Table of Contents
Introduction
A recurring question in consumer law is whether a patient can file a consumer complaint when the doctor or hospital provided treatment free of cost. This issue becomes relevant in cases where a doctor claims that the service was purely charitable and hence beyond the purview of the Consumer Protection Act. Indian courts have considered this issue for nearly three decades, beginning with the landmark Supreme Court judgment in Indian Medical Association v. V. P. Shantha 1995. This article analyses the legal position with the help of key judgments and assesses whether availing “free medical service” can be a valid ground for rejecting a complaint.
Legal Framework Under the Consumer Protection Act
Who is a consumer?
Section 2(7) of the CPA, 2019, defines a “consumer” as any person who buys goods or hires services for a consideration , whether paid or promised, partly paid and partly promised, or under any system of deferred payment. Consideration is fundamental for a consumer relationship to exist.
Services and their scope
Under Section 2(42) of CPA, “service” includes service of any description made available to potential users, except rendering of any service free of charge or under a contract of personal service.
Do Medical Services Fall Under “Service” in the Consumer Protection Act?
In IMA v. V.P. Shantha (1995) 6 SCC 651, the issue reached the Supreme Court because patients across the country had started filing complaints before consumer forums alleging medical negligence, and the forums were divided on whether such cases were even maintainable. To settle this confusion, the Indian Medical Association argued that medical professionals should be excluded from the Consumer Protection Act altogether. The Court looked closely at how hospitals operate, how patients receive treatment, and how payments or funding flow within the system, and then clarified the law. It was in this context that the Supreme Court in IMA v. Shantha, held that medical treatment is a “service” under the Consumer Protection Act unless it falls within one of three narrow exceptions:
- Purely charitable hospitals that charge no patient provide gratuitous services and fall outside the Act.
- Government hospitals offering completely free treatment also fall outside the definition of service.
- Personal service contracts, where the relationship is entirely personal, are excluded.
For all other hospitals, including private, corporate, semi-government, trust-run or mixed-model institutions, medical treatment is a service.
This interpretation is based on the economic reality that hospitals operate using financial consideration from multiple sources, including paying patients, insurance reimbursements and government schemes.
Why Is Consideration Necessary?
Consideration is what legally establishes the service-provider relationship under the CPA. Without it, a consumer forum cannot treat the service as a commercial or contractual one. Courts hold that consideration, whether direct, indirect, nominal, or paid by a third party, creates accountability. If no consideration is present at all, the treatment becomes a voluntary or charitable act, excluding jurisdiction under the Act.
Judicial Interpretation on Free Medical Services
Spring Meadows Hospital v. Harjot Ahluwalia, 1998 (4) SCC 39
In Spring Meadows Hospital v. Harjot Ahluwalia, 1998 (4) SCC 39, the case involved a child who suffered serious complications after a nurse at the hospital gave the wrong injection. The parents had admitted the child and were the ones who paid for the treatment. When the matter reached the Supreme Court, the Court held that both the child and the parents were consumers under the Consumer Protection Act. The Court also clarified that it does not matter who actually pays the medical bills because the service is still being provided to the patient. What matters is that the hospital received consideration from some source. The hospital’s responsibility does not change just because the patient personally did not make the payment.
Laxman Thamappa Kotgire v. G.M. Central Railway & Ors. (2007) 4 SCC 596
The case involved a railway employee’s wife who received medical treatment at a railway hospital as part of the employment benefits provided by the Railways. When negligence was alleged, the question arose whether the patient could file a complaint under the Consumer Protection Act, since the treatment was given free of charge. The Supreme Court held that such treatment is not truly free, because it is funded by the employer through service conditions. Therefore, the patient was considered a consumer and could bring a complaint under the CPA.
Pushpa Vyas w/o Late Ramesh Chand Vyas v. District Medical Officer Government Bangar Hospital, Pali & Ors (NCD)‑2018‑1‑160 (NCDRC)
Ramesh Chand Vyas, a former commissioner of Pali Municipal Council, suffered injuries in a road accident in June 2001 and was admitted to the trauma ward of Government Bangar Hospital, Pali, Rajasthan, where he was treated free of cost. His wife, Pushpa Vyas, alleged that despite repeated requests, the hospital did not conduct essential investigations such as ultrasonography, failed to properly diagnose internal injuries, and did not explain the diagnosis or treatment plan; Vyas died four days after admission. The hospital argued that the complaint was not maintainable because treatment was free and therefore the patient was not a “consumer” under the Consumer Protection Act. The NCDRC rejected this objection and held that even though the patient was treated free of cost in a government hospital, he still fell within the definition of “consumer”; it found negligence by the District Medical Officer and In‑charge of Government Bangar Hospital and ordered payment of Rs 10 lakh as compensation to the family.
