

“The three conditions for the applicationof second part of Section 45 are:

(a) the statement must be on a materialmatter or must suppress facts whichit was material to disclose.

(b) the suppression must befraudulently made by the policy-holder and

(c) the policy-holder must have knownat the time of making the statementthat it was false or that itsuppressed facts which it wasmaterial to disclose......”

But one thing was further observed inpara- 12 as under:

“.......For determination of the questionwhether there has been suppression ofany material facts it may be necessaryto also examine whether thesuppression relates to a fact which is inthe exclusive knowledge of the personintending to take the policy and it couldnot be ascertained by reasonableenquiry by a prudent person.”

4. In the present case, it is evident thatthe information collected from the records ofApollo Hospital is not primary piece ofevidence but the primary evidence would beof the doctors who recorded the informationin Discharge Summary. The doctor whoprepared the Discharge Summary has notbeen produced. The two life policies, one forRs. 1 lakh and other for Rs. 2 lakhs, wereapplied for in March 1999. The deceasedwas medically examined before issuing thePolicy and ECG, BST and X-ray etc., of thedeceased was done. Additional premium ofRs. 3.35 per thousand was charged.Insurance policies, though ordinarily issuedwithin 15 days or so, but in this case theinsurer took, complete 4 months to find as towhether the deceased was medically fit toissue the policy. The deceased wasunderweight. ECG did not show any heartproblem. Doctor of the Insurance Company

Life Insurance Corpn. of India v. Dr. P.S. Aggarwal (S.N. Kapoor, Presiding Member)

1. (2001) 2 SCC 160.

271


also reported that the insured was sufferingfrom cough, expectoration, breathlessness(hoarseness of voice). After thoroughexamination, the deceased was found fit forinsurance. Insurance Company could knotproduce any evidence to show that thedeceased was admitted in Chandigarh,Roorkee and the hospital of Dr. VeenaGupta or suffered an accident few yearsbefore her death. It was conceded before theState Commission by the counsel for theinsurance company. If hospital of Dr. VeenaGupta was a lady hospital, then the so-calledMan Mohan Singh and Nand Kishore Garg,the person who are reported to have takenthe earlier treatment, could not have beenadmitted in a lady hospital. In any case, theyhave not filed any affidavit supporting thecase of the insurance company. Dr. VeenaGupta was not examined. The DischargeCertificate from the Apollo Hospital showedthat she was admitted on 1-4-1999 anddischarged on 2-4-1999, that is very nextdate and diagnosis was bilateral intestinaldisease and that too was underinvestigation. Her investigation report wasgiven and she was discharged onsatisfactory condition. She might be ill andshe might not be ill even at that time for itwas to be decided only after investigationand not before making the proposal. Theproposal form was submitted in November1998. The policy was issued in March 1999after detailed examination, investigation andcheckup. She was not being treated at anypoint of time for any heart ailment. The extra-ordinary suspicious approach withoutpleading and without proof could not bejustified and the death did not have anydirect nexus with Bronchiectasi. If thecomplainant thus wanted to get easy moneyout of insurance of his wife, he could haveinsured her life for Rs.10 laksh for thehusband could pay the premium. He wouldnot have taken her to Apollo Hospital forcheck-up or for that matter to Vinay NursingHome for her treatment. No doubt, the

complainant husband is a doctor, but itwould not mean that all the doctors wouldgive wrong report at his behest as wassought to be made out. Since there was noproof, the contention of the learned counselfor the petitioner could not be accepted fornumerous reasons. Firstly, the detailedexamination conducted by the insurer and bythe doctor of the insurer, Secondly, theinsurer charged extra premium of Rs. 3. 35per thousand. Thirdly, issuing policy for 4months were spent by the insurer to satisfyitself would itself amount to deficiency inservice. Fourthly, there was no direct nexusbetween Bronchiectasi and Heat Failure.

5. The nature of ailment was not knownonly to the insured and the insurer, but itcould also not be known even to the doctorof insurance company despite detailedexamination.

6. In the aforementioned circumstances,it is difficult to accept the contention of thelearned counsel for the petitioner that therewas material concealment and as suchinsurance company was justified inrepudiating the claim of the complainants.

