Holding

Services rendered by medical practitioners and hospitals for consideration, including partially free or insurance‑paid services, fall within the definition of "service" under Section 2(1)(o) of the Consumer Protection Act, 1986, and are therefore subject to its consumer‑protection provisions.

Summary

The Supreme Court examined whether medical services rendered by doctors, hospitals and nursing homes fall within the definition of "service" under Section 2(1)(o) of the Consumer Protection Act, 1986, and thus attract consumer‑redress. It held that services provided for consideration – even if partially free or paid through insurance or employer – are "services" and the patients (or beneficiaries) are "consumers". Services rendered completely free of charge to all patients are excluded, but mixed‑payment schemes are not. The Court rejected the argument that the exclusionary clause on "contract of personal service" applies to medical practitioners, distinguishing it from a contract for services. It also found that the composition and procedure of the Consumer Disputes Redressal Forums are adequate for adjudicating medical negligence claims and that the Act does not violate Articles 14 and 19(1)(g) of the Constitution. Accordingly, the Court allowed appeals that had held medical services within the Act’s ambit and dismissed those upholding the contrary view.

Issues considered

Whether services rendered by medical practitioners and hospitals constitute "service" under Section 2(1)(o) of the Consumer Protection Act, 1986.
Whether services rendered free of charge to all patients are excluded from the definition of "service".
Whether the exclusionary phrase "contract of personal service" bars medical services from the Act.
Whether the Consumer Disputes Redressal Agencies are suitable to adjudicate medical negligence complaints.
Whether the provisions of the Act infringe Articles 14 and 19(1)(g) of the Constitution.

Legislation cited

Constitution of Indias. Article 14, s. Article 19(1)(g), s. Article 265
Consumer Protection Act, 1986s. 10, s. 13, s. 14, s. 15, s. 16, s. 17, s. 20, s. 21, s. 2(1)(d), s. 2(1)(g), s. 2(1)(o), s. 23, s. 3, s. 9
Indian Medical Council Act, 1956

Subjects

Consumer Protection ActMedical negligenceDefinition of serviceContract of personal serviceFree of charge medical servicesGovernment hospitalsConstitutional challengeConsumer redressal forumProfessional liability

Judgment

A INDIAN MEDICAL ASSOCIATION
v.
V.P. SHANTHA AND ORS.

NOVEMBER 13, 1995 .

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

Consumer Protection Act. 1986.

Ss. 2(1)(o), (c), (d), (g) and 14-Scope of 'Service' in the light of the
C definition 'consumer' and other relevant provisions of the Act-Remedy
against malpractice or negligence by Medical Practitioners, hospitals and
nursing homes in the process of consultation, diagnosis and treatment-Where
such medical se1vices are rendered free of charge to everybody availing the
se1vices they do not fall under the definition 'se1vice'-'--But where charges are
required to be paid by eve1ybody or payable by those who could afford and
D not by those who could not such medical se1vice rendered would constitute
'Se1vice'-Payment of token amount for registration purposes cannot be
treated as charges-Payment of charges by insurance company or employer
for medical services rendered to insured/employee, such se1vices would still
fall under 'se1vice' "contract of service'~ "Contract for service''-Difference.
E between-Se1vices rendered by medical practitioners or hospitals or nursing
homes-Deficiency in-To be judged by applying the test of reasonable skill
and care as applicable in action for damages for negligence.

Sections 3 and 13-Procedure followed by the Redressal
Fomm--Speedy disposal of complaints-Complicated issues requiling record-
F ing of evidence of experts-Complainant can be directed to approach Civil
Court.

Sections 3, JO, 13, 16 and 2o--Redressal Fomm-Associating non-legal
persons having knowledge in other fields connected with the object of the
G Act-Decision on the basis of maj01ity view-Technical matters arising in
complaint regarding deficiency in se1vice-Such members need not be experts
in the subject.

T01ts:

H Negligence or malp1:actice by Medical Practitioners-Liable for
110
INDIAN MEDICAL ASSN. v. V.P.SHANTIIA 111

damages-Can be sued in contract-Failure to take reasonable skill and A
care-Not immune from liability on the ground that they are subject to
disciplinary control under Medical Council Act.

Constitution of India, 1950 :

Article 265-T~haracteristics of-Expenses of 1wming a govem- B
ment hospital met from Consolidated Fund which is raised from taxes paid
by tax payers-'Free of charge' medical services rendere·d by the hospital to
such tax payers-Held, cannot be treated as paid services.

Words & Phrases : "Service'~ "Preferential users'~ "made available'~ C
"avails of' "Hires" Meaning of-In the context of Consumer Protection Act,
1986.

Divergent views had been expressed on the question whether a
medical practitioner can be regarded as rendering 'service' under Section
2(i)(o) of the Consumer Protection Act, 1986, and whether the service D
rendered at the hospital/nursing home can be regarded as 'service' under
the said provision. In Writ Petitions filed under Article 226 of the Con-
stitution, the Madras High Court had held that services rendered to a
patient by a medical practitioner or by a hospital by way of diagnosis and
treatment, both medicinal and surgical, would not come within the defini-
tion of 'service' under Section 2(1)(o) of the Act and a patient who
E
undergoes treatment under a medical practitioner or in a hospital by way
of diagnosis and treatment, both medicinal and surgical, cannot be con-
sidered to be a 'consumer' within the meaning of Section 2(1)(d) of the Act
but para-medical services rendered by them would be within the definition
of 'service' and a person availing of such service would be a 'consumer'. F
In proceedings arising out of complaints filed under the Act the
National Consumer Disputes Redressal Commission on the other hand,
had held that the activity of providing medical assistance for payment
carried on by the hospitals and members of the medical profession falls
within the expression of 'service' and in the event of any deficiency in the G
performance of such service, the aggrieved party can invoke the remedies
provided under the Act by filing a complaint before the Consumer Forum
having jurisdiction. The National Commission had also held that the legal
representatives of the deceased patients who were undergoing treatment
in the hospital are consumers under the Act and are competent to main- H
112 SUPREME COURT REPORTS (1995] SUPP. 5 S.C.R.

A tain the complaint. The National Commission was, however, of the view
that if the treatment given in a nursing home was totally free of charge, it
did not constitute 'service' under the Act. As regards Government hospi-
tals the National Commission held that persons who avail themselves of
the facility of medical treatment in Government hospitals are not con-
sumers and the said facility cannot be regarded as service 'hired' for
B 'consideration'. It was also ·held that the contribution made by the Govern-
ment employee in the Central Government Health Scheme or such other
similar scheme does not make him 'consumer' within the meaning of the
Act.

.C Appeals were filed by the petitioner in the Writ Petitions against the
judgment of the Madras High Court as well as various judgments of the
National Commission by the complainants as also the members of medical
profession and hospitals. A Writ Petition under Article 32 was also filed
by a hospital and a medical practitioner wherein the validity of the
provisions of the Act was challenged on the ground that the same. were
D violative of the provisions of Articles 14 and 19(1) (g) of the Constitution.

On behalf of the medical profession and the hospitals, the following
contentions were urged :-

(i) In law there is distinction between a 'profession' and an
E
'occupation' and while a person engaged in an occupation
renders service which falls within the ambit of Section 2(1)(o)
of the Consumer Protection Act the service rendered by a
person belonging to a profession does not fall within the ambit
of the said expression and therefore medical practitioners who
F belong to the medical profession are not covered under the
provisions of the Act.

(ii) Jn view of the words 'potential user· in Section 2(1) (o) and the
word 'hires' in Section 2(1)(d)(ii) medical practitioners are
not contemplated by Parliament to be covered by the
G provisions of the Act.

(iii) Having regard to the definition of 'deficiency' in Section
2(1)(g), a medical practitioner is excluded from the definition
of 'service' because medical services rendered by a medical
H practitioner cannot be judged on the basis of any fixed norms.
INDIAN MEDICAL ASSN. v. V.P. SHANTHA 113

(iv) The relationship between a medical practitioner and the A
patient is of trust and confidence and therefore it is in the
nature of a contract of personal service and it is excluded
from the ambit of 'service' by the exclusionary clause in Sec-
tion 2(1)(o).

(v) The composition of the District Consumer Redressal Forum,
B
the State Consumer Disputes Redressal Commission and the
National Commission and the procedure to be followed by
these agencies is such that it is not suitable for determination
of the complex questions which may arise in respect of claims
for negligence in respect of services rendered by medical prnc- C
titioners.

(vi) If the provisions of the Act are so construed as being ap·
plicable to the medical profession and hospitals then the same
are violative of the provisions of Articles 14 and 19(l)(g) of
the Constitution of India. · D

(vii) lf the medical profession is brought within the purview of the
Act, the consequences would be huge increase in medical
expenditure on account of insurance charges as well as
tremendous increase in defensive medicine and that medical E
practitioners may refuse to attend to medical emergencies and
there will be no safeguard against frivolous and vexatious
complaints and consequent blackmail.

Refuting the abovesaid contentions, the complainants submitted :-
F
(i) The expression "Contract of personal service" in Section
2(1)(o) is confined to employment of domestic servants only
and does not include the employment of a medical officer.

(ii) Even though the service rendered at a hospital, being free of
charge, does not fall within the ambit of Section 2(1)(o) in so G

-
far as the hospital is concerned, the said service would fall
within the ambit of Section 2(1)(o) since it is rendered by a
medical officer employed in the hospital who is not rendering
the services free of charge because the said medical officer
receives emoluments by way of salary for employment in the H
114 SUPREME COURT REPORTS [1995) SUPP. 5 S.C.R.

A hospital.

(iii) Even in Government hospitals/health centres/dispensaries
where services are rendered free of charge to all the patients,
the provisions of the Act shall apply because the expenses of
running the said hospitals are met by appropriation from the
B Consolidated Fund which is raised from the tax paid by the
tax payers.

Disposing of the rival contentions, this Court

HELD : 1.1. The definition of 'service' in Sectfon 2(1)(o) contains
c words of wide amplitude. The word 'any' has been used in a wider sense
extending from one to all. [125-C]

1.2. Service rendered to a patient by a medical practitioner (except
where the doctor renders service free of charge to every patient or under
D a contract of personal service), by way of consultation, diagnosis and
treatment, both· medicinal and surgical, would fall within the ambit of
'service' as defined in Section 2(1)(o) of the Act. [146-FJ

1.3. The fact that medical practitioners belong to the medical profes-
sion and are subject to the disciplinary control of the Medical Council of
E India and/or State Medical Councils constituted under the provisions of
the Indian Medical Council Act would not exclude the services rendered
by them from the ambit of the Act. [146-G]

Mason & McCall Smith; Law and Medical Ethics, 4th Edn. pp. 16~17
F. and 192 and Arizona v. Mmicopa Country Medical Society, 457 US 332 =73
L.Ed. (2d) 48, referred to.

