Madhya Pradesh High Court
City Hospital And Research Centre ... vs The Department Of Public Health ... on 5 September, 2022
Author: Sanjay Dwivedi
-1-
IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE SANJAY DWIVEDI
ON THE 05TH OF SEPTEMBER, 2022
WRIT PETITION NO.9134 OF 2022
Between:-
CITY HOSPITAL AND RESEARCH
CENTRE PRIVATE LIMITED (A
COMPANY REGISTERED &
INCORPORATED UNDER THE
PROVISIONS OF COMPANIES ACT
1956) HAVING REGISTERED OFFICE
NEAR 2ND BRIDGE NAGRATH
CHOWK JABALPUR : THROUGH
ITS DIRECTOR AMITOJ SINGH
MOKHA S/O SHRI S.S. MOKHA,
AGED ABOUT 22 YEARS, R/O 1112,
PACHPEDI, JABALPUR (MP)
.....PETITIONER
(BY SHRI BRAIN D'SILVA, SENIOR ADVOCATE WITH SHRI
AKSHAY KHANDELWAL, ADVOCATE)
AND
1. THE DEPARTMENT OF PUBLIC
HEALTH & FAMILY WELFARE,
THROUGH ITS SECRETARY,
GOVERNMENT OF MADHYA
PRADESH, MANTRALAYA, VALLABH
BHAWAN, BHOPAL (MP)
2. STATE HEALTH AGENCY, DEEN
DAYAL SWASTH RAKSHA PARISHAD,
"NIRAMAYAM" FIRST FLOOR IPC
BUREAU HOSPITAL COMPLEX,
BHOPAL (MP)
3. EXECUTIVE OFFICER, AYUSHMAN
BHARAT "NIRAMAYAM' MADHYA
PRADESH DEENDAYAL SWASTH
RAKSHA PARISHAD, "NIRAMAYAM"
FIRST FLOOR IPC BUREAU
HOSPITAL COMPLEX, BHOPAL (MP)
-2-
4. THE CHIEF MEDICAL & HEALTH
OFFICER, VICTORIA HOSPITAL,
BADI OMTI, GANJIPURA ROAD,
JABALPUR (MP)
5. THE COLLECTOR, COLLECTORATE
CAMPUS ROAD, SOUHT CIVIL LINES,
JABALPUR (MP)
6. UNION OF INDIA, THROUGH ITS
SECRETARY, DEPARTMENT OF
PUBLIC HEALTH & FAMILY
WELFARE, GOVERNMENT OF INDIA,
NIRMAN BHAWAN, NEW DELHI
.....RESPONDENTS
(BY SHRI PIYUSH JAIN, GOVERNMENT ADVOCATE)
.....................................................................................................................
RESERVED ON : 25.07.2022
DELIVERED ON : 05.09.2022
.....................................................................................................................
ORDER
Pleadings are complete. Parties agreed to argue the
matter finally, therefore, looking to the issue involved in the case,
it is heard finally.
2. The petitioner has field this petition under Article
226 of the Constitution of India challenging the order dated
31.03.2022 (Annexure-P/9) passed by the respondents whereby
affiliation of the petitioner's hospital under the scheme of
Madhya Pradesh Ayushman Bharat Niramayam Yojna (for short
the 'Yojna') has been refused to be extended and consequently it
has been restrained from providing medical services to the
beneficiaries of said Yojna.
3. As per the facts of the case, the petitioner has
established a huge hospital in the city of Jabalpur and according
to the petitioner, it is one of the most modern and sophisticated
hospital in the city known as the 'City Hospital'. The hospital is
spreaded over an area of about 40000 sq.fts. and is engaged in
imparting treatment in various critical branches of medical
science i.e. for Renal diseases, conservative treatment and
facilities of dialysis and Renal implant is also available in the
hospital and for cancer patients facilities of conservatory
treatment, chemotherapy and radiation are also made available.
For cardiac patients, all requisite facilities are available. For the
patients suffering from road accidents or other accidental
injuries, all advanced medical facilities with sophisticated
trauma centre including cosmetic surgery etc. are also available
in the said hospital.
4. The hospital made a huge expenditure in creating
and establishing advanced medical hospital with all modern
facilities and it has best of the experienced doctors, surgeons,
physicians and specialists. As per the petitioner, at present more
than 30 surgeons and consultants are engaged in the hospital with
all modern facilities and equipments which make the hospital of
the petitioner one of the best hospital in the city of Jabalpur.
5. Respondent No.3/State Health Agency preferred to
execute an MOU with the petitioner on 18.12.2018 for
empanelment under its scheme and since then the petitioner's
hospital has been dedicately providing best services to the
beneficiaries under the Yojna. Before empanelment, the hospital
had 150 beds but due to empanelment under the Yojna, the bed
strength was increased to 250 beds till March, 2022. Not only the
beds, but other medical facilities have also been increased and as
such, huge investment was made with the management of the
hospital.
