M/S Sheth M.L.Vaduwala Eye Hospital vs Oriental Ins.Co.Ltd. And Ors.

Reportable

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

Civil Appeal Nos 7611-7634 of 2021 (Arising out of SLP (C) No 16392-16415 of 2014)

M/s Sheth M L Vaduwala Eye Hospital Appellant

Versus

Oriental Insurance Company Limited and Others Respondents

JUDGMENT

Dr Dhananjaya Y Chandrachud, J.

1 Leave granted.

2 These appeals arise from a judgment of the National Consumer Disputes

Redressal Commission1 dated 26 February 2014.

3 The appellant is a charitable hospital registered under the Bombay Public Trust

Act 1961. Between 21 and 23 June 2000, the appellant conducted an eye camp where

cataract surgeries were performed on 112 patients. The patients complained of Signature Not Verified Digitally signed by 1 “NCDRC” Chetan Kumar Date: 2021.12.16 16:29:46 IST Reason: CA 7611-34/2021 2

negligence in the performance of the surgeries by the use of non-sterilized appliances,

contaminated medicines and lenses of an inferior quality resulting in eye infections and

loss of vision. The State Government appointed a Committee to enquire into the causes

which led, inter alia, to several patients having lost their eye-sight.

4 Meanwhile, twenty-four complaints were filed by a consumer organization, Jagrut

Nagrik Trust. The consumer complaints were instituted against the hospital and the

insurance company. The insurance policies were obtained by the doctors from the

insurer to cover claims of professional negligence. The doctors were not parties to the

proceedings before the District Consumer Disputes Redressal Forum, Vadodara 2,

though affidavits were filed by them.

5 The District Forum by its order dated 19 February 2010 awarded an amount of

Rs 1,70,000 as compensation to each of the twenty-four complainants together with a

refund of registration fees (Rs 250), compensation for mental agony (Rs 3000), costs

(Rs 1500) and interest at the rate of 9% per annum. In arriving at its conclusion, the

District Forum relied on the report of the Enquiry Committee appointed by the State

Government, which had found that there was negligence. An extract of the findings of

the Enquiry Committee as recorded by the District Forum are below:

The expert committee constituted by the Government of Gujarat has further concluded that there was total lack of aseptic precaution on the doctors and the OT staff. The operation theatre assistants were not qualified. There was lack of proper sterilization of instruments etc. used in operations. In the machines, OT tables instruments etc. […] 2 “District Forum” CA 7611-34/2021 3

bacteria was found and the damage to the eyes of the patients was because of this bacteria […] was also found on Phacomachine.

There was no proper fumigation and even after fumigation bacteria was found in OT and the operation table in O.T. The O.T staff was unqualified and it was not supervised by doctors. There were serious lapses in Autoclave. The patients ought to have been examined on the next day of operation. The Committee has held responsible the doctors and the staff for the damage to the eyes of the patient.”

6 The District Forum further rejected the argument of the insurer that no liability

could accrue to it as the doctors (who had taken the insurance policy) had not been

made parties to the proceedings and in any case, were not negligent. The Forum held

that according to the report of the Expert Committee, negligence of the doctors and the

staff of the appellant hospital had been established. Thus, the District Forum held that

the liability of both the hospital and the insurer would be joint and several, but the award

would be enforced only against the insurer. The award was not challenged by the

hospital.

7 The insurer filed appeals against the order of the District Forum before the State

Consumer Disputes Redressal Commission, Gujarat 3. By its judgment dated 30

November 2012, the State Commission dismissed the appeals. For convenience of

reference, the findings which were arrived at by the State Commission are extracted

below:

“In connection with the aforesaid undoubted facts, it is clear that the cataract operation camp which was organized by the defendant no.3 Hospital, in it the staff which was appointed for the help of Doctors, that staff being untrained staff, could not properly sterilize the

3 “State Commission” CA 7611-34/2021 4

equipments used for the purpose of operation. Moreover, the medicines which were used, were also adulterated and the patients were examined with the Non Standard Lens. Moreover, as Sidonomus (sic) lnfection was found in the operation theatre, the patients whose eyes were infected after the operation, the pupil of that eye were removed, otherwise there was fear of infection in another eye also. In these circumstances, the pupils of eyes of all the aforesaid patients were removed. The incident being occurred in such a huge proportion, the State Government took its note and framed inquiry committee. In it the expert doctors inquired regarding the incident, confirmed the fact of all negligence in their report. The Doctors who performed the surgery were questioned and cross examination of many doctors is also made by the prosecution.