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

G 2. A professional person owes to his client a duty in tort as well as
in contract to exercise reasonable care in givi~g advice of performing
service. Medical practitioners do not enjoy any immunity and they can be
sued in contract or tort on the ground that they have failed to exercise a
reasonable skill and care. [128-C; E]
-
H Saif Ali v. Sidney Mitchell & Co., (1980) 1 AC 198; Rees v. Sinclair,
INDIAN MEDICAL ASSN. v. V.P.. SHAN1HA 115

(1974) 1NZLR180 and Jackson & Powell on Professional Negligence, paras A
1-04, 1-05 and 1-56, referred to.

3.1. The word 'hires' in Section 2(1)(d)(ii) has been used in the same
sense as 'avails or and the words 'potential users' in Section 2(1)(o) means
'availing of services'. From the use of these words it cannot be inferred
that the services rendered by medical practitioners are not contemplated B
by Parliament to be covered with the expression 'service' as defined in
Section 2(1)(o). [130-C; E]

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

3.2. A determination about deficiency in service for the purpose of C
Section 2(1) (g) has to be made by applying the same test as is applied in
action founded on tort of negligence. It cannot, therefore, be said that in
view of the definition of'deficiency' as contained in Section 2(1)(g) medical
practitioners must be treated to be excluded from the ambit of the Act.
[131-E; 132-E] D
Bolam v. F1iers Management Committee, [1957) 1WLR582; W1zite v.
Jordan, [1981) 1 WLR 246; Maynard v. West Midland Regional Health
Authority, [1984) 1 WLR 634 and Sidaway v. Governors of Beth/em Royal
Hospital, (1985) AC 871, referred to.
E
4.1. There is a well recognised distinction between a 'contract of
service' and a 'contract for services'. Parliament has deliberately chosen
the expression 'contract of service' instead of the expression 'contract for
service' in the exclusionary part of the definition of 'service' in Section
2(1)(o) for the reason that an employee cannot be regarded as a consumer
in respect of the services rendered by his employer in pursuance of a F
contract of employment. By affixing the adjective 'personal' to the word
'service' the nature of the contracts which are excluded is not altered. The
said adjective only emphasizes that what is sought to be excluded is
personal service only. The expression 'contract of personal service' in the
exclusionary part of Section 2(1)(o) excludes services rendered by an G
employee to his employer. [137·H;. 138·C·E]

Dharangadhara Chemical Works Ltd. v. State of Saurashtra, [1957)
SCR 152, relied on.

Oxford Companion to Law, p. 1134; Simmons v. Health Laund1y Co., H
116 SUPREME COURT REPORTS [1995) SUPP. 5 S.C.R.

A (1910) 1 K.B. 543; Halsbury's Laws of England, 4th Edn., Vol.16 para 501
and Siroud's Judicial Dictionary, 5th Edn. p. 540, referred to.

4.2. The expression 'contract of personal service' contained in Sec-
tion 2(1)(o) is not confined to employment of domestic servants only.
There can be a contract of personal service if there is relationship of
B master and servant between a doctor and the person availing his services
and in that event the service rendered by the doctor to his employer would
be excluded from the purview of the expression 'service' under Section
2(1)(o) of the Act. [147-C]

C 43. A 'contract of personal service' has to be distinguished from a
'contract for personal service'. In the absence of a relationship of master
and servant between the patient and medical practitioner, the service
rendered by a medical prnctitioner to the patient cannot be regarded as
service rendered under a 'contract of personal service'. Such service is
service rendered under a 'contract/or personal service' and is not covered
D by exclusionary clause of the definition of 'service' contained in Section
2(l)(o) of the Act. [146-H; 147-A-B] ·>!
.fl·
The High Commissioner for India v. IM. Lall, (1948) L.R. 75 I.A. 225;
Ram Kissenda:; Dhanuka v. Satya Charan Law, (1949) L.R. 77 I.A. 128 and
E. Dr. S.B. Dutt v. University of Delhi, [1959) SCR"1236, relied on.

5.1. In the matter of constitution of the District Forums, the State
CoPJmission a.nd the National Commission the Act combines with legal
competence the merits of lay decision making by members having
knowledge and experience in dealing with problems relating to various
F _fields which are connected with the object and purpose of the Act, namely,,
protection of interest of consumers. [135-D-E]

Robin CA. White: The Admi11istratio11 of Justice, 2nd Edn. p. 345,
referred to.
G 5.2. Moreover, there is a safeguard of appeal against the order made
by the District Forum to the State Commission and against the order made
by the Sta~e Commission to the National Commission and further appeal
to the Supreme Court against the order made by the National Commis-
sion. The composition of the Consumer Disputes Redressal Agencies is,
H therefore, not such as to render them unsuitable for adjudicating on issues
INDIAN MEDICAL ASSN. v. V.P. SHANTIIA 117

arising in a complaint regarding deficiency in service rendered by the A
medical practitioner. (135-F-G]

5.3. All complaints of deficiency in rendering service by medical
practitioner would not raise complicated questions requiring recording of
evidence of expert. In many cases the deficiency in service may be due to
obvious faults which can be easily established. The issues arising in the B
complaints in such cases can be speedily disposed of by the procedure that
is being followed by the Consumer Disputes Redressal Agencies and in
complaints involving complicated issues requiring recording of evidence
of experts, the complainant can be asked to approach the Civil Court for
appropriate relief. It cannot, therefore, be said that on the ground of the c
procedure that is followed by the Consumer Disputes Redressal Agencies
in determining the issues arising before them the services rendered by the
medical practitioners are not intended to be included to the expression
'service' as defined in Section 2(1)(o) of the Act. [137-B-D]

6. The provisions of the Act are not open to challenge as being D
violative of the provisions of Articles 14 and 19(1)(g) of the Constitution
on the· ground that the composition of the Consumer Disputes Redressal
Agencies and the procedure to be followed by such agencies is such that
they are not suitable for adjudication of complex issues arising for con-
sideration in complaints relating to deficiency in service rendered by E
medical practitioners and hospitals. [150-F]

7.1. Doctors and Hospitals rendering services without any charge
whatsoever to every person availing the services would not fall within the
ambit of 'service' under Section 2(1)(o). The payment of a token amount
for registration purposes only would not alter the position in respect of F
such doctors or hospitals. [139-G]

7.2. The service rendered in hospitals/nursing homes where services
J•
are rendered free of charge to everybody availing the services would
continue to be service rendered free of charge and wool~ be outside the G
purview of Section 2(1)(o), even though the said service is rendered by a
medical officer employed in the hospital who receives emoluments by way
of salary for employment in the hospital. [141-F-G]

7.3. Services rendered free of charge to all patients in Government
hospjtaJs/health centres/dispensaries would not cease to be services H
118 SUPREME COURT REPORTS (1995) SUPP. 5 S.C.R.

A rendered free of charge on the ground that the expenses for running the
said hospital are met by appropriation from the Consolidated Fund which
i!t raised from the taxes paid by the tax payers. The tax paid by the person
availing the services at a Government hospital cannot be treated as a
consideration or charge for the services rendered by the said hospital and
such services though rendered free of charge do not cease to be so because
B the person availing the service happens to be a tax payer. [142-C; E-F]

17ie Commissioner, Hindu Religi,ous Endowments, Madras v. S1i
Lakshmindra 17iiltha Swamiar of Sri Shirnr Mutt, [1954) SCR 1005, relied
on ..
c 7.4. The services rendered by doctors and hospitals providing free
service to some of the patients belonging to the poor class and on payment
basis to the rest of the patients would fall within the ambit of Section
2(1)(o) even in respect of services rendered to patients free of charge. The
persons who are rendered services free of charge by such doctors and
D hospitals are the beneficiaries and as such come within the definition of
'consumer' under Section 2(l)(d)(ii) and services rendered to them, even
though free of charge, fall within the ambit of the expression 'service' in
Section 2(l)(o). [141 ..C-E]

7.5. Service rendered by a medical practitioner or hospital/nursing
E
home cannot be regarded as service rendered free of charge, if the person
availing the service has taken an insurance policy for medical care
whereunder the charges for consultation, diagnosis and medical treatment
are borne by the insurance company and such service would fall within the
ambit of 'service' as defined in Section 2(1)(o) of the Act. [148-F]
F
7.6. Similarly, where, as a part of the conditions of service, the
employer bears the expenses of medical treatment of an employee and his
family members dependent on him, the service rendered to such an
employee and his family members by a medical practitioner or a hospi-
G ta)/nursing home would not be free of charge and would constitute 'service'
under Section 2(1)(o) of the Act. [148-G]

H
8. In the conditions prevailing in India there is no cause for the
apprehension that if medical practitioners are brought within the purview
of the Act, there would be huge increase in .;.edical expenditure on account
of insurance charges as well as. tremendous increase in defensive medicine
-
INDIANMEDICALASSN.v. V.P.SHANTHA[S.C.AGRAWAL,J.) 119

and that medical practitioners would refuse to attend to medical emergen· A
cies and there will be no safeguards against frivolous and vexatious
complaints and consequent blackmail. [143-G]

Whitehouse v. Jordan & Anr., [1980] 1 All E.R. 650; Jackson & Powell
on Professional Liability, 3rd Edn. para 6-25 p.466; Mason & McCall Smith
: Law and Medical Ethics, 4th Edn., pp. 16, 191, 192-93, referred to. B

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 688 of
1993 etc. etc.

From the Judgment and Order dated 21.4.92 of the National Con- C
sumer Disputes Redressal Commission, New Delhi, in F.A. No. 94of1991.

H.N. Salve, Dr. Rajeev Dhawan, P.S. Poti, C. Sitramiah, M.N. Krish-
namani, P.N. Lekhi, Rajiv Dutta, G. Prakash, L.K. Pandy, M.P. Vinod,
Pramod Kumar, Gopal Singh, Naresh Mathur, Krishan Mahajan, A.D.N.
Rao, AS. Rawat, T.G.N. Nair, Shailendra Bhardwaj, L.R. Singh, Ms. Vimla D
Sinha, Ms. Meenakshi Grover, Yunus Malik, K.R. Nambiar, R.C. Verma,
S.R. Setia, M.K. Garg, Rajiv Dhavan, P.H. Parekh, Fazl, Ms. Lucy, (Mrs.
M. Karanjawala) (NP), P. Narasiman, Gopal Singh, Rakesh Luthra,
M.K.D. Nambordri, K.J. John, Chandra Shekhar, Ms. Indu Malhotra, Anil
Makhija, G. Prabhakar, Mrs. D. Bharathi Reddy, Mrs. Rani Chabbra, E
Prashant Bhushan, K.S. Bhati, S. Balakrishnan, S. Prasad, P.V. Yogesh-
waran and Ms. Shoba R. for the appearing parties.

The Judgment of the Court was delivered by

S.C. AGRAWAL, J. Leave granted in SLP (C) Nos. 18497/93 and F
21755/94. Delay condoned and leave granted in SLP(C) Nos. 18445-73/94.