6. There was no complaint made against the
petitioner's hospital by the beneficiaries of the Yojna but abruptly
the company received a notification dated 09.03.2022 on the
portal of the Yojna that the petitioner's hospital is de-listed/de-
empanelled and thereafter received a communication on the
registered mobile number of the hospital on 11.03.2022. No
reason was disclosed in the said communication as to why such
extreme drastic penal action which carries civil consequences has
been taken against the petitioner's hospital. No opportunity was
given to the petitioner and no notice before passing the impugned
order was given to it. In absence of proper reason, it is apparent
that the action of the respondent/authority is arbitrary and they
have acted in highhanded manner with a malicious intention
against the petitioner's hospital.
7. The petitioner represented before the authority
asking reasons and also requested for reconsidering the decision
but when nothing was done then the petitioner filed a petition i.e.
W.P. No.6720/2022 (City Hospital and Research Centre Pvt. Ltd
Vs. Union of India and others) in which notices were issued but
during the pendency of that petition, the respondents passed the
impugned order dated 31.03.2022, terminating the affiliation of
the petitioner's hospital under the Yojna.
8. The respondents have filed their reply justifying their
action and raised preliminary objection with regard to
maintainability of the petition saying that the petitioner has an
alternative remedy and when the alternate efficacious remedy is
available to it, the petition cannot be entertained.
9. Rejoinder to reply submitted by the respondents has
also been filed by the petitioner stating therein that even after
comparative assessment with the hospitals granted extension
under the Yojna, it is clear that the action of the respondents is
arbitrary and clearly shows malice acting against the petitioner,
and therefore, according to the petitioner, the impugned order is
liable to be set aside and does not deserve to stand.
10. As per the petitioner, alternative remedy is no bar to
file a petition under Article 226 of the Constitution and the
petition under the facts and circumstances is maintainable. In
support of their contention, they placed reliance upon a decision
reported in (2021) 1 MPLJ 348 (Alok Kumar Choubey Vs.
State of M.P. and Others).
11. Shri Brian D'Silva, learned senior counsel appearing
for the petitioner has submitted that from the impugned order it is
clear that no reasons were assigned as to why the petitioner's
hospital has not been granted extension and its contract has been
terminated. He further submitted that the decision of the
respondents is against the public interest. They have also filed
the rejoinder in which they have very categorically stated that the
petitioner's hospital was empanelled under the Yojna on
18.12.2018 and till date of their de-empanellment i.e. on
09.03.2022, there were only 11 complaints against the
petitioner's hospital, out of them four are pending and rest of
them have been resolved. The petitioner also collected the details
under the provisions of RTI about the complaints which were
made against various empanelled hospitals and those have been
reproduced by the petitioner in the rejoinder showing that there
were other hospitals which were allowed to continue under the
Yojna facing several complaints, which are still unresolved and
pending. According to the petitioner, the hospital against which
47 complaints of financial fraud are found even that hospital has
been continued. As per the petitioner though there were some
action taken by the State Government against the petitioner's
hospital and proceeding of National Security Act was initiated
but the Supreme Court has set aside those proceedings vide its
order dated 29.10.2021.
12. The petitioner has also reproduced the chart
comparing the treatment given by the petitioner's hospital under
the Yojna in different years. From perusal of said chart, it is clear
that the petitioner's hospital had treated the maximum patients/
beneficiaries of the Yojna in comparison to other hospitals. As
per the chart, total 68,887 patients have taken treatment under the
Yojna in Jabalpur from various hospitals empanelled, out of
which, the petitioner's hospital treated 43,369 patients alone
which comes around 63% of total patients. Shri D'Silva
submitted that the decision of the respondents in view of the data
available and reproduced by the petitioner showing as to how the
petitioner's hospital was providing treatment to the beneficiaries
of the Yojna clearly indicates that the decision taken by the
respondents is not in public interest and is contrary to the
legitimate expectation. He submitted that under such
circumstances, the decision of the respondents is apparently
arbitrary, illegal and contrary to public interest, therefore,
deserves to be set aside.
13. Shri D'Silva has placed reliance upon several
decisions of the Supreme Court reported in (1994) 6 SCC 651
(Tata Cellular Vs. Union of India), (2001) 2 SCC 386 (Om
Kumar and others Vs. Union of India), (2006) 8 SCC 161
(Epuru Sudhakar and another Vs. Govt. of A.P. and others),
(2005) 1 SCC 625 (Bannari Amman Sugars Ltd. Vs.
Commercial Tax Officers and others), (2009) 9 SCC 221
(Malay Kumar Ganguly Vs. Dr. Sukumar Mukherjee and
others), (2009) 1 SCC 267 (National Insurance Company Ltd.
Vs. Boghara Polyfab Private Limited) and 2021(1) MPLJ 348
(Alok Kumar Choubey Vs. State of M.P. and others).