Therefore, it is proved that as the staff helping the Doctors for performing the cataract operation was untrained, the care which should have been taken was not taken, the aforesaid applicants had to lose their eyes and in that manner the defendant no.3 Charitable Hospital, after accepting the charge of Rs.250/- towards treatment from every patient, the care which should have been taken was not taken and the loss of eye is caused on account of negligence of the Hospital and the circumstances had arrived that some patients had to lose their lives. As the principle of [res ipsa loquitur] can be applied to such case "Circumstances speak for themselves". On its basis, the Consumer Forum has come to the conclusion that the behavior of negligence is proved towards the patients. The Consumer Commission herein is convinced with that.”

8 A revision was filed before the NCDRC by the insurer. The NCDRC by its

impugned order dated 26 February 2014, set aside the orders of the consumer fora

holding the insurer liable. It, however, clarified that this would not affect the directions

fastening liability on the hospital. In arriving at this conclusion, the NCDRC noted that

the liability has been fastened on the hospital on the basis of six professional indemnity

policies obtained by the doctors, though their business addresses were shown to be

Vaduwala Eye Hospital. The NCDRC held that this fact could not by itself fasten the

liability on the insurer, particularly in the absence of any specific allegation of CA 7611-34/2021 5

negligence against any of the doctors.

9 Assailing the judgment of the NCDRC, the hospital is in appeal. During the

pendency of the proceedings, an interim order was passed by this Court on 20

February 2015. The order reads as follows:

“On condition of depositing the amount of Rs.42,00,000/- (Rupees Forty Two Lakhs) by the petitioner before the District Consumer Forum, Vadodara within four weeks, the proceedings for execution of the order dated 19.2.2010 passed in Consumer Complaint Nos.307/2000 to 309/2000, 311/2000 to 326/2000, 356/2000 and 358/2000 to 360/2000 passed by the District Consumer Forum, Vadodara shall remain stayed. On such deposit, the claimants would be entitled to withdraw the same.”

10 In pursuance of the above order, the appellant has deposited an amount of Rs 42

lakhs before the District Forum and the amount has been withdrawn by the claimants.

11 Mr Manoj Swarup, learned senior counsel has appeared on behalf of the

appellant while Ms Amrreeta Swaarup, learned counsel appears on behalf of the first

respondent.

12 Mr Manoj Swarup, learned senior counsel has made an earnest effort to

challenge the order of the NCDRC while submitting that the hospital was entitled to lay

a claim against the insurer as a beneficiary of the insurance policies and, consequently,

the NCDRC was not justified in reversing the findings of the District Forum and the

State Commission in revision. Learned senior counsel has principally relied upon the

observation of the NCDRC that there was no finding of negligence on the part of the CA 7611-34/2021 6

doctors and has assailed it on the ground that the doctors had participated in the

proceedings by filing affidavits in which event, it was open to the District Forum to

fasten joint and several liability on the hospital as well as the insurer.

13 On the other hand, it has been submitted on behalf of the first respondent that

there was no privity of contract between the insurer and the hospital and the

professional indemnity policies were obtained by the doctors. There was no insurance

cover in respect of the hospital or the staff. Hence, it has been submitted that the

NCDRC was justified in entertaining the revision and directing that the insurer would not

be liable to indemnify the hospital.

14 From the record, it emerges that the insurance policies were obtained by the

doctors. These were professional indemnity insurance policies which would cover a

claim for professional negligence which was made against the doctors. Admittedly, the

finding of negligence, as it appears from the order of the State Commission, is

specifically against the hospital. The finding is that the hospital and its staff were

negligent in the conduct of the cataract surgeries. The specific finding is that the

equipment which was used were not properly sterilized, the staff was not properly

trained and the medicines which were administered were not of the requisite quality and

were contaminated. In this backdrop, the issue is whether the hospital could have

claimed to be indemnified by the insurer. The hospital was not the beneficiary of the

insurance policies which were obtained by the doctors to cover the discharge of their CA 7611-34/2021 7

own professional obligations. There was a manifest error on the part of the District

Forum as well as the State Commission. The NCDRC had a valid basis to exercise its

revisional jurisdiction.

