M/S SHETH M L VADUWALA EYE HOSPITAL versus ORIENTAL INSURANCE COMPANY LIMITED AND OTHERS

Citation: [2021] 12 S.C.R. 116 · Decided: 11-12-2021 · Supreme Court of India · Bench: D.Y. CHANDRACHUD · Disposal: Dismissed

Judgment (excerpt)

A
B
C
D
E
F
G
H
116
SUPREME COURT REPORTS
[2021] 12 S.C.R.
116
M/S SHETH M L VADUWALA EYE HOSPITAL
v.
ORIENTAL INSURANCE COMPANY LIMITED AND OTHERS
(Civil Appeal Nos. 7611-7634 of 2021)
DECEMBER 11, 2021
[DR. DHANANJAYA Y CHANDRACHUD AND
A. S. BOPANNA, JJ.]
Consumer Protection: Medical negligence – Liability of
Hospital – Appellant a charitable hospital conducted an eye camp
and performed cataract surgeries on 112 patients – Patients
complained of negligence in performance of surgeries by use of
non-sterilized appliances, contaminated medicines and lenses of
an inferior quality resulting in eye infections and loss of vision –
State Government appointed a Committee to enquire into the causes
which led, inter alia, to several patients having lost their eye-sight
– Consumer complaints instituted by consumer organization against
the hospital and the insurer – Doctors had insurance policies to
cover claims of professional negligence – Doctors were not parties
to the proceedings before the District Forum though affidavits were
filed by them – District Forum held that according to the report of
the Expert Committee, negligence of the doctors and the staff of the
appellant hospital was established and passed an award of
compensation – 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 – Award was not
challenged by Hospital – State Commission dismissed the insurer’s
appeal – NCDRC set aside order 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 – NCDRC held that this fact could not by itself fasten the
liability on the insurer, particularly in the absence of any specific
allegation of negligence against any of the doctors – Instant appeals
filed by Hospital – Held: The insurance policies were obtained by
the doctors – These were professional indemnity insurance policies
[2021] 12 S.C.R. 116
A
B
C
D
E
F
G
H
117
which would cover a claim for professional negligence which was
made against the doctors – Admittedly, 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 – The hospital was not the beneficiary of the insurance
policies which were obtained by the doctors to cover the discharge
of their own professional obligations – A joint and several liability
could not have been fastened on the insurer under insurance policies
which were not obtained by the hospital – No interference with the
order of NCDRC called for.
Dismissing the appeals, the Court
HELD: 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 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.
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. [Paras 

Excerpt shown. Read the full judgment & AI analysis in Lexace.