14. Shri D'Silva has further submitted that as per
Clause- 16.3 which reads as under:-
"16.3. All or any dispute, controversy, claim or
disagreement arising out of or touching upon or in relation
to the terms of this MOU or its termination, breach,
invalidity, including the interpretation and validity thereof
and the respective rights and obligations of the parties
hereof, shall be settled as per the provisions of the
Arbitration and Conciliation Act, 1996, by a sole arbitrator
appointed by the State Health Agency."
there is an alternative remedy available but that indicates it can
only be done when there is termination of contract. But here in
this case, the dispute with regard to non-extending and non-
renewal of contract which does not fall within the ambit of
dispute which can be referred to arbitration. He submitted that
even otherwise when decision is apparently illegal and in
violation of principle of natural justice then as per several
decision of the Supreme Court and also of the High Court,
alternative remedy is no bar. He has also placed reliance upon a
case of National Insurance Company Ltd. (supra) and also the
decision of Alok Kumar Choubey (supra), in which the
Division Bench of the High Court has very categorically held
that alternative remedy is no bar and entertaining a petition
would also depend on fact situation of a given case and the
petition can be entertained if petitioner makes out a strong prima
facie case in his favour.
15. Shri Piyush Jain, appearing for the respondent/State
has opposed the submissions made by the counsel for the
petitioner and mainly relied upon the stand taken by the
respondents in their reply and submitted that the petition is not
maintainable due to alternative remedy available to the petitioner.
16. After hearing the arguments advanced by learned
counsel for the parties and perusal of material available on
record, this Court is of the opinion that with regard to submission
made by the counsel for the State about maintainability of
petition and placing reliance upon Clause-16.3 which has been
reproduced hereinabove, it is very specific that any dispute,
controversy, claim or disagreement arising out of or touching
upon or in relation to the terms of MOU then the same can be
settled as per the provisions of the Arbitration and Conciliation
Act, 1996. As per the MOU, there is a renewal clause i.e. Clause-
20 which reads as under:-
"Renewal of Empanelment of Network Hospital
The renewal of empanelment is subjected to -
(i) Mutual consent of both the Parties.
(ii) Performance of the Provider with respect to volumes
and quality of care like (Hospital acquired Infections,
Accreditation, clinical indicators, follow-up).
(iii) Reports of audits conducted by SHA & ISA that are
presented to the Empanelment Committee constituted
by SNA."
17. In view of the aforesaid clause, it is clear that the
renewal of empanelment is subjected to certain conditions. In the
present case, condition No.(i) applies because the renewal is
subjected to mutual consent of both the parties. The respondents
have taken a stand not to renew the empanelment of the
petitioner's hospital. Clause-16 deals with jurisdiction and
Clause-17 provides appeal provision if the dispute is of
Clause-16. But here it is not a dispute but renewal was not done
by the respondents/authority invoking Clause-20.
18. In the present case, the decision of the
respondent/authority does not contain any reason as to why the
petitioner's hospital has been de-empanelled whereas other
hospitals were allowed to continue to provide medical services to
the beneficiaries of the Yojna. In a chart produced by the
petitioner, undisputedly they have provided medical facilities to
maximum patients/beneficiaries under the Yojna in comparison
to other hospitals. Looking to the performance of other hospitals
which were allowed to continue to provide medical services, it
cannot be said that they are at better footing than that of the
petitioner's hospital. The Yojna is made in a public welfare and if
public is benefited, the authority has no right to act arbitrarily or
to take any decision which otherwise is against the public
interest. The government being a welfare state is expected to
behave properly. It is a legitimate expectation that their action
should be free from any biasness and arbitrariness. If the
respondents/authorities were not satisfied with the performance
of the petitioner's hospital or they have any complaint against the
it then prior notice could have been given to them and after
asking their reply, an appropriate order assigning reasons could
be passed. The Yojna is completely for public and maximum
patients under the Yojna have been benefited by the petitioner's
hospital, therefore, not giving consent to the petitioner's hospital
to be empanelled without any reason is a decision indicating
arbitrariness on the part of the State Authority and such an action
and conduct is not expected from the State.
19. The cases on which the learned counsel for the
petitioner has placed reliance, firstly, the case with respect of
entertaining the petition under Article 226 of the Constitution of
India is no bar even though the alternative remedy is available.
20. Shri D'Silva, learned senior counsel submitted that
in the present case when order passed by the respondents is silent
to the aspect as to why the empanellment of the petitioner's
hospital has not been extended and in absence of any specific
reason it is impossible for the petitioner to assail the said action
by availing the alternative remedy. He further submitted that the
action of the respondents is in violation of principle of natural
justice and in such circumstances when there are no disputed
facts involved the writ petition can be entertained and alternative
remedy is no bar. He submitted that the Division Bench in case
of Alok Kumar Choubey (supra) has very categorically
observed that entertaining the writ petition under Article 227/226
of the Constitution, exceptions to rule of alternative remedy
would always depend on facts situation of a given case. The
Division Bench in the said case has observed as under :-
"9. The judgment of the Supreme Court in Whirlpool
Corporation v. Registrar of Trade Marks, reported in
(1998) 8 SCC 1, is the landmark decision on the
question of maintainability of writ petition despite
availability of alternative remedy. In that case too, it was
held by the Supreme Court that under Article 226 of the
Constitution, the High Court having regard to the facts
of the case, has discretion to entertain or not to entertain
a writ petition. The High Court has imposed upon itself
certain restrictions, one of which is that if an effective
and efficacious remedy is available, the High Court
would not normally exercise its jurisdiction, but the
alternative remedy has been consistently held by the
Supreme Court not to operate as a bar in at least four
contingencies, namely, where the writ petition has been
filed for the enforcement of any of the fundamental
rights or where there has been a violation of the principle
of natural justice or where the order or proceedings are
wholly without jurisdiction or where the vires of an Act
is challenged.
