April 2007
Index
1 Messages: Managing Partner’s message
2 Comment: Making Doctors Pay
(In seeking compensation for medical negligence, the buck might ultimately come back to the patient)
3 Comment: Workmen vs Professionals
(What does the Supreme Court’s new definition mean
for corporate India?)
4 Comment: Prosecuting Politicians
(How much immunity do politicians have against
criminal prosecution?)
6 Initiative: Our Workshop Program schedule
1. Managing Partner’s Message
It's been an interesting year-end for us. In the first quarter of 2007, we have had the privilege to contribute legal support to Norwegian major
Orkla's acquisition of the respected southern food brand 'MTR' and at the same time, help Wolfensohn LLC acquire equity in Indian retail brand
'FabIndia'. These are both sunrise sectors for foreign equity and we feel a sense of achievement in closing these deals.
This time, on the topical end of the legal landscape, we look at the law on doctor's civil liabilities in medical malpractice cases in Making Doctors
Pay .
On the other end of the spectrum, in Workman v/s Professional , we look at the judgment of the Supreme Court arising out of bizarre circumstances where advocate Mr. Shyam Prakash Srivastava managed to keep his law officers job for 21 long years claiming he was a workman!
In addition, in Prosecuting Politicians , we look at another recent judgment of the Supreme Court setting out the legal framework in which politicians may be prosecuted for their misdeeds.
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Finally, it will be my privilege to address another two-day workshop on
Understanding Commercial Contracts in Bangalore on May 11 th and 12 th ,
2007 and I hope to see some of you there.
Ranjeev Dubey
2. Comment-1
(This column appeared in the, March 20 th , 2006 issue of Business World)
Making Doctors Pay
(In seeking compensation for medical negligence, the buck might ultimately come back to the patient)
Ranjeev C Dubey
In "Criminalising the Healer" (BW 9 January 2006), we looked at circumstances in which the law would send a doctor to jail for medical negligence. We observed that retribution was not only difficult but also did not make for economic common sense. This is especially so because the moment a case is medically mishandled, the doctor moves to contain the damage and that means more procedures and more costs. The patient ends up paying the cost of rectifying the medical negligence too, a heartless double whammy. To a dispassionate mind, compensating the victim is more important than sending the doctor to jail. What is the applicable law on compensation?
In the textbook view of Rattanlal and Dhirajlal, “Negligence is the breach of a duty caused by the omission to do something which a reasonable man, guided by those considerations which ordinarily regulate the conduct of human affairs would do, or doing something which a prudent and reasonable man would not do.” Thus, civil negligence comes down to only three basic ingredients: (1) a legal duty to exercise due care towards the patient; (2) breach of this duty; and (3) consequential damage to the patient. Observe that unlike criminal negligence, there is no element of criminal intent or guilty mind here: if the doctor fails the due care test and damage has been caused to a patient, he is liable. The Supreme Court held in Jacob Mathew (Dr.) v.
State of Punjab [122 (2005) DLT 83] last year that if these three ingredients are proved, the doctor is liable and the patient need prove nothing more.
What is the standard of due care that the doctor must exercise? This is how
Justice McNair put it in Bolam v. Friern Hospital Management Committee,
[(1957) 1 W.L.R. 582, 586]: “Where you get a situation which involves the use of some special skill or competence, then the test…is not the test of the man…(who does not have) this special skill. The test is the standard of the ordinary skilled man exercising and professing to have that special skill. A man need not possess the highest expert skill; it is well established law that it is sufficient if he exercises the ordinary skill of an ordinary competent man exercising that particular art.” This means that the patient can go to a court and show that a competent doctor would have done things differently. But he
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cannot demand money on the ground that the world's greatest doctor would have done it differently.
Is it really that simple? The Supreme Court's thinking in the Jacob Mathew case suggests that it is not. First, the court said that a society where a doctor is easy to sue is a society where a doctor would rather not touch a patient whose case is not likely to succeed. “Timidity forced upon a doctor is a disservice to society”, said the court. Second, the court said that the human body is so little understood that it did not approve of the “marked tendency to look for a human actor to blame for an untoward event.” Thus, the court held that an error of judgment is not negligence and law cannot require doctors to take extraordinary precautions. To find someone to blame, therefore, the patient had to prove either that the doctor was trying to practice a skill he did not possess or if he possessed that skill, he did not practise it with reasonable competence.