Mamta Bhatt & Anr v. Dr. Sushila Tiwari Govt. Hospital & Ors
Mamta Bhatt & Anr v. Dr. Sushila Tiwari Govt. Hospital & Ors (NCDRC, 2023) concerned a patient treated at a government hospital who alleged serious medical negligence in her management, including delay, lack of monitoring, and failure to provide timely specialist/ICU care. The hospital argued that, being a government facility with subsidised treatment, the complaint was not maintainable, but the NCDRC noted that a bill was actually raised and the hospital was not wholly free, so the patient was a “consumer” and the case could proceed. On examining the records, the Commission found deficiency in service/medical negligence and awarded compensation, making this a strong example that government hospitals which charge even nominal fees fall within the Consumer Protection Act.
Can Free Treatment Be a Ground to Reject a Complaint?
The Pure Charitable Institution Exception
Consumer forums can dismiss a complaint only if the hospital is a genuinely charitable institution that does not charge any patient for any service. Such institutions fall outside the purview of the Consumer Protection Act since there is no consideration moving from any quarters. The reasoning is that if the hospital does not demand or receive payment from any patient nor through reimbursement or funding tied to specific treatment, its services are wholly voluntary. In such cases, the relationship between doctor and patient is not commercial in nature and cannot be scrutinized under consumer law. Courts have emphasized time and again that this exception is narrow and applies only to hospitals that function on a completely non-commercial, donation-driven model.
Mixed Model Hospitals Cannot Claim Exemption
No hospital can claim that its services are gratuitous if it follows a mixed model where some patients pay for treatment while others are treated free. Courts recognize that hospitals operate due to funds collected from various sources, such as payments from some patients, insurance, or donations. Because the hospital as a whole receives financial support from different sources, a patient’s inability to pay does not exclude them from being recognized as a consumer under the law. This would include fees from paying patients, insurance payouts, employer-sponsored reimbursements, and funds obtained under government health schemes. Because the institution receives consideration in some form, though not from the complainant personally, services provided to free patients are also not gratuitous. The latter are treated as consumers because the hospital as an institution function within a larger commercial framework that enables it to provide those free services.
Free Treatment Does Not Terminate the Service Relationship
Courts have clarified that a hospital’s legal responsibility towards a patient is not removed just because no fees were charged. Once medical care is provided, the duty to ensure proper standards remains, regardless of whether payment is taken or not. Many hospitals have tried to argue that since no money was exchanged, the patient is not a consumer. Courts have refused this reasoning, partly because such an approach would defeat the very object of consumer protection-allowing hospitals to avoid liability by waving fees. A hospital cannot seek exemption from liability under the CPA by issuing a postdated declaration that the treatment was free when alleged negligence has occurred.
Rationale Behind the view
The courts take this approach because it would be unfair if only paying patients could seek justice for medical negligence. If hospitals were allowed to use “free treatment” as a defence, they could easily avoid responsibility by saying that a patient was treated free of cost, even when the treatment was actually part of their normal operations. This would create two classes of patients and weaken trust in the system. By allowing complaints from free patients in all hospitals that are not completely charitable, the law makes sure that every patient is protected and that doctors and hospitals maintain the same standard of care for everyone. Only those hospitals that are truly charitable and do not charge anyone are kept outside the Consumer Protection Act. This helps maintain fairness while still respecting the work of genuine charitable institutions.
Conclusion
The legal position is simple. When medical treatment is given absolutely free in a government hospital or a genuine charitable hospital, the patient is not a consumer under the CPA since there is no payment of any sort involved. But strictly private and mixed-model hospitals, where some patients pay and others are treated gratis, do come within the purview of the CPA, and even free patients are consumers in such places and may file complaints. Courts and consumer commissions have repeatedly upheld such an approach.
This article is authored by Ms. Shreya Joshi, a 2nd Year B.A. LL.B., student from Institute of Law, Nirma University, Ahmedabad.
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