These appeals, ,;pecial leave petitions and the Writ Petition raise a
common question, viz., whether and, if so, in what circumstances, a medical
practitioner can be regarded as rendering 'service' under Section 2(1)(o) G
of the Consumer Protection Act, 1986 (hereinafter referred to as 'the Act').
Connected with this question is the question whether the service rendered
at a hospitaVnursing home can be regarded as 'service' under Section
2(1)(o) of the Act. These questions have been considered by various High
Courts as well as by the National Consumer Disputes Redressal Commis-
sion (hereinafter referred to as 'the National Commission'). H
120 SUPREME COURT REPORTS (1995] SUPP. 5 S.C.R.

A In Dr. A.S. Chandra v. Union of India, (1992) 1 Andhra Law Times
713, a Division Bench of Andhra Pradesh High Court has held that service
rendered for consideration by private medical practitioners, private hospi-
. tals and nursing homes must be construed as 'service' for the purpose of
Section 2(1)(o) of the Act and the persons availing such services are
'consumers' within the meaning of Section 2(1)(d) of the Act.
B
In Dr. C.S. Subramanian v. Kumarasamy & Anr., (1994) 1 MLJ 438,
a Division Bench of the Madras High Court has, however, taken a different
view. It has been held that the services rendered to a patient by a medical
practitioner or by a hospital by way of diagnosis and treatment, both
C medicinal and surgical, would not come within the definition of 'service'
under Section 2(1)(o) of the Act and a patient who undergoes treatment
under a medical practitioner or a hospital by way of diagnosis and treat-
ment, both medicinal and surgical, cannot be considered to be a 'consumer'
within the meaning of Section 2(1)(d) of the Act; but the medical prac-
D titioners or hospitals undertaking and providing para-medical services of
all kinds and categories cannot claim similar immunity from the provisions
of the Act and that they would fall, to the extent of such para-medical
services rendered by them, within the definition of 'service' and a person
availing of such service would be a 'consumer' within the meaning of the
Act. C.A. Nos. 4664-65/94 and Civil Appeal arising out of SLP(C) No.
E 21775/94 filed by the complainants and Civil Appeals arising out of SLP(C)
Nos. 18445-73/94 filed by the Union .of India are directed against the said
judgment of the Madras High Court.

The National Commission by its judgment and order dated Decem-
F ber 15, 1989 in First Appeal No. 2of1989 has held that persons who avail
themselves of the facility of medical treatment in Government hospitals are
not "consumers" and the said facility offered in the Government hospitals
cannot be regarded as service "hired" for "consideration". It has been held
that the payment of direct or indirect taxes by the public does not con-
stitute "consideration" paid for hiring the services rendered in the Govern-
G ment hospitals. It has also been held that contribution made by a
Government employee in the Central Government Health Scheme or such
other similar Scheme does not make him a "consumer" within the meaning
of the Act. Civil Appeal arising out of SLP(C) No. 18497/93 has been filed
by Consumer Unity Trust Society, a recognised consumer association,
H against this judgment of the National Commission.
INDIANMEDICALASSN.v. V.P.SHANTHA[S.C.AGRAWAL,J.) 121

By judgment dated April 21, 1992 in First Appeal Nos. 48 and 94 of A
1991, the National Commission has held that the activity of providing
medical assistance for payment carried on by hospitals and members of the
medical profession falls within the scope of the expression 'service' as
defined in Section 2(1)(o) of the Act and that in the event of any deficiency
in the performance of such service, the aggrieved party can invoke the
B
remedies provided under the Act by filing a complaint before the Con-
sumer Forum having jurisdiction. It has also been held that the legal
representatives of the deceased patients who were undergoing treatment
in the hospital are 'consumers' under the Act and are competent to
maintain the complaint. C.A. Nos. 688/93 and 689/93 filed by the Indian
Medical Association and SLP (C) Nos. 6885 and 6950/92 filed by Mis c
Cosmopolitan Hospital are directed against the said judgment of the
National Commission. The said judgment dated April 21, 1992 was fol-
lowed by the National Commission in its judgment dated November 16,
1992 in First Appeal No. 97 of 1991 (Dr. Sr. Louie & Anr. v. Smt. Kanno/ii
Pathumma & Anr.). S.L.P. No. 351/93 has been filed by Josgiri Hospital D
and Nursing Home against the said judgment of the National Commission.

By judgment dated May 3, 1993 in O.P. No. 93/92, the National
Commission has held that since the treatment that was given to the
complainant's deceased husband in the nursing home belonging to the
opposite party was totally free of any charge, it did not constitute 'service' E
as defined under the Act and the complainant was not entitled to seek any
relief under the Act. C.A. No. 254/94 has Leen filed by the complainant
against the said judgment of the National Commission.

Writ Petition No. 16 of 1994 has been filed under Article 32 of the F
Constitution by Cosmopolitan Hospital (P) Ltd., and Dr. K. Venogopalan
Nair (petitioners in SLP (C) Nos. 6885 and 6950/92) wherein the sa;rl
petitioners have assailed the validity of the provisions of the Act, insofar
as they are held to be applicable to the medical profession, as being
violative of Articles 14 and 19(1)(g) of the Constitution.
G
Sllrl~P\lfasaran, Shri Harish Salve, Shri A.M. Singhvi, Shri Krish-
namani and Shri S. Balakrishnan have addressed the court on behalf of the
medical profession and the hospitals and Shri Rajeev Dhavan has
presented the case of the complainants. Before we proceed to deal with
their contentions we would briefly take note of the background and the H
122 SUPREME COURT REPORTS [1995] SUPP. 5 S.C.R.

A scheme of the Act.

On April 9, 1985, the General Assembly of the United Nations, by
Consumer Protection Resolution No. 39/248, adopted the guidelines to
provide a framework for Governments, particularly those of developing
B countries, to use in elaborating and strengthening consumer protection
policies and legislation. The objectives of the said guidelines include assist-
ing countries in achieving or maintaining adequate protection for their
population as consumers and encouraging high levels of ethical conduct for
those engaged in the production and distribution of goods and services to
the consumers. The legitimate needs which the guidelines are intended to
c meet include the protection of consumers from hazards to their health and
safety and availability of effective consumer redress. Keeping in view the
said guidelines, the Act was enacted by Parliament to provide for the better
protection of the interests of consumers and for that purpose to make
provision for the establishment of consumer councils and other authorities
D for the settlement of consumers' disputes and for matters connected there-
with. The Act sets up a three-tier structure for the redressal of consumer
grievances. At the lowest level, i.e., the District level, is the Consumer
Disputes Redressal Forum known as 'the District Forum'; at the next·
higher level, i.e., the State level, is the Consumer Disputes Redressal
Commission known as 'the State Commission' and at the highest level is
E the National Commission. (Section 9). The jurisdiction of these three
Consumer Disputes Redressal Agencies is based on the pecuniary limit of
the claim made by the complainant. An appeal lies to the State Commission
against an order made by the District Forum (Section 15) and an appeal
lies to the National Commission against an order made by the State
F Commission on a complaint filed before it or in an appeal against the order
passed by the District Forum. (Section 19). The State Commission can
exercise revisional powers on grounds similar to those contained in Section
115 CPC in relation to a consumer dispute pending before or decideJ by
a District Forum [Section 17(b)] and the National Commission has similar
revisional jurisdiction in respect of a consumer dispute pending before or
G decided by a State Commission. [Section 21(b)]. Further, there is a
provision for appeal to this Court from an order made by the National
Commission on a complaint or on an appeal against the order of a State
Commission. (Section 23). By virtue of the definition of complainant in
Section 2(1)(c), the Act affords protection to the consumer against unfair
H trade practice or a restrictive trade practice adopted by any trader, defect
-- INDIAN MEDICAL ASSN. v. V.P. SHANTIIA [S.C. AGRAWAL,).] 123

in the goods bought or agreed to be bought by the consumer, deficiency in A
the service hired or availed of or agreed to be hired or availed of by the
consumer, charging by a trader price in excess of the price fixed by or
under any law for the time being in force or displayed on the goods or any
package containing such goods and offering for sale to public, goods which
will be hazardous to life and safety when used, in contravention of the
B
provisions of any law for the time being in force requiring traders to display
information in regard to the contents, manner and effect of use of such
goods. The expression "complainant", as defined in Section 2(1)(b), is
comprehensive to enable the consumer as well as any voluntary consumer
association registered under the Companies Act, 1956 or under any other
law for the time being in force, or the Central Government or any State c
Government or one or more consumers where there are numerous con-
sumers having the same interest, to file a complaint before the appropriate
Consumer Disputes Redressal Agency and the consumer dispute raised in
such complaint is settled by the said agency in accordance with the proce-
dure laid down in Section 13 of the Act which prescribes that the District D
Forum (as well as the State Commission and the National Commission)
shall have the same power as are vested in a Civil Court under the Code
of Civil Procedure in respect of summoning and enforcing attendance of
any defendant or witness and examining the witness on oath; discovery and
production of any document or other material object producible as
evidence; the reception of evidence on affidavits; the requisitioning of the E
report of the concerned analysis or test from the appropriate laboratory or
from any other relevant source; issuing of any commission for the examina-
tion of any witness; and any other matter which may be prescribed. Section
14 makes provisions for the nature of reliefs that can be granted to the
complainant on such a complaint. The provisions of the Act are in addition F
to and not in derogation of the provisions of any other law for the time
being in force. (Section 3).

- In this group of cases we are not concerned with goods and we are
only concerned with rendering of services. Since the Act gives protection G
to the consumer in respect of service rendered to him, the expression
"service" in the Act has to be construed keeping in view the definition of
"consumer" in the Act. It is, therefore, necessary to set out the definition
of the expression 'consumer' contained in Section 2(1)(d) insofar as it
relates to services and the definition of the expression 'service' contained
in Section 2(l)(o) of the Act. The said provisions are as follow: H 1
124 SUPREME COURT REPORTS [1995) SUPP. 5 S.C.R. ...
A "Section 2(1)(d) "consumer" means any person who, -

(i) omitted

(ii) hires (or avails of) any services for a consideration which has
been paid or promised or partly paid and partly promised, or under
B any system of deferred payment and includes any beneficiary of
such services other than the person who hires (or avails of) the
service for consideration paid or promised, or partly paid and
partly promised, or under any system of deferred payment, when
such services are availed of with the approval of the first mentioned
person.
c
Explanation. - Omitted"

"Section 2(1)(o) : "service" means service of any description which
is made available to the potential users and includes the provision
of facilities in connection with banking, financing, insurance,
D transport, processing, supply of electrical or other energy, board
or lodging or both, (housing construction), entertainment, amuse-
ment or the purveying of news or other information, but does not
include rendering of any service free of charge or under a contract
of personal service;"
E
The words "or avails of' after the word "hires" in Section 2(1)(d)(ii)
and the words "housing construction" in Section 2(1)(o) were .inserted by
the Act 50 of 1993.

The definition of 'service' in Section 2(1)(o) of the Act can be split
F up into three parts - the main part, the inclusionary part and the exclusion-
ary part. The main part is explanatory in nature and defines service to mean
service of any description which is made available to the potential users.
The inclusionary part expressly includes the provision of facilities in con-
nection with banking, financing, insurance, transport, processing, supply of
G electrical or .other energy, board or lodging or both housing construction,
entertainment, amuseinent or the purveying of news or other information.
The exclusionary part excludes rendering of any service free of charge or
under a contract of personal service.

