Laxman Thamappa Kotgiri v. G.M, Central Railway And Others, Supreme Court Of India, Judgment, Law, casemine.com

Factual and Procedural Background

The appellant, an employee of the Indian Railways, alleged that his wife died due to negligent treatment at B.R. Ambedkar Hospital, a Central Railway facility established primarily for railway employees and their dependants. He filed a complaint under the Consumer Protection Act, 1986 before the State Consumer Disputes Redressal Commission, Bombay. The State Commission held that services rendered by the hospital constituted predominantly free service and therefore fell outside the definition of “service” under Section 2(1)(o) of the Act, rendering the complaint non-maintainable. The National Consumer Disputes Redressal Commission affirmed that view. Aggrieved, the appellant approached the Supreme Court, which granted leave to appeal.

Arguments of the Parties

Appellant's Arguments

The State and National Commissions misapplied the decision in Indian Medical Association v. V.P. Shantha (1995) 6 SCC 651.

Paragraph 55(12) of V.P. Shantha establishes that medical services provided as part of the conditions of service are not “free” but paid for by the employer and therefore fall within the Act.

Respondents' Arguments

Supported the findings of the State and National Commissions that the hospital’s services are essentially free for railway employees.

Relied on State of Orissa v. Divisional Manager, LIC (1996) 8 SCC 655 to contend that a government servant receiving employer-provided medical facilities is outside the purview of the Act.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Indian Medical Association v. V.P. Shantha (1995) 6 SCC 651	Distinguishes between (i) hospitals giving totally free service, and (ii) services rendered to employees as part of service conditions where the employer bears the cost, which constitutes “service” under the Act (para 55(12)).	The Court held that the Railway hospital falls under para 55(12); therefore the appellant’s complaint is maintainable under the Act.
State of Orissa v. Divisional Manager, LIC (1996) 8 SCC 655	Indicates that government servants receiving employer-provided medical facilities obtain free service and are outside the Act.	The Court declined to follow this precedent because it was decided by a smaller Bench and conflicted with the larger-Bench ruling in V.P. Shantha.

Precedent

Rule or Principle Cited For

Application by the Court

Indian Medical Association v. V.P. Shantha (1995) 6 SCC 651

Distinguishes between (i) hospitals giving totally free service, and (ii) services rendered to employees as part of service conditions where the employer bears the cost, which constitutes “service” under the Act (para 55(12)).

The Court held that the Railway hospital falls under para 55(12); therefore the appellant’s complaint is maintainable under the Act.

State of Orissa v. Divisional Manager, LIC (1996) 8 SCC 655

Indicates that government servants receiving employer-provided medical facilities obtain free service and are outside the Act.

The Court declined to follow this precedent because it was decided by a smaller Bench and conflicted with the larger-Bench ruling in V.P. Shantha.

Court's Reasoning and Analysis

The Court noted that the hospital in question is maintained and subsidised by the Union of India for the benefit of railway employees and their dependants, and that only nominal maintenance charges are levied. Referring to para 55 of V.P. Shantha, the Court differentiated three categories of medical service:

(i) Non-governmental hospitals providing entirely free service;

(ii) Government hospitals providing entirely free service; and

(iii) Services given to employees and their families as a condition of service, the cost of which is borne by the employer.

Services in categories (i) and (ii) fall outside the Act, whereas category (iii) constitutes “service” within Section 2(1)(o). Because the appellant’s medical entitlement arises from his employment conditions and the employer subsidises the hospital, the case squarely fits category (iii). Although the respondents invoked State of Orissa v. LIC, the Court preferred the larger-Bench authority of V.P. Shantha and rejected the contrary view.

Holding and Implications

Appeal Allowed; impugned orders set aside; matter remanded to the National Commission for decision on merits.

The immediate effect is that the appellant’s consumer complaint will now be heard on its merits by the National Commission. The judgment reaffirms the larger-Bench precedent in V.P. Shantha and clarifies that medical services provided as part of employment benefits are covered by the Consumer Protection Act; no new legal principle beyond this affirmation was created.

Laxman Thamappa Kotgiri v. G.M, Central Railway And Others

Order

1. Leave granted.

2. The appellant is an employee of the Railways. On the ground that his wife had been negligently treated in B.R Ambedkar Hospital of the Central Railway (referred to as “the hospital”) as a result of which she died, he filed a complaint under the Consumer Protection Act, 1986 (hereinafter referred to as “the Act”) before the State Commission in Bombay. The State Commission came to the conclusion that the hospital had been set up to treat railway employees and the “predominant component” of the Railway Hospital was free service to the railway employees and not paid service to outsiders. The charges taken from the railway employees were nominal and were with reference to the maintenance charges of the hospital. Relying upon the decision of this Court in Indian Medical Assn. v. V.P Shantha (1995) 6 SCC 651 the State Commission came to the conclusion that even if these charges were taken into consideration, the services rendered at the Railway Hospital would not come within the definition of “paid service” for the purposes of the Consumer Protection Act, 1986 and, therefore, the complaint of the appellant was not maintainable.

3. The National Commission upheld this view and rejected the appeal preferred by the appellant.

4. The appellant has submitted that the decision of the Commission was erroneous as it proceeded on a misunderstanding of the scope of the decision of this Court in V.P Shantha case (1995) 6 SCC 651. It is submitted that V.P Shantha case (1995) 6 SCC 651 was a clear authority for the proposition that where medical service was rendered as part of the terms and conditions of service this would not amount to free service and would constitute service for the purposes of the Act.

5. Learned counsel for the respondents has argued in support of the opinion expressed by the fora under the Act and in addition has relied upon the decision of this Court in State of Orissa v. Divisional Manager, LIC (1996) 8 SCC 655 to contend that a government servant who was granted medical facilities was in fact enjoying free service. Thus, making of a complaint by such government servant is outside the purview of the Act.

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 dependants. 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 case (1995) 6 SCC 651 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 p. 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 service [vide para 55(9)] on the one 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 [para 55(12)] on the other. In the first two circumstances, it would not (sic) be free service within the definition of Section 2(1)(o) of the Act. In the third circumstance it would (sic not) 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 as part of the conditions of service of the appellant and that the hospital is run and subsidised by the appellant's employer, namely, the Union of India, the appellant's case would fall within the parameters laid down in para 55(12) of the judgment in V.P Shantha case (1995) 6 SCC 651 and not within the parameters of either para 55(6) or para 55(9) of the said case.

8. It is true that the decision in State of Orissa v. Divisional Manager, LIC (1996) 8 SCC 655 relied upon by the learned counsel for the respondents appears to hold to the contrary. However, since the decision is that of a smaller Bench and the decision in V.P Shantha (1995) 6 SCC 651 case was rendered by a larger Bench, we are of the opinion that it is open to this Court to follow the larger Bench which we will accordingly do.

9. The appeal is allowed and the impugned order is set aside. The matter is remanded back to the National Commission for decision on merits.

Civil Appeal No. 171 of 2004, decided on January 6, 2005

Laxman Thamappa Kotgiri v. G.M, Central Railway And Others

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellant's Arguments

Respondents' Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Laxman Thamappa Kotgiri v. G.M, Central Railway And Others

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