1
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.3155 OF 2017
UNION OF INDIA … APPELLANT
VERSUS
MOOL CHAND KHAIRATI RAM TRUST … RESPONDENT
WITH
CIVIL APPEAL NOS.31533154 OF 2017
CIVIL APPEAL NO. 3156 OF 2017
AND
CIVIL APPEAL NOS.31573158 OF 2017
J U D G M E N T
ARUN MISHRA, J.
1. The question involved in the appeals is with respect to the
validity of Circular issued by the Government of NCT of Delhi
(GNCTD) on 2.2.2012 whereby it intimated the hospitals to implement
2
the judgment of Delhi High Court with regard to free treatment to the
weaker sections of the society in terms of the judgment dated
22.3.2007 in the case of Social Jurists v. Government of NCT of Delhi
& Ors. Thereafter, the Land & Development Officer (in short, ‘L&DO')
passed an order dated 2.2.2012 wherein it was stated that the
Government of India had taken a policy decision that all the hospitals
which have been provided land by L&DO have to strictly follow the
policy of providing free treatment as provided in it. That the said
conditions were applicable to Moolchand Hospital and St. Stephens
Hospital as they were allotted land by L&DO. Communication on
similar lines was issued by Government of NCT of Delhi to Sitaram
Bhartia and the Foundation of Cancer Research imposing condition of
providing free treatment to 10% indoor patients and 25% to outdoor
patients of poor strata of the society. The decision was taken in the
light of the decision of Delhi High Court in Social Jurists case (supra)
which was referred by this Court in Special Leave Petition [Civil]
No.18599 of 2007 vide order dated 1.9.2011 in which this Court
observed that 25% OPD and 10% IPD have to be given treatment free
of cost. Said patients should not be charged with anything. However,
the concerned hospital could make the arrangements of the cost
3
either by meeting the treatment/medicines cost from its funds or
resources or by way of sponsorships or endowments or donations. As
the respondentshospitals were not a party, they have questioned
imposition of said conditions in the impugned order by filing writ
applications. The High Court has quashed the imposition of
conditions hence, the appeals have been preferred.
2. The factual matrix reflects that the Government of India in the
year 1949 took a decision to provide all possible help to the hospitals
by allotting land to the hospitals and schools at highly concessional
rates so as to involve them in achieving the larger social objective of
providing health and education to the people. Pursuant to the
decision taken in the meeting dated 10.6.1949 under the
Chairmanship of the Secretary (Finance) it was decided that the land
would be allotted to the hospitals and schools at the rate of
Rs.2000/ to Rs.5000/ per acre. The hospitals and schools were
treated as charitable institutions. While the first safeguard relating to
institutions being secular and noncommunal in character, free help
by allotment of land to schools and hospitals was unanimously
accepted. It was also agreed that nonprofit making bodies be
4
included under the term “charitable institution” with the aforesaid
institutions. The test should be that the institute should be run for
the good of the public without any profit motive. The relevant portion
of policy decision dated 10.6.1949 is extracted hereunder:
“1) It should be clearly laid down that the land will
be made available only for institutions of secular
and non-communal character, schools and
hospitals should be freely helped by allotment of
land but applications from other types of charitable
institutions should be considered individually on
merits. It would be risky to lay down a general rule
as regards the latter.
2) Recognition by an appropriate authority to the
Government should be a condition precedent the
allotment of land to schools, hospitals etc.
2) The first safeguard was unanimously accepted.
It was understood that an institution of secular and
non-communal character was one which did not
discriminate against any class of people on any
ground while making an admission. It was also
agreed that institutions like Arts and Crafts Society
and other non-profit making bodies should be
included under the term "Charitable Institution".
The test should be that the institution should be run
for the good of the public without any profit
motive."
3. It was also deliberated upon on 10.6.1949 that what should be
premium and ground rent chargeable to a charitable institution. As
per the policy laid down by the Government of India in the letter of
5
the Department of Education, Land, dated 25.7.1943, the premium
charged was too high, to be easily payable by any charitable
institution much less by any displaced institution from Pakistan.
According to that formula, any charitable institution will have to pay
a premium at the rate of 25,000 to 35,000 per acre, plus ground rent
@ 15% on the premium per annum, that would be obviously too high.
Hence, it was agreed that the premium chargeable on land allocated
to charitable institutions in Delhi should vary from Rs.2000/ to
Rs.5000/ per acre.
Facts relating to Mool Chand Khairati Ram Trust :
4. In the year 1927 one Lala Kharaiti Ram of Lahore made a Will
with a codicil registered at Lahore by which Moolchand Khairati Ram
Trust was constituted by Lala Kharaiti Ram with the name of his
father Shri Moolchand. The relevant clauses of the Will are extracted
hereunder :
"(8) After meeting the above-mentioned allotments
the following instructions shall be observed with
regard to the property of every description that
may remain after my death:-
(a) All the remaining property of every description
shall constitute a Trust known as Moolchand
6
Kharaiti Ram Trust, Lahore, the objects of which
shall be as follows:-
(1) Imparting education in and preaching
Sanskrit according to Sanatan Dharm Methods, and
(2) Devising means for imparting education in
and improving the Ayurvedic System of Medicine
and preaching the same. In order to gain object
No.2 it is not prohibited to take help from the
English or Yunani or any other system of medicine
and according to need one or more than one
Ayurvedic Hospital may be opened.”
5. It was the case of the Trust that the author neither used the
word charity nor charitable while creating the Trust in the Will. In
law, it became a charitable trust on account of the provisions of
section 2 of the Charitable Endowments Act, 1890. Mool Chand
hospital acquired the perception of being charitable not from the Will
or the purpose set out for the Trust but from the very nature of the
activity of providing medical relief, more so in view of section 2(15) of
the Income Tax Act, 1961 which defines charitable purpose.
6. The Trust was running a hospital in Lahore in the name of
Moolchand Kharaiti Ram Hospital. After partition, the trustees had to
leave Pakistan and migrate to India as refugees in 1947. The Ministry
of Rehabilitation allotted nine acres of land at Lajpat Nagar to the
7
Trust on 17.4.1951 on which land at Lajpat Nagar, Delhi, the Trust
built a hospital which has been running since then. At the time of
allotment Lajpat Nagar was not a prime location of Delhi.
7. It was further the case of the Trust that in the allotment letter
there was no term or condition to provide free treatment to patients
belonging to economically weaker sections of the society at the
hospital. Subsequently, lease deed was formally executed between the
President of India and Moolchand Kharaiti Ram Trust which was to
be effective from 17.4.1951 for a period of 99 years. In this lease deed
also, there was no such condition regarding free treatment to any
patient. Thus, it was not open to the Government to impose the
obligation of providing free medical treatment by an executive order.
The policy of 1949 regarding institution should be run for the good of
the public without any profit motive was applicable to other
institutions like Arts & Crafts Society and not to hospitals. At the
most, the only rider in the policy was that the institution would be
run for the good of the public without any profit motive. This
policy/test was to be applied at the time of allotment of land and only
such institutions were to be allotted land which in the opinion of the
8
Government fulfilled the said criteria. Since the policy has not been
converted into law by enactment of an Act by the legislature, only
insistence could be that the institution should be run without any
profit motive and not that the institution be required to provide free
treatment to any specified number of patients. The DDA (Disposal of
Developed Nazul Land) Rules, 1981 are not applicable in the case of
Trust. Clause 14 of the lease deed did not authorize the Government
to impose such conditions. That the decision of Social Jurists case
(supra) is not applicable as in that case there was either conditions of
allotment, or the stipulations in the lease deed under which the
hospitals were obliged to provide access to significant percentage of
the IPD and OPD facilities. Right to carry on any occupation, trade or
business is fundamental under Article 19(1)(g) as such, such
restriction could have been imposed by enacting a law under Article
19(6) of the Constitution of India by Parliament or the State
legislature. Such condition could not have been imposed by executive
feat in exercise of power under Article 162. In the decision in Social
Jurists (supra) which has been affirmed by this Court, the Trust was
not a party. The condition of lease could not have been altered
unilaterally. This Court while dismissing the SLP on 1.9.2011 by a
9
speaking order, did not intend such result. This Court never intended
to pass adverse order against a person who had not been given notice
or heard in the matter. A contempt petition was filed in the High
Court for proceeding against the hospital run by the trust. The same
was dismissed by the High Court as they were not parties to the case
of Social Jurists (supra). Land was given by way of incentivizing the
Trust to open a hospital in that locality because at that time not so
many people were willing to open hospitals or schools. As these
services were to be provided by the State, the land was not given at
the concessional rate. It was the market rate that prevailed in the
year 1951. Report of Justice Qureshi Committee was not relied upon
by the High Court while deciding the case of Social Jurists (supra) and
High Court had appointed a Committee namely Mr. N.N. Khanna
Committee. At that time when Justice Qureshi Committee’s report
was prepared, it was based upon the statement made by disgruntled
workmen who were having dispute with the management of the
hospital as such said report cannot be looked into. It was also
submitted that there are specialist doctors in the Trust run since
1958 who devote one hour each day to OPD patients from the weaker
10
sections of the society without charging them anything and they will
continue to do so.
Facts regarding St. Stephen hospital :
8. In the case of St. Stephen hospital, it was averred by the
hospital that it was established in the year 1885 by a group of
missionary women in Chandni Chowk, Delhi. In 1908 it moved to its
present location to Tees Hazari, Delhi. Land admeasuring 1.37 acres,
2331 sq.yds. and 1.29 acres was allotted to it by L&DO vide allotment
letters dated 12.6.1970, 25.2.1972 and 19.1.1976 for its additional
requirements. Subsequent to the agreement, the lease deeds were
signed and perpetual lease deeds were executed. There was no such
condition in the allotment letters/lease deeds for providing free
care/treatment to the patients. The hospital having regard to its
objective has always been providing substantial treatment to the
needy. In the writ petition, the order passed by L&DO on 2.2.2012
was questioned regarding the condition of free care as part of the
terms and conditions of the lease deed. Same has been allowed by the
High Court. Though land had been obtained for purpose of the
charitable institution it was not open to imposing such riders by
11
executive order. There was no condition of free care in the 1949
policy. Unilateral amendment of the lease deed could not have been
made. The decision of Social Jurists (supra) is not applicable as 20
hospitals were dealt with in the said decision. There was no
stipulation regarding free care in the allotment letters/lease deeds.
