Supreme Court Dismisses Appeal in Gujarat Eye Surgery Negligence Case

The Supreme Court of India recently dismissed the appeal in M/s Sheth M.L. Vaduwala Eye Hospital vs. Oriental Insurance Company Limited, a case concerning medical negligence at an eye camp conducted by a charitable hospital. The Court upheld the decision of the National Consumer Disputes Redressal Commission (NCDRC), which exonerated the insurance company from liability while holding the hospital responsible for negligence in conducting cataract surgeries.

Background of the Case

The case arose from a cataract surgery camp organized by M/s Sheth M.L. Vaduwala Eye Hospital, a charitable institution in Gujarat. Between June 21 and 23, 2000, the hospital performed surgeries on 112 patients. Soon after, several patients complained of infections, and many suffered partial or complete loss of vision.

The Gujarat State Government formed an Enquiry Committee to investigate the incident. The Committee’s report found gross negligence in the hospital’s procedures:

The hospital used non-sterilized equipment.
Contaminated medicines and substandard intraocular lenses were used.
Operation theatre staff were unqualified, and surgeries lacked aseptic precautions.
Bacteria were found in operation theatre tables, instruments, and autoclaves.

Following these findings, 24 patients filed complaints through the Jagrut Nagrik Trust, a consumer rights organization, seeking compensation.

Proceedings Before Consumer Forums

The complaints were filed against both the hospital and the insurance company. The doctors who performed the surgeries had obtained professional indemnity insurance from Oriental Insurance Company Limited.

The District Consumer Disputes Redressal Forum, Vadodara, in its order dated February 19, 2010, held the hospital liable for negligence and awarded compensation to the victims:

₹1,70,000 for each complainant as compensation.
₹250 refund of registration fees.
₹3,000 for mental agony.
₹1,500 towards costs.
Interest at 9% per annum.

The Forum ruled that the hospital and the insurance company were jointly and severally liable to pay the compensation.

Oriental Insurance Company challenged this decision before the State Consumer Disputes Redressal Commission, Gujarat, which dismissed the appeal and upheld the compensation order.

The insurance company then approached the National Consumer Disputes Redressal Commission (NCDRC). The NCDRC, in its judgment dated February 26, 2014, set aside the orders of the District and State Commissions regarding the insurer’s liability, holding that the hospital alone was responsible for the damages.

Legal Issues Raised

Whether the hospital was negligent in conducting the surgeries.
Whether the insurance company could be held liable under the professional indemnity policies obtained by the doctors.
Whether the NCDRC was justified in setting aside the orders holding the insurer liable.

Petitioner’s Arguments (M/s Sheth M.L. Vaduwala Eye Hospital)

The hospital argued that it was covered under the professional indemnity policies taken by the doctors.
It claimed that the insurance company was liable to indemnify the hospital against claims arising from medical negligence.
The hospital also contended that the doctors participated in the proceedings by filing affidavits and, therefore, the liability should be shared.

Respondent’s Arguments (Oriental Insurance Company Limited)

The insurance company contended that it had no contractual obligation towards the hospital, as the policies were issued to individual doctors, not the hospital.
It argued that the NCDRC correctly held that liability could not be fastened on the insurer in the absence of specific allegations against the insured doctors.
The insurance company emphasized that the Enquiry Committee’s report found the hospital, its staff, and its administrative failures responsible for the tragedy.

Supreme Court’s Verdict

The Supreme Court, in a bench comprising Justices Dr. Dhananjaya Y Chandrachud and A.S. Bopanna, dismissed the hospital’s appeal, holding that the insurance company was not liable for the compensation awarded.

The Court observed:

“The insurance policies were obtained by the doctors for professional indemnity, not by the hospital. The hospital was not the beneficiary of these policies, and therefore, it cannot claim indemnification.”

Key Observations by the Supreme Court

The Enquiry Committee report had conclusively established negligence on the part of the hospital and its staff.
The insurance policies were for professional indemnity of individual doctors and did not cover hospital-wide negligence.
The NCDRC was justified in exercising its revisional jurisdiction to set aside the erroneous findings of the lower consumer forums.
The hospital’s contention that it was the beneficiary of the doctors’ insurance policies was without basis.

The Supreme Court ruled:

“In the circumstances, we see no reason to entertain the appeals. The dismissal of the appeals shall not affect the claimants’ rights against the hospital, which remains liable for the compensation awarded.”

Final Order

The Supreme Court dismissed the appeals filed by the hospital.
The compensation awarded by the District Forum against the hospital remained enforceable.
The insurer was not liable to indemnify the hospital.
The ₹42 lakh deposited by the hospital was permitted to be withdrawn by the claimants.

Key Takeaways

Hospitals must ensure proper medical procedures: The ruling highlights the importance of following standard protocols in surgeries.
Professional indemnity insurance has limits: Such policies protect individual doctors, not institutions unless explicitly stated.
Liability in medical negligence cases is strictly determined: The hospital, as an entity, was found responsible due to systemic failures.
Consumer forums have authority in medical negligence claims: The decision reinforces the role of consumer protection laws in healthcare-related disputes.

This judgment underscores the need for hospitals to maintain the highest standards of medical care and ensures that insurance policies are interpreted based on contractual obligations.

Petitioner Name: M/s Sheth M.L. Vaduwala Eye Hospital.
Respondent Name: Oriental Insurance Company Limited.
Judgment By: Justice Dhananjaya Y Chandrachud, Justice A.S. Bopanna.
Place Of Incident: Gujarat.
Judgment Date: 10-12-2021.

Don’t miss out on the full details! Download the complete judgment in PDF format below and gain valuable insights instantly!

Download Judgment: ms-sheth-m.l.-vaduw-vs-oriental-insurance-c-supreme-court-of-india-judgment-dated-10-12-2021.pdf

Directly Download Judgment: Directly download this Judgment

See all petitions in Health Insurance Disputes
See all petitions in Other Insurance Cases
See all petitions in Medical Malpractice
See all petitions in Judgment by Dhananjaya Y Chandrachud
See all petitions in Judgment by A. S. Bopanna
See all petitions in dismissed
See all petitions in supreme court of India judgments December 2021
See all petitions in 2021 judgments

See all posts in Insurance Cases Category
See all allowed petitions in Insurance Cases Category
See all Dismissed petitions in Insurance Cases Category
See all partially allowed petitions in Insurance Cases Category