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SC determines commercial use of nurses’ hostels u/Consumer Protection Act, 1986

December 27, 2019

By Priyanka Batra and Anuj Jhawar

The Hon’ble Supreme Court has established broad principles to determine whether medical trust and its ancillary services (like providing hostels for nurses) would be covered under the term ‘consumer’ under the Consumer Protection Act, 1986 (hereinafter referred to as the “Act’), vide its judgement dated November 14, 2019, in the matter of Lilavati Kirtilal Mehta Medical Trust v M/S Unique Shanti Developers & Ors.[1]

Brief facts of the case:

  • The complainant is a permanent trustee of Lilavati Kiratlal Mehta Medical Trust (hereinafter referred to as the “Trust”) of Lilavati hospital (hereinafter referred to as the “Hospital”)
  • The Complainant filed a complaint against M/S Unique Shanti Developers (hereinafter referred to as “Developers”) from whom 29 units of one BHK flats in the year 1997 were purchased for the Trust for providing hostel facility to nurses of the Hospital.
  • The flats were used for the aforesaid purpose till 2002 and were subsequently vacated due to their dilapidated condition owing to their poor construction.
  • Pursuant to this, a complaint was filed before the National Consumer Disputes Resolution Commission (hereinafter referred to as NCDRC) against the Developers for deficiency in services.
  • NCDRC dismissed the aforementioned complaint and based on order stating that ‘trust’ was not covered within the definition of ‘consumer’ under Section 2 (1) (d) of the Act, as the Trust through the Hospital was engaged in profit rendering services.
  • Subsequently, an appeal against the said order was filed before the Hon’ble Supreme Court.

Observations by the Hon’ble Supreme Court 

  • The Hon’ble Supreme Court found that there was no direct connection between the purchase of flats by the Trust and its profit-generating activities. The flats used by the nurses on a free of cost basis.
  • The Court further held that the provision of providing hostel facilities to nurses was to facilitate better accommodation services for them. It was a part of the progressive duty performed by the hospital to maintain the valuable efforts provided by the nurses.

Hence, it was held that, the Trust qualified as a consumer under Section 2(1)(d) of the Act as the use of flats as hostel for nurses did not constitute commercial activity. The case was then remanded to the NCDRC for re-consideration in accordance with the law.

Conclusion

The decision of the Supreme Court provides another descriptive analysis of the term ‘consumer’ under the Act. The judgement given in this case paves way for circumstances where trusts can be considered as a ‘consumer’ and appropriate compensation can be awarded in case of similar future complaints.

[1] Civil Appeal No. 12322 of 2016

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