KISHORELAL versus CHAIRMAN, E.S.I. CORPORATION

The appellant was insured with Employees' State Insurance Corporation (for short "the Insurance No. 913644. The employee's/appellant's contribution insurance scheme under the Employees' State Insurance Act, referred to as "the ESI Act") was being deducted regularly deposited by his employer with the Corporation. In 1993, the was admitted in the ESI dispensary at Sonepat for her treatment However, the condition of his wife continued to deteriorate. appellant, there were instances when the doctors were during emergencies. Later, the appellant got his wife medically private hospital. The tests done revealed that his wife had incorrectly in the ESI dispensary; and that the deterioration of the appellant's wife was a direct result of the wrong appellant filed a complaint under the Consumer Protection Act, referred to as "the CP Act") before the District Consumer Forum seeking (i) compensation towards mental agony, harassment, torture, pains, sufferings and monetary loss for the negligence (ii) direction for removal of, and improvement in, the deficiencies; direction for payment of interest on the amount of reimbursement Corporation through its officers entered appearance and raised certain preliminary objections, namely, (i) that the complaint filed is not maintainable in the District Consumer Forum and is liable to be dismissed as the complainant was treated in the ESI dispensary, Sonepat, government dispensary and the complainant cannot be treated as a and (ii) that the complainant is not a consumer within the definition 'consumer' in the CP Act and he is not entitled to file a complaint the ESI dispensary. It was also contended that the facility of medical in government hospital cannot be regarded as a 'service' hired consideration, apart from the other defences raised in the written

pp. 142–143, margin D

The District Consumer Forum relied on the ratio of Birba/ ES/ Corporation, (1993) II CPJ 1028, wherein on a complaint compensation for being aggrieved by poor medical attention received late wife of the complainant at an ESI hospital, the Haryana State Commission had held that the complainants did not come within the ambit of the of 'consumer' under the CP Act because of the gratuitous nature medical services provided. On this basis, the District Forum held services rendered by the ESI dispensary are gratuitous in nature and, out of the purview of the CP Act. Appeal was preferred to the Haryana Consumer Disputes Redressal Commission and it was urged by the that ESI is a scheme of insurance and hence the service rendered Corporation was not gratuitous. The State Commission relying on the in Birba/ Singh (supra) and Indian Medical Association v. V.P. Shantha and Ors., [1995] 6 SCC 651 held that free medical services were not the CP Act and upheld the judgment of the District Forum. Appellant a revisio'l before the National Consumer Disputes Redressal Commission, the same was also dismissed in limine. Hence, this appeal by special

p. 143, margin C

By second counter affidavit filed in August, 2000, the respondent- Corporation have also raised the question of the jurisdiction of a forum. The respondent contended that by virtue of Section 75 of the the dispute raised by the appellant is covered and is to be decided Employees' Insurance Court established under Section 74 of the ESI it being a special Act the jurisdiction of the consumer forum is

p. 143, margin F

From the decisions rendered by the District Forum, ·Commission and the National Commission, and the questions raised appellant and the respondent, the question that falls for our consideration A two-fold: I. Whether the service rendered by an ES! hospital is gratuitous or not, and consequently whether it falls within the ambit of 'service' as defined in the Consumer Protection Act, 1986? 2. Whether Section 74 read with Section 75 of the Employees' State Insurance Act, 1948 ousts the jurisdiction of the consumer forum as regards the issues involved for consideration?

pp. 143–144, margin G

It is contended by Shri Dayan Krishnan, the learned counsel for the appellant, that in the case of Indian Medical Association (supra} although it was held that the free medical service was not covered under the CP Act, the very same judgment in conclusion No. (11) in para 55 includes any medical service given under the scheme of insurance within the scope of the CP Act and, therefore, the claim made by the appellant squarely falls within the jurisdiction of the consumer forum, the appellant being a consumer and the respondent's dispensary having rendered a service to him for consideration.