The order is without jurisdiction. Hence, the writ petition was filed in
the High Court.
Facts regarding Sitaram Bhartiya Institute of Science &
Research:
9. Sitaram Bhartiya Institute of Science & Research was a
registered society. On 30.3.1984, it applied for allotment of land
admeasuring 3 acres for establishing a multidisciplinary research
complex in New Delhi. On 22.10.1984 the DDA allotted land
admeasuring 1.52 acres @ Rs.6 lakhs per acre. Request was made by
the said society to charge at the concessional rate that was declined
on 20.11.1984. On 2.9.1985 lease deed was signed by which a
consideration of Rs.8,76,000/ for 1.46 acres was transferred to the
petitioner. The case of Social Jurists (supra) was filed in the High
Court. The writ petition was disposed of by the High Court. Pursuant
to the decision in Social Jurists (supra), Circular was issued by the
12
Government on 20.1.2012 to the hospitals/societies to whom land
had been allotted at concessional rates to provide free treatment to
the eligible patients or weaker sections category free of charge. The
society took the stand that it was not allotted the land for the purpose
of hospital at concessional rate. Hospital was asked by the
department on 28.6.2012 to provide free treatment. On 28.6.2012 it
directed that it was making arrangement to comply with the order.
On 12.7.2012 the society informed the Director of Health Services
about the stand taken by it to comply with the said directions.
However, on 13.3.2012 contempt application filed against it for not
complying with the directions, was disposed of by the High Court
holding that no contempt was made out. On 18.4.2013 and
29.4.2013, Director of Health Services required the accounts of
hospitals for the purpose of scrutiny for the last two years from the
date on which the possession of land was given. Petitioner pointed
out on 4.5.2013 that there was no condition to provide free treatment
to economically weaker sections category as such the hospital was
not similarly situated. Condition was not applicable. However, name
of petitioner was not removed from the hospitals that failed to provide
free treatment hence the writ petition was filed in the High Court.
13
Moreover, similar are the facts of Foundation for Applied Research in
Cancer.
The stand of the Government:
10. On behalf of the State it was contended that the stand of the
Government was that as per the policy decision taken in the year
1949, it was decided to allot the land at concessional rates i.e. @
Rs.2000/ to Rs.5000/ per acre to the institutions which was far
lesser than the already prevailing concessional rate of Rs.25,000/ to
Rs.30,000/ per acre fixed vide letter dated 25.7.1943.
11. In the case of Moolchand Khairati Ram Trust vide allotment
letter dated 17.4.1951 land was allotted at the rate of Rs.2000/ to
Rs.5000/ per acre and ground rent @ 5% on the premium per
annum. Thereafter, a lease deed was executed for 99 years on
24.4.1968 in favour of Moolchand Khairati Ram Trust.
12. St. Stephens hospital was similarly allotted 1.37 acres of land
vide allotment letter dated 12.6.1970 which was followed by lease
deed dated 3.7.1970, whereafter, further land admeasuring 2331 sq.
yds. was allotted vide allotment letter dated 25.2.1972 at the rate of
Rs.5000/ per acre and ground rent at the rate of 5% per annum.
14
13. Sitaram Bhartiya Institute of Science & Research was allotted
1.52 acres of land at the rate of Rs.6/ lakhs per acre on 22.10.1984
followed by lease deed dated 2.9.1985 in respect of another plot of
1.46 acres for a consideration of Rs.8,76,000/. The Government of
Delhi with the approval of Lt. Governor of Delhi constituted a
Committee headed by Mr. Justice A.S. Qureshi to review the existing
free facility extended by the charitable hospitals and various other
hospitals which had been allotted land at concessional terms/rates
by the Government. Amongst other measures the Committee opined
as under:
"1. Most of the representatives of the hospital
submitted that 25% of beds earmarked for poor
patients were excessive since the cost of medicines
was too high. It was agreed that it should not be
more than 15% in any case, but 10% would be
ideal. Therefore, the Committee recommended 10%
indoor beds free for poor patients for all purposes
including medicines and consumables. The free
treatment services should be available to 25% of
total OPD patients. This condition should be
made applicable to all hospitals that have
been allotted land by the govt.”
(emphasis supplied)
15
14. The recommendations of the Qureshi Committee were accepted
with some variation in the meeting of the GNCTD presided over by the
Chief Secretary on 23.10.2002.
15. Earlier, a writ petition was filed by Social Jurists under Article
226 of the Constitution of India in the High Court of Delhi seeking
that conditions of allotment of land to hospital particularly in regard
to free treatment to poor people be complied with and action be taken
in respect of recommendations of the Justice Qureshi Committee. The
writ petition was decided on 22.3.2007. Various directions were
issued, inter alia, as under:
“A. All the 20 hospitals stated in this judgment
and/or all other hospitals identically situated shall
strictly comply with the term of free patient
treatment to indigent/poor persons of Delhi as
specified above i.e. 25 OPD and 10% IPD patients
completely free of charges in all respects.”
16. The High Court of Delhi vide order dated 17.7.2007 directed all
the hospitals which had been given land on concessional rates to
abide by the order of free treatment. The special leave petitions were
preferred by the hospitals which were dismissed by a speaking order
16
by this Court. This Court observed that 25% OPD and 10% of IPD
patients have to be given treatment free of cost. The said patients
should not be charged with anything.
17. Thereafter the GNCTD came out with a Circular on 20.1.2012
intimating hospitals to implement the directions of the High Court
with regard to free treatment in terms of judgment dated 2.3.2007.
Land & Development Officer passed an order in this regard to follow
the policy. Similar letters were issued to Sitaram Bhartiya and
Foundation for Applied Research in Cancer.
18. The Foundation for Applied Research in Cancer was allotted a
plot admeasuring 0.9 acres @ Rs.28,50,000/ per acre provisionally
with annual ground rent at 2.5% per annum, the premium was
revised to Rs.39,00,000/ per acre on 22.10.1991. In August 1992, it
represented to the Lt. Governor that as per notification dated
11.09.1991, the price of the land allotted to it was fixed at
Rs.3,25,000/ and sought a refund, however, the request was
declined.
17
19. The High Court of Delhi had allowed the writ applications,
hence, the appeals have been preferred. Social Jurists, a civil rights
group has filed Civil Appeal Nos.31573158 of 2017 against the
judgment and order passed in the case of Moolchand Kharaiti Ram
Trust and others. Other appeals have been filed by Union of
India/NCT of Delhi.
Rival Submissions
20. It was urged by Mr. Sandip Sethi, learned Additional Solicitor
General on behalf of the appellants that the High Court erred in
allowing the writ applications. The condition of providing 10% IPD
and 25% OPD free medical treatment to poor strata of the society
cannot be considered to be a restriction in terms of Article 19(6) of the
Constitution of India putting fetters on the right of the respondent
hospitals to carry on their trade and profession under Article 19(1)(g)
of the Constitution of India. The direction has been issued in terms of
the policy of allotment in public interest which must override the
business interest of an individual. The High Court erred in holding it
to be a restraint under Article 19(6) which can be imposed only by a
legislation. It was within the competence of the Government to pass
18
Government Order to implement the recommendations of Mr. Justice
A.S. Qureshi Committee. The respondents Moolchand Khairati Ram
Trust and St. Stephens hospital were given land at the concessional
rate being charitable institutions with the purpose of providing
medical aid to poor and needy sections of the society. The
concessional rates in 1949 were reduced substantially as per policy
from the rates in 1943 with respect to charitable institutions. The
Moolchand Khairati Ram Trust and St. Stephens hospital have taken
benefit of State largesse on account of being charitable institutions
cannot turn around and question the conditions imposed by the
Government to provide free medical aid to the percentage of patients.
It was also urged by learned counsel on behalf of the appellants that
in Writ Petition [C] No.2866 of 2002 Social Jurists v. GNCTD & Ors.
decided by the High Court, the cases were similarly placed. The
allotment was made in those cases also at the concessional rate by
the Government. Though there was some stipulation in some of the
lease deeds of the said hospitals to provide free service to the extent
from 10% to 70%. However, Justice A.S. Qureshi Committee
recommended a uniform standard of 10% IPD and 25% OPD free
19
treatment in all hospitals that had been given land by the
Government at a concessional rate.
21. It was also urged that in the cases of Sitaram Bhartia Institute
of Science & Research and Foundation for Applied Research in
Cancer, there was a stipulation in the lease deed under clause 7 as
under:
“7. The DDA reserves its right to alter any terms
and conditions on its discretion.”
The Government was well within its powers to impose the
condition in terms of the aforesaid clause.
22. It was also urged that Sunder Lal Jain Charitable hospital had
challenged the said order by preferring a special leave petition that
was dismissed by this Court on 1.9.2011 by a speaking order. Thus,
the issue had attained finality and it was incumbent upon the
hospitals in question to provide free services to the poor.
23. Sitaram Bhartia Institute of Science & Research and
Foundation for Applied Research in Cancer were given land as per the
DDA, 1981 Rules, in particular Rules 3, 4, 5, 6 and 20 at
20
concessional rates. The predetermined rates are nowhere close to
market rates. A bare reading of the rules would reflect that a separate
process is given for the sale of plots by auction or tender. Thus,
allotment of land at predetermined rates is also concessional.
24. It was also urged that the definition of ‘charitable’ as given in
Incometax Act would not govern the field in the present case. Word
‘charitable' is to be seen in the legal sense. Word ‘charitable' is used
and has been relied upon in the Law Lexicon by P. Ramanatha Aiyar,
2
nd Edition, 1997, which defines the ‘charitable’ as under:
“includes every gift for a general public use, to
be applied consistent with existing laws, for benefit
of an indefinite number of persons, and designed
to benefit them from an educational, religious,
moral, physical or social standpoint.”
25. On the other hand, learned senior counsel appearing on behalf
of the respondentshospitals contended that legal obligation of a
person can be created by an agreement or statutory law and in no
other manner. The court cannot pass an order on account of
sympathy in contravention of the settled law as the function of this
court is to protect and preserve the rule of law which has been held to
21
be basic feature of the Constitution in the case of Kesavananda
Bharti. In the case of Moolchand Khairati Ram Trust, in the Will, the
executor of the Will by which he created the Trust, never intended
that free treatment should be provided to the poor and needy.