In Whirlpools Corporation (supra), the Supreme Court
followed its earlier two Constitution Bench judgments in
A.V. Venkateswaran, Collector of Customs v. Ramchand
Sobhraj Wadhwani, AIR 1961 SC 1506 and Calcutta
Discount Co. Ltd. v. ITO, Companies Distt., AIR 1961
SC 372.
In A.V. Venkateswaran, Collector of Customs (supra),
the Supreme Court held as under:--
"The passages in the judgments of this Court we have
extracted would indicate (1) that the two exceptions
which the learned Solicitor General formulated to the
normal rule as to the effect of the existence of an
adequate alternative remedy were by no means
exhaustive, and (2) that even beyond them a discretion
vested in the High Court to have entertained the petition
and granted the petitioner relief notwithstanding the
existence of an alternative remedy. We need only add
that the broad lines of the general principles on which
the Court should act having been clearly laid down, their
application to the facts of each particular case must
necessarily be dependent on a variety of individual fact
which must govern the proper exercise of the discretion
of the Court, and that in a matter which is thus
preeminently one of discretion, it is not possible or even
if it were, it would not be desirable to lay down
inflexible rules which should be applied with rigidity in
every case which comes up before the Court."
In Calcutta Discount Co. Ltd. (supra), the Supreme
Court held as under:
"Though the writ of prohibition or certiorari will not
issue against an executive authority, the High Courts
have power to issue in a fit case an order prohibiting an
executive authority from acting without jurisdiction.
Where such action of an executive authority acting
without jurisdiction subjects or is likely to subject a
person to lengthy proceedings and unnecessary
harassment, the High Courts will issue appropriate
orders or directions to prevent such consequences. Writ
of certiorari and prohibition can issue against the Income
Tax Officer acting without jurisdiction under section 34,
Income Tax Act."
10. The Supreme Court in Union of India v. State of
Haryana, (2000) 10 SCC 482, has added one more
exception to the rule of alternative remedy, namely, the
writ petition can be entertained despite alternative
remedy if the question raised is purely legal one, there
being no dispute on facts.
11. In Verigamto Naveen v. Govt, of A.P., reported in
(2001) 8 SCC 344, the Supreme Court held that the
freedom of the Government to enter into business with
anybody it likes is subject to the condition of
reasonableness and fair play as well as public interest. It
was further held that after entering into a contract, in
cancelling the contract, which is subject to terms of the
statutory provisions, it cannot be said that the matter
falls purely in a contractual field and therefore, it cannot
be held that since the matter arises purely on contract,
interference under Article 226 of the Constitution is not
called for.
12. In State of Tripura v. Manoranjan Chakraborty,
(2001) 10 SCC 740, the Apex Court held that if gross
injustice is done and it can be shown that for good
reason the Court should interfere, then notwithstanding
the alternative remedy which may be available by way
of appeal or revision, a Writ Court can in an appropriate
case exercise its jurisdiction to do substantial justice.
13. In State of H.P. v. Gujarat Ambuja Cement Limited,
(2005) 6 SCC 499 : AIR 2005 SC 3936, the Supreme
Court while considering the objection of alternative
remedy to filing of writ petition under Article 226 of the
Constitution, held that despite existence of alternative
remedy, it is within the discretion of the High Court to
grant relief under Article 226 of the Constitution. But
normally the High Court should not interfere if there is
efficacious alternative remedy is available. If somebody
approaches the High Court without availing alternative
remedy provided, the High Court should ensure that he
has made out a strong case that there exists good ground
to invoke the extraordinary jurisdiction. Following
observations of the Supreme Court are reproduced
herein for the facility of reference:--
"Where under a statute there is an allegation of
infringement of fundamental rights or when on the
undisputed facts the taxing authorities are shown to have
assumed jurisdiction which they do not possess can be
the grounds on which the writ petitions can be
entertained. But normally, the High Court should not
entertain writ petitions unless it is shown that there is
something more in a case, something going to the root of
the jurisdiction of the officer, something which would
show that it would be a case of palpable injustice to the
writ petitioner to force him to adopt the remedies
provided by the statute. It was noted by this Court in L.
Hirday Narain v. Income Tax Officer, Bareilly, (1970) 2
SCC 355 : AIR 1971 SC 33 that if the High Court had
entertained a petition despite availability of alternative
remedy and heard the parties on merits it would be
ordinarily unjustifiable for the High Court to dismiss the
same on the ground of non exhaustion of statutory
remedies; unless the High Court finds that factual
disputes are involved and it would not be desirable to
deal with them in a writ petition."