p. 144, margin B

At this stage, it would be appropriate to refer to certain statutory provisions of the Consumer Protection Act, 1986. 'Consumer' is defined in clause (d) and 'service' in clause (o) of Section 2(1) of the CP Act as under: "2. Definitions.- (I) Jn this Act, unless the context otherwise requires,xxx xxx ( d) "consumer" means any person who, - (i) buys any goods for consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment, when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or (ii) hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who hires or /'avails of the services 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 but does not include a person who avails of such services for any commercial purpose; Explanation.- For the purposes of this clause, "commercial purpose" does not include_ use by a person of goods bought and used by him and services availed by him exclusively for the purposes of earning his livelihood by means of self-employment;" xxx xxx xxx "( o) "Service" means service of any description which is made available to potential users and includes, but not limited to, the provision of facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, board or lodging or both, housing construction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service;"

pp. 144–145, margin C

The definition of' consumer' in the CP Act is apparently wide enough and encompasses within its fold not only the goods but also the services, bought or hired, for consideration. Such consideration may be paid or promised or partly paid or partly promised under any system of deferred payment and includes any beneficiary of such person other than the person who hires the service for consideration. The Act being a beneficial legislation, aims to protect the interests of a consumer as understood in the business parlance. The important characteristics of goods and services under the Act are that they are supplied at a price to cover the costs and generate profit or income for the seller of goods or provider of services. The comprehensive definition aims at covering every man who pays money as the price or cost of goods and services. However, by virtue of the definition, the person who obtains goods for resale or for any commercial purpose is excluded, but the services hired for consideration even for commercial purposes are not excluded. The term 'service' unambiguously indicates in the definition that the definition is not restrictive and includes within its ambit such services as well which are specified therein. However, a service hired or availed, which does not cost anything or can be said free of charge, or under a contract of personal service, is not included within the meaning of 'service' for the purposes of the CP Act.

p. 145, margin D

A 3-Judge Bench of this Court in Indian Medical Association (supra) has extensively considered the provisions of the shall be a 'service' within the meaning of Section Court was considering whether the service rendered within the purview of the CP Act, it being a service and whether the patients, who are treated by the defined in Section 2(l)(d) of the CP Act. The of' service' in Section 2( I)( o) can be split into inclusionary part and the exclusionary part. The nature and defines service to mean service of available to the potential users. The inclusionary provision of facilities in connection with banking, transport, processing, supply of electrical or or both, housing construction, entertainment, news or other information, whereas the exclusionary of any service free of charge or under a contract of exclusionary part in Section 2( I)( o) excludes from (i) free of charge; or (ii) under a contract of personal 'contract of personal service' in the exclusionary be construed as excluding the services rendered employer under the contract of personal service expression 'service'. There is a distinction between a 'contract for service'. A 'contract for service' one party undertakes to render service e.g. professional to or for another in the performance of which direction and control and exercises professional own knowledge and discretion, whereas a ·contract relationship of master and servant and involves in the work to be performed and as to its mode A contract of service is excluded for consideration of 'service' in the CP Act, whereas a contract regards service rendered free of charge under that the medical practitioners, government hospitals/nursing hospitals/nursing homes, who render service to every person availing of the service would 'service' under Section 2(1)(o) of the Act. The for registration purposes only would, however, respect of such doctors and hospitals, but the charges are required to be paid by everybody within the purview of the expression 'service' of the Act. The Court held that the relationship and a patient carries within it a certain degree of mutual confidence and trust and, therefore, the service rendered by the medical practitioners can be regarded as a service 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 as a contract of personal service and it is a contract for service and the service rendered by the medical practitioner his patient under such contract is not covered by the exclusionary part of the definition of'service' contained in Section 2(1)(o) of the CP Act. In paragraph 55 of the judgment, the Court summarized its conclusions. We are really concerned in this case with conclusions Nos. (9), (IO), (I I) and (12). Conclusion No. (9) is in regard to the service rendered at a government hospital/health center/dispensary where no charges whatsoever are made from any person and they are given free service, which would not be a service under Section 2(1 )( o) of the CP Act. Conclusion No. (I 0) lays down that where the service is rendered at a government hospital/health center/dispensary on payment of charges and also rendered free of charge, then it would fall within the ambit of the expression ·service'. Conclusion No. (I I) says that if a patient or his relation availed of the service of a medical practitioner or hospital/nursing home where the charges for consultation, diagnosis and medical treatment are borne by the insurance company, then such service would fall within the ambit of service. Similarly, under conclusion No. (12), 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, then the service rendered by a medical practitioner or a hospital/nursing home would not be treated to be free of charge and would constitute ·service' under Section 2( I)( o ).