Reliance has been placed on the definition of ‘charity’ in Charitable
Endowment Act, 1890 and Income Tax Act, 1961 and the land had
been allotted to the Trust as per the directions issued by the Ministry
of Rehabilitation as the trustees came to India as refugees from
Pakistan. The policy decision in 1949 did not envisage free treatment
to the patients neither the conditions in allotment letter nor in the
lease deed executed for 99 years. The condition in the policy dated
10.6.1949 that the institution should be run for good of the public
without any profit motive was not applicable to hospitals. Even if it
was applicable to hospitals it only provided that the institutions
would be run for the public good without any profit motive. Thus,
condition of free treatment could not have been imposed. The DDA
Rules of 1981 are not applicable. Clause 14 of the lease deed would
not cover imposition of such onerous condition. The decision in Social
Jurists (supra) is not applicable. Thus, such a condition could have
been imposed in view of provision under Article 19(6) of the
22
Constitution by enacting a statutory law as defined in Article 13. It
was not open to the Executive to impose such conditions. The order of
this Court dated 1.9.2011 is not applicable to respondenthospitals
as they were not parties to the said decision and this Court could not
have issued such directions without hearing them. Contempt petition
filed in the High Court against the Trust for violating decision in
Social Jurists (supra), was dismissed. As a matter of fact allotment
was made at the market rates prevailing in 1951. Free services are
being provided in the hospital since 1958 at its own level.
26. In the case of St. Stephens hospital similar arguments have
been raised, apart from that it was urged by learned senior counsel
that though charity is being performed by the missionaries as such
conditions could not have been imposed by the appellants. There was
no such stipulation in the allotment letters/sale deeds. The
interpretation of the lease deed made by L&DO was impermissible.
Unilaterally such conditions could not have been imposed. It could
have been done by enacting statutory law. The conditions were
impermissible, arbitrary and violative of Article 14. The lease deeds
are not governed by the provisions of the Government Grants Act. The
23
Executive power referred to in Articles 73 and 298 of the Constitution
did not empower the State to unilaterally amend the terms of a
perpetual lease deed granted by it. The fundamental rights cannot be
abridged by an executive order. Decision in Social Jurists (supra) is
distinguishable. There was no similar stipulation in the lease deeds of
respondents. Judgment of the High Court in Social Jurists (supra)
was faulty to the extent that it imposed a condition of free care on
hospitals in whose lease deeds there was no such condition. It was
not open to the court to first create a law or an obligation and then
seek to enforce it. Charity would not mean free services to be
provided. Medical relief itself is a charitable purpose. It would not
mean that it cannot charge for services provided by it. Though while
seeking allotment by the missionaries as charitable society, do not get
actuated by a profit motive. Surplus income is also utilized for
charitable purpose for providing medical care. The fact that the land
was allotted on concessional rates would not confer any right on the
Government of India to unilaterally amend the lease deed. There was
no provision for free care in 1949 policy.
24
27. On behalf of Sitaram Bhartiya Institute of Science & Research,
inter alia, it was urged that it was not covered by the judgment of
Delhi High Court in Social Jurists (supra). The land was not given to
respondent No.1 at concessional rates. No condition for providing free
treatment was prescribed in the allotment letter or in the lease deed.
Since lease was in perpetuity there was no right to impose a further
condition on the lessee which may have financial implications. Clause
7 of the allotment letter does not authorize the lessee to change or
alter any terms of the lease. As no such condition was there in the
letter of allotment, as such new condition could not have been
imposed. Lease rental is liable to be increased after every 30 years.
The condition of free treatment is not legally tenable or justified.
Since the work of the institute was not charitable in nature, such
conditions could not have been imposed. Respondent No.1 Sitaram
Bhartiya Institute provides medical services as part of its agenda, as
the same generates valuable research data and funds for respondent
No.1's research activities. A show cause notice was issued to the
society on 9.2.2005 alleging that it was running a hospital on
commercial lines. It was required to show cause as to why the
allotment and lease deed should not be canceled, and it was informed
25
to the Commissioner, Institutional Branch, DDA that it was pursuing
its mission of research in healthcare and medicine. The
clinical/hospital portion generates valuable research data and funds
which enable respondent No.1 to finance research activities. It was
further contended that there were three categories, government
organisations, charitable organisations and other institutions, for the
purposes of allotment of land. Other institutions were allotted land at
the zonal variant rates that were the rate paid by the respondent.
There was no such condition. The condition would have serious
financial consequences as entire feasibility and viability would have to
be worked out, whether it would be economically viable to undertake
the project at all or not. Such unconscionable, unreasonable and
arbitrary condition could not have been imposed. Some of the
medicines are very expensive. Its cost cannot be borne by the hospital
and it cannot form part of free medical treatment except possibly in
Government hospitals. No profit no loss condition would not mean
that it was allotted on a concessional basis. Respondent No.1 is a
selfsupporting society, is doing medical research also. In case free
medical treatment is provided it would diminish the respondent's
ability to invest in research. Populist and misplaced policies could not
26
have been framed or imposed. Similar arguments have been raised by
the Foundation for Applied Research in Cancer.
28. Following questions arise for consideration:
1. Whether by virtue of fact that Moolchand Kharaiti Ram Trust and
St. Stephens Hospital have obtained the land for charitable purposes
at a concessional rate, it was open to the Government to impose a
condition of 10% in IPD and 25% in OPD services to be provided free
of cost to patients of economically weaker sections?
2. Whether in view of the condition No.7 of the allotment letter issued
in the case of Sitaram Bhartiya Institute and Foundation for Applied
Research in Cancer, the imposition of the aforesaid condition of free
treatment was permissible?
3. Whether the imposition of aforesaid conditions amounts to
restriction under Article 19(6) to carry on profession, trade or
business under Article 19(1)(g) of the Constitution of India?
4. What is the effect of the previous decision rendered in the case
of Social Jurists (supra)?
In reference to question nos.1 & 2 :
27
29. In order to decide the main question, it is necessary to ponder
on the question with respect to the meaning of charity. In the
background of the fact that Government of India in the year 1949
took a decision for allotment of land at the concessional rate to the
charitable institutions. The hospitals and schools inter alia were
treated as charitable institutions of secular and noncommunal
character with a further rider that the same should be run for the
good of public without any profit motive. It was observed that as per
the policy decision dated 25.7.1943, the premium charged was too
high. As per that formula, the premium was Rs.25,000 to Rs.35,000
per acre per annum plus ground rent at 5% on the premium per
annum. It was decided to allot the land at the concessional rates
between Rs.2,000/ to Rs.5,000/ per acre. A substantial area of 9
acres in Lajpat Nagar the heart of Delhi to Moolchand Khairati Ram
Trust and 2.66 acres & 2331 sq. yards to St. Stephens hospital was
allotted.
30. It was urged on behalf of the Moolchand Kharaiti Ram Trust
that creator of the Trust never intended that free treatment should be
provided to the poor and needy. Reliance has been placed on the
28
definition of charity in Charitable Endowment Act, 1890 and Income
Tax Act, 1961. The policy decision taken in 1949, did not envisage
free treatment to the patients. In the allotment letter, there was no
such condition that free treatment shall have to be provided to the
patients belonging to economically weaker sections of the society at
the hospital. The lease deed was executed for 99 years. The only
condition was that the institution should be run for the good of the
public without any profit motive. The aforesaid condition was not
applicable to the hospitals, even if it was applicable, the only rider
was that it should run without any profit motive. The free treatment
was not envisaged in the aforesaid expression.
31. It was urged that the hospital by itself is a charitable
institution. It carries out obligation and stipulations of free treatment
at its own level. In order to appreciate the submission made, we
deem it appropriate to consider the meaning of charitable, charitable
purpose, charitable corporation and charitable trust in common
parlance.
29
32. The Black’s Law Dictionary, Ninth Edition defines ‘charitable’,
‘charitable purpose’, ‘charitable corporation’ and ‘charitable trust’
thus:
“Charitable - Dedicated to a general public
purpose, usu. for the benefit of needy people who
cannot pay for benefits received.
Charitable purpose – The purpose for which an
organization must be formed so that it qualifies as
a charitable organization under the Internal
Revenue Code – Also termed charitable use.
Charitable corporation – A nonprofit corporation
that is dedicated to benevolent purposes and thus
entitled to special tax status under the Internal
Revenue Code. – Also termed eleemosynary
corporation.
Charitable trust – A trust created to benefit a
specific charity, specified charities, or the general
public rather than a private individual or entity.
Charitable trusts are often eligible for favorable tax
treatment. If the trust’s terms do not specify a
charity or a particular charitable purpose, a court
may select a charity. – Also termed public trust;
charitable use.”
33. In Webster’s New World Dictionary, the expressions of
‘charitable’ and ‘charity’ are defined thus:
“Charitable – 1. Kind and generous in giving
money or other help to those in need. 2. of or for
charity. 3. kindly in judging others; lenient.
30
Charity – 1. in Christianity, the love of God for
man or of man for his fellow men. 2. an act of good
will or affection. 3. the feeling of good will;
benevolence. 4. the quality of being kind or
lenient in judging others. 5. a giving of money or
other help to those in need; benefaction. 6. an
institution, organization, or fund for giving help to
those in need."
34. The Halsbury’s Laws of England, Vol.5, Fourth Edition while
dealing with the definition of ‘charity’ for the purpose of the Charities
Act, 1960, has discussed the matter thus:
“501. Definition of “charity”. For the purposes of
the Charities Act, 1960 “charity” means any
institution, corporate or not, which is established
for charitable purposes and is subject to the control
of the High Court in the exercise of its jurisdiction
with respect to charities. “Institution” includes any
trust or undertaking; and “charitable purposes”
means purposes which are exclusively charitable
according to the law of England and Wales. The
question of whether purposes are or are not
charitable is therefore determined according to the
same principles as before 1960.
The requirement that an institution is subject to the
control of the High Court in the exercise of the
court's jurisdiction with respect to charities is
satisfied if the institution is subject to that
jurisdiction in any significant respect. It does not
have to be subject to that jurisdiction which the
court only exercises over charities and not over
other trusts or other corporate bodies, and it is
sufficient if the court could restrain the institution
31
from applying its property ultra vires or in breach of
trust.