The Supreme Court has taken the same liberal view in other cases as well. In
State of Punjab v. Shiv Ram and Others decided on 25 August 2005, a threejudge bench of the Supreme Court was asked to evaluate negligence when a sterilized woman became pregnant. The court investigated gynecological data, determined that their existed no foolproof methods of female sterilisation and declined to compensate the pregnant women, observing that
"causes for failure could well be attributable to the natural functioning of the human body and not necessarily attributable to any failure on the part of the surgeon".
To a difficult civil action, Indian procedures add their own woes. To file a civil tort action, a patient must be willing to suffer a 20-year litigation, paying, as he goes, never certain that he will be compensated. What really hurts though is the upfront court fees: even in the 'cheapest' of courts, he will pay something over 1 per cent of his claim in court fees. What are his alternatives?
One alternative is to find a forum that does not demand court fees and the
Consumer Protection Act has established just such forums. The catch is that to benefit from the act, the patient has to prove several different things. First, the patient must prove that he is a consumer and since medical procedures are not goods, he must prove that he “hires or avails of any services for a consideration.” Second, the patient must also prove that there was a
'deficiency' in the services meaning “any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained …in relation to any service.” Is rendering medical assistance a ‘service'?
This question has been hotly contested in Indian courts ever since the
Consumer Protection Act was implemented and it has finally found an answer in the portals of the Supreme Court. In Indian Medical Association v. V.P.
Shantha and Ors. [(1995) 6 SCC 651] , the court observed that a 'profession'
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differs from 'occupation' in the context of the performance of duties and consequently, on the concept of negligence. Nevertheless, the Court held that with the exception of cases where the medical service was free, medical consultation, diagnosis and treatment, both medicinal and surgical, are each a
‘service' under the Act. It also clarified that doctors are not excluded from liability under the Consumer Protection Act because they are subject to the disciplinary control of the Medical Council of India or State Medical Councils.
That of course leaves open the final question: is cheaper and quicker litigation good for us as a society? It is always good if the law holds people responsible for the things they do but there is another viewpoint. Although commercialisation of medical service colours our view on the subject, inevitably, any attempt by society to consistently litigate on negligence issues will push doctors to proliferate investigative procedures, resort to specialists where generalists would do and pass through higher and higher insurance premiums to their patients. Somehow, no matter what we choose to do, its hard to resist the conclusion that buck will ultimately be passed back to the patient.
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3. Comment-2
This column appeared in the Jan 1 st , 2007 issue of Business World)
Workmen vs Professionals
(What does the Supreme Court’s new definition mean for corporate India?)
Ranjeev C Dubey
Back in 1995, when an officer of Standard Chartered Bank told me that I couldn't get a loan for a brand new Esteem because I was a lawyer, I must confess that I was so offended that I still get a perverse pleasure in telling their salesmen off every time they offer me one deal or another. However, reading the Supreme Court's Muir Mills decision, I think I owe them an apology because Mr. Shyam Prakash Srivastava, advocate, has managed to fight a case for 21 years claiming that a legal officer is a workman!
Here's the story. In June 1982, Mr. Srivastava worked as a probationer with the Muir Mills unit of National Textile Corporation (UP) Limited. When his probationary period ended a year later, he was politely asked to go. He went without a demur. But nearly two years later, in February 1985, he raised an industrial dispute claiming that the termination of his services was “wrongful”.
The Uttar Pradesh Labour Court seemed to agree and, in May 1987, it delivered an award reinstating him with full back wages. The employer appealed to the High Court. The court admitted the appeal but asked the mill to deposit half of the unpaid wages in court and pay Mr. Srivastava salary in the future till further orders.
Even as it was turning out to be a lucrative litigation for a man incapable of delivering on the job, Muir Mills folded up in 1991 and was referred to Bureau
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of Industrial and Financial Reconstruction. Worse, in February 2002, NTC (UP)
Limited was also declared sick and 9 of its 11 mills were closed. In November that year—15 years after it had admitted the writ—the High Court dismissed the appeal stating that it would not interfere with the Labour court order.
However, the Ministry of Labour did not approve closure of Muir Mills till
March 2004. This gave enough time for the Labour Court to demand back wages for its workman lawyer the next month and for the mill to appeal the
High Court order in retaliation. This set the stage for the Supreme Court's intervention.
