Madhya Pradesh High Court
The State Of Madhya Pradesh vs Lbs Hospital Bhopal on 27 January, 2025
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NEUTRAL CITATION NO. 2025:MPHC
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IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE SURESH KUMAR KAIT,
CHIEF JUSTICE
&
HON'BLE SHRI JUSTICE VIVEK JAIN
ON THE 27th JANUARY, 2025
WRIT APPEAL No. 2945 of 2024
THE STATE OF MADHYA PRADESH AND OTHERS
Versus
LBS HOSPITAL BHOPAL
Appearance:
Shri Anubhav Jain - Government Advocate for appellants/State
appellants/State.
Shri Siddharth Sharma - Advocate for respondent.
ORDER
Per: Hon'ble Shri Justice Suresh Kumar Kait, Chief Justice
1. By way of this appeal, appellants/State seeks the following
reliefs:-
"1. Hon'ble Court may be pleased to set aside the order
dated 04.01.2024 passed by the Single Bench in
W.P.No.22847/2023 (Annexure A/1) & order dated
10.092024 passed in I.A.No.4304/2024 (Annexure A/2).
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2. Any other suitable relief deemed fit in the facts and
circumstances of the case may also kindly be granted in
favour
avour of the appellant."
appellant.
2. The writ petitioner is a multi
multi-speciality
speciality Hospital and providing
high standard quality of medical facilities to the residents of the area
since 1990. Looking to the available infrastructure with the petitioner
Hospital,
spital, it has been empanel
empanelled
ed under the "Ayushman Bharat
Niramayam Scheme" (for short, the Scheme).
Scheme). The empanelment was
made vide order dated 28.08.2018 by the State Empanelment
Committee. The hospital was discharging its obligations and providing
all medical facilities to the members of the Scheme who are basically
low income earners of the country. As claimed, the
he petitioner Hospital
left no stones unturned in providing quality medical and healthcare
related facilities to the beneficiaries of the Scheme and took all steps to
fulfil the norms and requirement of the Scheme in letter and spirit.
3. The case
ase of the writ petitioner before the writ Court was that a
show cause notice was issued to the petitioner on 29.01.2020 (Annexure
P/1) pointing out certain irregularities committed by the petitioner
hospital while providing medical facilities to the membe
members of the
Scheme. Also pointing out certain irregularities as they are not
complying with the National Accreditation Board for Hospitals &
Healthcare Providers (NABH) Certification Standards with respect to
building construction rules as there were not any side margins, facilities
of exits/stairways/etc. By the said show cause notice, petitioner hospital
was provided an opportunity of personal hearing and also proposed that
if it is found that the hospital is guilty, the action likely to be taken has
also been proposed in the show cause notice itself.
itself After receiving the
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reply dated 05.02.2020 to the said show cause notice, which was
received by the appellants on 13.02.2020,
13.02.2020 a fresh show cause notice was
again issued to the petitioner on 20.11.2020 (Annexuree P/2)
P/2 and
pursuant thereto, the petitioner submitted a detailed reply to the said
show cause notice on 28.11.2020.
4. Thereafter, audit of the petitioner hospital was carried out by the
State Health Agency wherein certain minor discrepancies were noticed
in ICU due to which General Medicine Speciality was allegedly de
de-
empanelled but the portal remains open for admission and claims. The ee-
mail was received by the hospital of the petitioner restraining them from
admitting patients under the Scheme.
5. Again a show cause notice was issued on 22.08.2022 (Annxure
P/4) alleging that despite de-empanelment
de empanelment of the petitioner/hospital,
they have registered 3379 claims and payment of Rs.8,75,69,298/
Rs.8,75,69,298/- was
approved but all the future payments
payment got withheld.. Moreover, the
petitioner/hospital continued
continue to stay suspended till further orders and
also restrained to offer services under the Scheme till further final
orders. Again on 25.08.2022, the reply to the show cause notice was
submitted by the petitioner and also filed an appeal before the
Commissioner, Directorate of Health Services (Annexure
Annexure P/6).