7. Seeing the reasons given by the StateCommission, it is not possible to reverse thejudgment in absence of anything to showthat the State Commission has exercised itsjurisdiction not vested in it by law or hasfailed to exercise a jurisdiction so vested orhas acted in the exercise of its jurisdiction orwith material irregularity. In revisionaljurisdiction, this Commission is not supposedto substitute its own opinion, if two opinionsare possible.

For the aforesaid reasons, the revisionpetition is dismissed and the parties are leftto bear their own costs.

272

I] CPA 25Jasvinder Singh v. New India Insurance Co. Ltd. (M.B. Shah, President)



Mr. M.B. SHAH, PRESIDENT andMrs. RAJYALAKSHMI RAO, MEMBER

O.P.No.294 of 2001 - Decided on 15-9-2004.

Jasvinder Singh

v.

New India Insurance Co. Ltd. and another

CONSUMER PROTECTION ACT, 1986,Sec. 21 — Insurance Claim — Insurancecoverage — Insured sustained loss onaccount of fire — Surveyors of insurerassessed loss — Divisional Managerrecommended for its payment —Insurance Company deducted certainamount from the same on the ground thatstock in process was not covered byInsurance Policy — Complainant takinginsurance policy continuously for years— Those polices covered the risk ofstock in process also — Present policy isa renewal of previous policy whichcovered stock in process also — Officerof company admitted that error wascommitted in not mentioning stock inprocess in cover note and that insurednever intended to exclude stock inprocess out of the scope of coverage ofthe policy — Policy taken for the sameamount as in the previous year — Morepremium was also collected — Held thatInsurance Company unjustifiablydeducted the amount on the ground thatstock in process was not covered —Such action of insurer smacks ofarbitrariness — Directions given to paythe amount as assessed by Surveyors.

Mr. M.N. Krishnamani, Sr. Advocate withMr. Inderbir Singh and Mr. D. Singh, Advocatesfor the Complainant.

Mr. Sanjiv Sharma, Advocate for the Opp. Parties.

ORDER(Per Mr. M.B. Shah, President)

M/s. Kayasens, Surveyors, appointed bythe Insurance Company, submitted their

elaborate report dated 18-2-2000 andassessed the net loss at Rs.49,79,539/-. Yet,the Insurance Company, for the reasonsbest known to it, failed to pay the saidamount, despite recommendation by theRegional Office. It is contended that therewas unfair trade practice by the InsuranceCompany. We, for the reasons stated below,hold that deduction was totally unjustifiedand arbitrary.

2. The aforesaid conclusion is arrived atby considering the fact that the complainanthas taken an insurance policy in respect ofplant and machinery, building and stocks ofraw materials including stocks in process inconnection with business of manufacturingvarious kinds of ply-boards, block-boardsetc. For such manufacturing activity, thecomplainant is required to have rawmaterials in the form of wood which ispurchased locally and also maintain semi-finished stocks. It is contended that fireoccurred at his premises on 12-10-1999and that for the assessed loss ofRs.92,23,490/-, the insurance company paidonly a sum of Rs.35,35,976/-. This delayedpayment was made after a lapse of oneyear. It is, therefore, submitted that this wasan unfair trade practice indulged in by theinsurance company. The Complainant hastherefore prayed that the insurancecompany be directed to pay:

(1) Shortfall of the claim ofRs. 56,87,514.22 (Rupees Fifty sixlakhs eighty seven thousand fivehundred fourteen and twenty twopaise only)

(2) Rs.75,00,000/- (Rupees seventyfive lakhs only) for the loss ofbusiness, delay in settlement ofclaim, undue expenses,compensation for the trauma,misery, pain, dismay caused to thecomplainant.

Thus total claim is for a sum ofRs.1,31,87,614/- with interest @ 20% perannum till the date of payment.