The definition of 'service' as contained in Section 2(1)(o) of the Act
'.H has been construed by this Court in Lucknow Development Authority v.
... INDiANMEDICALASSN.v. V.P.SHANTHA[S.C.AGRAWAL,J.) 125

M.K Gupta, [1994) 1 SCC 243. After pointing out that the said definition A
is in three parts, the Court has observed :

"The main clause itself is very wide. It applies to any service made
available to potential users. The words 'any' and 'potential' are
significant. Both are of wide amplitude. The word 'any' dictionarily
means; one or some or all'. In Black's Law Dictionary it is ex- B
plained thus, "word 'any' has a div~rsity of meaning and may be
employed to indicate 'all' or 'every' as well as 'some' or 'one' and
its meaning in a given statute depends upon the context and the
subject-matter of the statute". The use of the word 'any' in the
context it has been used in clause (o) indicates that it has been c
used in wider sense extending from one to all. The other word
'potential' is again very wide. In Oxford Dictionary it is defined as
'capable of coming into being, possibility'. In Black's Law Diction-
ary it is defined "existing in possibility but not in act. Naturally and
probably expected to come into existence at some future time,
though not now existing; for example, the future product of grain D
or trees already planted, or the successive future instalments or
payments on a contract or engagement already made." In other
words service which is not only extended to actual users but those
who are capable of using it are covered in the definition. The clause
is thus very wide and extends to any or all actual or potential users." E
(p.255)

The contention that the entire objective of the Act is to protect the
consumer against malpractices in business was rejected with the observa-
tions:
F
"The argument proceeded on complete misapprehension of the
purpose of Act and even its explicit language. In fact the Act
requires provider of service to be more objective and caretaking."
(p.256).

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

-.. "The inclusive clause succeeded in widening its scope but not
exhausting the services which could be covered in earlier part. So
?ny service except when it is free of charge or under a constraint
of personal service is included in it." (p.257) H
A
126 SUPREME COURT REPORTS [1995] SUPP. 5 S.C.R.

In that case the Court was dealing with the question whether housing
...
construction could be regarded as service under Section 2(1)(o) of the Act.
While the matter was pending in this Court, "housing construction" was
inserted in the inclusive part by Ordinance No. 24 of 1993. Holding that
housing activity is a service and was covered by the main part. of the
definition, the Court observed :
B
"......... the entire purpose of widening the definition is to include
in it not only day to day buying and selling activity undertaken by
a common man but even such activities which are otherwise not
commercial in nature yet they partake of a character in which some
c benefit is conferred on the consumer." (p.256)

In the present case the inclusive part of the definition of "service" is
not applicable and we are required to deal with the questions falling for
consideration in the light of the main part and the exclusionary part of the
D definition. The exclusionary part will require consideration only if it is
found that in the matter of consultation, diagnosis and treatment a medical
practitioner or a hospital/nursing home renders a service falling within the
main part of the definition contained in Section 2(1)(o) of the Act. We
have, therefore, to determine whether medical practitioners and hospi-
tals/nursing homes can· be regarded as rendering a "service" as con-
E templated in the main part of Section 2(1)(o). This determination has to
be made in the light of the aforementioned observations in Lucknow
Development Authority (supra). We will first examine this question in
relation to medic~l practitioners.

F It has been contended that in law there is a distinction between a
profession and an occupation and that while a person engaged in an
occupation renders service which falls within the ambit of Section 2(1)(o)
the service rendered by a person belonging to a profession does not fall
within the ambit of the said provision and, therefore, medical practitioners
.
G who belong to the medical profession are not covered by the provisions of
the Act. It has been urged that medical practitioners are governed by the
provisions of tlie Indian Medical Council Act, 1956 and the Code of
Medical Ethics made by the Medical Council of India, as approved by the
Government of India under Section 3 of the Indian Medical Council Act,
1956 which regulates their conduct as members of the medical profession
H ; and provides for disciplinary action by the Medical Council of India and/or
INDIANMEDICALASSN.v. V.P.SHANTHA(S.C.AGRAWAL,J.) 127

State Medical Councils against a person for professional misconduct. A
While expressing his reluctance to propound a comprehensive defini-
tion of a 'profession', Scrutton L.J. has said '"profession' in the present use
of language involves the idea of an occupation requiring either purely
intellectual skill, or of manual skill controlled, as in painting and sculpture,
or surgery, by the intellectual skill of the operator, as distinguished from B
an occupation which is substantially the production or sale or arrangement
for the production or sale of commodities. The line of demarcation may
vary from time to time. The word 'profession' used to be confined to the
three learned professions, the Church, Medicine and Law. It has now, I
think, a wider meaning" (See : Commissioners of Inland Revenue v. Maxse, c
1919 1 K.B. 647 at p.657).

According to Rupert M. Jackson and John L.Powell the occupations
which are regarded as professions have four characteristics, viz.,

(i) the nature of the work which is skilled and specialized and a substantial D
part is mental rather than manual;

(ii) commitment to moral principles which go beyond the general duty of
honesty and a wider duty to community which may transcend the duty to
a particular client or patient; E
(iii) professional association which regulates admission and seeks to uphold
the standards of the profession through professional codes on matters of
conduct and ethics; and

(iv) high status in the community. F
The learned authors have stated that during the twentieth century an

- increasing number of occupations have been seeking and achieving "profes-
sional" status and that this has led inevitably to some blurring of the
features which traditionally distinguish the professions from other occupa-
tions. In the context of the law relating to Professional Negligence the
G

learned authors have accorded professional status to seven specific occupa-
tions, namely, (i) architects, engineers and quantity surveyors, (ii) sur-
veyors, (iii) accountants, (iv) solicitors, (v) barristers, (vi) medical
practitioners and (vii) insurance brokers. (See : Jackson & Powell on
Professional Negligence, paras 1-01and1-03, 3rd Edn.).
.. ' .,., '.:~··
H
128 SUPREME COURT REPORTS (1995] SUPP. 5 S.C.R.

A In the matter of professional liability professions differ from other
occupations fcir the reason that professions operate in spheres where
success cannot be achieved in every case and very often success or failure
depends upon factors beyond the professional man's control. In devising a
rational approach to professional liability which must provide proper
B. protection to the consumer while allowing for the factors mentioned above,
the approach of the courts is to require that professional men should
possess a certain minimum degree of competence and that they should
exercise reasonable care in the discharge of their duties. In general, a
professional man owes to his client a duty in tort as well as in contract to
exercise reasonable care in giving advice or performing services. (See :
C Jackson & Powell (supra), paras 1-04, 1-05 and 1-56). Immunity from suit
was enjoyed by certain professions on the grounds of public interest. The
trend is towards narrowing of such inimunity and it is no longer available
to architects in respec;t of certificates negligently given and to mutual
valuers. Earlier, barristers were. enjoying complete immunity but now even
D for them the field is limited to work done in court and to a small category
of pre- trial work which is directly related to what transpires in court. (See
: Jackson & Powel~ (supra), para 1-66; Saif Ali v. Sidney Mitchell & Co.,
(1980) 1 AC. 198; Rees v. Sinclair, (1974) 1 N.Z.L.R. 180 and Giamiarelli
v. Wraith, (1988) 81 A.L.R. 417). Medical practitioners do not enjoy any
immunity and they can be sued in contract or tort on the ground that they
E have failed to exercise reasonable skill and care.

It would thus appear that medical practitioners, though belonging to
the medical profession, are not immune from a claim for damages on the
ground of negligence. The fact that they are governed by the Indian
F Medical Council Act and are subject to the disciplinary control of Medical
Council of India and/or State Medical Councils is no solace to the person
who has suffered due to their negligence and the right of such person to
seek redress is not affected.

Referring to the changing position with regard to the relationship
G between the medical practitioners and the patients in the United Kingdom,
it has been said :

"Where, then, does the doctor stand today in relation to society?
To some· extent, he is a servant of the public, a public which is
H widely (though not always well) informed on medical matters.
INDIANMEDICALASSN.v. V.P.SHANIBA[S.C.AGRAWAL,J.] 129

Society is conditioned to distrust paternalism and the modern A
medical practitioner has little wish to be paternalistic. The new
talk is of 'producers and consumers' and the concept that 'he who
pays the piper calls the tune' is established both within the profes-
sion and in its relationships with patients. The competent patient's
inalienable rights to understand his treatment and to accept or B
refuse it are now well established." (pp. 16-17)

"Consumerism is now firmly established in medical practice and
this has been encouraged on a wide scale by government in the
United Kingdom through the introduction of 'charters'. Complaint
is central to this ethos - and the notion that blaine must be C
attributed, and compensated, has a high priority." (p.192)

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

In Arizona v. Maricopa County Medical Society, 457 US 332 = 73
L.Ed. (2d.) 48, two Arizona county medical societies formed two founda- D
tions for medical care to promote fee-for- service medicine and to provide
the community with a competitive alternative to existing health insurance
plans and by agreement amongst the doctors established the schedule of
maximum fees that participating doctors agreed to accept as payment in
full for services performed for patients insured under plans. It was held E
that the maximum fee agreement, as price fixing agreements, are per se
unlawful under the Sherman Act. It was observed :

"Nor does the fact doctors - rather than non-professionals - are.
the parties to the price-fixing agreements support the respondents'
position..... The respondents claim for relief from the per se rule F ·
is simply that the doctors' agreement not to charge certain insureds
more than a fixed price facilitates the successful marketing of an

.. attractive insurance plan. But the claim that the price restraint will
make it easier for customers to pay does not distinguish the
medical profession from any other provider of goods or services." G
(pp. 348~49, 61-62)

We are, therefore, unable to .subscribe to the view that merely
because medical practitioners belong to the medical profession they are
outside the purview of the provisions of the Act and the services rendered
by medical practitioners are not covered by Section 2(1)(o) of the Act. H
130 SUPREME COURT REPORTS [1995] SUPP. 5 S.C.R.

A Shri Harish Salve, appearing for the Indian Medical Association, has
urged that having regard to the expression 'which is made available to
potential users' contained in Section 2(1)(o) of the Act, medical prac-
titioners are not contemplated by Parliament to be covered within the
provisions of the Act. He has urged that the said expression is indicative
of the kind of service the law contemplates, namely, service of an institu-
B tional type which is really a commercial enterprise and open and available
to all who seek to avail thereof. In this context, reliance has also been
placed on the word 'hires' in sub-clause (ii) of the definition of 'consumer'
contained in Section 2(1)(d) of the Act. We are unable to uphold this
contention..The word 'hires' in Section 2(1)(d)(ii) has been used in the
c same sense as 'avails of as would be evident from the words 'when such
services are availed of in the latter part of Section 2(1)(d)(ii). By inserting
the words 'or avails of after the word 'hires' in Section 2(1)(d)(ii) by the
Amendment Act of 1993, Parliament has clearly indicated that the word
'hires' has been used in the same sense as 'avails of. The said amendment
D only clarifies what was implicit earlier. The word 'use' also means 'to avail.
oneself of. (See : Black's Law Dictionary, 6th Edn., at p, 1541).1 The. word
'user' in the expression 'which is made available to potential users' in the
definition of 'service' in Section 2(1)(o) has to be construed having regard
to the definition of 'consumer' in Section 2(1)(d)(ii) and, if so construed,
it means 'availing of services'. From the use of the word 'potential users' it
E cannot, therefore, be inferred that the services rendered by medical prac-
titioners are not contemplated by Parliament to be covered "within the
expression 'service' as contained in Section 2(1)(o).