pp. 145–147, margin H

In the case of Laxman Thamappa Kotgiri v. G.M Central Railway & Ors., (2005) I Scale 600, where an employee of the railways had filed a complaint on the ground that his wife had been negligently treated at a hospital of the Central Railway as a result of which she had died, the State Commission concluded that since the hospital had been set up to treat railway employees predominantly and the service provided was free of charge it did not come within the definition of 'service' under the CP Act and _hence the complaint was not maintainable. On appeal to the National Commission, the judgment of the State Commission was upheld and the appeal filed by the employee was rejected. Thereafter, appeal was preferred to this Court. Allowing the appeal, this Court in paras 6 and 7 has held as under: "6. There is no dispute that the Hospital in question has been set up for the purpose of granting medical treatment to the Railway employees and their dependents. Apart from the nominal charges which are taken from such an employee, this facility is part of the service conditions of the Railway employees. V.P. Shantha's case has made a distinction between non-Governmental hospital/nursing home where no charge whatsoever was made from any person availing of the service and all patients are given free service (vide para 55(6) at page 681) and services rendered at Government Hospital/Health Centre/Dispensary where no charge whatsoever is made from any person availing of the services and all patients are given free serv,ice (vide para 55(9)) on the hand and service rendered to an employee and his family members by a medical practitioner or a hospital/nursing home which are given as part of the conditions of service to the employee and where the employer bears expenses of the medical treatment of the employee and his family members, (paragraph 55(12) on the other. In the first two circumstances, it would not be free service within the definition of the Sec. 2C)(o) of the Act. In the third circumstance it would be. 7. Since it is not in dispute that the medical treatment in the said Hospital is given to employees like the appellant and his family members is part of the conditions of service of the appellant and that the Hospital is run and subsidised by the appellants employer, namely, the Union of India, the appellant's case would fall within the parameters laid down in paragraph 55(12) of the judgment in V.P. Shantha's case and not within the parameters of either para 55(6) or para 55(9) of the said case."

pp. 147–148, margin E

Further, the appellant has brought to our notice a judgment of this Court in the case of Regional Provident Fund Commissioner v. Shiv Kumar Joshi, [2000] l SCC 98, wherein the Employees' Provident Fund Scheme, 1952, framed under Section 5 of the Employees' Provident Fund Act came for consideration of the Court and the Court held in para 11 as under: A perusal of the Scheme unambiguously shows that it is for consideration which is applicable to all those factories and establishments covered under the Act and the Scheme who are required to become a member of the fund under the Scheme. The contribution of the employee has to be equal to the contribution payable by the employer in respect of such employee. The words "in respect of' are significant as they indicate the liability of the employer to pay of the contribution in consideration of the employee working But for the employment of the employee there is no obligation the employer to pay his part of the contribution to the Scheme. administrative charges, as required to be paid under Para Scheme are also paid for consideration of the employee member of the Scheme and for the services rendered under the It is immaterial as to whether such charges are deducted actually the wages of the employee or paid by his employer in respect member-employee of the Scheme working for such employer. be held that even though the employee is a member of the yet the employer would only be deemed to be a consumer for made payments of the administrative charges ... "

pp. 148–149, margin E

It is contended by the learned counsel for the appellant :hat appellant is a member of the insurance scheme applicable in the establishment where he is serving and, therefore, the insurance policy which takes the medical treatment of the appellant as well as his dependents given in the ESI hospital/dispensary would be a service falling within purview of Section 2(l)(o) of the CP Act. To appreciate this contention learned counsel, it would be necessary to consider the insurance which is applicable in the establishment under various provisions of

