M/s Sheth M L Vaduwala Eye Hospital Versus Oriental Insurance Company Ltd. &Ors

 

                       M/s Sheth M L Vaduwala Eye Hospital

                                             Versus

                     Oriental Insurance Company Ltd. &Ors

 

                              Civil appeal No. 7611-7634 of 2021

                                   (SLP (C) No 16392-16415 of 2014, SC)

 

 

 

Bench:

Justice D Y Chandrachud

 

Facts of the Case:

 

1.     Sheth M L Vaduwala Eye Hospital (Appellant), a charitable hospital registered under the Bombay Public Trust Act, 1961. The Appellant conducted an eye camp in June 2000, between 21^st to 23^rd June and they performed eye surgeries on 112 cataract patients. After the operations, the patients alleged that there was negligence in performing the said surgeries, like using of non-sterilized appliances, lenses of inferior quality and contaminated medicines which have resulted in eye infections and even loss of vision for many.

2.     The Enquiry Committee appointed by the State Government submitted their report stating that the Hospital, their doctors and the Operation Theatre staffs were liable for their negligence. Relying on this report, the District Forum by its order in 2010, awarded an amount of Rs 1,70,000 as compensation to each of the 24 complainants along 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. The District Forum held that the Appellant and the Respondent would be jointly liable but the award would only be enforced against the Respondent.

3.      A Revision petition was filed before the National Consumer Disputes Redressal Commission (NCDRC) by the Respondent. In 2014, NCDRC held that the insurer was liable. NCDRC also noted that the liability has been fastened on the hospital on the basis of 6 professional indemnity policies obtained by the doctors, though their business address were shown to be Vaduwala Eye Hospital. In pursuance to this order, the Appellant has deposited an amount of Rs 42 Lakhs before the District Forum and the amount was withdrawn by the claimants.

4.     Aggrieved by this judgment, the Respondent filed the present appeal before the Hon’ble Supreme Court of India.

 

 

Issue raised:

 

Whether the Appellant could be a beneficiary of the insurance policies obtained by their doctors, and be covered by the same in this case?

 

 

Decision of the Supreme Court:

 

After considering the arguments, the Apex Court found that the insurance policies were obtained by the doctors and thus the submission of the hospital that it was the beneficiary of those insurance policies does not have any basis of evidence.

HELD –The hospital cannot claim protection under the insurance obtained by doctors against claims of professional negligence.

 

 

Rationale:

 

Here, the Appellant was held responsible as they were ‘vicariously’ liable. Vicarious Liability means a party is held responsible not for its own negligence but for the negligence of others. The same happened here with the eye hospital, they were legally liable for any malpractice committed by their physician and staffs.

 

 

Defects of the Law:

 

Earlier there have been such cases where the court has ordered to pay for the compensation of medical negligence by both the doctors and hospital jointly, even if they are not the beneficiary of insurance policy. Since the negligence was occurred because of the operating doctors, court had asked for them also to pay for the compensation along with the hospital.

[United India Insurance Company vs. Ram Singh &Ors, 2014 SCDRC Punjab]

 

Thus a clear law shall be made to specify the facts whether the hospital can be a beneficiary or not under professional indemnity insurance. Also the Insurance companies shall be ordered to shape plain and unambiguous insurance policies so that the policies can be understandable and clear for the claimants.

 

 

 

Conclusion:

 

It is significant to note that there were no allegations made against the doctors at the first place. Also according to the reports of the Committee, the negligence was occurred due to untrained staffs and the lesser quality of lenses used. The medicines and lenses used which were of mediocre qualities must be provided by the hospital, so that was not anything that could be controlled by the doctors. The State Committee has found only the hospital at fault for the negligence caused.

Up until this judgment there was no clear conception about the claimants of such insurance and the judgments had varied from case to case. Thus, after the coherent judgment passed by the Apex Court, it becomes clear that the hospital cannot take the benefits of the professional indemnity insurance policies of the doctors.

 

 

Citation:

 

[Sheth M L Vaduwala Eye Hospital v. Oriental Insurance Company] Judgment

 

Article by Vasanth Rajasekaran, Mondaq

 

www.livelaw.in , judgment of the case M L Vaduwala Eye Hospital vs. Oriental Insurance Company, 2021.

 

 

 

Authored by:

 

Vishruti Pandey

B.A. LL.B, IV YEAR

BIHAR INSTITUTE OF LAW

PPU, PATNA