Shri Harish · Salve has also placed reliance on the definition of the
p expression 'deficiency' as contained in Section 2(1)(g) of the Act which
provides as follows :

"Section 2(1)(g) : "deficiency" means. any fault, imperfection,
shortcoming or inadequacy in the quality, nature and manner of .,...
performance which is required to be maintained by or under any
law for the time being in force ·or has been undertaken to be
performed by a person in pursuance of a contract or otherwise in
.relation to any·.service;"

The submission of Shri Salve is that under the said clause the
Hi deficiency with tegard to fault, imperfection, shortcoming. or inadequacy in
INDIANMEDICALASSN.v. V.P.SHANTIIA[S.C.AGRAWAL,J.] 131

respect of a service has to be ascertained on the basis of certain norms A
relating to quality, nature and manner of performance and that medical
services rendered by a medical practitioner cannot be judged on the basis
of any fixed norms and, therefore, a medical practitioner cannot be said to
have been covered by the expression "service" as defined in Section 2(1)(o).
We are unable to agree. While construing the scope of the provisions of B
the Act in the context of deficiency in service it would be relevant to take
note of the provisions contained in Section 14 of the Act which indicate
the reliefs that can be granted on a complaint filed under· the Act. In
respect of deficiency in service, the following reliefs can be granted :

(i) return of the charges paid by the complainant. [Clause (c)] c
(ii) payment of such amount as may be awarded as compensation to the
consumer for any loss or injury suffered by the consumer due to the
negligence of the opposite party. [Clause (d)]

(iii) removal of the defects or deficiencies in the services in question. D
[Clause (e)]

Section 14(1)(d) would, therefore, indicate that the compensation to
be awarded is for loss or injury suffered by the consumer due to the
negligence of the opposite party. A determination about deficiency in E
service for the purpose of Section 2(1)(g) has, therefore, to be made by
applying the same test as is applied in an action for damages for negligence.
The standard of care which is required from medical practitioners as laid
down by McNair J. in his direction to the jury in Bolam v. Friers Hospital
Management Committee, (1957) 1 WLR 582, has been accepted by the F
House of Lords in a number of cases. (See: 'Whitehouse v. Jordan, (1981)
1 WLR 246; Maynard v. West Midlands, Regional Health Authority, (1984)
1 WLR 634 and Sidaway v. Governors of Bethlem Royal Hospital, 1985 AC
871). In Bolam (supra) McNair J has said :

"But where you get a situation which involves the use of some G
special skill or competence, then the test as to whether there has
been negligence or not is not the test of the man on the top of a
Clapham omnibus, because he has not got this special skill. The
test is the standard of the ordinary skilled man exercising and
professing to have that special skill. A man need not possess the H
132 SUPREME COURT REPORT~ [1995] SUPP. 5 S.C.R.

A highest expert skill; it is well established law that it is sufficient if
he exercises the ordinary skill of an ordinary competent man
exercising that particular art." (p. 586)

In an action for negligence in tort against a surgeon this Court, in
Laxman Balalai§}ma Joshi v. Trimbak Bapu Godbole & Anr., {1969] 1 SCR
B 206, has held :
"The duties which a doctor owes to'his patient are clear. A person
who holds himself out ready to give medical advice and treatment
impliedly undertakes that he is possessed of skill and knowledge
for the purpose. Such a person when consulted by a patient owes
c him certain duties, viz., a duty of care in deciding whether to
undertake the case, a duty of care in deciding what treatment to
give or a duty of care 1n the administration of that treatment. A
breach of any of those duties gives a right of action for negligence
to the patient. The practitioner must bring to his task a reasonable
D degree of skill and knowledge and must exercise a reasonable
degree of care. Neither the very highest nor a very low degree of
care and competence judged in the light of the particular cir-
cumstances of each case is what the law require. (p.213)

It is, therefore, not possible to hold that in view of the definition of
E "deficiency" as contained in Section 2(1)(g) medical practitioners must be
treated to be excluded from the ambit of the Act and the service rendered
by them is not. covered under Section 2(1)(o).

Another contention that has Seen urged by learned counsel appear-
F ing f9r the medical profession to exclude medic~l practitioners from the
ambit of the Act is that the composition of the District Forum, the State
Commission _and the National Commission is such that they cannot fully
appreciate the complex issues which may arise for determination and
further that the proceduE! that is followed by these bodies for determina-
tion of issues before them is not suitable for the determination of the
G complicated questions which arise in respect of claims for negligence in
respect of the services rendered by medical practitioners. The provisions
with regard to the composition of the District Forum are contained in
Section 10 of the Act which provides that the President of the Forum shall
be a person who is or who has been or is qualified to be a District Judge
H and the other two members shall be persons of ability, integrity and
INDIAN MEDICAL ASSN. v. V.P.SHANTHA[S.C.AGRAWAL,J.] 133

standing, having adequate knowledge or experience or, or having shown A
capacity in dealing with, problems relating to economics, law, commerce,
accountancy, industry, public affairs or administration and one of them
shall be a woman. Similarly, with regard to the composition of the· State
Commission, it is provided in Section 16 of the Act that the President of
the Commission shall be a person who is or who has been a Judge of a B
High Court appointed by the State Government in consultation with -the
Chief Justice of the High Court and that the other two members shall be
persons of ability, integrity and standing, having adequate knowledge or
experience of, or having shown capacity in dealing with, problems relating
to economics, law, commerce, accountancy, industry, public affairs or
administration, and one of them shall be a woman. The composition of the c
National Commission is governed by Section 20 of the Act which provides
that the President of the Commission shall be a person who is or who has
been a Judge of the Supreme Court to be appointed by the Central
Government after consultation with the Chief Justice of India and four
other members shall be persons of ability, integrity and standing having D
adequate knowledge or experience of, or having shown capacity in dealing
with, problems relating to economics, law, commerce, account;incy, in-
dustry, public affairs or administration and one of them shall be a woman.
It will thus be seen that the President of the District Forum is required to
be a person who is or who has been or is qualified to be a District Judge E
and the President of the State Commission is required to be a person who
is or who has been the Judge of the High Court and the President of the
National Commission is required to be a person who is or who has been a
Judge of the Supreme Court, which means that all the Consumer Disputes
Redressal Agencies are headed by a person who is well versed in law and
has considerable judicial or legal experience. It has, however, been sub-
F
mitted that in case there is difference of opinion, the opinion of the
majority is to prevail and, therefore, the President may be out-voted by the
other members and that there is no requirement that the members should
have adequate knowledge or experience in dealing with problems relating
to medicine. It is no doubt true that the decisions of the District Forum as G
well as the State Commission and the National Commission have to be
taken by majority and it may be possible in some cases that the President
may be in minority. But the presence of a person well versed in law as the
President will have a bearing on the deliberations of these Agencies and
their decisions. As regards the absence of a requirement about a member H
134 SUPREME COURT REPORTS (1995] SUPP. 5 S.C.R.

A having adequate knowledge or experience in dealing with the problems
relating to medicine it may be stated that the persons to be chosen as
members are required to have knowledge and experience in dealing with
problems relating to various fields connected with the object and purpose
of the Act, viz., protection and interests of the consumers. The said
knowledge and experience would enable them to handle the consumer
B disputes coming up before them for settlement in consonance with the
requirement of the Act. To say that the members must have adequate
knowledge or experience in the field to which the goods or services, in
respect of which the complaint is made, are related would Jead to impos-
sible situations. At one time there will be two members in the District
C Forum and they would have knowledge or experience in two fields which
would mean that complaints in respect of goods or services relating to
other fields would be beyond the purview of the District Forum. Similarly
in the State Commission there may be members having knowledge or
experience in fields other than the fields in which the members of the
D District Forum have knowledge or experience. It ,would mean that the
goods or services in respect of which the District Forum can entertain a
complaint will be outside the purview of the State Commission. Same will
be the position in respect of the National Commission. Since the goods or
services in respect of which complaint can be filed under the Act may
relate to number of fields it cannot be expected that the members of the
E Consumer Disputes Redressal Agencies must have expertise in the field to
which the goods or services in respect of which complaint is filed, are
related. It will be for the parties to place the necessary material and the
knowledge and exper'ience which the members will have in the ~elds 1,

indicated in the Act would enable them to arrive at their findings on the
F basis of that material. It cannot, therefore, be said that since the members
of the Consumer Disputes Redressal Agencies are not required to have
knowledge and experience in medicine, they are not in a position to deal
with issues which may arise before them in proceedings arising out of
complaints about the deficiency in service rendered by medical prac-
titioners.
G
Discus~ing the role of lay persons in decision making, Prof. White
has referred to two divergent views. One view holds that lay adjudicators
are superior to professional judges in the application of general standards
of conduct, in their notions of reasonableness, fairness and good faith and
H that they act as 'an antidote against excessive technicality' and 'some
INDIAN MEDICAL ASSN. v. V.P. SHANlHA [S.C. AGRAWAL, J.) 135

guarantee that the law does not diverge too far from reality'. The other A
view, however, is that since they are not experts, lay decision makers
present a very real danger that the dispute may not be resolved in accord-
ance with the prescribed rules of law and the adjudication of claims may
be based on whether the claimant is seen as deserving rather than on the
legal rules of entitlement. Prof. White has indicated his preference for a
B
Tribunal composed of a lawyer, as Chairman, and two lay members. Such
a Tribunal, according to Prof. White, would present an opportunity to
develop a model of adjudication that combines the merits of lay decision
making with legal competence and participation of lay members would lead
to general public confidence in the fairness of the process and widen the
social experience represented by the decision makers. Prof. White says c
that apart from their breadth of experience, the key role of lay members
would be in ensuring that procedures do not become too full of mystery
and ensure that litigants before them are not reduced to passive spectators
in a process designed to resolve their disputes. (See : Prof Robin CA.
White: The Administration of Justice, 2nd Edition, p. 345).
D
In the matter of constitution of the District Forum, the State Com-
mission and the National Commission the Act combines with legal com-
petence the merits of lay decision making by members having knowledge
and experience in dealing with problems relating to various fields which
are connected with the object and purpose of the Act, namely, protection E
and interests of the consumers.

Moreover, there is a further safeguard of an appeal against the order
made by the District Forum to the State Commission and against the order
made by the State Commission to the National Commission and a further F
appeal to this Court against the order made by the National Commission.
It cannot, therefore, be said that the composition of the Consumer Dis-
putes Redressal Agencies is such as to render them unsuitable for ad-
judicating on issues arising in a complaint regarding deficiency in service
rendered by a medical practitioner.
G
As regards the procedure to be followed by these agencies in the
matter of determination of the issues coming up for consideration it may
be stated that under Section 13(2)(b), it is provided that the District Forum
shall proceed to settle the consumer disputes (i) on the basis of evidence
brought to its notice by the complainant and the opposite party, where the H
136 SUPREME COURT REPORTS (1995) SUPP. 5 S.C.R.