14. In Zonal Manager, Central Bank of India v. Devi
Ispat Limited, (2010) 11 SCC 186, the Supreme Court
held that writ of mandamus can be issued even in
contractual matters and in paragraph- 28 of the said
judgment, the apex Court held as under:--
"28. It is clear that (a) in the contract if there is a clause
for arbitration, normally, a writ Court should not invoke
its jurisdiction; (b) the existence of effective alternative
remedy provided in the contract itself is a good ground
to decline to exercise its extraordinary jurisdiction under
Article 226; and (c) if the instrumentality of the State
acts contrary to the public good, public interest, unfairly,
unjustly, unreasonably discriminatory and violative of
Article 14 of the Constitution of India in its contractual
or statutory obligation, writ petition would be
maintainable. However, a legal right must exist and
corresponding legal duty on the part of the State and if
any action on the part of the State is wholly unfair or
arbitrary, writ Courts can exercise their power. In the
light of the legal position, writ petition is maintainable
even in contractual matters, in the circumstances
mentioned in the earlier paragraphs."
15. In Joshi Technologies International Inc. v. Union of
India, reported in (2015) 7 SCC 728, the Supreme Court
held that the State in its executive capacity, even in the
contractual field, is under obligation to act fairly and
cannot practice some discrimination. If the facts of such
case are disputed and require assessment of evidence the
correctness of which can only be tested satisfactorily by
taking detailed evidence, Involving examination and
cross-examination of witnesses, the case could not be
conveniently or satisfactorily decided in proceedings
under Article 226 of the Constitution.
16. Seven well recognized exceptions to the rule of
alternative remedy, which can be culled out from the
afore-discussed judgments of the Supreme Court for
entertaining a writ petition under Article 226/227 of the
Constitution, can be summarized thus : (i) where the writ
petition has been filed for enforcement of fundamental
rights; (ii) where there has been violation of principle of
natural justice; (iii) where the order of proceedings is
wholly without jurisdiction; (iv) where the vires of any
Act is under challenge; (v) where availing of alternative
remedy subjects a person to very lengthy proceedings
and unnecessary harassment; (vi) where the writ petition
can be entertained despite alternative remedy if the
question raised is purely legal one, there being no
dispute on facts; and (vii) where State or its intermediary
in a contractual matter acts against public good/interest
unjustly, unfairly, unreasonably and arbitrarily. Despite
afore-noted exceptions, especially fifth and seventh of
the above, whether or not in a particular case the writ
Court should entertain a petition under Article 226/227
of the Constitution of India rather than requiring the
petitioner to avail alternative remedy, would always
depend on the facts situation of a given case, upon the
petitioner making out a strong case. If it is shown that
the facts of the case are not disputed and the
Government or its instrumentality has been found acting
unjustly, unfairly and unreasonably even in regard to its
contractual obligations, the High Court would be
justified in entertaining the writ petition despite
availability of alternative remedy."
21. Therefore, in view of the law laid down by the
Division Bench relying upon several decisions of the Supreme
Court and the discussion made hereinabove, the preliminary
objection raised by the respondents with regard to
maintainability of the petition is without any substance and is
hereby rejected. Since it is a case in which the authority without
asking any reason and also without giving any opportunity of
hearing took a decision arbitrarily that too against public interest
did not extend the period of empanellment of the petitioner's
hospital, therefore, in the circumstances when there are no
disputed facts involved, the writ petition can be entertained under
Article 226 of the Constitution.
22. Further as per the case of Tata Cullular (supra)
relied upon by the learned counsel for the petitioner, the judicial
review is permissible even in the matter of exercising the
contractual powers by the government bodies in order to prevent
arbitrariness or favouritisms. In the said case, the Supreme Court
has observed as under:-
"70. It cannot be denied that the principles of judicial
review would apply to the exercise of contractual powers
by Government bodies in order to prevent arbitrariness
or favouritism. However, it must be clearly stated that
there are inherent limitations in exercise of that power of
judicial review. Government is the guardian of the
finances of the State. It is expected to protect the
financial interest of the State. The right to refuse the
lowest or any other tender is always available to the
Government. But, the principles laid down in Article 14
of the Constitution have to be kept in view while
accepting or refusing a tender. There can be no question
of infringement of Article 14 if the Government tries to
get the best person or the best quotation. The right to
choose cannot be considered to be an arbitrary power. Of
course, if the said power is exercised for any collateral
purpose the exercise of that power will be struck down.
77. The duty of the court is to confine itself to the
question of legality. Its concern should be:
1. Whether a decision-making authority exceeded its
powers?
2. Committed an error of law,
3. committed a breach of the rules of natural justice,
4. reached a decision which no reasonable tribunal
would have reached or,
5. abused its powers.
Therefore, it is not for the court to determine whether a
particular policy or particular decision taken in the
fulfilment of that policy is fair. It is only concerned with
the manner in which those decisions have been taken.