P/6 The
appellate Authority passed the impugned order on 01.03.2023
(Annexure P/7) firstly saying that State Empanelment Committee
chaired by the Additional Chief Secretary and Secretary, Health being
the members of the above Committee are not entitled to hear and
adjudicate appeal matters relating to de-empanelment
de empanelment of hospitals as the
order against which the appeal is preferred has been approved and
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ratified by the Committee itself;
itself; and secondly, Clause 17.3 of the MOU
provides for dispute adjudication mechanism in the matters relating to
de-empanelment
empanelment of hospitals. Since an arbitration under the Arbitration
and Conciliation Act, 1996 has been provided under the MOU,
therefore, the hospital should take appropriate arbitration in view of the
above terms.
6. Thus, the appellants rejected the claim of the petitioner on
25.09.2023 by justifying
justif and clarifying that the basic order though
issued by the General Manager (Operations), but it was approved by
the competent authority.
authority The petitioner submitted
ted before the writ
Court that the show cause
ause notice and impugned order are without
jurisdiction because in view of law laid down by the Indore Bench of
this Court in case of Index Medical College Hospital Vs. State of M.P.
and Others in W.P. No.7484/2023 decided on 07.07.2023, wherein th
the
Court has observed that the initial show cause issued by the General
Manager, Bhopal, intimating
ntimating the petitioner therein about the
discrepancies noticed in the hospital even without sending the same
before the State Empanelment Committee which is the competent
authority and as such, the said order is without jurisdiction. The Court
has further observed that post facto approval is immaterial and that
will not validate the order passed by an incompetent authority. As per
the MOU, the Empanelment Committee is competent to take decision
for de-empanelment.
empanelment. The power and definition of Empanelment
Committee provided in the MOU reads as under:-
under:
Empanelment Committe
"Empanelment Committee" " means a State Empanelment
Committee vested with powers, among others, of empanelment
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and de-empanelment
empanelment of Providers in accordance with specified
manner.
7. The further case of the writ petitioner is that the Indore Bench of
this Court in the case of Index Medical College Hospital (supra)
(supra), has
clearly observed that initial proceeding of de-empanelment
de empanelment initiated by
issuing show cause notice by an incompetent authority and as such, final
order passed by the General Manager is also not competent to do so.
Clause 19 of MOU deals with the disciplinary proceedings and de
de-
empanelment proceedings. Clause 19.1 which is relevant, reads as
under:-
"19.1. The SHA, Anti Fraud Cell, Grievance Redressal
Committee or State Empanelment Committee may initiate
disciplinaryy proceedings against the Provider for any Fraud
in terms of Clause 16, non-
non compliance with this MoU, non
compliance of other SHA guidelines or any acts or
omissions which are in violation of the principles of this
Scheme i.e; providing cashless Health Facility
Facility to the
Beneficiary in terms of the Scheme."
8. In view of the aforesaid, the further case of the writ petitioner is
that the General Manager is not the competent authority to pass any
order as has been done in the present case. As per the order of the High
Court in case of Index Medical College (supra), the said order of
incompetent authority is not sustainable and the order passed by the
Indore Bench has attained finality because the same has not been
assailed further. The observations made in case of Index Medical
College (supra) read as under:-
under:
"6. Learned counsel for the petitioner submitted that the
action taken by the respondents No. 2 and 3 are contrary to
the terms of the MoU, arbitrary and in utter breach of
principles
ples of natural justice inasmuch as the order of de-
de
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empanelment has been issued without affording any
opportunity of hearing to the petitioner. The order dated
14.03.2023 has been passed by respondent No.3 on the basis
of report submitted by the field team without even providing
copy of the aforesaid report and without considering the fact
that the report was prepared on Sunday (holiday) during
which many of the staff members were not available. It is
further submitted that under the Standard Operating
Procedure
edure (SOP) for de-empanelment,
empanelment, any action for
suspension of hospital can be initiated by the SHA based on
the recommendations of the State Empanelment Committee
(SEC). In the instant case, the order of suspension dated
21.03.2023 has been passed without any recommendation of
the SEC, which renders the same patently without authority
and jurisdiction.