A opposite party denies or disputes the allegations contained in the com-
plaint, or (ii) on the basis of evidence brought to its notice by the com-
plainant where the opposite party omits or fails to take any action to
represent his case within the time given by the Forum. In Section 13(4) of
the Act it is further provided that the District Forum shall have the same
powers as are vested in the civil.court under the Code of Civil procedure
B while trying a suit in respect of the following matters :

"(i) the summoning and enforcing attendance of any defendant
or witness and examining the witness on oath;

(ii) the discovery and production of any document or other
c material object producible as evidence;

(iii) the reception of evidence on affidavits;

(iv) the requisitioning of the report of the concerned analysis or
test from the appropriate laboratory or from any other
D relevant source;

(v) issuing of any commission for the examination of any witness
and
0
(vi) any other matter which may be prescribed."
E
The same provisions apply to proceedings before the State Commission
and the National Commission. It has been urged that proceedings involving
negligence in the matter of rendering services by a medical practitioner
would raise complicated questions requiring evidence of experts to be
F recorded and that the procedure which is followed for determination of
consumer disputes under the Act is summary in nature involving trial on·
the basis of affidavits and is not suitable for determination of complicated
questions. It is no doubt true that sometimes complicated questions requir-
ing recording of evidence of experts may arise in a complaint about
deficiency in service based on the ground of negligence in . rendering
G medical services by a medical practitioner; but this would not be so in all
complaints about deficiency in rendering services by a medical practitioner.
There may be cases which do not raise such complicated questions and the
deficiency in service may be due to obvious faults which can be easily
established such as removal of the wrong limb or the performance of an
H operation on the wrong patient or giving injection of a drug to which the
I,NDIANMEDICALASSN. v. V.P.SHANTI:IA[S.C.AGRAWAL,J.] 137

patient is allergic without looking into the out patient card cont::tining the A
warning (as in Chinkeow v. Government of Malaysia, (1967) 1 WLR 813
P.C.) or use of wrong gas during the course of an anesthetic or leaving
inside the patient swabs or other items of operating equipment after
surgery. One often reads about such incidents in the newspapers. The
issues arising in the complaints in such cases can be speedily disposed of B
by the procedure that is being followed by the Consumer Disputes Redres-
sal Agencies and there is no reason why complaints regarding deficiency
in service in such cases should not be adjudicated by the Agencies under
the Act. In complaints involving complicated issues requiring recording of
evidence of experts, the complainant can be asked to approach the Civil
Court for appropriate relief. Section 3 of the Act which prescribes that the C
provisions of the Act shall be in addition to and not in derogation of the
provisions of any other law for the time being in force, preserves the right
of the consumer to approach the Civil Court for necessary relief. We are,
therefore, unable to hold that on the ground of compo~ition of the Con-
sumer Disputes Redressal Agencies or on the ground of the procedure D
which is followed by the said Agencies for determining the issues arising
before them, the service rendered by the medical practitioners are not
intended to be included in the expression 'service' as defined in Section
2(1)(o) of the Act.

Keeping in view the wide amplitude of the definition of 'service' in E
the main part of Section 2(1)(o) as construed by this Court in Lucknow
Development Authority (supra), we find r.o plausible reason to cut down
the width of that part so as to exclude the services rendered by a medical
practitioner from the ambit of the main part of Section 2(1)(o).
F
We may now proceed to consider the exclusionary part of the defini-
tion to see whether such service is excluded by the said part. The exclusion-
ary part excludes from the main part service rendered (i) free of charge;
or (ii) under a contract of personal service.

Shri Salve has urged that the relationship between a medical prac- G
titioner and the patient is of trust and confidence and, therefore, it is in
the nature of a contract of personal service and the service rendered by
the medical practitioner to the patient is not 'service' under Section 2(1)(o)
of the Act. This contention of Shri Salve ignores the well recognised
distinction between a 'contract of service' and a 'contract for services'. (See H
138 SUPREME COURT REPORTS [1995] SUPP. 5 S.C.R.

A : Halsbury's Law of England, 4th Ecln., Vol. 16, para 501 and Dharangad-
hara Chemical Works Ltd. v. State of Saurashtra, [1957] SCR 152 at p. 157).
A 'contract for services' implies a contract wh~reby one party undertakes
to render services e.g. professional. or technical services, to or for another.
in the performance of which he is not subject to detailed direction and
control but exercises professional or technical skill and uses his own
I
B knowledge and discretion. (See : Oxford Companion to Law, p. 1134). A
'contract of service' implies relationship of master and servant and involves
.an obligation to obey orders in the work to be performed and as to its
mode and manner of performance. (See : Stroud's Judicial Dictionary, 5th
Edn., p. 540; Simmons v. Heath Laundry Co., (1910) 1 K.B. 543 and
c Dharangadhara Chemical Works (supra) at p. 159). We entertain no doubt
that Parliamentary draftsman was aware of this well accepted distinction
between "contract of service" and "contract for services" and has deliberate-
ly chosen the expression 'contract of service' instead of the expression
'contract for services', in the exclusionary part of the definition of 'service'
D in Section 2(1)(o). The reason being that an employer cannot be regarded
as a consumer in respect of the services rendered by his employee in
pursuance of a contract of employment. By affixing the adjective 'personal'
to the word "service" the nature of the contracts which are excluded is not
altered. The said adjective only emphasizes that what is sought to be
excluded is personal service only. The expression "contract of personal
E service" in the exclusionary part of Section 2(1)(o) must, therefore, be
construed as excluding the services rendered by an employee to his
employer under the contract of personal service from the ambit of the
expression "service".

It is no doubt true that the relationship between a medical prac-
F
titioner and a patient carries within its certain degree of mutual confidence
and trust and, therefore, the services rendered by the medical practitioner
can be regarded as services of personal nature but since there is no
relationship of master and servant between the doctor and the patient the
contract between the medical practitioner and his patient cannot be treated
G as a contract of personal service but is a contract for services and the
service rendered by the medical practitioner to his patient under such a
contract is not covered by the exclusionary part of the definition of 'service'
contained in Section 2(1)(o) of the Act.

H Shri Rajeev Dhavan has, however, submitted that the expression
INDIANMEDICALASSN.v. V.P.SHANTHA(S.C.AGRAWAL,J.] 139

'contract of personal service' contained in Section 2(l)(o) of the Act has A
to be confined to employment of domestic servants only. We do not find
any merit in this submission. The expression 'personal service' has a well
known legal connotation and has been construed in the context of the right
- to seek enforcement of such a contract under the Specific Relief Act. For
that purpose a contract of personal service has been held to cover a civil B.
servant, the managing agents of a company and a professor in the Univer-
sity. (See : The High Commissioner for India v. l.M La/4 (1948) L.R. 75
I.A. 225; Ram Kissendas Dhanuka v. Satya Charan Law, (1949) L.R. 77 I.A.
128 and Dr. S.B. Dutt v. University of.Delhi, [1959] SCR 1236). There can
be a contract of personal service if there is relationship of master and
servant between a doctor and the person availing his services and in that C
event the services rendered by the doctor to his employer would be
excluded from the purview of the expression 'service' under Section 2(1)(o)
of the Act by virtue of the exclusionary clause in the said definition.

The other part of exclusionary clause relates to services rendered
"free of charge". The medical practitioners, Government hospitals/nursing D
homes and private hospitals/nursing homes (hereinafter called "doctors and
hospitals") broadly fall in three categories :-

(i) where services are rendered free of charge to everybody
availing the said services, E
(ii) where charges are required to be paid by everybody availing
the services, and

(iii) where charges are required to be paid by persons availing
services but certain categories of persons who cannot afford F
to pay are rendered service free of charges.

There is no difficulty in respect of first two categories. Doctors and
hospitals who render service without any charge whatsoever to every
person availing the service would not fall within the ambit of "service" under
Section 2(1)(o) of the Act. The payment of a token amount for registration G
purposes only would not alter the position in respect of such doctors and
hospitals. So far as the second category is concerned, since the service is
rendered on payment basis to all the persons they would clearly fall within
the ambit of Section 2(1)(o) of the Act. The third category of doctors and
hospitals do provide free service to some of the patients belonging to the H
140 SUPREME COURT REPORTS (1995] SUPP. 5 S.C.R.

A poor class but the bulk of the service is rendered to the patients on
payment basis. The expenses incurred for providing free service are met
out of the income from the service rendered to the paying patients. The
service rendered by such doctors and hospitals to paying patients undoub-
tedly fall within the ambit of Section 2(1)(o) of the Act.
B
The question for our consideration is whether the service rendered
to patients fee of charge by the doctors and hospitals in category (iii) is
excluded by virtue of the exclusionary clause in Section 2(1)(o) of the Act.
In our opinion the question has to be answered in the negative. In this
context it is necessary to bear in mind that the Act has been enacted "to
c provide for the protection of the interests of "consumers" in the background
of the guidelines contained in the Consumer Protection Resolution passed
by the U.N. General Assembly on April 9, 1985. These guidelines refer to
"achieving or maintaining adequate protection for their population as
consumers" and "encouraging high levels of ethical conduct for those
D engaged in the protection and distribution of goods and services to· the
consumers". The protection that is envisaged by the Act is, therefore,
protection for consumers as a class. The word "users" (in plural), in the
phrase 'potential users' in Section 2(1)(o) of the Act also gives an indica-
tion that consumers as a class are contemplated. The definition of
'complainant' contained in Section 2(b) of the Act which includes, under
E clause (ii), any voluntary consumer association, and clauses (b) and (c) of
Section 12 which enable a complaint to be filed by any recognised con-
sumer association or one or more consumers where there are numerous
consumers, having the same interest, on behalf of or for the benefit of all
consumers so 'interested, also lend support to the view that. the Act seeks
F to protect the interests of consumers as a class. To hold otherwise would
mean that the protection of the Act would be available to only those who
can afford to pay and such protection would be tlenied to those who cannot
so afford, though they are the people who need the protection more. It is
difficult to conceive that the legislature intended to achieve such a result.
Another consequence of adopting a construction, which would restrict the
G protection of the Act to persons who can afford to pay for the services
availed by them and deny such protection to those who are not in a position
to pay for such services, would be that the standard and quality of service
rendered at an establishment would cease to be uniform. It would be of a
higher standard and of better quality for persons who are in a position to
H pay for such service while the standard and quality of such se.rvice would
INDIANMEDICALASSN. v. V.P.SHANTHA[S.C.AGRAWAL,J.) 141