The Charities Act 1960 establishes a register of
charities and it is the duty of the charity trustees of
any charity which is required to be registered to
apply for registration. The effect of registration is
that an institution is for all purposes other than
rectification of the register conclusively presumed
to be or to have been a charity at any time when it
is or was on the register of charities. The Act does
not provide that an institution which, if it were a
charity, would be required to be registered, but
which is not registered, is for that reason, not a
charity."
35. Again, the Halsbury’s Laws of England while dealing with the
meaning of charity, has discussed the matter thus:
“502. Meaning of “charity”. Since the Charities Act,
1960 provides no statutory definition of what
purposes are and what are not charitable, all the
cases previously decided on the subject are still
relevant. The legal meaning of “charitable
purposes” is said to be precise and technical, and
the phrase is a term of art, but it is probably
incapable of definition. The popular use of the
expressions “charity”, “charitable”, “charitable
objects” and “charitable purposes” does not
coincide with their technical legal meaning
according to the law of England. The word
“charitable”, when used in its legal sense, covers
many objects which a layman might not consider to
be included under that word, but it excludes some
benevolent or philanthropic activities which a
layman might consider charitable.
32
Charitable uses or trusts form a distinct head of
equity, and it is the court's duty to determine
whether particular purposes are charitable. To be
charitable a purpose must satisfy certain tests; it
must either fall within the list of purposes
enumerated in the preamble to the ancient statute
of Elizabeth I (sometimes referred to as the Statute
of Charitable Uses or the Charitable Uses Act, 1601)
or within one of the four categories of charitable
purposes laid down by Lord Macnaghten and
derived from the preamble and in the case of the
fourth of those categories it must be within the
spirit and intendment of the ancient statute, either
directly or by analogy with decided cases on the
same point, or it must have been declared to be
charitable by some other statute. In addition, it
must be for the public benefit, that is to say, it
must be both beneficial and available to a sufficient
section of the community.
References to "charity" in any legislative Act should
be construed in their technical legal sense unless a
contrary intention appears from the context. For
income tax purposes "charity" means any body of
persons or trust established for charitable purposes
only. References in any enactment or document to
a charity within the meaning, purview, and
interpretation of the ancient statute of Elizabeth I,
or of the preamble to it, are to be construed as
references to a charity within the meaning which
the word bears as a legal term according to the law
of England and Wales.
An activity which is charitable in the legal sense is
not any the less charitable because it is being
carried on without any regular organization by a
person who may discontinue it at any time. Such
an activity would come within the statutory
definition of charity as a trust or undertaking.”
33
36. The charitable trust can be enforced by the Court, which knows
about what charitable purposes are. In the Halsbury’s Laws of
England, the following discussion has been made in this regard :
“504. Purposes must be exclusively charitable. To
be a charity in law, a trust or institution must be
established for purposes which are exclusively
charitable; a charitable trust can be enforced by
the court at the suit of the Attorney General, for the
court knows what are charitable purposes and can
apply the trust property accordingly, but a trust for
benevolent purposes cannot be so enforced and is
therefore void for uncertainty.”
37. Public welfare is one of the essential requirements of legal
charity, which has been discussed in Halsbury’s Laws of England in
paragraph 505, which is extracted hereunder:
“505. Public benefit essential. It is a clearly
established principle of the law of charities that a
purpose is not charitable unless it is directed to the
public benefit so that the element of public benefit
is the necessary condition of legal charity. There
are two distinct elements in this requirement: the
purpose itself must be beneficial and not harmful to
the public, and the benefit of the purpose must be
available to a sufficient section of the public. The
line of distinction between purposes of a public and
a private nature is fine and practically incapable of
definition."
34
38. The benefit to the poor is one of the essential requirements of
charity. The concept has been discussed in paragraph 509 of
Halsbury’s Laws of England, which reads thus:
“509. Benefit to rich as well as poor. An object
may be charitable in the legal sense
notwithstanding that it will benefit the rich as well
as the poor, but it is difficult to believe that a trust
would be held charitable if the poor were excluded
from its benefits.”
39. In Incorporated Council of Law Reporting for England and Wales
vs. AG (1971) 3 All ER I029, CA, it was observed that when a purpose
has been proved to be of general public welfare or beneficial to the
community, it will be held to be charitable unless there is some
reason for holding that it is not within the spirit and intendment of
the Preamble.
40. The Cypres doctrine is applied by the Courts in England to
administer a charitable trust of which the particular mode of
application has not been defined. Where a clear charitable intention
is expressed, it will not be permitted to fail because the mode, if
specified, cannot be executed, but the law will substitute another
mode. The Cypres doctrine has been discussed in paragraph 696 of
Halsbury’s Laws of England, which is extracted hereunder:
35
“696. The cy-pres doctrine. Where a clear
charitable intention is expressed, it will not be
permitted to fail because the mode, if specified,
cannot be executed, but the law will substitute
another mode cy-pres, that is, as near as possible
to the mode specified by the donor.
An application cy-pres results from the exercise of
the court’s ordinary jurisdiction to administer a
charitable trust of which the particular mode of
application has not been defined by the donor.
Where he has in fact prescribed a particular mode
of application and that mode is incapable of being
performed, but he had a charitable intention which
transcended the particular mode of application
prescribed, the court, in the exercise of this
jurisdiction, can carry out the charitable intention
as though the particular direction had not been
expressed at all.
However, where the particular mode of application
prescribed by the donor was the essence of his
intention, which may be shown by a condition or by
particularity of language, and that mode is
incapable of being performed, there is nothing left
upon which the court can found its jurisdiction, so
that in such circumstances the court has no power
to direct any other charitable application in place of
that which has failed.
Where the particular mode of application does not
exhaust a gift, these principles apply to the surplus.
There can be no question under English law of a cypres
application of property subject to trusts which
are not charitable in law.”
36
41. It has also been observed in the Halsbury’s Laws that not all
hospitals are charitable institutions, for there may be hospitals run
commercially, with a view to the profit of private individuals or
hospitals, the services of which are not available to a sufficient
section of the public. The mere fact that a hospital is supported by
the payment of fees does not prevent its being a charitable
corporation. In paragraph 707, the following discussion has been
made:
"707. Hospital supported partly by fees. Not all
hospitals are charitable institutions, for there may
be hospitals run commercially, with a view to the
profit of private individuals, or hospitals the
services of which are not available to a sufficient
section of the public. The mere fact that a hospital
is supported by the payment of fees does not
prevent it's being a charitable corporation, and the
same is true of schools. Furthermore, the Charity
Commissioners have the power to authorize the
committee of management of a voluntary hospital
to provide facilities for paying patients in certain
circumstances."
42. In the Law Lexicon, the Encyclopedic Law Dictionary by P.
Ramanatha Aiyer, the discussion has been made with the help of
certain decisions and dictionaries, with regard to charitable,
37
charitable object, charitable purpose, charity and charitable trust of
public nature, relevant parts of which are reproduced hereunder:
“Charitable. Having the character or purpose of a
charity. The word "charitable", in a legal sense,
includes every gift for a general public use, to be
applied consistent with existing laws, for benefit of
an indefinite number of persons, and designed to
benefit them from an educational, religious, moral,
physical or social standpoint. This term is
synonymous with "beneficent", "benevolent", and
"eleemosynary". (Black)
Connected with an object of charity, of the nature
of charity [S.49, Indian Evidence Act and S.92(1),
C.P.C.]
Charitable purpose. In Charitable Endowments
Act "Charitable purpose" includes relief of the poor,
education, medical relief, and advancement of any
other object of general public utility, but does not
include a purpose which related exclusively to
religious teaching or worship. Act VI of 1890
(Charitable Endowments), S. 2.
Per MUKERJI, J. The expression “charitable
purposes” in Act XXI of 1860 should be understood
in a wide sense. If relief wants of occasioned by
lack of pecuniary means is charity, adoption of
preventive measures to ward off pecuniary wants is
also charity. 51 CLJ 272 = AIR 1930 Cal 397.
CHARITABLE PURPOSES, technically, and in the eye
of a Court of justice, “has a meaning so extensive
as to include everything which is expressly
described as a ‘charitable use’ in 43 Eliz. c. 4, S. 1,
or is within what has been called the equity of the
statute, but there is perhaps not one person in a
thousand who knows what is the technical and
38
legal meaning of the word ‘charity’. Per Lord
CAIRNS in Dolan v. Macdermott, (1868) 3 Ch App
678.
This term has the legal technical meaning given it
by English law. Commissioners of Income Tax v.
Pemsel, (1891), App Cas 532; and see Cunnack v.
Edwards, (1896) 2 Ch 679 (CA). [In the Income Tax
Act, 1842 (5 & 6 Vic. c. 35), sch. A, S. 61]
“Charitable purposes” in S. 4 of the Income-tax Act
would include relief of the poor, education,
medical relief and the advancement of any other
object of general public utility. Trusts for the
benefit of the inhabitants of a particular locality are
regarded as charitable, but trusts for the benefit of
a particular political party or for the
advancement of particular political purposes or
opinions are not regarded as charitable. A gift for
such purposes as a particular individual or
individuals may consider to be charitable is not a
good charitable purpose although a gift for such
charitable purposes as the managing committee of
a trust may think fit would be good, because the
committee would be bound to keep within the
ambit of charity, and if they go beyond the legal
boundary, they can be controlled by the
Court. 43 Bom LR 1027 = 1942 Bom 61.
The definition includes relief of the poor. Relief of
the poor by itself would not be a charitable object
unless it involved an object of general public
utility. Relief for the poor relations of the settlor or
donor will not be a charitable purpose within the
definition. Trustees of Gordhandas Govindram
Family Charity Trust v. Commissioner of Income Tax,
AIR 1952 Bom 346. [S. 4(3)(i) Income Tax Act 1992]
‘Charitable purpose' – the dominant purpose of a
State Bar Council is to ensure quality service of
competent lawyers to the litigating public, a spread
39
legal literacy, promote law reforms and provide
legal assistance to the poor, such purpose is the
advancement of the object of general public utility
and it will be a charitable purpose. C.I.T. Bombay v.
Bar Council of Maharashtra, AIR 1981
SC 1462, 1467. [Income Tax Act (43 of 1961), Ss.
2(15) and 11.]