257


3. By a Registered Letter dated 6thSeptember 2000, the insurance companyinformed the complainant that Competent

Authority has agreed to approve thefollowing claims on the basis of coverageunder respective policies:

(A) Loss approved for building and/or shedscovered vide policy No. 11/7452 Rs. 10,78,238.50

Less pro rata ‘Re-instatement of suminsured for the period w.e.f. 12-10-1999to 7-8-2000 5% S. Tax included. Rs. 5,144.00

Total Rs. 10,73,094.50

(B) Loss approved for Plant and Machinerycovered vide policy No. 11/7155 Rs. 5,59,084.32

Less pro rata “Re-instatement of

(C) Loss approved for stocks coveredVide policy No.11/7362 Rs. 19,26,663.48

Less pro rata “Re-instatement of suminsured premium for the period w.e.f.12-10-1999 to 24-4-2000. Rs. 12,204.00

Total Rs. 19,14,459.48

Total A + B + C Rs.35,45,976.30

Less Excess clause as per Policy Rs. 10,000.00

Net amount payable Rs.35,35,976.00

Now you have backed out from thesettlement of Rs.49,80,000/- and sentus the voucher for Rs.35,35,976/- fordischarge which is totally wrong andnot justified from an insurancecompany of repute. It is cheating andhighhandedness as the paymentagreed upon has not been made andit has been unduly delayed.

We are accepting the payment ofRs.35,35,976/- because of exigenciesof business treating it as part paymentand reserve our rights to recover thebalance amount through court of law.”

5. Undisputedly, on 15th September,insurance company along with a letter sent acheque for a sum of Rs.35,35,976/- for theloss that occurred on 12-10-1999.

At the time of hearing of this complaint,learned counsel for the complainant

Before releasing the payment we would likeyou to return the Discharge Voucher, dulysinged by you, enclosed herewith induplicate.

4. Thereafter, the complainantimmediately wrote on 15-9-2000 stating interalia that:

“To our dismay you have sent usdischarge voucher of Rs. 35,35,976/-against our claim of Rs. 92,23,450.22which was agreed upon forRs.49,80,000/- in the meeting held withDivn. Manager Sh. A.K. Aggarwal andsurveyor Sh. K.P. Sen on 13-2-2000.We agreed to this settlement muchagainst our wishes as our loss wasmuch more but Divn. ManagerMr. Aggarwal assured us that since thisfalls within the limits of RegionalManager, Chandigarh, the payment ofclaim will be made latest by 31-3-2k.

258

I] CPA 27

confined his submissions to unjustifieddeduction from agreed sum ofRs.49,80,000/-. It is pointed out that theaforesaid amount was agreed to be paid in ameeting held with Divisional Manager andthe Surveyor on 13-2-2000. As against this,learned counsel for the insurance companysubmitted that amount was deductedbecause peril to stock in process was notcovered by the insurance company.

6. In our view, the submission of theInsurance Company is totally unjustified forthe reasons stated below.

7. Firstly, it is to be stated thatcomplainant was taking insurance policycontinuously for years and those policiescovered the risk of stock in process. Thepolicy for the period between 25-4-1998 and24-4-1999, which was taken for a sum ofRs.80 lakhs, covered the following risks:

“On stocks of plywood, Boards &/orraw materials of all kinds to be used forthe manufacturing of Plywood &/orBoards, whilst stored &/or lying &/orunder any process in the insured’s,factory, built of 1st class const, situatedat above address.”

8. Thereafter, the policy was renewed forwhich cover-note was issued on 22-4-1999.This policy was also for a sum of Rs.80lakhs. Premium charged was for a sum ofRs. 49,623/-. For the said sum of Rs.80lakhs for the year 1998-99, premiumcharged was Rs.44,688/-. The cover-noteprovides coverage or risks as under:

“On stocks of raw materials of timber &/or Plywood, Board &/or other materialto be used for the manufacturing ofPlywood, whilst stored &/or lying in theinsured’s factory, built of A classconstruction, situated at aboveaddress.

R/Policy No. 11/06786 exp. On24-4-1999.”

9. Last line undisputedly provides that itis for renewal of insurance policy, whichexpired on 24-4-1999. This would mean thatthe policy was simpliciter for renewal of risk,which was covered by the previous policy.This is required to be mentioned because inthis cover-note, the words “stock in process”are not mentioned. Considering theaforesaid coverage, it is apparent that theinsurance coverage was for stock or rawmaterials of timber, plywood, boards or othermaterials to be used for manufacture ofplywood. This would undoubtedly include thestock in process. Same was the view takenby the Branch Manager of the insurancecompany. This is specifically mentioned inletter dated 24-4-2000 written by theDivisional Officer to the Branch Managerelaborately wherein he has admitted hismistake in para-6 of the letter which is asunder:

