Law of Torts
Deficiency in Service Sector by Sector: Medical, Banking, Insurance, Housing, Transport and Professional Services
The categories in this note are not separate causes of action. Each is an application of the single question posed by section 2(11): was the service faulty, imperfect, deficient or inadequate in its quality, nature or manner of performance, judged against what the law required, what the contract promised, or what was otherwise undertaken. What the sectors usefully show is how the same test produces very different kinds of complaint, and where the consumer forum is and is not the right place to bring one.
The six sectors, and why deficient service and professional negligence are the same enquiry
1. Medical Services
📖 Indian Medical Association v. V.P. Shantha, (1995) 6 SCC 651 Facts The question referred was whether, and in what circumstances, a medical practitioner renders a "service" within the meaning of the consumer legislation, so that a patient may complain to a consumer forum rather than bring a civil suit. Held Medical services rendered for consideration fall within the definition of service, and a patient is a consumer. Ratio Service rendered by a medical practitioner, by way of consultation, diagnosis and treatment, both medicinal and surgical, falls within the definition of "service" unless it is rendered free of charge to everybody. Where a hospital charges some patients and treats others free, the patients treated free are also consumers, because the service is rendered as part of an establishment run on payment. Service rendered under a contract of personal service is excluded, but the relationship between a doctor and a patient is ordinarily a contract for service and not a contract of service. |
- The standard applied is Bolam as qualified by Bolitho, examined in TORT 039: the practice relied on must be one a responsible body of medical opinion supports, and must withstand logical analysis.
- Spring Meadows Hospital v. Harjol Ahluwalia, (1998) 4 SCC 39 holds that both the person who avails of the service and the beneficiary of it are consumers, so parents and child may each claim: TORT 042.
- Kousik Pal v. B.M. Birla Heart Research Centre, 2025 INSC 1487, decided 20 December 2025, holds that deficiency in service and medical negligence are distinguishable concepts, and that the power to award compensation is separate and distinct from the disciplinary power of the State Medical Council: TORT 043.
- A medical negligence complaint turning on seriously disputed expert evidence may be relegated to a civil suit, the summary procedure being unsuited to it.
2. Banking
- Unauthorised debits and fraudulent electronic transactions, where the question is whether the bank followed the security and verification procedures required of it.
- Wrongful dishonour of a cheque, which damages the customer's credit. A trader whose cheque is wrongfully dishonoured recovers substantial damages without proof of actual loss, the injury to commercial reputation being presumed, and the smaller the amount of the cheque the greater the injury.
- Loss of documents, securities or articles held in safe custody, and of the contents of a locker, where the question is the extent of the bank's undertaking and whether it was a bailee.
- Failure to follow the directions of the Reserve Bank of India limiting a customer's liability in unauthorised electronic transactions, which supply a standard against which the bank's conduct is measured.
- Delay or failure in the collection or transfer of funds, and the wrongful debit of charges.
3. Insurance
- Repudiation of a claim on a ground not disclosed at the time, or on a non disclosure that was not material to the risk.
- Unreasonable delay in settling a claim, which is itself a deficiency independent of whether the claim was ultimately paid.
- Failure to explain exclusions, or to supply the policy document, so that the insured was unaware of a limitation on his cover.
- A breach of a policy condition must be material and must bear a causal relation to the loss before it defeats the claim. The approach is the same as that taken to the insurer's defences under the Motor Vehicles Act examined in TORT 086, and rests on the same reasoning.
- Non disclosure must be of a material fact, judged by whether it would have influenced a prudent insurer in fixing the premium or deciding to accept the risk.
- The contract is one of uberrima fides on both sides, which means that the insurer owes duties of disclosure and fair dealing too.
4. Housing and Builders
The complaint | What is examined |
Delay in possession | Delay beyond the agreed date. Compensation and interest are awarded for the period of delay, and a purchaser may in a proper case seek refund with interest rather than possession |
Deviation from the sanctioned plan | Construction differing from what was approved and from what was represented |
Reduction of area | Delivery of a smaller carpet or built up area than was promised, for which a proportionate refund follows |
Failure to provide amenities | Promised facilities, common areas, parking, lifts or open space not provided |
Defective construction | Seepage, structural defects, poor materials and failure of services |
Failure to convey title or form the association | Failure to execute the conveyance, to form the owners' association, or to hand over the common areas |
- This is the largest single category of consumer litigation in India.