Charity. "In the broadest sense charity includes
whatever proceeds from a sense of moral duty
or from humane feelings towards others,
uninfluenced by one's own advantage or
pleasure." (Doyle v. Lyun, 19 Am Rep 431.). In
Jones v. Williams, Ambll. 651, Lord CAMDEN
defined a charity to be "a gift to a general public
use, which may extend to the poor as well as to the
rich." It embraces all that is usually understood by
the words "benevolence, "Philanthropy" and "good
will". A gift to a home for the friendless is a gift to
charity.
This “word”, in its widest sense, denotes all the
good affections men ought to bear towards each
other; in its most restricted and common sense,
Relief of the Poor. In neither of these senses is it
employed in the English Chancery Courts. Here its
signification is derived chiefly from the Statute of
Elizabeth (43 Eliz. c. 4.). Those purposes are
considered charitable which that statute
enumerates, or which by analogies are deemed
within its spirit and intendment”. Per GRANT, M.R.,
Morice v. Dhurhan Bp., 9 Ves. 405.
The term “charity” under the Hanafi School of
Mahommedan Law has a more general import than
under the English Law. A wakf of property by a
Mahommedan to defray the expenses of the poor,
the fakirs, the orphans, the needy and the indigent,
and to defray the expenses of good deeds, creates
a trust for public purposes of a charitable nature.
(32 All 499 = 7 ALJ 420=6 IC 188.)
40
In common parlance, the word ‘charity' means a
giving to some one in necessitous circumstances
and in law it means a giving for public good. A
private gift to one's own self or Kith and Kin may be
meritorious and pious but is not a charity in the
legal sense. Fazlul Rabhi v. State of West Bengal,
AIR 1965 SC 1722, 1727. [West Bengal Estates
Acquisition Act, 1953 (1 of 1954), S. 6(1)(i)]
A benevolence, specially to the poor [S. 378, ill. (n),
I.P.C.]”
43. From the aforesaid discussion, it is apparent that charitable is
the public purpose for the benefit of the needy people, who cannot
pay for benefits received. The Internal Revenue Code may define it
separately for its purposes what is charitable so as to claim the
benefit under the Act. The charitable trust is a trust which is for the
benefit of general public. Charitable is a kind and generous in giving
money or other help to those in need as defined in Webster’s New
World Dictionary and Black’s Law Dictionary. The Halsbury’s Laws of
England discussed the meaning of charity, which provides that if
there is no statutory definition of charitable purposes, to be a
charitable purpose, it must satisfy certain tests. It must be for the
public benefit and available to a sufficient section of the community.
The reference to charity should be construed in their technical legal
41
sense. For income tax purpose, the charity may be defined in the Act
and in that light, the interpretation of the Act has to be made. Public
benefit is an essential ingredient of charitable activities. There are
two distinct requirements, the purpose itself must be beneficial and
not harmful to the public. In paragraph 509 of Halsbury's Laws of
England, it has been discussed that it is difficult to believe that a
trust would be held charitable if the poor are excluded from its
benefits.
44. The cypres doctrine has been discussed in paragraph 696 of
Halsbury's Laws of England. The said doctrine can be clearly pressed
into service in the instant matter when the Government land has
been allotted to the hospitals even if the mode of giving charity was
not specified. It can be specified later on and the Court is not
powerless to enforce that purpose of the charitable trust, of which the
particular mode of the application had not been defined by the donor
or otherwise. In Ironmongers’ Co. vs. AG (1844) 10 CI & Fin 908 at
927, HL, it was observed that where a testator intends to benefit
several charitable objects, one of which fails, the fund must not be
distributed among other objects if the one that fails bears no
42
resemblance to the other. In reference Lambeth Charities (1853) 22
LJ Ch 959, it was observed that when trusts have been altered by a
scheme, and the trusts of the scheme become impossible so that a
new cypres scheme is required, the trusts of the new scheme must
be as close as possible to the original trusts of the gift.
45. The relief of the poor is one of the essential requirements of the
charity. All hospitals are not charitable institutions as there may be
hospitals which run commercially. The hospitals, which are
operating under the guise of charity, are in fact being run on a
commercial basis and it has become impossible for the poor to afford
the lifesaving drugs at an affordable price. Their right to life is in
jeopardy. Merely by the expression hospital, it could not be
successfully claimed by the respondenthospitals that they are
charitable. They can be directed to fulfill their obligation and fulfill
the purpose by undertaking charitable activities and give it the real
meaning by giving free services as envisaged in the policy. The claim
of the hospitals that they are undertaking charity at their own level
cannot be used as a shield to the performance of charity in an
organized way. The very spirit of the argument that as they do
43
charity, it cannot be fastened upon them, is selfdestructive and
tends by its tenor to negate unjust obstruction created in the path of
real charity
46. The definition of “charitable purpose” as defined in the
Charitable Endowments Act, 1890 is extracted hereunder:
“2. Definition. – In this Act "charitable purpose"
includes relief of the poor, education, medical relief
and the advancement of any other object of
general public utility, but does not include a
purpose which relates exclusively to religious
teaching or worship."
It is apparent from the definition that charitable purpose
includes relief of the poor, education and medical needs. As per the
provisions of the Charitable Endowments Act, 1890, relief of the poor
and medical relief is included as such conditions which had been
imposed are clearly within the parameters of aforesaid definition.
47. The charity in the broadest sense includes whatever proceeds
from a sense of moral duty or from humane feelings towards others
uninfluenced by one's own advantage or pleasure. In its widest
sense, denotes all the good affections men ought to bear towards each
other; in its most restricted and common sense, relief of the poor. In
44
the Mahommedan Law, the charity has a more general import than
under the English Law. A wakf of property by a Mahommedan to
defray the expenses of the poor, the fakirs, the orphans, the needy
and the indigent and to defray the expenses of good deeds, creates a
trust for public purposes of a charitable nature. In common
parlance, the word charity means giving to someone in any
necessitous circumstances and in law, it means a giving for public
good.
48. In P.C. Raja Ratnam Institution vs. Municipal Corporation of Delhi
& Ors., 1990 (Supp) SCC 97, wherein this Court considered the
definition of ‘charitable purpose’ under Section 115 (4) (a) of the Delhi
Municipal Corporation Act, 1957, the school in question was run by a
Society. It was claimed that it was a nonprofit making registered
society and its object was to organize and run schools in Delhi and
elsewhere with a view to promoting education and welfare. The
question arose whether it was necessary for the educational
institution to qualify for exemption from the tax liability to offer
medical relief. In that context, it was observed by this Court that the
test of charitable purpose would be satisfied by the proof of any of the
45
three conditions, namely, relief of the poor, education or medical
relief. The fact that some fee was charged from the students was not
decisive. The explanation was held inclusive and not exhaustive.
This Court observed thus:
“3. The learned Counsel for the petitioner has
contended that in view of the language of Section
115(4)(a), quoted below, it is not correct to suggest
that to qualify for exemption from the tax liability it
is necessary for a society to offer medical relief:
“(a) lands and buildings or portions of lands
and buildings exclusively occupied and used
for public worship or by a society or body for a
charitable purpose:
Provided that such society or body is supported
wholly or in part by voluntary contributions, applies
its profits, if any, or other income in promoting its
objects and does not pay any dividend or bonus to
its members.
Explanation-"Charitable purpose" includes relief of
the poor, education and medical relief but does not
include a purpose which relates exclusively to
religious teaching;”
The argument is well founded. The test of
'charitable purpose' is satisfied by the proof of any
of the three conditions, namely, relief of the poor,
education, or medical relief. The fact that some fee
is charged from the students is also not decisive
inasmuch as the proviso indicates that the
expenditure incurred in running the society may be
supported either wholly or in part by voluntary
contributions. Besides, the explanation is in terms
inclusive and not exhaustive. The impugned
46
judgment must, therefore, be held to be
erroneous.”
The question in the aforesaid case was altogether different with
respect to the meaning of charitable purpose as defined under Section
115 (4) (a).
49. In Municipal Corporation of Delhi vs. Children Book Trust, (1992)
3 SCC 390, this Court considered the provisions of Section 115(4)(a)
of Delhi Municipal Corporation Act, 1957 and dealt with the question
of charitable purpose, context of property tax in respect of lands and
buildings and exemption to lands and buildings occupied and used
by a society for charitable purpose. It was held that conditions for
applicability of the tax exemption were firstly on the society must be
charitable and not earn a profit. This Court considered the meaning
of charitable purpose for imparting education sans an element of
public welfare not per se charitable. Secondly, society must be
supported wholly or in part by voluntary contribution and lastly,
society must utilize its income in promoting its object and must not
pay any dividend or bonus to its members. This Court observed that
the tax liability of a registered society running recognized private
unaided school should be considered in the light of the above
47
conditions. Transfer of funds by the school to the society even in the
name of contribution would amount to transfer by the society itself
and, therefore, cannot be considered for the purposes of the
exemption. It was also observed that where running of school by the
society generating positive income from the fees and donations
received from the students/parents, the activity of the school was not
for a charitable purpose but for commercial purpose. The conditions
of charitable purposes having not been fulfilled, society was not
entitled to tax exemption. This Court has further observed that
where the predominant object is to subserve charitable purpose and
not to earn a profit, it would be a charitable purpose. This Court has
observed thus:
“68. Therefore, an element of public benefit or
philanthropy has to be present. The reason why we
stress on this aspect of the matter is if education is
run on commercial lines, merely because it is a
school, it does not mean it would be entitled to the
exemption under Section 115(4) of the Act.
xxx xxx xxx
76. In view of the above rulings, it would be clear
that where the predominant object is to subserve
charitable purpose and not to earn profit it would
be a charitable purpose. However, the argument of
the appellant is as per the Delhi School
Education Act and the rules framed thereunder, if
the society cannot utilise the fund and the school
cannot be run for private gain in the absence of any
profit, it would be a charitable purpose.
48
77. We have already seen that merely because
education is imparted in the school, that by itself,
cannot be regarded as a charitable object. Today,
education has acquired a wider meaning.
If education is imparted with a profit motive, to
hold, in such a case, as charitable purpose, will not
be correct. We are inclined to agree with Mr. B. Sen,
learned counsel for the Delhi Municipal Corporation
in this regard. Therefore, it would
necessarily involve public benefit.