be inferior for person who cannot afford to pay for such service and who A
avail the service without payment. Such a consequence would defeat the
object of the Act. All persons who avail the services by doctors and
hospitals in category (iii), are required to be treated on the same footing
irrespective of the fact that some of them pay for the service and others
avail the same free of charge. Most of the doctors and hospitals work on B
commercial lines and the expenses incurred for providing services free of
charge to patients who are not in a position to bear the charges are met
out of the income earned by such doctors and hospitals from services
rendered to paying patients. The Government hospitals may not be com-
mercial in that sense but on the overall consideration of the objectives and
the scheme of the Act it would not be possible to treat the Government C
hospitals differently. We are of the view that in such a situation the persons
belonging to "poor class" who are provided services free of charge are the
beneficiaries of the service which is hired or availed of by the "paying class".
We are, therefore, of opinion that service rendered by the doctors and
hospitals falling in category (iii) irrespective of the fact that part of the D
service is rendered free of charge, would nevertheless fall within the ambit
of the expression "service" as defined in Section 2(1)(o) of the Act. We are
further of the view that persons who are rendered free service are the
"beneficiaries" and as such come within the eefinition of "consumer" under
Section 2(1)(d) of the Act.
E
In respect of the hospitals/nursing homes (Government and non~
Government) falling in category (i), i.e., where services are rendered free
of charge to everybody availing the services, it has been urged by Shri
Dhavan that even though the service rendered at the hospif.N, being free
of charge, does not fall within the ambit of Section 2(1)(o) of the Act in F
so far as the hospital is concerned, the said service would fall within the
ambit of Section 2(1)(o) since it is rendered by a medical officer employed
in the hospital who is not rendering the service free of charge because the
said medical officer receives emoluments by way of salary for employment
in the hospital. There is no merit in this contention. The medical officer
who is employed in the hospital renders the service on behalf of the G
hospital administration and if the service, as rendered by the hospital, does
not fall within the ambit of Section 2(1)(o), being free of charge, the same
service cannot be treated as service under Section 2(1)(o) for the reason
that it has been rendered by a medical officer in the hospital who receives
salary ,'or employment in the hospital. There is no direct nexus between H
142 SUPREME COURT REPORTS (1995) SUPP. 5 S.C.R.

A the payment of the salary to the medical officer by the hospital administra-
tion and the person to whom service is rendered. The salary that is paid
by the hospital administration to the employee medical officer cannot be
regarded as payment made on behalf of the person availing the service or
for his benefit so as to make the person availing the service a "consumer"
under Section 2(1)(d) in respect of the service rendered to him. The service
B rendered by the employee medical officer to such a person would, there-
fore, continue to be service rendered free of charge and would be outside
the purview of Section 2(1)(o).

A contention has also been raised that even in the Government
c hospitals/health centres/dispensaries where services are rendered free of
charge to all the patients the provisions of the Act shall apply because the
expenses of running the said hospitals are met by appropriation from the
Consolidated Fund which is raised from the taxes paid by the tax payers.
We do not agree.

D The essential characteristics of a tax are that (i) it is imposed under
statutory power without the tax-payer's consent and the payment is en-
forced by law; (ii) it is an imposition made for public purpose without
reference to any special benefit to be conferred on the payer of the tax; and
(iii) it is part of the common burden, the quantum of imposition upon the
E tax payer depends generally upon his capacity to pay. (See : The Commis-
sioner, Hindu Religious Endowments, Madras v. Sli Lakshmindra 171irtha
Swamiar of Sli Shimr Mutt, (1954] SCR 1005 at pp. 1040-41). The tax paid
by the person availing the service at a Government hospital cannot be
treated as a consideration or charge for the service rendered at the said
hospital and such service though rendered free of charge does not cease
F to be so because the person availing the service happens to be a tax payer.

Adverting to the individual doctors employed and serving in the
hospitals, we are of the view that such doctors working in the hospi-
tals/nursing homes/dispensaries/whether Government or private - belong-
G ing to categories (ii) and (iii) above would be covered by the definition of
"service" under the Act and as such are amenable to the provisions of the
Act along with the management of the hospital, etc. jointly and severally.

There may, however, be a case where a person has taken an in-
surance policy for medi-care whereunder all the charges for consultation,
H diagnosis and medical treatment are borne by the insurance company. In
INDIANMEDICALASSN.v. V.P.SHANTHA[S.C.AGRAWAL,J.] 143

such a case the person receiving the treatment is a beneficiary of the service A
which has been rendered to him by the medical practitioner, the payment
for which would be made by the insurance company under the insurance
policy. The rendering of such service by the medical practitioner cannot be
said to be free of charge and would, therefore, fall within the ambit of the
expression 'service' in Section 2(1)(o) of the Act. So also there may be . B
cases where as a part of the conditions of service the employer bears the
expense of medical treatment of the employee and his family members
dependent on him. The service rendered to him by a medical practitioner
would not be free of charge and would, therefore, constitute service under
Section 2(1)(o).
c
Shri AM. Singhvi has invited our attention to following observations
of Lord Denning M.R. in Whitehouse v. Jordan & Anr., [1980] 1 All E.R.
650:

"Take heed of what has happened in the United States. 'Medical D
malpractice' cases there are very worrying, especially as they are
tried by juries who have sympathy for the patient and none for the
doctor, who is insured. The damages are colossal. The doctors
insure but the premiums become very high : and these have to be
passed on in fees to the patients. Experienced practitioners are
known to have refused to treat patients for fear of being accused E
of negligence. Young men are even deterred from entering the
profession because of the risks involved. In the interests of all, we
must avoid such consequences in England. Not only must we avoid
excessive damages. We must say, and say firmly, that, in a profes-
sional man, an error of judgment is not negligent." (p.658) F

Relying on these observations learned counsel has painted a grim
picture that if medical practitioners are brought within the purview of the
Act the consequence would be huge increase in medical expenditure on
account of insurance charges as well as tremendous increase in defensive
medicine and that medical practitioners may refuse to attend to medical G
emergencies and there will be no safeguards against frivolous and vexatious
complaints and consequent blackmail. We do not entertain such an ap-
prehension. In the first place, it may be stated that the aforementioned
observations of Lord Denning were made in the context of substantive law
governing actions for damages on the ground of negligence against medical H
144 SUPREME COiJRT REPORTS [1995] SUPP. 5 S.C.R.

A practitioners. There too the last sentence in the said observations that "an
error of judgment is not negligent" has not been approved, in appeal, by
the House of Lords. (See : [1981] 1 All E.R. 267). By holding that medical
practitioners fall within the purview of the Act no change is brought about
in the substantive law governing claims for compensation on the ground of
negligence and the principles which apply to determination of such a claim
B before the Civil Court would equally apply to consumer disputes before
the Consumer Disputes Redressal Agencies under the Act. The Act only
provides an inexpensive and a speedy remedy for adjudication of such
claims. An analytical study of tort litigation in I~dia during the period from
1975 to 1985 made by Prof. Galanter reveals that a total number of 416 tort
c cases were decided by the High Courts and this Court, as reported in the
All India Reporter, out of which 360 cases related to claims under the
Motor Vehicles Act and cases relating to medical malpractice were only
three in number. (See: Upendra Baxi and 17wmes Paul, Mass Disasters and
Multinational Liability. The Bhopal case, pp. 214-218). One of the factors
D inhibiting such claims is the requirement regarding court fee that must be
paid by the plaintiff -in an action for damages on the ground of negligence.
Since no court fee is required to be paid on a complaint filed under the
Act it would be possible for persons who have suffered injury due to
deficiency in service rendered by medical practitioners or at hospitals/nurs-
ing homes to see redress. The conditions prevailing in India cannot, there-
E fore, be compared with those in England and in the United States.

As regards the criticism of the American malpractice litigation by the
British judiciary it has been said :

F "Discussion of these important issues is sometimes clouded by an
over-simplistic comparison between England and American
"malpractice" litigation. Professor Miller noted in 1986 that
malpractice claims were brought in the United States nearly 10
times as often as in England, and that this is due to a complex
combination of factors, including cultural differences, judicial at-
G titudes, differences in the legal system and the rules about costs.
She points to the deterrent value of malpractice litigation and
resent some of the criticisms of the American system expressed by
the British judiciary. Interestingly, in 1989 the number of medical
negligence claims and the size of medical malpractice insurance
H premiums started to fall in New York, California and many other
INDIANMEDICALASSN.v. V.P.SHANTHA[S.C.AGRAWAL,J.] 145

states. It is thought that this is due in part to legislation in a number A
of states limiting medical malpractice claims, an in part to im-
proved patient care as a result of litigation."

(Jackson & Powell on Professional Liability, 3rd Edn., para 6-25,
p. 466)
B
Dealing with the present state of medical negligence cases in the
United Kingdom it has been observed :

"The legal system, then, is faced with the classic problem of doing
justice to both parties. The fears of the medical profession must C
be taken into account while the ·legitimate claims of the patient
cannot be ignored.

Medical negligence apart, in practice, the courts are increasingly
reluctant to interfere in clinical matters. What was once perceived
as a legal threat to medicine has disappeared a decade later. While D
the court will accept the absolute right of a patient to refuse
treatment, they will, at the same time, refuse to dictate to doctors
what !reatment they should give. Indeed, the fear could be that, if
anything, the pendulum has swung too far in favour of therapeutic
immunity." (p. 16) E

"It would be a mistake to think of doctors and hospitals as easy
targets for .the dissatisfied patient. -It is still very difficult to raise
an action of medical negligence in Britain; some, such as the
Association of the Victims of Medical Accidents, would say that
it is unacceptably difficult. Not only are there practical difficulties F
in linking the plaintiffs injury to medical treatment, but the stand-
ard of care in medical negligence cases is still effectively defined
by the profession itself. All these factors, together with the sheer
expense of bringing legal action and the denial of legal aid to all
but the poorest, operate to inhibit medical litigation in a way in G
which the American system, with its contingency fees and its
sympathetic juries, does not.

It is difficult to single out any one cause for what increase there
has been in the volume of medical negligence actions in the United
Kingdom. A common explanation is that there are, quite simply, H
146 SUPREME COURT REPORTS [1995] SUPP. 5 S.C.R.

A more medical accidents occurring - whether this be due to in-
creased pressure on hospital facilities, to falling standards of
professional competence or, more probably, to the ever-increasing
complexity of therapeutic and diagnostic methods." (p. 191)

"A patient who has been injured by an act of medical negligence
B has suffered in a way which is recognised by the law - and by the
public at large - 3.S deserving compensation. This loss may be
continuing and what may seem like an unduly large award may be
little more than that sum which is required to compensate him for
such matters as loss of future earnings and the future cost of
c medical or nursing care. To deny a legitimate claim or to restrict
arbitrarily the size of an award would amount to substantial injus-
tice. After all, there is no difference in legal theory between the
plaintiff injured through medical negligence and the plaintiff in-
jured in an industrial or motor accident." (pp. 192-93)

D (Mason's Law and Medical Ethics, 4th Edn.)

We are, therefore, not persuaded to hold that in view of the conse-
quences indicated by Lord Denning in Whitehouse v. Jorden (supra) medi-
cal practitioners should be excluded from the purview of the Ac~.