“This is to clarify that insured had neverintended to exclude stock in processout of the scope of the coverage of thepolicy nor have they ever made anysuch written request for the same. HereI wish to submit that original & 1st copyof the covernotes were required to begiven to the insured-one for them andanother for their bankers. So IInd copyof the covernote was deposited withoffice for policy preparation. As I wasleft with illegible copy of the covernote,so on occasions I used to redraft thewording of the covernote thoughinsured always intended for fullcoverage for their stocks and suminsured was kept accordingly by them,it is merely due to drafting error thatstocks in process got omitted undercovernote number 94197 dt. 22-4-1999which is otherwise provided coverageunder all previous insurances”.

10. Further, the Divisional Manager by itsletter dated 23-6-2000 recommended thatinsured should be paid Rs. 49,79,539/-which is the loss assessed by the surveyors.

Jasvinder Singh v. New India Insurance Co. Ltd. (M.B. Shah, President)

259


In that report, it is specifically mentioned thatthe policies taken by the insured wererenewals of the policies previously taken byhim. The report also reflects that as the losswas major, loss claimed was investigated byLoss Prevention Association of India andtheir findings were also placed on the file.

11. Similarly, the Regional Manager, onthe basis of the recommendation of theDivisional Manager and the report of theRegional Accountant, has also observed thatstock-in-process was covered by theinsurance policy and that was the intention ofthe insured. This aspect is again elaboratedby the Branch Manager is his report. For us,it is not necessary to reiterate the same.

12. From the aforesaid documents onrecord, it is apparent that insurancecompany has unjustifiably deducted theamount on the ground that stock in processwas not covered.

13. In this view of the matter, there wasno justifiable reason or basis for deductingdamage to the stock in process orrawmaterial for which the insurancecoverage is given and not paying as per lossassessed by the Surveyor. Hence, thecomplaint is partly allowed and theInsurance Company is directed to pay thebalance amount of Rs.14,44,024/- (i.e.Rs. 49,80,000/- minus Rs. 35,35,976/- paid)with interest at the rate of 12% p.a Theinterest will run from two months after theSurveyors report, i.e., 18-4-2000 till the dateof payment. It is apparent that the decisionnot to pay the said amount smacks ofarbitrariness, and, therefore, the InsuranceCompany is directed to pay costs ofRs.50,000/- to the Complainant. Thecomplaint is disposed of in the above terms.



Mr. S.N. KAPOOR, PRESIDINGMEMBER and Mr. B.K. TAIMNI,

MEMBER


Central Bank of India and another

v.

Smt. Heera Soni and others

CONSUMER PROTECTION ACT, 1986,Section 21 — Insurance claim underMaster Group Insurance Policy — Grouppolicy issued in favour of employees ofCentral Bank — Under the provisions ofpolicy, Central Bank has to deductmonthly contributions from salaries ofemployees and remit the same to LIC inone lump sum — Non-remittance ofpremium by Bank for any particularmonth would not lead to automatic lapseof the policy — LIC reserves its right toterminate the policy and may also permitresumption of payment thereafter — Therole of Bank is that of an Agent underContract Act having implied authority ofLIC for collecting premium fromemployees — The moment amount isdeducted from salary, it would bedeemed to have been paid to LIC —Failure to deposit amount by Bank wouldnot lead to lapse of policy — Failure ofBank, agent of LIC, to remit amount ofcontributions deducted from salaries,would not absolve LIC from its liability topay the amount insured — Plea of LICthat policy lapsed due to non-payment ofpremium by Bank — Not tenable —Directions given to pay the insuredamount to legal heirs of deceased Bankemployee covered by Group Policytogether with interest.

260

I] CPA 29

CASE REFERRED:1. Desu v. Basanti Devi: (1999) 8 SCC 229 =

AIR 2000 SC 43. (Para 13)

M/s. Sh. Vijay Gupta and Sh. J. Das, Advocates forthe Petitioners.

None for the Respondents.

ORDER(Per S.N. Kapoor, Presiding Member)

Heard the learned Counsel for theparties.