78. The rulings arising out of Income Tax Act
may not be of great help because in the Income Tax
Act "charitable purpose" includes the relief of the
poor, education, medical relief and the
advancement of any other object of general public
utility. The advancement of any other object of
general public utility is not found under the Delhi
Municipal Corporation Act. In other words, the
definition is narrower in scope. This is our answer to
question No. 1.
xxx xxx xxx
85. The last aspect of the matter is utilisation of
the income in promoting its objects and
not paying any dividend or bonus to its members.
The learned counsel for the appellant and the
intervenor would urge that on the basis of Cane
(Valuation Officer) vs. Royal College of Music,
(1961) 2 QBD 89, the position in the instant case is
the same. At page 121 the following
observation is found:
"One, I think, that enriches the corporation
itself or relieves it of a burden or furthers
its objects or powers."
49
Thus, it is apparent from the aforesaid discussion that the
charitable object would be served if it is not to earn a profit.
50. The medical and legal professions stand on a different pedestal
in the matter of fulfilling the obligations towards the society. They are
not meant to be for commercial activity which by and large has
become a bitter reality of the day. ‘Free treatment' to economically
weaker sections is a normal obligation by very nature of charity, and
it was also contended on behalf of the hospitals that the medical
treatment itself is regarded as charitable one. The question arises
when medical profession is charitable, what meaning is to be given to
charity and whether by virtue of commercial gains only by giving
treatment, it would still retain charitable character in its true
meaning. Charity in common parlance is a relief to the poor and
needy.
51. What may be proper for others in the society, may still be
improper for members of the legal profession. The same ethical
standard applies with equal force to the medical profession. Medical
profession deals with the life of human beings. There has to be a
balancing of human rights with the commercial gains.
50
52. In the wake of globalisation, we are in a regime of Intellectual
Property Rights. Even these rights have to give way to the human
rights. It is an obligation of the Government to provide lifesaving
drugs to havenots at affordable prices so as to save their lives, which
is part of Article 21 of the Constitution of India. It is equally an
obligation of the State to devise such measures that havenots are not
deprived of the very treatment itself. Administering medicines is also
a part of medical therapy. Thus, in our considered opinion members
of the medical profession owe a constitutional duty to treat the havenots.
They cannot refuse to treat a person who is in dire need of
treatment by a particular medicine or by a particular expert merely
on the ground that he is not in a position to afford the fee payable for
such an opinion/treatment. The moment it is permitted, the medical
profession would become purely a commercial activity, it is not
supposed to be so due to its nobleness. Thus, in our opinion, when
the Government land had been obtained for charitable purpose of
running the hospital, the Government is within its right to impose
such an obligation.
51
53. The nobility and obligation of the medical profession have also
found statutory recognition in the form of regulations framed by the
Medical Council of India in the exercise of the power conferred under
section 20A read with section 33(m) of the Indian Medical Council
Act, 1956. The Medical Council of India with prior approval of the
Central Government has made the regulations relating to the
standards of professional conduct and etiquette and code of ethics for
registered medical practitioners. Chapter 1 whereof contains the code
of medical ethics. Part B of Regulation 1.1 deals with the character of
a physician. Regulation 1.1.1 provides that the institution shall
uphold the dignity and honour of the profession. Regulation 1.1.2 is
selfexplanatory and the same is extracted hereunder:
“1.1.2 The prime object of the medical profession is
to render service to humanity; reward or financial
gain is a subordinate consideration. Whosoever
chooses his profession, assumes the obligation to
conduct himself in accordance with its ideals. A
physician should be an upright man, instructed in
the art of healings. He shall keep himself pure in
character and be diligent in caring for the sick; he
should be modest, sober, patient, prompt in
discharging his duty without anxiety; conducting
himself with propriety in his profession and in all
the actions of his life.”
52
It lays down in an unequivocal term that the medical profession
has to render service to humanity; reward or financial gain is a
subordinate consideration. The doctor is supposed to be noble in all
actions of his life.
54. Under Regulation 1.2.1 it is the duty of the member of the
medical profession to make available to the patients the benefits of
their professional attainments. Regulation 1.2.1 is extracted
hereunder:
"1.2.1 The principal objective of the medical
profession is to render service to humanity with full
respect for the dignity of profession and man.
Physicians should merit the confidence of patients
entrusted to their care, rendering to each a full
measure of service and devotion. Physicians should
try continuously to improve medical knowledge and
skills and should make available to their patients
and colleagues the benefits of their professional
attainments. The physician should practice
methods of healing founded on a scientific basis
and should not associate professionally with
anyone who violates this principle. The honoured
ideals of the medical profession imply that the
responsibilities of the physician extend not only to
individuals but also to society."
55. Under Regulation 1.8, the physician engaged in the practice of
medicine has to give priority to the medical interests of the patients
53
and not to the personal financial interests. Regulation 1.8 is extracted
hereunder:
“1.8 Payment of Professional Services: The
physician, engaged in the practice of medicine shall
give priority to the interests of patients. The
personal financial interests of a physician should
not conflict with the medical interests of patients. A
physician should announce his fees before
rendering service and not after the operation or
treatment is underway. Remuneration received for
such services should be in the form and amount
specifically announced to the patient at the time
the service is rendered. It is unethical to enter into
a contract of "no cure no payment". Physician
rendering service on behalf of the state shall refrain
from anticipating or accepting any consideration."
56. Under Regulation 2.1 it is provided that in the case of
emergency the physician must treat the patient. No physician shall
arbitrarily refuse treatment to a patient. At the time of registration,
the medical practitioner has to submit a declaration that "I solemnly
pledge myself to consecrate my life to service of humanity" and that "I
will maintain the utmost respect for human life from the time of
conception." And he is dutybound to maintain all means in his power
to honour the noble provisions of the medical profession and he has
to abide by the regulations framed by the Medical Council of India.
Considering the object of the statutory rules also, medical profession
54
owes a duty to serve the poor and havenots, irrespective of financial
status, they have to treat everybody equally with respect to social
standing and economic disparity, that cannot be achieved without
free treatment to the needy.
57. When the Government land has been allotted to the hospitals,
they would not be doing free service but being a recipient of
Government largesse at concessional rates and continue to enjoy it,
they owe a duty to act in public interest. In our opinion, not only
Moolchand Kharaiti Ram Trust and St. Stephens Hospital have
obtained the land at a concessional rate, the other two hospitals,
namely, Sita Ram Bhartia Institute of Science & Research and
Foundation for Applied Research in Cancer have also obtained land at
a lower predetermined rate, not at market rate. It was not by way of
a public auction that they have received the land. Besides in the
cases of Sita Ram Bhartiya Institute of Science & Research and
Foundation for Applied Research in Cancer, clause 7 was inserted in
the allotment letters to the effect that "The DDA reserves its right to
alter any terms and conditions on its discretion."
55
58. It was contended on behalf of Sita Ram Bhartia Institute of
Science & Research and Foundation for Applied Research in Cancer
that their request for allotment of land at concessional rate had been
turned down. It was urged on behalf of the State that DDA (Disposal
of Developed Nazul Land) Rules, 1981, in particular Rules 3 to 6 and
20 indicate that the land was allotted to the charitable institutions at
predetermined rates and not on market rates. The allotment of land
to aforesaid two institutes was at predetermined rates. The predetermined
rates are nowhere close to the market rates. As per the
DDA Rules, land has to be disposed of by way of open auction or
tender. The predetermined rates are nowhere near market rates
fetched in auction or tender thus they are also the concessional ones.
Apart from that, as already discussed, as hospitals are enjoying
Government land it is open to the Government to impose such riders
and stipulations for free treatment to be given to economically weaker
sections.
59. The realization of human rights vests responsibilities upon the
State. The State has to constantly make an endeavor for realization of
human rights agenda, particularly in relation to economic, social and
56
cultural rights. Right to health is provided in Article 25 of Universal
Declaration of Human Rights of 10.12.1948 (the UDHR). The Article
provides that:
“Everyone has the right to a standard of living
adequate for the health and well-being of himself
and of his family, including food, clothing, housing
and medical care and necessary social services,
and the right to security in the event of
unemployment, sickness, disability, widowhood, old
age or other lack of livelihood in circumstances
beyond his control.”
60. The State has to ensure the basic necessities like food,
nutrition, medical assistance, hygiene etc. and contribute to the
improvement of health. Right to life includes right to health as
observed in State of Punjab & Ors. v. Mohinder Singh Chawla & Ors.
(1997) 2 SCC 83. Right to life and personal liberty under Article 21 of
the Constitution also includes right of patients to be treated with
dignity as observed by this Court in Balram Prasad v. Kunal Saha &
Ors. (2014) 1 SCC 384. Right to health i.e., right to live in a clean,
hygienic and safe environment is a right under Article 21 of the
Constitution as observed in Occupational Health and Safety
Association v. Union of India & Ors., AIR 2014 SC 1469. The concept
57
of emergency medical aid has been discussed by this Court in Pt.
Parmanand Katara v. Union of India & Ors. (1989) 4 SCC 286. In
Paschim Banga Khet Mazdoor Samity & Ors. v. State of West Bengal &
Anr. (1996) 4 SCC 37, right to medical treatment has been extended
to prisoners also.
61. In Parmanand Katara (supra) this Court has observed that every
doctor whether at a Government hospital or otherwise has the
professional obligation to extend his services with due expertise for
protecting life. The obligation being total, absolute and paramount,
laws of procedure whether in statutes or otherwise, which would
interfere with the discharge of this obligation cannot be sustained
and must, therefore, give way, and there is an obligation upon the
doctor to treat the injured victim on his appearance before him either
by himself or being carried by others. It has also been observed by
this Court that the effort to save the person should be the top priority
not only of the medical professional but even of the Police or any
other person who happens to be connected with the matter or who
happens to notice such an incident or a situation. Apprehensions
that the doctor will have to face police interrogation and stand as a
58
witness in court and face all the harassments, should not prevent
them from discharging their duty as medical professionals to save a
human life and to do all that is necessary.