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

(1) Service rendered to a patient by a medical practitioner (except
where the doctor renders service free of charge to every patient
or under a contract of personal service), by way of consultation,
F diagnosis and treatment, bot~ medicinal and surgical, would fall
within the ambit of 'service' as defined in Section 2(1)(o) of the
0
Act.

(2) The fact that medical practitioners belong to the medical
profession and are subject to the disciplinary control of the Medi-
G
cal Council of India and/or State Medical Councils constituted
under the provisions of the Indian Medical Council Act would not
exclude the services rendered by them from the ambit of the Act. ,..J

(3) A 'contract of personal service' has to be distinguished from a
H 'contact for personal services'. In the absence of a relationship of

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

master and servant between the patient and medical practitioner, A
the service rendered by a medical practitioner to the patient cannot
be regarded as service rendered under a 'contract of personal
service'. Such service is service rendered under a 'contract for
personal services' and is not covered by exclusionary clause of the
definition of 'service' contained in Section 2(1)(o) of the Act.
B
(4) The expression 'contract of personal service' in Section 2(1)(o)
of the Act cannot be confined to contracts for employment of
domestic servants only and the said expression would include the
employment of a medical officer for the purpose of rendering
medical service to the employer. The service rendered by a medical C
officer to his employer under the contract of employment would
be outside the purview of 'service' as defined in Section 2(1)(o) of
the Act.

(5) Service rendered free of charge by a medical pract1t1oner
attached to a hospitaVNursing home or a medical officer employed D
in a hospital/Nursing home where such services are rendered free
of charge to everybody, would not be "service" as defined in Section
2(1)(o) of the Act. The payment of a token amount for registration
purpose only at the hospital/nursing home would not alter the
position. E
(6) Service rendered at a non-Government hospital/Nursing home
where no charge whatsoever is made from any person availing the
service and all patients (rich and poor) are given free service - is
outside the purview of the expression 'service' as defined in Section
2(1)( o) of the Act. The payment of a token amount for registration F
purpose only at the hospital/Nursing home would not alter the
position.

(7) Service rendered at a non-Government hospital/Nursing home
where charges are required to be paid by the persons availing such G
services falls within the purview of the expression 'service' as
defined in Section 2(1)(o) of the Act.

(8) Service rendered at a non-Government hospital/Nursing home
where charges are required to be paid by persons who are in a
position to pay and persons who cannot afford to pay are rendered H
148 SUPREME COURT REPORTS [1995) SUPP. 5 S.C.R.

A service free of charge would fall within the ambit of the expression
'service\as defined in Section 2(1)(o) of the Act irrespective of
the fact that the service is rendered free of charge to persons who
are not in a position to pay for such services. Free service, would
also be "service" and the recipient a "consumer" under the Act.
B (9) Service rendered at a Government hospital/health centre/dis-
pensary where no charge whatsoever is made from any person
availing the services.and all patients (rich and poor) are given free
service - is outside the purview of the experssion 'service' as -~

defined in Section 2(1)(o) of the Act. The payment of a token
c amount for registration purpose only at the hospital/nursing home
would not alter the position.

(10) Service rendered at a Government hospital/health centre/dis-
pensary where services are rendered on payment of charges and
also rendered free of charge. to o_ther persons availing such services
D would fall within the ambit ·of the expression 'service' as defined
in Section 2(1)(o) of the Act irrespective of the fact that the service
is .rendered free of charge to persons who do not pay for such
service. Free service would also be "service" and the recipient a
"consumer" under the Act.
E
(11) Service rendered by a medical practitioner or hospital/nursing
home cannot be regarded as service rendered free of charge, if the
person availing the service has taken an insurance policy for
medical care whereunder the'. charges for consultation, diagnosis
and medical treatment are borne by the insurance company and
F such service would fall within the ambit of 'service' as defined in
Section 2(1)(o) of the Act.

(12) Similarly, where, as a part of the conditions of service, the
employer bears the expenses of medical treatment of an employee
and his family members dependent on him, the service rendered
G to such an employee and his family members by a medical prac-
titioner or a hospital/nursing home would not be free of charge
and would constitute 'service' under Section 2(1)(o) of the Act.

In view of the conclusions aforementioned the judgment of the
H National Commission dated April 21, 1992 in First Appeal No. 48 of 1991
INDIAN MEDICAL ASSN. v. V.P. SHANTI-IA [S.C. AGRAWAL, J.] 149

(Mis Cosmopolitan Hospitals & Anr. v. Smt. Vasantha P. Nair) and the A
judgment dated November 16, 1992 in First Appeal No. 97 of 1991 (Dr. Sr.
Louie & Anr. v. Smt. Kanno/ii Pathumma & Anr.) holding that the activity
of providing medical assistance for payment carried on by hospitals and
members of the medical profession falls within the scope of the expression
'service' as defined in Section 2(1)(o) of the Act and that in the event of B
any deficiency in the performance of such senii.ce the aggrieved party can
invoke the remedies provided under the Act by filing a complaint before
the Consumer Forum having jurisdiction, must be upheld and Civil Appeal
Nos. 688/93 and 689/93 and S.L.P. (Civil) Nos. 6885/92, 6950/92 and 351/93
filed against the said judgment have to be dismissed. The National Com-
mission in its judgment dated May 3, 1993 in O.P. No. 93/92 has held that c
since the treatment that was given to the deceased husband of the com-
plainant in the nursing home belonging to the opposite party was totally
free of any charge it does not constitute 'service' as defined in Section
2(1)(o) of the Act. The Tribunal has not considered the question whether
services are rendered free of charge· to all the patients availing services in D
the said nursing home or such services are rendered free of charge only to
some of the patients and are rendered on payment of charges to the rest
of the patients. Unless it is found that the services are rendered free of
charge to all the patients availing services at the nursing home, it cannot
be held that the said services do not constitute 'service' as defined in E
Section 2(1)(o) of the Act. Civil Appeal No. 254/94 has, therefore, to be
~lowed and the matter has to be remitted to the National Commission for
!'onsideration in the light of this judgment. The judgment of the Madras
High Court in Dr. C.S. Subramaniam v. Kumaraswamy & Anr. (supra),
holding that the services rendered to a patient by a medical practitioner or
a hospital by way of diagnosis and treatment, both medicinal and surgical,
F
would not come within the definition of 'service' in Section 2(1)(o) and a
patient who undergoes treatment under a medical practitioner or a hospital
by way of diagnosis and treatment, both medicinal and surgical, cannot be
considered to be a 'consumer' within the meaning of Section 2(1)(d) of the
Act cannot be sustained and Civil Appeals Nos. 4664-65/94 as well as Civil G
Appeals arising out of S.L.P. (Civil) Nos. 21755/94 and 18445-73/94 have
to be allowed and the said judgment of the Madras High Court has to be
set aside and the writ petitions disposed of by the said judgment have to
be dismissed. The judgment of the National Commission dated December
15, 1989 in First Appeal No. 2 of 1989 holding that services rendered in H
150 SUPREME COURT REPORTS [1995] SUPP. 5 S.C.R.

A Government hospitals are not covered by the expression 'service' as
defined in Section 2(1)(o) of the Act cannot be upheld in its entirety but
can be upheld only to the extent as indicated in conclusion No. 9. Civil
Appeal arising out of S.L.P. (Civil) No. 18497/93 has to be allowed and the
complaint has to be remitted to the State Commission for consideration in
the light of this judgment. S.L.P. (Civil) Nos. 21348-21349/93 have been
B filed against the judgment "of the Kerala High Court dated October 6, 1993
in Writ Petitions filed on behalf of the hospitals claiming that the services
rendered by the hospitals do not fall within the ambit of Section 2(1)(o) of
the Act. The said Writ Petitions were dismissed by the High Court having
regard to the decision of.the National Commission in Cosmopolitan Hospi-
C tal (supra) and the pendency of appeal against the said decision before this
Court. Since the decision of the National Commission in Cosmopolitan
Hospital (supra) is being upheld by us, S.L.P. (Civil) Nos. 21348-21349/93
have to be dismissed.

D Writ Petition (Civil) No. 16/94 has been filed by the Cosmopolitan
Hospital (P) Ltd. and Dr. K. Venugopalan Nair who have also filed S.L.P.
(Civil) Nos. 6885/92 and 6950/92 against the judgment of the National
Commission dated April 21, 1992. In the Writ Petition, the said writ
petitioners have sought a declaration that the provisions of the Act are not
applicable to alleged deficiency in medical service and that if the said
E provisions are held to be applicable to the medical profession and hospitals
the same may be declared as unconstitutional as being violative of Articltl
14 and 19(1)(g) of the Constitution. As regards the first part of the prayer
regarding the applicability of the provisions of the Act to the alleged
deficiency in medical service, we have already considered the matter and
F found that the provisiOns of the Act are applicable to deficiency in service
rendered by medical practitioners and hospitals and for the same reason
the said prayer cannot be allowed. The other prayer sought for in the Writ
Petition regarding the validity of the provisions of the Act is also without
any substance. The ground on which the writ petitioners are seeking to
assail the validity of the provisions of the Act is that the composition of the
G Consumer Disputes redressal Agencies and the procedure to be followed
by the said Agencies is such that it is not suitable for adjudication of the
complex issues arising for consideration. We have already considered this
grievance urged on behalf of the medical profession and have found that
the composition of the Consumer Disputes Redressal Agencies as well as
H the procedure to be followed by them does not preclude a proper adjudica-
INDIANMEDICALASSN. v. V.P.SHANTHA[S.C.AGRAWAL,J.] 151

tion of the consumer disputes arising out of complaints relating to deficien- A
cy in service rendered by medical practitioners and hospitals. In our
opinion, no case is made out that the Act suffers from the vice of arbitrari-
ness or unreasonableness so as to be violative of Articles 14 and 19(1)(g)
of the Constitution. There is, therefore, no merit in the Writ Petition and
it has to be dismissed.
B
In the result Civil Appeals Nos. 688/93 and 689/93, and S.L.P. (Civil)
Nos. 6885/92 and 6950/92 are dismissed. The State Commission will deal
with the complaints in the light of this judgment. S.L.P. (Civil) Nos. 351/93
and 21348-21349/93 and Writ Petition (Civil) No. 16/94 are also dismissed.
Civil Appeal No. 254/94 is allowed and the judgment of the National C
Commission dated May 3, 1993 is set aside and O.P. No. 93/92 is remitted
to the National Commission for consideration in the light of this judgment.
Civil Appeals Nos. 4664-65/94 and Civil Appeals arising out of S.L.P.
(Civil) Nos. 21755/94 and 18445-73/94 are allowed and the judgment of the
Madras High Court dated February 17, 1994 is set aside and the writ
petitions disposed of by the said judgment of the High Court are dismissed D
and as a result the Consumer Disputes Redressal Agencies would deal with
the complaint petitions covered by those writ petitions in the light of this
judgment. Civil Appeal arising out of S.L.P. (Civil) No. 18497/93 is also
allowed and Complaint Case No. 1 of 1988 is remitted to the State
Commission for consideration in the light of this judgment. No order as to E
costs.

G.N. Appeal allowed.