- The Real Estate (Regulation and Development) Act, 2016 now runs alongside, providing its own authority, registration regime and remedies.
- The remedies under the two Acts are concurrent and not exclusive, and an allottee may choose, subject to not recovering twice.
5. Transport Services
- Airlines: cancellation, denied boarding, lost, delayed or damaged baggage, and delay causing consequential loss. The obligations imposed by the civil aviation regulator supply the standard.
- Railways: failure of a confirmed reservation, loss of booked luggage, and negligence causing injury. A passenger is a consumer, the fare being the consideration.
- Road transport and couriers: loss of or damage to a consignment. A clause limiting liability to a nominal sum is construed strictly against the carrier, and may be held not to apply where the loss resulted from the carrier's own gross negligence or from a fundamental departure from what it undertook.
- The service is the carriage, and the standard is what the operator undertook together with what the law requires of a carrier.
6. Professional Services
- Architects, engineers, chartered accountants, auditors, valuers and surveyors answer for deficiency in the professional service rendered.
- The standard is that of the ordinary competent member of the profession, examined in TORT 044, and it is the same standard a civil court would apply.
- Advocates stand differently. Whether legal services fall within the consumer legislation has been contested at length. The position taken is that a lawyer's service to his client, being rendered under a contract of personal service and involving a relationship of a particular character, falls outside the Act, and that the client's remedy lies in a civil suit for negligence and in the disciplinary jurisdiction of the Bar Council under the Advocates Act, 1961.
- That exclusion does not leave the client without a remedy, and the substantive standard applicable to an advocate is set out in TORT 044.
7. Deficient Service and Professional Negligence
Deficiency in service | Professional negligence | |
The question asked | Did the service fall short of what the law, the contract or the undertaking required | Did the professional fall below the standard of the ordinary competent member of his calling |
The forum | A consumer commission | A civil court |
Court fee | Nominal | Ad valorem |
Procedure | Summary, largely on affidavit | A full trial with oral evidence and cross examination |
Suitability | Unsuited to a case turning on seriously disputed expert evidence | Designed for exactly such a case |
The answer on the same facts | The same, because the content of the statutory standard is supplied by the common law one | The same |
⚠ How to choose the forum Because the two enquiries coincide in substance, the choice between a consumer commission and a civil suit turns almost entirely on the nature of the evidence the case will require. Where the facts are largely documentary and not seriously in dispute, a delayed flat, an unpaid insurance claim, a wrongly dishonoured cheque, an unauthorised debit, the commission is plainly the better forum: it is quicker, it costs a fraction as much, and the summary procedure is adequate to the material. Where the case will turn on contested expert opinion tested in cross examination, which is the position in most serious medical negligence claims and in many construction defect claims, the commission is the wrong forum, and a complaint filed there is liable to be relegated to a civil suit after a delay that has cost the claimant his limitation. The question to ask at the outset is therefore not which remedy is cheaper but what will have to be proved and how, and a case that cannot be proved on affidavits should not be begun on them. |
8. The Position Stated Shortly
1. Each sector applies the single test in section 2(11): was the service faulty, imperfect, deficient or inadequate in quality, nature or manner of performance.
2. Indian Medical Association v. V.P. Shantha brought medical services within the Act, excluding only services rendered free of charge to everybody.
3. Patients treated free at a hospital that charges others are also consumers, and the beneficiary of a service is a consumer as well as the person who availed of it.
4. Banking complaints concern unauthorised transactions, wrongful dishonour of cheques, loss of articles in safe custody, and failure to follow the RBI directions.
5. A trader whose cheque is wrongfully dishonoured recovers substantial damages without proof of actual loss.
6. In insurance, a breach of a policy condition must be material and causally related to the loss before it defeats the claim, and delay in settling is itself a deficiency.
7. Housing is the largest category, and the remedies under the Consumer Protection Act, 2019 and the Real Estate (Regulation and Development) Act, 2016 are concurrent.
8. A clause limiting a carrier's liability is construed strictly against the carrier.
9. Professionals are judged by the standard of the ordinary competent member of the calling, which is the same standard a civil court applies.
10. The choice of forum turns on the nature of the evidence: a commission is unsuited to a case that will turn on contested expert opinion tested in cross examination.