7. It is submitted that the constitution of the SEC is laid
down in the State Empanelment Criteria for private
hospitals issued by the respondent no.1 as under :-
i. CEO, State Health Agency - Chairperson
ii. Medical Officer, Clinical Establishment Regulation Act
-Member
iii. Two State Government officials nominated by the
Department - Members
8. The Standard Operating Procedure (SOP) for de de-
empanelment of service providers stipulates that any action
for suspension of hospital can be initiated by the SHA based
on the recommendations of the SEC. The relevant Clauses of
SOP are reproduced hereunder :
4.3.1 De-empanelment
De empanelment proceedings may be initiated
by the Sate Health Agency only after following principles
of natural justice. The recommendation from SHA shall
be sent to SEC for taking final action against the
Provider.
4.3.2 Issuing show-cause
show cause notice to the Provider:
Based on the report, if the SHA feels that there
ere are clear
grounds of Provider indulging in any malpractices or
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non-compliance
compliance with the MoU or SHA guidelines, a show
cause notice shall be issued to the hospital. SHA in the
notice shall clearly indicate the grounds for the show
cause to the Provider. Provider will need to respond to
the notice within the time limit as mentioned in the show
cause notice.
4.3.3 The reply to the show cause notice and the
SHA report on the same shall be put before SEC for
consideration. In case the reply to the show-cause
cause notice
aforementioned is found satisfactory, the Provider shall
be removed from the "watch
"watch-List" and deempanelment
proceedings will be discontinued.
4.3.4 In case the reply filed for show cause notice
aforementioned is found unsatisfactory, suspension
proceedings may be initiated by State Health Agency
based on the recommendations of SEC.
4.3.6 In case SEC deems it appropriate, Service
Provider may be deempanelled for violations of
conditions of MoU.
4.4 At all times Providers shall be given due
opportunity to be heard and submit detailed
representation to the SHA. The representation shall be
duly examined by the SHA and its recommendation shall
be forwarded to the SEC for consideration. The SEC may
pass appropri
appropriate order based on the recommendations of
the SHA.
9. Learned counsel for the petitioner submits that in the
present case, from the note-sheet
sheet (Annexure P/8) it is evident
that the order of suspension (Annexure P/5) dated 21.03.2023
as also the order of de-empanelment
d (Annexure P/10) dated
29.03.2023 has been passed by respondent No.3 without
placing the matter before the SEC which renders the
aforesaid orders patently illegal and without jurisdiction.
10. Learned counsel for the petitioner further submi
submits that
the impugned action has been initiated in a haste manner on
the basis of a purported enquiry report drawn by the audit
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team. The alleged enquiry report has not been placed on
record in the present case. The impugned orders have been
passed by the respondents
r by giving a complete go-bye
bye to the
procedure prescribed in the SOP which clearly indicates the
malafides and per-determination
determination to deempanel and to take
adverse action against the petitioner hospital.
11. Learned counsel for the petitioner has placed reliance
on the judgment passed by the Apex Court in case of Ravi
Yashwant Bhoir vs. District Collector reported in AIR 2012
SC 1339 wherein it was held as under :
"22. The Constitution Bench of this Court in
G.Sadanandan v. State of Kerala & Anr., AUR 1966 SC
1925, held that if all the safeguards provided under the
statute are not observed, an order having serious
consequences is passed without proper application of
mind, having a casual approach to the matter, the same
can be characterized as having
having been passed mala-fide,
mala
and thus, is liable to be quashed."
12. The order of de-empanelment
de empanelment (Annexure P/10), besides
being without jurisdiction, is also bad-in-law
law on account of
the same having been passed in glaring breach of principles
of natural justice and without affording any opportunity of
hearing to the petitioner. In similar fact and situation, the
coordinate Bench of this Court at Principal Seat in W.P.No.
9134 of 2023 has been pleased to quash the order of de de-
empanelment on the ground of breach reach of principles of
natural justice.