The extent of the duty to act fairly will vary from case to
case. Shortly put, the grounds upon which an
administrative action is subject to control by judicial
review can be classified as under:
(i) Illegality : This means the decision-maker must
understand correctly the law that regulates his decision-
making power and must give effect to it.
(ii) Irrationality, namely, Wednesbury unreasonableness.
(iii) Procedural impropriety.
The above are only the broad grounds but it does not
rule out addition of further grounds in course of time. As
a matter of fact, in R. v. Secretary of State for the Home
Department, ex Brind [(1991) 1 AC 696] , Lord Diplock
refers specifically to one development, namely, the
possible recognition of the principle of proportionality.
In all these cases the test to be adopted is that the court
should, "consider whether something has gone wrong of
a nature and degree which requires its intervention".
78. What is this charming principle of Wednesbury
unreasonableness? Is it a magical formula? In R. v.
Askew [(1768) 4 Burr 2186 : 98 ER 139] , Lord
Mansfield considered the question whether mandamus
should be granted against the College of Physicians. He
expressed the relevant principles in two eloquent
sentences. They gained greater value two centuries later:
"It is true, that the judgment and discretion of
determining upon this skill, ability, learning and
sufficiency to exercise and practise this profession is
trusted to the College of Physicians and this Court will
not take it from them, nor interrupt them in the due and
proper exercise of it. But their conduct in the exercise of
this trust thus committed to them ought to be fair, candid
and unprejudiced; not arbitrary, capricious, or biased;
much less, warped by resentment, or personal dislike."
79. To quote again, Michael Supperstone and James
Goudie; in their work Judicial Review (1992 Edn.) it is
observed at pp. 119 to 121 as under:
"The assertion of a claim to examine the reasonableness
been done by a public authority inevitably led to
differences of judicial opinion as to the circumstances in
which the court should intervene. These differences of
opinion were resolved in two landmark cases which
confined the circumstances for intervention to narrow
limits. In Kruse v. Johnson [(1898) 2 QB 91 : (1895-9)
All ER Rep 105] a specially constituted divisional court
had to consider the validity of a bye-law made by a local
authority. In the leading judgment of Lord Russell of
Killowen, C.J., the approach to be adopted by the court
was set out. Such bye-laws ought to be 'benevolently'
interpreted, and credit ought to be given to those who
have to administer them that they would be reasonably
administered. They could be held invalid if unreasonable
: Where for instance bye-laws were found to be partial
and unequal in their operation as between different
classes, if they were manifestly unjust, if they disclosed
bad faith, or if they involved such oppressive or
gratuitous interference with the rights of citizens as
could find no justification in the minds of reasonable
men. Lord Russell emphasised that a bye-law is not
unreasonable just because particular judges might think
it went further than was prudent or necessary or
convenient.
In 1947 the Court of Appeal confirmed a similar
approach for the review of executive discretion generally
in Associated Provincial Picture Houses Ltd. v.
Wednesbury Corpn [(1948) 1 KB 223 : (1947) 2 All ER
680] . This case was concerned with a complaint by the
owners of a cinema in Wednesbury that it was
unreasonable of the local authority to licence
performances on Sunday only subject to a condition that
'no children under the age of 15 years shall be admitted
to any entertainment whether accompanied by an adult
or not'. In an extempore judgment, Lord Greene, M.R.
drew attention to the fact that the word 'unreasonable'
had often been used in a sense which comprehended
different grounds of review. (At p. 229, where it was said
that the dismissal of a teacher for having red hair (cited
by Warrington, L.J. in Short v. Poole Corpn. [(1926) 1
Ch 66, 91 : 1925 All ER Rep 74] , as an example of a
'frivolous and foolish reason') was, in another sense,
taking into consideration extraneous matters, and might
be so unreasonable that it could almost be described as
being done in bad faith; see also R. v. Tower Hamlets
London Borough Council, ex p Chetnik Developments
Ltd. [1988 AC 858, 873 : (1988) 2 WLR 654 : (1988) 1
All ER 961] (Chapter 4, p. 73, supra). He summarised
the principles as follows:
'The Court is entitled to investigate the action of the
local authority with a view to seeing whether or not they
have taken into account matters which they ought not to
have taken into account, or, conversely, have refused to
take into account or neglected to take into account
matter which they ought to take into account. Once that
question is answered in favour of the local authority, it
may still be possible to say that, although the local
authority had kept within the four corners of the matters
which they ought to consider, they have nevertheless
come to a conclusion so unreasonable that no reasonable
authority could ever have come to it. In such a case,
again, I think the court can interfere. The power of the
court to interfere in each case is not as an appellate
authority to override a decision of the local authority, but
as a judicial authority which is concerned, and
concerned only, to see whether the local authority has
contravened the law by acting in excess of the power
which Parliament has confided in them.'
This summary by Lord Greene has been applied in
countless subsequent cases.
"The modern statement of the principle is found in a
passage in the speech of Lord Diplock in Council of
Civil Service Unions v. Minister for Civil Service
[(1985) 1 AC 374 : (1984) 3 All ER 935 : (1984) 3 WLR
1174] :
'By "irrationality" I mean what can now be succinctly
referred to as "Wednesbury unreasonableness".