The Supreme Court of India was called upon to decide if a ‘legal assistant' with a company is a workman under the Industrial Disputes Act. The court was also asked to decide if there was something perverse about a terminated probationer sacked for incompetence enjoying a salary under court orders for
15 years without doing any work.
Mr. Srivastava didn't think so. He argued that he had worked as hard as he was capable to the full satisfaction of his employer but was sacked without reason. He argued that he was a legal assistant and since he was not performing any work of a supervisory nature, he qualified as a workman under Section 2(z) of the U.P. Industrial Disputes Act, 1947. As far as he was concerned, he had been retrenched and he had to be paid back wages.
Mercifully, Supreme Court of India did not agree with him. It took a good look at the UP Industrial Disputes Act and this is how workman is defined:
‘Workman' means any person … employed in any industry to do any skilled or unskilled manual, supervisory, technical or clerical work for hire or reward,
… but does not include any such person…
(iii) who is employed mainly in a managerial or administrative capacity; or
(iv) who, being employed in a supervisory capacity …exercises, either by the nature of duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature.
Quite apart from the Supreme Court's views, I think this definition is instructive because it tells us what lawmakers were thinking about labour rights shortly after independence. If we read the text in isolation, anyone who had no one to supervise would be a workman and given how businesses are structured today, this could include IT professionals, company secretaries, salesmen, quality control inspectors…
In the circumstances, the Supreme Court was compelled to state what every court should have known in the first place: that by definition, a professional cannot be a workman! It observed:
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“It isn't that merely because the employee had not been performing any managerial or supervisory duties, ipso facto he would be a workman. His job involved creativity. He not only used to render legal opinion on a subject but also used to draft pleadings on behalf of the appellant as also represent it before various courts. He would also discharge quasi-judicial functions as an enquiry officer in departmental enquiries against workmen. Such a job, in our considered opinion, would not make him a workman.”
Since he was not a workman, the Supreme Court really had no need to decide the question of retrenchment and back wages. However, the court stopped short at this point and did not go the last mile by asking Mr. Srivastava to pay back the salary he had received for fifteen years for no service rendered.
Is there a learning here for corporate India? On the legal point, I don't think so. India 's politicians are petrified to deal with the problem of workers' rights; their inactivity is compelling the courts to step in. From all indicators, it is clear that the judiciary can see that aggressive workers' rights do not in themselves secure distributive justice, but they do impede economic progress sufficiently to be anti- workman in the long run. Workmen find it progressively harder to win in courts these days but the fact remains that Mr. Srivastava was able to keep his show on the road for 23 years. Is this an indictment of the way labour litigation is handled in India?
The answer to that question is both yes and no. Most people will agree that justice delayed is justice denied, but given judicial sympathy for workmen in the 1980s, not deciding a case but keeping a man lucratively salaried with no deliverables was a kind of justice at the time. Today, the tide has turned.
Workmen who approach labour courts find dysfunctional courts where they are unable to get any orders at all for years together. It's the Indian way of doing things, perfectly mirrored by a pithy statement I seem to recall former
Prime Minister Narasimha Rao making years ago: “Not to decide something is a decision!”
4. Comment-3
(This column appeared in the Feb 19 th , 2007 issue of Business World)
Prosecuting Politicians
(How much immunity do politicians have against criminal prosecution?)
Ranjeev C Dubey
There is a view out there that politicians are crooked because we have established a system that intrinsically knits corruption into the political construct. There are many limbs to this argument. One of them argues that the law itself grants immunity in a way that makes successful prosecution the exception.
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Perhaps there's a point here. The Prevention of Corruption Act is a special purpose vehicle designed to attack this all-pervading menace. Yet, Section
19(1) provides that “no court can take cognisance of” any of the more serious offences except “with the previous sanction of the authority that is competent to remove him from his office at the time when the offence was committed.”
This means that if, for instance, you wish to prosecute a central minister, you need central government permission.
It is pretty much the same for a crime under the Indian Penal Code. For instance, Section 197 of the Code of Criminal Procedure provides that no court can take cognisance of a case where a judge or magistrate or a public servant protected under the Indian constitution “is accused of any offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duty.” It further says that action can be taken only with the sanction of his employer.
Is it realistic to expect that a sanction will be forthcoming? No, the answer is a predictable and sordid NO. Rather, the truth is that sanction happens only when the target is from the rival party.