15 In this backdrop, and for the above reasons, no fault can be found with the

ultimate findings of the NCDRC. While it is true that the NCDRC has interfered in the

exercise of its revisional jurisdiction, it was justified in doing so since a joint and several

liability could not have been fastened on the insurer under insurance policies which

were not obtained by the hospital. The submission of the hospital that it was the

beneficiary of those insurance policies does not evidently have any basis.

16 In the circumstances, we see no reason to entertain the appeals. However, all

that needs to be clarified is that the dismissal of the appeals shall not come in the way

of the appellant working out its equities or rights in law by adopting suitable proceedings

against any other persons, who according to them may also be negligent in the

discharge of their duties, on which this Court makes no observation or finding of fact

whatsoever. Since the amount was deposited in pursuance of the interim order and has

been permitted to be withdrawn by the patients, it also needs to be clarified that this

aspect shall stand confirmed while disposing of the appeals. If any amount has not

been disbursed to the original claimants, this shall be done expeditiously. CA 7611-34/2021 8

17 The appeals are disposed of in the above terms.

18 Pending applications, if any, stand disposed of.

..….......……………….....…………..J. [Dr Dhananjaya Y Chandrachud]

.…....…........……………….…........J. [A S Bopanna]

New Delhi;

December 11, 2021 CKB CA 7611-34/2021 9

ITEM NO.8 Court 4 (Video Conferencing) SECTION XVII-A

S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS

Petition(s) for Special Leave to Appeal (C) Nos.16392-16415/2014

(Arising out of impugned final judgment and order dated 26-02-2014 in RP No. 2143/2013 26-02-2014 in RP No. 2166/2013 26-02-2014 in RP No. 2145/2013 26-02-2014 in AP No. 2146/2013 26-02-2014 in AP No. 2147/2013 26-02-2014 in AP No. 2148/2013 26-02-2014 in AP No. 2149/2013 26-02-2014 in AP No. 2150/2013 26-02-2014 in AP No. 2151/2013 26-02-2014 in AP No. 2152/2013 26-02-2014 in AP No. 2153/2013 26-02-2014 in AP No. 2154/2013 26-02-2014 in AP No. 2155/2013 26-02-2014 in AP No. 2156/2013 26-02-2014 in AP No. 2157/2013 26-02-2014 in AP No. 2158/2013 26-02-2014 in AP No. 2159/2013 26-02-2014 in AP No. 2160/2013 26-02-2014 in AP No. 2161/2013 26-02-2014 in AP No. 2162/2013 26-02-2014 in AP No. 2163/2013 26-02-2014 in AP No. 2164/2013 26-02-2014 in AP No. 2165/2013 26-02-2014 in RP No. 2144/2013 passed by the National Consumers Disputes Redressal Commission, New Delhi)

M/S SHETH M.L.VADUWALA EYE HOSPITAL Petitioner(s)

VERSUS

ORIENTAL INS. CO. LTD. AND & ORS. Respondent(s)

Date : 11-12-2021 These petitions were called on for hearing today.

CORAM :

HON'BLE DR. JUSTICE D.Y. CHANDRACHUD HON'BLE MR. JUSTICE A.S. BOPANNA

For Petitioner(s) Mr. Manoj Swarup, Sr. Adv.

Mr. Shakti Kanta Pattanaik, AOR Mr. Tarun Kumar Tiwari, Adv.

Mr. Santosh Kumar, Adv.

Mr. Dhruv Kiran Dave, Adv.

For Respondent(s) CA 7611-34/2021 10

Ms. Amrreeta Swaarup, AOR

UPON hearing the counsel the Court made the following O R D E R

1 Leave granted.

2 The appeals are disposed of in terms of the signed reportable judgment.

3 Pending applications, if any, stand disposed of.

(CHETAN KUMAR) (SAROJ KUMARI GAUR) A.R.-cum-P.S. Court Master

(Signed Reportable Judgment is placed on the file)