(Associated Provincial Picture Houses Ltd. v.
Wednesbury Corpn. [(1948) 1 KB 223 : (1947) 2 All ER
680] ) It applies to a decision which is so outrageous in
its defiance of logic or of accepted moral standards that
no sensible person who had applied his mind to the
question to be decided could have arrived at.' "
80. At this stage, The Supreme Court Practice, 1993, Vol.
1, pp. 849-850, may be quoted:
"4. Wednesbury principle.-- A decision of a public
authority will be liable to be quashed or otherwise dealt
with by an appropriate order in judicial review
proceedings where the court concludes that the decision
is such that no authority properly directing itself on the
relevant law and acting reasonably could have reached
it. (Associated Provincial Picture Houses Ltd. v.
Wednesbury Corpn. [(1948) 1 KB 223 : (1947) 2 All ER
680] , per Lord Greene, M.R.)"
81. Two other facets of irrationality may be mentioned.
(1) It is open to the court to review the decision-maker's
evaluation of the facts. The court will intervene where
the facts taken as a whole could not logically warrant the
conclusion of the decision-maker. If the weight of facts
pointing to one course of action is overwhelming, then a
decision the other way, cannot be upheld. Thus, in
Emma Hotels Ltd. v. Secretary of State for Environment
[(1980) 41 P & CR 255] , the Secretary of State referred
to a number of factors which led him to the conclusion
that a non-resident's bar in a hotel was operated in such a
way that the bar was not an incident of the hotel use for
planning purposes, but constituted a separate use. The
Divisional Court analysed the factors which led the
Secretary of State to that conclusion and, having done
so, set it aside. Donaldson, L.J. said that he could not see
on what basis the Secretary of State had reached his
conclusion.
(2) A decision would be regarded as unreasonable if it is
impartial and unequal in its operation as between
different classes. On this basis in R. v. Barnet London
Borough Council, ex p Johnson [(1989) 88 LGR 73] the
condition imposed by a local authority prohibiting
participation by those affiliated with political parties at
events to be held in the authority's parks was struck
down."
23. Further, in case of Om Kumar and others (supra),
the Supreme Court has also observed that the administrative
action which is discriminatory treating unequals as equal and
action is apparently arbitrary, the judicial review is permissible.
The Supreme Court relying upon its several decisions and also
relying upon Wednesbury principle has observes as under:-
"66. It is clear from the above discussion that in India
where administrative action is challenged under Article
14 as being discriminatory, equals are treated unequally
or unequals are treated equally, the question is for the
Constitutional Courts as primary reviewing courts to
consider correctness of the level of discrimination
applied and whether it is excessive and whether it has a
nexus with the objective intended to be achieved by the
administrator. Here the court deals with the merits of the
balancing action of the administrator and is, in essence,
applying "proportionality" and is a primary reviewing
authority.
67. But where an administrative action is challenged as
"arbitrary" under Article 14 on the basis of Royappa
[(1974) 4 SCC 3 : 1974 SCC (L&S) 165] (as in cases
where punishments in disciplinary cases are challenged),
the question will be whether the administrative order is
"rational" or "reasonable" and the test then is the
Wednesbury test. The courts would then be confined
only to a secondary role and will only have to see
whether the administrator has done well in his primary
role, whether he has acted illegally or has omitted
relevant factors from consideration or has taken
irrelevant factors into consideration or whether his view
is one which no reasonable person could have taken. If
his action does not satisfy these rules, it is to be treated
as arbitrary. [In G.B. Mahajan v. Jalgaon Municipal
Council [(1991) 3 SCC 91] (SCC at p. 111).]
Venkatachaliah, J. (as he then was) pointed out that
"reasonableness" of the administrator under Article 14 in
the context of administrative law has to be judged from
the stand point of Wednesbury rules. In Tata Cellular v.
Union of India [(1994) 6 SCC 651] (SCC at pp. 679-80),
Indian Express Newspapers Bombay (P) Ltd. v. Union of
India [(1985) 1 SCC 641 : 1985 SCC (Tax) 121] (SCC at
p. 691), Supreme Court Employees' Welfare Assn. v.
Union of India [(1989) 4 SCC 187 : 1989 SCC (L&S)
569] (SCC at p. 241) and U.P. Financial Corpn. v. Gem
Cap (India) (P). Ltd. [(1993) 2 SCC 299] (SCC at p.
307) while judging whether the administrative action is
"arbitrary" under Article 14 (i.e. otherwise then being
discriminatory), this Court has confined itself to a
Wednesbury review always."
24. In case of Epuru Sudhakar and another (supra),
the Supreme Court has further dealt with the scope of judicial
review and gone to the extent that power of pardon by the
President or Governor, as the case may, is not immune from
judicial review and observed as under:-
"22. It is fairly well settled that the exercise or non-
exercise of pardon power by the President or Governor,
as the case may be, is not immune from judicial review.
Limited judicial review is available in certain cases."