p. 149, margin C

It is an admitted fact that the appellant's wife was given in the ES! dispensary at Sonepat. Under Section 38 of the ESI employees in a factory or establishment where the Act applies are to be insured under the insurance scheme. Section 39 speaks contribution which is required to be paid to the Corporation for the scheme which shall comprise the contribution payable by the employer the contribution payable by the employee. The contribution is required paid at such rates as may be prescribed by the Central Government. of Section 40, the principal employer is liable to pay the contributions, the employer's contribution and the employee's contribution, in instance of the employees directly employed by him or by or through immediate employer. Sub-section (2) of Section 40 authorises the employer to recover the contribution made for the employee by deducting same from the wages of the employee. Chapter V of the ES! Act deals benefits. Sub-section (I) of Section 46 falling within this Chapter contemplates that the ins• ired persons, their dependents and the persons mentioned the Section shall be entitled to the various benefits referred to in clauses (a) to (t). Clause (e) reads: "medical treatment for an attendance on insured persons (hereinafter referred to as medical benefit)". Section 56 is a specific Section which has reference to the medical benefits available to an insured person or to his family member whose condition requires medical treatment and attendance and they shall be entitled to receive medical benefit. Under Section 59, the Corporation is called upon with the approval of the State Government to establish and maintain in a State such hospitals, dispensaries and other medical and surgical services as it may think fit for the benefit of insured persons and, where such medical benefit is extended, to their families.

pp. 149–150, margin E

On a plain reading of the aforesaid provisions of the ES! Act, it is apparent that the Corporation is required to maintain and establish the hospitals and dispensaries and to provide medical and surgical services. Service rendered in the hospital to the insured person or his family member for medical treatment is not free, in the sense that the expense incurred for the service rendered in the hospital would be borne from the contributions made to the insurance scheme by the employer and the employee and, therefore, the principle enunciated in conclusion No. (I I) in para 55 in the case of Indian Medical Association (supra) will squarely apply to the facts of the present case, where the appellant has availed the services under the insurance policy which is compulsory under the statute. Wherever the charges for medical treatment are borne under the insurance policy, it would be a service rendered within the ambit of Section 2(l)(o) of the CP Act. It cannot be said to be a free service rendered by the ES! hospital/dispensary.

p. 150, margin C

The service rendered by the medical practitioners of hospitals/ nursing homes run by the ES! Corporation cannot be regarded as a service rendered free of charge. The person availing of such service under an insurance scheme of medical care, whereunder the charges for consultation, diagnosis and medical treatment are borne by the insurer, such service would fall within the ambit of service' as defined in Section 2(l)(o) of the CP Act. We are of the opinion that the service provided by the ES! hospital/dispensary falls within the ambit of 'service' as defined in Section 2(l)(o) of the CP Act. ES! scheme is an insurance scheme and it contributes for the service rendered by the ES! hospitals/dispensaries, of medical care in its hospitals/dispensaries, and as such service given in the ES! hospitals/dispensaries to a member of the Scheme or his family cannot be treated as gratuitous.

p. 150, margin E

We shall now proceed to consider the second question raised by Shri Vijay K. Mehta, the learned counsel for the respondent that by virtue of Section 74 read with Section 75, and particularly Section 75(e), of the ESI Act, the claim made by the appellant would exclusively fall for decision within the jurisdiction of the Employees' Insurance Court and that being the position the consumer forum has no jurisdiction to adjudicate upon the issue.