X X X
17. On perusal of the preliminary show-cause
show cause notice dated
14.03.2023 (Annexure P/3) it is seen that the same has been
issued by the General Manager (Operations Ayushman
Bharat), Bhopal intimating the petitioner
p the discrepancies
found at the petitioner hospital. However, the said
preliminary show-cause
show cause notice along with recommendations
from SHA do not appear to have been sent to the SEC for
taking final action against the petitioner hospital. Moreover,
there are no documents to indicate that reply to the show
show-
cause notice and the SHA report were put up before the SEC
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for consideration. There are no documents on record to
show that the SEC had granted permission to initiate action
against the petitioner hospital.
ospital. The respondents are also
unable to point out the fact as to whether the SEC had
granted permission to de-empanel
de the petitioner hospital.
However, during the arguments, learned counsel for
respondent had submitted that post facto approval was take
taken
from SEC after passing of the order by the SHA, that too
from the Additional Chief Secretary (ACS) who happens to
be the Chairman of the SEC (State Executive Committee).
No document has been produced on record to show that the
SEC was ever constituted. Merely
Merely showing the constitution
of the SEC would not suffice. Even the decision to de de-
empanel the petitioner hospital by the SEC is not available
on record. From perusal of the impugned orders, it is seen
that the same has been passed by an incompetent authority
auth
i.e. the General Manager of the "Ayushman Bharat"
Scheme which is absolutely without jurisdiction. Admittedly,
from perusal of the record, it is seen that due opportunity of
hearing has not been provided to the petitioner at all times,
as envisaged in the Clause 4.4 of the SOP. Even before
passing of the de-empanelment
de empanelment order, opportunity of
hearing was not granted to the petitioner."
9. However, the
he case of the appellants before the writ Court was that
the impugned order dated 25.09.2023 (Annexure P/9)) has been passed
by taking approval of the competent authority and the same was issued
by the General Manager.
Manager But, the
he writ Court was of the view that
subsequent approval of competent authority does not validate the order
passed by an incompetent authority
autho and no material even otherwise was
placed before the Court by the appellants showing that the impugned
order has ever been placed before the competent authority before being
issued and, therefore, approval after passing the order is ins
insufficient,
therefore,, the show cause notice issued to the petitioner by an
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incompetent authority and final order dated 25.09.2023 are liable to be
set aside.
10. Accordingly, after
after hearing learned counsel for the parties, on
perusal of the record and the order passed by the Indore Bench of this
Court in the case of Index Medical College (supra), the writ Court
rightly opined that the order issued by the authority in pursuance to
the show cause notice dated 22.08.2022 which had been issued by the
Executive Officer who is not
not the competent authority proposing de
de-
empanelment and final order based upon the same is otherwise illegal
because the show cause notice dated 22.08.2022 and impugned order
dated 25.09.2023 were passed without there being any supporting
material that the order was placed before the competent authority and
therefore, neither the show cause notice nor the impugned order was
issued by the competent authority.
11. It is pertinent to mention herein that the appellants/State filed
I.A.No.4304/2024 for recalling of the order dated 04.01.2024 passed in
writ petition based on the ground that the order passed in Index
Medical College (supra) has been set aside by the Division
Division Bench in
Writ Appeal No.353/2024 vide order dated 21.02.2024. On perusal of
the same, it is clear that the Division Bench set aside the order on the
ground that the State has not filed their
the reply in that writ petition but in
the case in hand, the reply
reply was filed by the State and duly considered by
the writ Court and the order passed by the writ Court is not solely based
upon the order of the Indore Bench but it was disposed of considering
the merits of the case, thereby declining the prayer of the Sta
State for
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recalling of the order, the I.A. was dismissed by the writ Court vide
order dated 10.09.2024.
12. On taking into consideration the above, we are of the considered
opinion that the writ Court has rightly set aside the impugned show
cause notice dated 22.08.2022 and the order dated 25.09.2023. Finding
no merits in the present appeal, the same is accordingly dismissed. The
appellants are directed to comply with the order of the writ Court within
four weeks from today.
(SURESH KUMAR KAIT) (VIVEK JAIN)
CHIEF JUSTICE JUDGE
C.