62. In Paschim Banga Khet Mazdoor Samity (supra), this Court has
observed that the Constitution envisages the establishment of a
welfare State. In a welfare State, the primary duty of the Government
is to secure the welfare of the people. Providing adequate medical
facilities for the people is an essential part of the obligations
undertaken by the Government in a welfare State. The Government
discharges this obligation by running hospitals and health centers
which provide medical care to the person seeking to avail of those
facilities. Preservation of human life is thus of paramount
importance. Government is dutybound to provide timely care to
persons in serious conditions. Medical facilities cannot be denied by
the Government on the ground of nonavailability of bed. Denial of
medical assistance on unjust ground was held to be in violation of
right to life under Article 21 and the State was directed to pay the
compensation of Rs.25,000 to the petitioner and requisite directions
were issued by this Court. The State cannot avoid its constitutional
59
obligation in that regard on account of financial constraints and was
directed to allocate funds for providing adequate medical
infrastructure.
63. In our opinion, the State can also impose such obligation when
the Government land is held by such hospitals and it is the
constitutional obligation imposed upon such hospitals. Under Article
47, State has to make constant endeavor to raise the level of nutrition
and the standard of living and to improve public health. It is also one
of the fundamental duties enshrined in Article 51A(h) to develop the
scientific temper, humanism and the spirit of inquiry and reform. It
would be inhuman to deny a person who is not having sufficient
means or no means, the lifesaving treatment, simply on the ground
that he is not having enough money. Due to financial reasons, if
treatment is refused, it would be against the very basic tenets of the
medical profession and the concept of charity in whatever form we
envisage the same, besides being unconstitutional would be violative
of basic human rights. In our opinion, when the State largesse is
being enjoyed by these hospitals in the form of land beside it is their
obligation by the very nature of the medical services to extend the
60
reciprocal obligation to the public by providing free treatment as
envisaged in the impugned order. In case they want to wriggle out of
it and not to comply with it, they have to surrender the land and orge
out the benefit which they have received by virtue of holding the
Government land in an aforesaid manner.
64. It is regrettable that the land had been obtained by Moolchand
Kharaiti Ram Trust which claims to be charitable and St. Stephens
Hospital run by the Missionaries admittedly for charity, are
questioning the very conditions for which they have come into being
and it appears with the passage of time they have lost the very
purpose of their establishment. In our opinion they should have
welcomed the conditions imposed by the Government, considering
their objectives and for the purpose, they have obtained the land. Two
other hospitals, namely, Sita Ram Bhartia Institute of Science &
Research and Foundation for Applied Research in Cancer also cannot
wriggle out of their such obligations.
65. Even when the purpose of the charitable activity is not defined,
it is open to the court to define it. The decision of the Government
cannot be said to be foreign to the purpose for which land is held.
61
Thus, the action of the State cannot be said to be unauthorized,
illegal or arbitrary in any manner whatsoever and is in furtherance of
the very objectives for which the medical profession exists. It is very
unfortunate that by and large the hospitals have now become centers
of commercial exploitation and instances have come to notice when a
dead body is kept as security for clearance of bills of hospitals which
is per se illegal and criminal act. In future, whenever such an act is
reported to the police, it is supposed to register a case against
management of Hospital and all concerned doctors involved in such
inhumane act, which destroys the basic principles of human dignity
and tantamount to a criminal breach of the trust reposed in the
medical profession.
66. It is unfortunate that most of the hospitals are being run on a
commercial basis and various ills have sunk in the noble medical
profession. Right from wrong reporting, uncalled for investigation
inclusive of invasive one, even as to heart and other parts of the body,
which are wholly unnecessary, are performed, it is time for soulsearching
for such big hospitals in and around Delhi, Gurgaon etc.
and other places. They must ponder what they are doing. Is it not a
62
criminal act? Simply by the fact that action is not taken does not
absolve the responsibility. Time has come to fix accountability and to
set right the evils which have rotten the system. The medical
profession had never been intended to be an exploitative device to
earn money at the cost of patients who require godly approach and
helping hand of doctors. Every prescription starts from Rx, not from
the amount of bill. Being big commercial international hospitals in
and around Delhi, they are not above the ethical standards which
they have to maintain at all costs even by extending financial help to
the havenots.
67. The poor cannot be deprived of the treatment by the best
physician due to his economic disability in case he requires it. It is
the obligation on the medical professionals, hospitals, the State and
all concerned to ensure that such person is given treatment and not
deprived of the same due to poverty. That is what is envisaged in the
Constitution also. On the making of a doctor, the State spends and
invests a huge amount of public money and it is the corresponding
obligation to serve the needy and the treatment cannot be refused on
the ground of financial inability of the patient to bear it. To such an
63
extent, the right and moral obligation can be enforced and that
precisely has been done by issuance of the impugned directions to
provide free treatment in IPD and OPD to economically weaker
sections of society. They have suffered so long and benefit has not
percolated down to them of distributive justice and they are deprived
of equal justice and proper treatment due to lack of financial means.
It is apparent from the policy decision dated 10.6.1949 and also the
provisions contained in section 2 of the Charitable Endowments Act,
1890 that running of hospitals is regarded as a charitable activity.
The further rider in policy was that such institution claiming
allotment should be secular and of noncommunal character.
68. The Arts and Crafts Society and other nonprofit making bodies
were also included under the term ‘charitable institution' with the
rider that the institution should be run for the good of the public
without any profit motive. It was contended on behalf of the hospitals
that the aforesaid condition is not applicable to hospitals and would
apply to Arts and Crafts Association, and there was no specific
stipulation with respect to providing free treatment in the letter of
allotments and lease deed. In our opinion, the rider that the Arts and
64
Crafts institution should be run for good of the public, without any
profit motive is primarily applicable to the charitable institutions like
hospitals etc. then it has been only specified as an obligation to Arts
and Crafts institution etc. too. As such there would be an obligation
upon hospitals being charitable by their very nature to provide free
treatment to economically weaker sections of society. The expression
‘no profit motive' would also exclude the hospitals being run for
commercial gains. That would be violative of the very foundational
basis and fulcrum on which the allotment order had been issued and
lease deeds have been executed. Once having claimed themselves to
be charitable institutions, it does not lie in the armory of defense to
raise such plea and having obtained the benefit of the public largesse.
It is not open to raising the aforesaid challenge within the framework
of legal parameters. As a matter of fact, as these hospitals are being
run for commercial gains, it would be open to the lessor to terminate
the lease. That can be done in case there is a refusal to comply with
or violation in any manner of the obligation of providing free medical
treatment to 10% IPD and 25% OPD patients belonging to
economically weaker sections of the society. The imposition of the
said condition is inherent in the policy and in the very grant on the
65
basis of which the land is held and even otherwise in the case of two
other institutes i.e. Sita Ram Bhartia Institute of Science & Research
and Foundation for Applied Research in Cancer, as they are holding
the Government land for the hospital purpose and research functions
in the hospital, the allotment was also made at a predetermined rate
and not by way of auction and considering the specific stipulation in
clause 7 of the lease deed and considering the aforesaid other
aspects, and it being charitable activity, it was open to the
Government to obligate them by providing free medical treatment.
69. It is apparent that decision in Social Jurists (supra) has been
rendered on the basis of the terms and conditions contained in the
allotment letters as well as stipulations made in the lease deeds.
Some representations were made relating to free treatment. The High
Court, hence in Social Jurists (supra), opined that it was not
necessary to incorporate each and every condition in the lease deed
and other corresponding documents would also be seen and it was
not only contractual but statutory, and public law obligation enjoined
upon the hospitals to fulfil condition of free treatment. The order was
66
affirmed by this Court by a reasoned order, hence it becomes binding
as precedent.
70. It is apparent that in the case of Moolchand Kharaiti Ram Trust
and St. Stephens Hospital, the lands were allotted for charitable
purposes under the Scheme of the year 1949, as further modified,
thus, the policy under which they had obtained lease deed would also
be a relevant document and of paramount importance for entitlement
to hold the land for purpose as specified in the policy, as that is the
basic document governing the rights of the parties, and the terms and
conditions of lease deed, would be supplemental to the main objective
of the policy. The lease deed can supplement not supplant the main
policy or rules as the case may be under which the allotment has
been obtained and lease deed has been executed.
71. In our considered opinion, not only by the policy that prevailed
in 1949, the land at concessional rates for charitable purposes, had
been obtained and free treatment being as stipulated in the order
dated 02.02.2012 issued by the Government of India, is within the
realm of the policy under which allotment had been made at highly
concessional rates in the heart of Delhi and the Delhi Development
67
Authority Rules framed in 1981. They cannot wriggle out of their
obligation by contending that there was no such stipulation in the
allotment letter or lease deed. Allotment letter and lease deed are
subject to the riders in the main policy and rules under which grant
has been made. It is the foundation of the allotment letter and the
lease deed.
72. In the case of Sitaram Bhartia Institute of Science & Research
and Foundation for Applied Research in Cancer, the allotment had
been made by the DDA when the Delhi Development Authority
(Disposal of Developed Nazul Land) Rules, 1981 were in vogue.
73. In the case of Sitaram Bhartia Institute of Science & Research,
applications were made to the DDA for allotment of land for
establishing a multidisciplinary research complex in New Delhi. The
allotment was made for 1.52 acres of land at Rs.6 lacs per acre on
22.10.1984, followed by lease deed dated 02.09.1985 in respect of
another plot of land of 1.46 acres for a consideration of Rs.8,76,000.
Thus, it was clearly subject to Rules 5 and 20 of aforesaid DDA Rules,
1981. Rules 5 and 20 are extracted hereinbelow:
68
“5. Rules of premium for allotment of Nazul land to
certain public institutions.- The Authority may allot
Nazul land to schools, colleges, universities,
hospitals, other social or charitable institutions,
religious, political, semi-political
organisations and local bodies for remunerative,
semi-remunerative or unremunerative purposes at
the premia and ground rent in force immediately
before the coming into force of these rules, or at
such rates as the Central Government may
determine from time to time.
[Explanation.- For the purpose of this rule the
expression ‘hospitals’ do not include the
hospitals/dispensaries established by a company,
firm or trust as referred to in Sub-rule (2) of Rule
(4).]
20. Allotment to certain public institutions. - [***]
No allotment of Nazul land to public institution
referred to in Rule 5 shall be made unless -
(a) according to the aims and objects of that public
institution -
(i) it directly subserves the interests of the
population of the Union Territory of Delhi;
(ii) it is generally conducive to the planned
development of the Union Territory of Delhi;
(iii) it is apparent from the nature of work to be
carried out by that public institution, that the
same cannot, with equal efficiency be carried
out elsewhere than in that Union Territory.