pp. 150–151, margin H

Relevant portions of Sections 74 and 75 of the ES! Act are reproduced below: "74. Constitution of Employees' Insurance Court.-{ I) The State Government shall, by notification in the Official Gazette, constitute an Employees' Insurance Court of such local area as may be specified in the notification. xxx xxx" "75. Matters to be decided by Employees' Insurance Court.- (I) If any question or dispute arises as to (a) whether any person is an employee within the meaning of this Act or whether he is liable to pay the employee's contribution, or (b) the rate of wages or average daily wages of an employee for the purpose of this Act, or (c) the rate of contribution payable by the principal employer in respect of any employee, or ( d) the person who is or was the principal employer in respect of any employee, or ( e) the right of any person to any benefit and as to the amount and duration thereof, or ( ee) any direction issued by the Corporation under Section 55- A on a review of any payment of dependants' benefits, or, (t) [Omitted), or (g) any other matter which is in dispute between a principal employer and the Corporation, or between a principal employer and an immediate employer, or between a person and the Corporation or between an employee and a principal or immediate employer, in respect of any contribution or benefit or other dues A payable or recoverable under this Act, or any other matter required to be or which may be decided by the Employees' Insurance Court under this Act, such question or dispute subject to the provisions of sub-section (2- A) shall be decided by the Employees' Insurance Court in accordance with the provisions of this Act. (2) Subject to the provisions of sub-section (2-A), the following claims shall be decided by the Employees' Insurance Court, namely,- (a) claim for the recovery of contributions from the principal employer; (b) claim by a principal employer to recover contributions from any immediate employer; (c) (Omitted); ( d) claim against a principal employer under Section 68; ( e) claim under Section 70 for the recovery of the value or amount of the benefits received by a person when he is not lawfully entitled thereto; and (t) any claim for the recovery of any benefit admissible under this ' Act. xxx xxx xxx (3). No Civil Court shall have jurisdiction to decide or deal with any question or dispute as aforesaid or to adjudicate on any liability which by or under this Act is to be decided by a medical board, or by a medical appeal tribunal or by the Employees' Insurance Court."

pp. 151–152, margin B

It has been held in numerous cases of this Court that the jurisdiction .. of a consumer forum has to be construed liberally so as to bring many cases under it for their speedy disposal. In the case of Mis. Spring Meadows G Hospital and Anr. v. Harjo/ Ahluwalia and Anr., AIR (1998) SC 1801, it was held that the CP Act creates a fr~mework for speedy disposal of consumer disputes and an attempt has been made to remove the existing evils of the ordinary court system. The Act being a beneficial legislation should receive a liberal construction. In State of Karnataka v. Vishwabarathi House Building Co-op. Society and Ors., AIR (2003) SC 1043, the Court speaking on the jurisdiction of the consumer fora held that the provisions of the said Act are required to be interpreted as broadly as possible and the fora under the Act have jurisdiction to entertain a complaint despite the fact that other fora/ courts would also have jurisdiction to adjudicate upon the lis. These judgments have been cited with approval in paras 16 and 17 of the judgment in Secretary, Thirumurugan Cooperative Agricultural Credit Society v. M Lalitha and Ors., [2004] 1 SCC 305. The trend of the decisions of this Court is that jurisdiction of the consumer forum should not and would not be curtailed unless there is an express provision prohibiting the consumer forum to up the matter which falls within the jurisdiction of civil court or any other forum as established under some enactment. The Court had gone to the extent of saying that if two different fora have jurisdiction to entertain the dispute in regard to the same subject, the jurisdiction of the consumer forum would not be barred and the power of the consumer forum to adjudicate upon dispute could not be negated.

pp. 152–153, margin F

The submission of the learned counsel for the respondent is that claim made by the appellant before the consumer forum raises a dispute regard to damages for negligence of doctors in the ES! hospital/dispensary and would tantamount to claiming benefit and the amount under the ES! provisions and would fall within clause (e) of Section 75(1) and, therefore, is the Employees' Insurance Court alone which has the jurisdiction to decide it. We are afraid that we cannot agree with the submission made by learned counsel. Section 75 provides for the subjects on which the jurisdiction shall be exercised by the Employees' Insurance Court. Clause ( e) of Section 75(1) gives power to the Employees' Insurance Court to adjudicate upon dispute of the right of any person to any benefit and as to the amount duration thereof. The benefit which has been referred to, has a reference the benefits under the Act, i.e., the ES! Act. The Employees' State Insurance (Central) Rules, 1950 (hereinafter referred to as "the Rules") have been framed in exercise of the powers under Section 95 of the ESI Act. Rule 56 provides for maternity benefits, Rule 57 for disablement benefits, Rule 58 for dependents' benefits, Rule 60 for medical benefits to insured person who ceases to an insurable employment on account of permanent disablement and Rule for medical benefits to retired insured persons. Thus, these are the benefits which are provided under the Rules to the employees and the ex-employees for which claim can be made in rhe Employees' Insurance Court. The appellant's claim has no relation to any of the benefits which are provided in the Rules for which the claim can be made in the Employees' Insurance Court. appellant's claim is for damages for the negligence on the part of the hospital/dispensary and the doctors working therein.