25. In case of Bannari Amman Sugars Ltd. (supra), the
Supreme Court has dealt with the doctrine of legitimate
expectation and observed that change in government policy
which is the cause of defeating the legitimate expectation must
be fair, non-arbitrary and must disclose a discernible principle
which should be reasonable so as to be not violative of
Article-14. The Supreme Court has further observed that change
in policy, opportunity of hearing to affected persons not a
pre-requisite condition but it should be made fairly,
non-arbitrarily and should disclose a discernible principle which
should satisfy the test of reasonableness. The supreme Court in
the said case dealt with the principle of legitimate expectation
has observed as under:-
"8. A person may have a "legitimate expectation" of
being treated in a certain way by an administrative
authority even though he has no legal right in private law
to receive such treatment. The expectation may arise
either from a representation or promise made by the
authority, including an implied representation, or from
consistent past practice. The doctrine of legitimate
expectation has an important place in the developing law
of judicial review. It is, however, not necessary to
explore the doctrine in this case, it is enough merely to
note that a legitimate expectation can provide a
sufficient interest to enable one who cannot point to the
existence of a substantive right to obtain the leave of the
court to apply for judicial review. It is generally agreed
that "legitimate expectation" gives the applicant
sufficient locus standi for judicial review and that the
doctrine of legitimate expectation to be confined mostly
to right of a fair hearing before a decision which results
in negativing a promise or withdrawing an undertaking
is taken. The doctrine does not give scope to claim relief
straightaway from the administrative authorities as no
crystallised right as such is involved. The protection of
such legitimate expectation does not require the
fulfilment of the expectation where an overriding public
interest requires otherwise. In other words, where a
person's legitimate expectation is not fulfilled by taking
a particular decision then the decision-maker should
justify the denial of such expectation by showing some
overriding public interest. (See Union of India v.
Hindustan Development Corpn. [(1993) 3 SCC 499 :
AIR 1994 SC 988] )
9. While the discretion to change the policy in exercise
of the executive power, when not trammelled by any
statute or rule is wide enough, what is imperative and
implicit in terms of Article 14 is that a change in policy
must be made fairly and should not give the impression
that it was so done arbitrarily or by any ulterior criteria.
The wide sweep of Article 14 and the requirement of
every State action qualifying for its validity on this
touchstone irrespective of the field of activity of the
State is an accepted tenet. The basic requirement of
Article 14 is fairness in action by the State, and non-
arbitrariness in essence and substance is the heartbeat of
fair play. Actions are amenable, in the panorama of
judicial review only to the extent that the State must act
validly for discernible reasons, not whimsically for any
ulterior purpose. The meaning and true import and
concept of arbitrariness is more easily visualised than
precisely defined. A question whether the impugned
action is arbitrary or not is to be ultimately answered on
the facts and circumstances of a given case. A basic and
obvious test to apply in such cases is to see whether
there is any discernible principle emerging from the
impugned action and if so, does it really satisfy the test
of reasonableness."
26. Likewise in case of Malay Kumar Ganguly (supra),
the Supreme Court has considered the doctrine of legitimate
expectation in respect of medical services and observed as
under:-
"154. The standard of duty to care in medical services
may also be inferred after factoring in the position and
stature of the doctors concerned as also the hospital; the
premium stature of services available to the patient
certainly raises a legitimate expectation. We are not
oblivious that the source of the said doctrine is in
administrative law. A little expansion of the said doctrine
having regard to an implied nature of service which is to
be rendered, in our opinion, would not be quite out of
place."
27. In view of the law enunciated by the High Court and
also by the Supreme Court as discussed hereinabove, it is clear
that the decision of the respondents informing the petitioner not
extending its empanellment under the Yojna is purely an arbitrary
action because neither any opportunity of hearing nor any notice
was given to the petitioner before de-empanelling it from the
Yojna. Simultaneously, the other hospitals which were not at
better footing than that of petitioner's hospital were allowed to
continue.
28. As has been discussed hereinabove, the Yojna of
Central Government is in public interest and it is the legitimate
expectation of public from the respondents especially the State
Government to implement said Yojna in welfare of public and for
doing so they must consider the fact that the welfare of the public
should not be prejudiced in any manner. The petitioner's hospital
has given treatment to maximum patients in a previous period
and a very less number of complaints made against it
comparatively with the other hospitals, then there was no reason
to pass such type of order. The action of the respondents,
therefore, is discriminatory, arbitrary and against the public
interest and, therefore, the said decision is not sustainable in the
eyes of law.
29. Thus, the impugned decision i.e. the order dated
31.02.2022 (Annexure-P/9) and order dated 06.04.2022
(Annexure-P/10) in relation to the petitioner's hospital are set
aside and petition is accordingly, allowed. The respondents
(competent authority) is therefore, directed to take fresh decision
in respect of the petitioner's hospital within a period of 30 days
from the date of submitting a copy of this order.
No order as to cost.
(SANJAY DWIVEDI)
JUDGE
ac/-
ANIL CHOUDHARY
2022.09.06
11:54:05 +05'30'