2. In this case, a Group Insurance MasterPolicy No. GSLI/601073 was issued infavour of employees of the Central Bank ofIndia, Regional Office, Chhindwara (MP) on20-11-1990. It is claimed by the InsuranceCo. that Nand Kishore Soni, an employee ofthe Central Bank expired. His legal heirspressed the claim for Rs.1,20,000/-. Thatclaim was not settled despite notice to theLIC as well as to the Central Bank of India.The legal heirs of the Nand Kishore filed acomplaint.

3. The LIC contested the matter amongstother grounds on the ground that since theCentral Bank of India has not paid thepremium, the policy lapsed and as such, theLIC was not liable to pay the amount. TheCentral Bank took the plea that they werenot charging any fee from the employee andthe claim regarding payment payable afterthe death of an employee was notmaintainable.

4. The District Forum after hearing thematter directed the Insurance Company topay the amount of the Insurance Policy interms of Master Policy No. GSLI/601073along with interest thereon at the rate of 12%from 17-2-1999 till the date of payment.Defendant Nos. 1 & 2 were supposed to payRs. 1,000/- to the applicant as cost of thesuit.

5. LIC filed an appeal and the StateCommission took the view that the policyhad lapsed and LIC was not liable to pay any

amount since the deficiency was found onthe part of the Central Bank. They weredirected to pay the amount of Rs.1,20,000/-with interest @ 6% from the date of filing ofthe complaint i.e. from 12-1-2000 along withcost of Rs.1,000/- within a period of twomonths from the date of receipt of the order.

6. The Central Bank has come up inrevision challenging the order of the learnedDistrict (sic. State) Forum.

7. Having heard the parties’ Counsel, ashort question arises in this matter as towhether policy could have been said to havebeen lapsed, to hold the LIC as not liable. Inthis regard, it would be appropriate to refer tothe terms and conditions of the policy inregard to liability and payment of premium.

8. There is no dispute about one aspectthat Nand Kishore, the deceased employeeof the Central Bank was eligible to getbenefits on the date of commencement ofthe said policy. It is not the case that he waspermitted to withdraw or retired. As such, hewas eligible.

9. It would be useful to reproduceprovisions of Clauses 2 and 4 of Part II of theMaster Group Insurance Policy. They readas under:

2. The Grantees shall pay thepremiums in respect of all the membersin one lump-sum.

4. If the premium is not paid in respectof all members for a particular month orif the premium is not paid on the duedate, the Grantees shall be deemed tohave discontinued payment of premiumin respect of this policy as whole andthe Corporation reserves the right toterminate the policy forthwith, TheGrantees shall not, thereafter, beentitled to resume payment except withthe consent of Corporation and on suchterms an conditions as the Corporationmay prescribe in this regard.

10. As regards the payment of premium,

Central Bank of India v. Smt. Heera Soni (S.N. Kapoor, Presiding Member)

261


in terms of Clause 2 of Part II of the Policy,the Grantees (the Central Bank) wassupposed to pay the premium in respect ofall members in one lumpsum. Clause 4 ofthe Policy provides for different kind ofbeneficial insurance cover in respect ofmembers of a Group Insurance Policy likethe present one for it does not say in somany words that if the premium is not paid inrespect of all members for a particular monthor if the premium is not paid on the due dateby the bank like the Grantees though theyshould be deemed to have discontinuedpayment of premium, in the policy as awhole, yet it would not lead to automaticlapse of the policy. This is one part, whichappears to be slightly in favour of LIC. But,this is subject to another clause, whichreads, “The Corporation reserves the right toterminate the policy forthwith”. The Granteesshall not thereafter i.e. after termination ofthe policy, be entitled to resume paymentexcept with the consent of the Corporationand on such terms and conditions as theCorporation may prescribe in this regard. Ifthe right of the Corporation to terminate thepolicy was kept in reserve and LIC did notexercise that right, it would only mean thatLIC was interested in continuing thatinsurance cover for the beneficiaries of thepolicies and any member of GroupInsurance Policy of Grantees bank and theGrantees i.e., the Central Bank shall beentitled to make payment of the unpaidpremium on such terms and conditions asmay be prescribed by the LIC.

11. If contributions are paid by theemployees in full and the employer just actsonly as a co-ordinator and monthlycontributions from the salaries of theemployees are required to be remitted to LICevery month, failure of the Co-ordinatorwould not and ought not absolve the LifeInsurance Corporation of its responsibility. Itis not a policy of an individual. It would affecthundreds of employees for none of their

faults. This appears to be the reason toreserve the right to terminate the policy andnot to automatically terminate the policy.

