Insurer Not a Necessary Party in Medical Negligence Cases

Source: High Court of Andhra Pradesh 

Why in News? 

The bench of Justices Ravi Nath Tilhari and Challa Gunaranjan in the case of Dr. Mudunuri Ravi Kiran v. The District Consumer Dispute Redressal Commission, Guntur and 4 Others held that an insurance company holding a professional indemnity policy for a hospital is neither a necessary nor a proper party in medical negligence complaints before Consumer Disputes Redressal Commissions. 

What was the Background of Dr. Mudunuri Ravi Kiran v. The District Consumer Dispute Redressal Commission, Guntur and 4 Others (2025) Case? 

Complaint Filed: 

• Chekuri Lakshmi Narayana (2nd respondent) filed Consumer Complaint No.112 of 2023 before the District Consumer Disputes Redressal Commission, Guntur, claiming compensation against Dr. Mudunuri Ravi Kiran (Chief Operational Officer of Yashoda Hospitals) and two Managing Directors, alleging medical negligence. 

Application for Impleadment: 

• The petitioner-doctor filed M.A.No.487 of 2023 under Order I Rule 10 of the Civil Procedure Code, 1908 (CPC) seeking to implead the New India Assurance Company Limited as the 4th Opposite Party in the consumer complaint. 
• The petitioner contended that the hospital was covered under a professional indemnity medical establishment policy, making the insurance company a proper and necessary party. 
• The petitioner argued that not impleading the insurance company would lead to multiplicity of litigation, as the doctor would have to file a separate case against the insurer. 

District Forum's Order: 

• On 07.03.2024, the District Forum dismissed M.A.No.487 of 2023, holding that:  
  • The complainant had no privity of contract with the insurance company. 
  • The complainant was neither a consumer nor beneficiary of the insurance company. 
  • If liability was fixed on the doctor, he was at liberty to seek relief from the insurance company under the professional indemnity policy. 

Appeal to National Commission: 

• The petitioner filed Diary No.5271/NCDRC/2025-RP before the National Consumer Disputes Redressal Commission. 
• On 06.03.2025, the National Commission rejected the revision, holding it was not maintainable. 

Writ Petition: 

• Challenging both orders dated 07.03.2024 and 06.03.2025, the petitioner filed Writ Petition No.18839 of 2025 before the Andhra Pradesh High Court under Article 226 of the Constitution of India. 

 What were the Court's Observations? 

Dominus Litis Principle: 

• The Court reiterated that the plaintiff is dominus litis (master of the suit) with the right to choose their opponent.  
• Plaintiffs cannot be compelled to implead a person unless they are a necessary or proper party. The Court relied on Sudhamayee Pattanik v. Bibhu Prasad Sahoo (2022). 

Definition of Necessary and Proper Party: 

• Referring to Mumbai International Airport v. Regency Convention Centre (2010), the Court clarified: 
• Necessary Party: A person in whose absence no effective decree can be passed. If not impleaded, the suit is liable to be dismissed. 
• Proper Party: A person whose presence would enable complete adjudication, though not essential for passing a decree. 

Application to the Present Case: 

The Court held the insurance company is neither necessary nor proper because: 

• Compensation can be awarded against doctors/hospital without the insurer's presence. 
• Core issues (negligence, deficiency in service) can be adjudicated based on evidence alone. 
• The complainant has no privity of contract with the insurance company. 
• If liability is fixed, the insurance company reimburses the doctor under their separate contract. 
• The complainant has no connection with the insurance agreement. 

Rejection of Motor Vehicle Act Analogy: 

• The petitioner argued that insurance companies are made parties in motor accident claims, so the same should apply to medical negligence cases. 

The Court rejected this, distinguishing medical negligence from motor accident cases: 

Under Motor Vehicles Act, 1988: 

• Third party insurance is statutorily mandatory (Section 146). 
• Insurance companies have statutory duties to settle claims (Section 149). 
• Claims Tribunals must give notice to insurers (Section 166). 
• Insurers have specific statutory defences. 
• The Tribunal specifies payment by insurer/owner/driver (Section 168). 

Key Distinction: The Motor Vehicles Act creates a comprehensive statutory framework making insurers necessary parties. No such framework exists for medical negligence cases. 

Final Order: 

• The Writ Petition was dismissed as devoid of merits. 
• No order as to costs. 
• All pending interlocutory applications stood closed. 

 What is Order I Rule 10 of CPC? 

• Order I Rule 10 inter alia empowers the court to allow addition, substitution or deletion of a party to a suit at any stage of the proceedings. 
• Order I Rule 10 (1) provides for when the suit is filed in the name of wrong plaintiff. 
  •  This provision allows courts to correct situations where a lawsuit has been filed by the wrong person as the plaintiff or where there is uncertainty about whether the correct plaintiff has filed the suit. 
  • The court has the discretionary power to make corrections at any stage of the legal proceedings, meaning this remedy is available throughout the entire duration of the case. 
  • For the court to exercise this power, it must be satisfied that the error occurred due to a genuine mistake made in good faith, not through any fraudulent or malicious intent. 
  • The court must also determine that substituting or adding the correct plaintiff is necessary for resolving the actual dispute at the heart of the case. 
  • When the court decides to make such changes, it can either substitute the wrong plaintiff with the right one or add additional plaintiffs to the case as deemed appropriate. 
  • The court has the authority to impose whatever terms and conditions it considers fair and just when making these changes to ensure all parties are treated equitably. 
  • This provision serves as a procedural safeguard to prevent cases from being dismissed purely due to technical errors in naming the plaintiff, thereby promoting the substantive resolution of disputes. 
• Sub-rule (2) of Order I Rule 10 of CPC grants the court wide discretion to add or remove parties at any stage of the suit proceedings. 
  • The court can strike out or add parties at any stage of proceedings, either on application by a party or on its own initiative. 
  • The court may remove any party that has been improperly joined to the case, whether as plaintiff or defendant. 
  • The court can add any person who should have been included as a party but was omitted from the original suit. 
  • The court may also add parties whose presence is necessary for complete and effective adjudication of all issues in the case. 
  • All such orders are made on terms that the court considers just and fair to all parties involved. 
  • This power ensures proper constitution of parties for comprehensive resolution of disputes. 
• Sub- rule (3) of Order I Rule 10 of CPC provides for consent requirements: 
  • No person can be added as a plaintiff who requires a next friend (legal guardian) to sue on their behalf without that person's explicit consent. 
  • Similarly, no person can be added as a next friend for a plaintiff under disability without their consent to act in that capacity. 
• Sub- rule (4) of Order I Rule 10 of CPC provides for Amendment when defendant is added: 
  • When a new defendant is added to the case, the plaint (statement of claim) must be amended to reflect this change unless the court directs otherwise. 
  • Amended copies of both the summons and the plaint must be served on the newly added defendant. 
  • The court may also order that amended copies be served on the original defendant if it considers this appropriate. 
• Sub – rule (5) of Order I Rule 10 of CPC provides for limitation period for added defendants. 
  • The legal proceedings against any newly added defendant are considered to have commenced only from the date when the summons is served on them.