In a significant legal development, the Supreme Court of India delivered a landmark judgement on consumer rights in the healthcare sector. This ruling has far-reaching implications for the provision of medical services, particularly involving the duty of hospitals to ensure fair treatment of consumers. Stay informed about the latest updates in the realm of consumer protection in healthcare. #ConsumerRights #Healthcare #SupremeCourt #LegalCase
Facts
- The Appellant trust took possession of 29 flats for hostel facilities for nurses employed by Lilavati Hospital.
- Appellant claims Respondent No 1 obtained occupation certificate through fraud.
- Flats were used for hostel facilities till 2002.
- Consumer Complaint No 117/2016 filed claiming compensation for loss of rent and damages.
- National Commission initially dismissed complaint as time-barred in 2016.
- Appellant vacated flats in 2002, lying unused since 2004.
- Structural report found cost of repairs more than reconstruction.
- Agreements to sell the flats were registered, not conveyance deeds.
- Delay in filing complaint not justified by pending litigation of trustees.
- National Commission recalled order based on error in recording agreements as conveyance deeds.
- Complaint dismissed again on grounds that Appellant trust is not a ‘consumer’ under 1986 Act due to commercial purpose of providing hostel for nurses.
- Separate litigation concerning control of trustees led to interim Board of Trustees being constituted.
- Architect issued completion certificate for the flats on 17.2.1997.
Also Read: Tower Infotech Ltd. Bail Order Appeal
Analysis
- Section 2(1)(d) of the 1986 Act defines ‘consumer’
- Defines ‘consumer’ as a person who buys goods or hires services for consideration paid or promised
- Includes users of goods and beneficiaries of services, excluding those who obtain goods or avail services for resale or commercial purposes
- Commercial purpose does not include use of goods or services for earning livelihood through self-employment
- The dominant purpose test is applied to determine if the provision of hostel facilities by the trust is integral to its commercial activities.
- Disclaiming liability based on engagement in trade and commerce would hinder consumer remedies and discourage employers from providing facilities to employees.
- The purchase of CT scan machines by a diagnostic center is considered for a commercial purpose under Section 2(1)(d) of the 1986 Act.
- The National Commission’s view on commercial purpose being for earning profits on a large scale is discussed.
- The purchase of goods is seen in the context of profit generation.
- The purchase of flats by the trust to accommodate nurses does not directly link to profit generation activities.
- The Explanation clause added in 1993 reiterates the definition of ‘consumer’.
- The purpose of the transaction rather than the identity of the purchaser determines commercial intent.
- The facilities provided to nurses aim to enhance medical care and are not solely for profit-making purposes.
- The purchase of medical equipment for a hospital or diagnostic center aligns with commercial activities.
- The emphasis is on the purpose of purchase, not the person making the transaction.
- The hostel facilities for nurses are deemed not intended for commercial purpose but to improve services.
- The judgment stresses that each case’s facts and circumstances determine consumer status or commercial purpose.
- The Act is intended for business-to-consumer disputes, not business-to-business disputes.
- The purchase of goods must have a close nexus with a profit-generating activity to be excluded from being a ‘consumer’.
- Employer organizations are obligated to provide welfare measures for their employees.
- The purpose of the good or service purchased determines if it is for a commercial purpose.
- The dominant purpose of the purchase decides if it is for a commercial purpose or not.
- The Explanation clause in Section 2(1)(d) is clarificatory, affirming decisions of the National Commission.
- The transaction being for a commercial purpose depends on the facts and circumstances of each case.
- Quasi-judicial bodies like District Forums and State Commissions are created by the Act to provide remedies to consumers.
- The Act is designed to protect the consumer’s interest and ensure fair treatment in the market.
Also Read: Priority of Employees’ Dues in Asset Sale: SARFAESI Act vs. Land Revenue Code
Decision
- The appeal is allowed and restored before the National Commission, setting aside the impugned judgment.
- The duty of the hospital to provide medical services exists irrespective of profit or turnover.
- The Appellant trust is considered a ‘consumer’ under Section 2(1)(d) of the 1986 Act for the transaction.
- The matter is remanded to the National Commission for further consideration.
- Parties are directed to record their evidence before the National Commission.
- The National Commission is requested to expeditiously hear and decide the matter.
Also Read: Judgment Acquitting Accused in Satpal v. State of India
Case Title: LILAVATI KIRTILAL MEHTA MEDICAL TRUST Vs. M/S UNIQUE SHANTI DEVELOPERS
Case Number: C.A. No.-012322-012322 / 2016