p. 153, margin C

A bare perusal of the provisions of clauses (a) to (g) of Section 75(1) -11clearly shows that it does not include claim for damages for medical negligence, like the present case which we are dealing with. Although the question does not directly arise before us, we shall consider what in the ordinary course shall constitute negligence.

p. 154

This Court has considered the principles of the law on negligence in Jacob Mathew v. State of Punjab and Anr., [2005] 6 SCC I. The jurisprudential concept of negligence defies any precise definition. Eminent jurists and leading judgments have assigned various meanings to negligence. ; The concept as has been acceptable to Indian jurisprudential thought is wellstated in the Law of Torts, Ratanlal & Dhirajlal (24th Ed. 2002, edited by Justice G.P. Singh). It is stated (at pp. 441-442): "Negligence is the breach of a duty caused by the omission to do something which a reasonable man, guided by those considerations which ordinarily regulate the conduct of human affairs would do, or doing something which a prudent and reasonable man would not do. Actionable negligence consists in the neglect of the use of ordinary care or skill towards a person to whom the defendant owes the duty of observing ordinary care and skill, by which neglect the plaintiff has suffered injury to his person or property . the definition involves three constituents of negligence: (1) A legal duty to exercise due care on the part of the party complained of towards the party complaining the farmer's conduct within the scope of the duty; (2) breach of the said duty; and (3) consequential damage. Cause of action for negligence arises only when damage occurs; for, damage is a necessary ingredient of this tort." F Cause of action for negligence arises only when damage occurs and thus the claimant has to satisfy the court on the evidence that three ingredients of negligence, namely, (a) existence of duty to take care; (b) failure to attain that standard of care; and (c) damage suffered on account of breach of duty, are present for the defendant to be held liable for negligence. Therefore, the claimant has to satisfy these ingredients before he can claim damages for medical negligence of the doctors and that could not be a question which could be adjudicated upon by the Employees' Insurance Courts which have been given specific powers of the issues, which they can adjudicate and decide. Claim for damages for negligence of the doctors or the ES! hospital/ dispensary is clearly beyond the jurisdictional power of the Employees' KISHORE LAL CHAIRMAN, E.S.I. COPRN. (P.P. NAOLEKAR, 155 Insurance Court. An Employees' Insurance Court has jurisdiction to decide certain claims which fall under sub-section (2) of Section 75 of the ES! Act. A bare reading of Section 75(2) also does not indicate, in any manner, that the claim for damages for negligence would fall within the purview of the decisions being made by the Employees' Insurance Court. Further, it can be seen that any claim arising out of and within the purview of the Employees' B Insurance Court is expressly barred by virtue of sub-section (3) to be adjudicated upon by a civil court, but there is no such express bar for the consumer forum to exercise the jurisdiction even if the subject matter of the .... claim or dispute falls within clauses (a) to (g) of sub-section (1) of Section 75 or where the jurisdiction to adjudicate upon the claim is vested with the C Employees' Insurance Court under clauses (a) to (f) of sub-section (2) of Section 75 if it is a consumer's dispute falling under the CP Act.

pp. 154–155, margin B

Having considered all these aspects, we are of the view that the appellant is a consumer within the ambit of Section 2(l)(d) of the Consumer Protection Act, 1986 and the medical service rendered in the ES! hospital/ D dispensary by the respondent Corporation falls within the ambit of Section 1( 1 )( o) of the Consumer Protection Act and, therefore, the consumer forum has jurisdiction to adjudicate upon the case of the appellant. We further hold that the jurisdiction of the consumer forum is not ousted by virtue of subsection (1) or (2) or (3) of Section 75 of the Employees' State Insurance Act, 1948. E

p. 155

For the aforesaid reasons, the appeal is allowed. The impugned order is set aside and the matter is remitted back to the District Consumer Disputes Redressal Forum, Sonepat, for decision in accordance with law laid down herein. B.S. Appeal allowed.

p. 155