This pretty much explains why you do have such laws. Since time immemorial, those in quest for power have slaughtered their opponents.
There was a time when this was done with horse, sword and armor. But as
‘civilizations' developed over the decades, judicial murder has become a far more ‘sensible' way to do it (remember the hanging of Pakistan 's Zulfiqar Ali
Bhutto in the 1970s and recently Iraq 's Saddam Hussein). Are you going to allow rivals to accuse politicians of corruption and crimes when they are out of office in a never-ending Sicilian game of vendetta and counter vendetta?
Should there not be a way to institutionalise a system which will stem such pointless violence against our political system by the unscrupulous and the uncouth?
Play of Words
Although the language of Section 19 and 197 are wide in scope, courts have been circumspect in interpreting the immunity conferred by them. In the celebrated case of A. R. Antulay, the former Maharashtra chief minister accused of corruption, the Governor did not accord sanction. As the storm clouds gathered, Antulay resigned and the resignation was accepted.
Meanwhile, several months after this resignation, the governor sanctioned the prosecution. In a new complaint, Antulay was accused of distributing ad hoc cement quotas, granting liquor licences and issuing no objection certificates to transactions that let out government premises for cash. Antulay challenged the prosecution on the ground that he had ceased to be chief minister when the prosecution commenced but he was an MLA on that date and being a public servant, the Maharashtra Legislative Assembly had to accord sanction for his prosecution. As the case wound its way up the judicial pyramid, two legal issues arose: (a) on the date that a prosecution is launched, who
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provides the sanction: the old hiring and firing authority or the new one, and
(b) is an MLA a public servant at all?
The Supreme Court pondered these questions and observed; “the corrupt conduct is directly attributable and flows from the power conferred on the office. This interrelation and interdependence between individual and the office he holds is substantial and not severable. That being so, if the public servant holds two offices and he is accused of having abused one and from which he is removed but continues to hold the other which is neither alleged to have been used nor abused, the sanction must come from the authority competent to remove him from the job he has abused.”
That still left open the question whether an MLA was a public servant at all.
On this point, the Court then reviewed all the case laws and held that he was not! The consequences of this decision are still being worked out.
This entire matter came up again before the Supreme Court in a recent complaint that Prakash Singh Badal and his family had abused the office of
Chief Minister of Punjab to embezzle money, purchase benami properties, route black money into the family transport business, evade income tax and so forth. As soon as the charge sheet was framed, Badal took it all the way up to the Supreme Court and reopened the question of the protection permitted to a public servant. On 6 December last year, the court rendered judgment. This is how the Supreme Court thought it through:
“If in doing his official duty, he acted in excess of his duty, but there is a reasonable connection between the act and the performance of the official duty, the excess will not be a sufficient ground to deprive the public servant from the protection…. It must be shown that the official concerned was accused of an offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duties. It is not the duty which requires examination so much as the act, because the act can be performed both in the discharge of the official duty as well as in dereliction of it. The act must fall within the scope and range of the official duties of the public servant concerned.”
The court then illustrated its thought with a common example:
“For instance, a police officer in discharge of duty may have to use force which may be an offence for the prosecution of which the sanction may be necessary. But if the same officer commits an act in course of service but not in discharge of his duty and without any justification there for, then the bar under Section 197 of the Code is not attracted.”
Pithy words those. What they mean is that if you are a politician hiring people in your department and you take cash for it, you are abusing your office in the discharge of your duties and so government approval would be required to prosecute you. On the other hand, if you are a politician murdering people
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in your backyard, you don't have immunity because that isn't part of your job.
The answer may well be different if you were a policeman and killed someone not at home but while interrogating a suspect in the cop station.
Looked at this way, the immunity isn't particularly wide or indulgent to the political class. Most hard-core criminals, who evade legal retribution by virtue of being politicians, are accused of crimes that have nothing to do with the offices they hold. A politician without an office to look after could be prosecuted for almost any offence. If India is struggling to rein in rogue politicians, the culprit is certainly not the letter of the law.
6. Initiative
Our Workshop schedule
Details posted at http://www.iallm.org/
Workshop – Understanding Commercial
Contracts
Structuring, Risk Assessing, Drafting, Negotiating and Closing Win-Win Contracts.
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Two day workshop
May 11 th and 12th,
2007
Bangalore
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