12. Mr. Gupta, learned Counsel for thepetitioner submits that the policy is stillcontinuing till to-day. We will have toappreciate this provision in a properperspective keeping in view the backgroundand formation of LIC on one hand and in thelight of the fact that the clause 4 is differentfrom other kinds of insurance policies andthe LIC is a Public Sector Undertaking of aSocial Welfare State as is mentioned in thePreamble of our Constitution. Besides, thesepolices were started with two purposes, oneto provide insurance cover to the employeesas labour welfare measure and another witha view to fulfil the larger social objective interms of nationalisation of Life Insurancebusiness. If we appreciate this clause of thepolicy in this background, this policy shouldnot be read otherwise except that the policywas not terminated and it would lapse as anyother life policy of an individual lapseautomatically in case of non-payment ofinsurance premium within the prescribedtime. We have not been shown anyprovisions indicating automatic expiry ofpolicy for non-payment except the reservedright to terminate the policy. And terminationof the policy has not taken place in this case.This further supports the view, which we aretaking in this matter.

13. In Desu v. Basanti Devi1, the Hon’bleSupreme Court in relation to a similar kind ofGroup Insurance Scheme under the name ofSalary Saving Scheme, observed in para 11about the relationship, between the Desuand LIC in following words:

“Desu is certainly not an insuranceagent within the meaning of theaforesaid Insurance Act and theregulations but Desu is certainly anagent as defined in Section 182 of theContract Act. The mode of collection of

1. (1999) 8 SCC 229 = AIR 2000 SC 43.

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premium has been indicated in theScheme itself and the employer hasbeen assigned the role of collectingpremium and remitting the same toLIC. As far as the employee as such isconcerned, the employer will be anagent of LIC. It is a matter of commonknowledge that insurance companiesemploy agents. When there is noinsurance agent as defined in theregulations and Insurance Act, thegeneral principles of the law of agencyas contained in the Contract Act are tobe applied.”

14. The Hon’ble Supreme Court furtherobserved that the authority of Desu to collectpremium on behalf of LIC was implied. Inany case, Desu had ostensible authority tocollect premium and so far the employeewas concerned Desu was an agent of LIC tocollect premium on its behalf.

15. Accordingly, we hold that CentralBank of India was acting as an Agent havingimplied authority of the LIC of collecting theinsurance premium from the employees. Themoment the amount was deducted from thesalary of employees by the Central Bank itwould be deemed to have been paid to theLife Insurance Corporation. Failure on thepart of the agent having an implied authority

to receive premium on receipt by deductionfrom the salary coupled with failure todeposit the same with LIC could not lead tolapse of the policy by any stretch ofimagination.

16. It may be mentioned that in Desu v.Basanti Devi (1 supra), ultimately, theHon’ble Supreme Court directed LIC to payto Basanti Devi insurance amount ofRs.50,000/- with interest at the rate of 15%p.a. from 17-12-1992 p.a. thus substitutingthe LIC for Desu as was ordered by theState Commission.

17. In the aforesaid circumstances wefind that the order of the learned StateCommission cannot be sustained and itrequires modification. Following thejudgment of the Supreme Court in Desu v.Basanti Devi and another (1 supra) LIC, wehold LIC liable to pay the amount of policy ofRs. 1,20,000/- to such beneficiaries andconsequently we direct the LIC to pay theaforesaid amount along with interest @ 9%p.a. from 1-9-1997. (Keeping some marginof time to settle the claim of the deceased) tillpayment. The amount shall be paid by LICwithin a period of six weeks. In case offailure by the LIC to pay the amount as saidhereinabove, LIC shall pay the aboveamount along with interest @ 12% p.a. Therevision petition is disposed of accordingly.

Central Bank of India v. Smt. Heera Soni (S.N. Kapoor, Presiding Member)

CPA Section Ends

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Documents

I] CPA 1 ANDHRA LAW TIMES - Gulf Oil · 3. Submission advanced by Mrs. Rachna Joshi Issar, Smt. C.K. Sucharita and Shri Atul Nanda for petitioners in three batches of revision petitions