(b) it is a society registered under the Societies
Registration Act, 1860 (21 of 1860) or such
institution is owned and run by the Government or
any Local Authority, or is constituted or
established under any law [for the time being in
69
force or it is a company, firm or trust for the
purpose of establishment of hospital or
dispensary];
(c) it is of non-profit making character;
(d) it is in possession of sufficient funds to meet
the cost of land and the construction of buildings
for its use; and
(e) allotment to such institution is sponsored or
recommended by a [Department of the
Government of National Capital Territory of
Delhi] or a Ministry of the Central Government:
[Provided that in case of allotment to a company,
firm or trust for the purpose of establishment of
hospital or dispensary by tenders or auction, as the
case may be, such company, firm or trust, as the
case may be, shall not be required to be sponsored
by a Department of the Government of National
Capital Territory of Delhi or a Ministry
of the Central Government.]”
74. It is apparent from Rule 5 that allotment of lands to the
charitable institutions would be at predetermined rates and not on
market rates. According to Rule 20 above, the allotment is subject to
the further rider that public institution should subserve the interests
of the population of the Union Territory of Delhi and such institutions
should be of nonprofit motive character. There was a clear
stipulation by way of the condition in clause 7 of the allotment letter
to the effect that DDA reserves the right to alter any terms and
70
conditions on its discretion. Thus, it appears that the land was
obtained for research purposes. Later on, it was noticed that
hospitals were set up and were running on commercial lines, which
was objected to by the DDA as it was in clear violation of the terms
and conditions. As the land was obtained at concessional rates, not
on market rates, the hospitals were bound to serve the public good
and the imposition of such condition in the lease deed could not be
said to be impermissible, arbitrary or irrational. The allotments that
were made in favour of Sitaram Bhartiya Institute and Foundation for
Applied Research in Cancer were at predetermined rates, which were
lesser than the market rates.
75. The contention raised on behalf of Moolchand Kharaiti Ram
Trust to the effect that this Court cannot proceed to make an order on
account of sympathy in contravention of settled law and it will
seriously damage the credibility of this institution. In our view, it is
wholly impermissible submission. The Trust cannot be permitted to
wriggle out of its obligation unjustly and unfairly. Originally the
Trust was set up for pure charity. In raising such unworthy and
untenable submission, Trust has lost its main objective and assumed
71
a commercial character and it is regrettable that it has to be
reminded of its responsibility by the Court for the purpose for which
it exists and having obtained the land on a particular basis, is
observed only in breach thereof. The adverse remarks in the report of
Justice Qureshi Committee with respect to the institution cannot be
brushed aside on the sole ground that comments recorded in Justice
Qureshi's report were based on the statement made by disgruntled
employees of the hospitals, who were in dispute with the management
of the hospital.
76. Learned senior counsel appearing on behalf of St. Stephens
Hospital has also relied on the decision rendered in Divisional
Manager, Aravali Golf Club & anr. v. Chander Hass & anr., (2008) 1
SCC 683, to contend that it is not open to the Court to create a law or
an obligation and then seek to enforce it. The statement in the
factual matrix has no legs to stand and we are conscious that we are
not trying to create any new obligation. It was a selfcreated
obligation on missionaries to do charity for which they exist while
obtaining the land and Court is duty bound to enforce it. By the
stipulation in the question of free treatment, the policy rules of
72
allotment have been given a shape that is enforceable and cannot be
termed to be a new imposition not contemplated initially.
77. On behalf of Moolchand Kharaiti Ram Trust, Will has been
relied upon to indicate the purpose of creation of Trust. It is apparent
that Moolchand Kharaiti Ram Trust was created by a Will executed by
Lala Kharaiti Ram resident of Lahore in 1927. The Will was produced
for perusal. The objects of the creation of Trust were imparting
education in and preaching Sanskrit according to Sanatan Dharam
methods; and, secondly, for devising means for imparting education
in and improving the “Ayurvedic system of medicine” and preaching
the same. In order to achieve the latter object, it was not prohibited to
take help from the English or Yunani or any other system of medicine
and according to need, one or more than one Ayurvedic Hospital may
be opened. It was contended that it was not in the deed of the Trust
to impart free medical aid. The ground raised and what is contained
in the Will is against the very purpose for which the Moolchand
Kharaiti Ram Hospital is being run. When its object was of improving
the Ayurvedic system of medicine only as is apparent from the
material on record that at present the said activities had been
73
confined to one room and the changed main activity is an Allopathic
system of medicine which was not at all the intendment of the creator
of the Trust. We leave the matter at that in these proceedings.
However, having obtained the land for charitable purposes for the
hospital, for no profit and for the public good, whatever system of
medicine is being administered, it can be obligated with such
charitable rider of free treatment as envisaged in the impugned order
issued by the Government.
78. Similarly, St. Stephens Hospital is Missionaries’ hospital and its
very objective admittedly is to provide the charitable services free of
charge but it has also become more or less a commercial venture as
in the case of other hospitals inter alia involved in the instant matter,
how such provision for charity is opposed is beyond comprehension,
is it charity versus charity. They have to abide by the just and
reasonable legal conditions for free treatment which are
constitutionally envisaged also.
79. It was also urged on behalf of Moolchand Kharaiti Ram Hospital
that though nine acres of land was allotted at Lajpat Nagar, it was not
a prime locality at the relevant time and the land was given at the
74
market rate. The submissions are wholly baseless and against the
record and cannot be countenanced. The record belies the same.
In Reference to question No.3 relating to Article 19(1)(g) and
19(6):
80. It was contended on behalf of the respondents/hospitals that
imposition of such a stipulation for free treatment tantamounts to
imposing restriction on the right enshrined in Article 19(1)(g) of the
Constitution which confers a Fundamental Right on all citizens of
India to practice any profession or to carry on any occupation, trade
or business in India. Since the Trustees are Indian citizens, they are
exercising their fundamental right in running the hospitals. If any
restriction was to be placed on their right to run the institution by
providing the manner in which they must run their hospitals by
providing free treatment to a particular percentage of patients, this
could only be done by enacting a ‘law’ under Article 19(6) of the
Constitution. It was further contended that ‘law’ is clearly defined in
Article 13 of the Constitution as ‘statutory law’ which has a
foundation in a legislation enacted either by the Parliament or State
Legislatures. Reliance has been placed on Kharak Singh v. State of
U.P. (1964) 1 SCR 322 in which this Court observed that the
75
provisions contained in Police Regulations had no statutory basis but
were merely executive or departmental instructions and that they
could therefore not be “a law” which the State was entitled to make
under Article 19(2) to (6) to regulate or curtail Fundamental Rights
nor would it constitute a procedure established by law in furtherance
of Article 21 of the Constitution and if any action under those
executive instructions violated the Fundamental Rights of a person,
the person concerned would be entitled to relief from the courts.
81. Reliance has also been placed on Bijoe Emmanuel & Ors. v.
State of Kerala & Ors. (1986) 3 SCC 615 wherein the Government had
issued circulars requiring all students to join in the singing of the
National Anthem. It might have been a very laudable object of the
Government and its policy but this Court held that the Circular being
only executive instructions of the Government, could not infringe
upon the Fundamental Rights of the students and stated that “The
law is now well settled that any law which be made under clauses (2)
to (6) of Article 19 to regulate the exercise of the right to the freedoms
guaranteed by Article 19(1)(a) to (e) and (g) must be ‘a law’ having
76
statutory force and not a mere executive or departmental instruction.”
This Court observed:
“15. If the two circulars are to be so interpreted as
to compel each and every pupil to join in the
singing of the National Anthem despite his genuine,
conscientious religious objection, then such
compulsion would clearly contravene the rights
guaranteed by Article 19(1)(a) and Article 25(1).
16. We have referred to Article 19(1)(a) which
guarantees to all citizens freedom of speech and
expression and to Article 19(2) which provides that
nothing in Article 19(1)(a) shall prevent a State
from making any law, in so far as such law imposes
reasonable restrictions on the exercise of the right
conferred by Article 19(1)(a) in the interests of the
sovereignty and integrity of India, the security of
the State, friendly relations with foreign States,
public order, decency or morality, or in relation to
contempt of Court, defamation or incitement to an
offence. The law is now well settled that any law
which may be made, under Clauses (2) to (6) of
Article 19 to regulate the exercise of the right to
the freedoms guaranteed by Article 19(1)(a) to (e)
and (g) must be 'a law' having statutory force and
not a mere executive or departmental instruction.
In Kharak Singh v. State of U.P. AIR 1963 SC 1295,
1299, the question arose whether a police
regulation which was a mere departmental
instruction, having no statutory basis could be said
to be a law for the purpose of Article 19(2) to (6).
The Constitution Bench answered the question in
the negative and said:
Though learned counsel for the respondent
started by attempting such a justification by
invoking Section 12 of the Indian Police Act he
gave this up and conceded that the regulations
77
contained in Chapter XX had no such statutory
basis but were merely executive or departmental
instructions framed for the guidance of the police
officers. They would not, therefore, be "a law"
which the State is entitled to make under the
relevant Clauses (2) to (6) of Article 19 in order to
regulate or curtail fundamental rights guaranteed
by the several sub-clauses of Article 19(1), nor
would the same be "a procedure established by
law" within Article 21. The position, therefore, is
that if the action of the police which is the arm of
the executive of the State is found to infringe any
of the freedoms guaranteed to the petitioner the
petitioner would be entitled to the relief of
mandamus which he seeks, to restrain the State
from taking action under the regulations.
17. The two circulars on which the department has
placed reliance in the present case have no
statutory basis and are mere departmental
instructions. They cannot, therefore, form the
foundation of any action aimed at denying a
citizen's Fundamental Right under Article 19(1)(a).
Further it is not possible to hold that the two
circulars were issued 'in the interest of the
sovereignty and integrity of India, the security of
the State, friendly relation with foreign States,
public order, decency or morality, or in relation to
contempt of Court, defamation or incitement to an
offence’ and if not so issued, they cannot again be
invoked to deny a citizen's Fundamental Right
under Article 19(1)(a). In Kameshwar Prasad v.
State of Bihar (1962) Supp 3 SCR 369, a
Constitution Bench of the court had to consider the
validity of Rule 4A of the Bihar Government
Servants Conduct Rules which prohibited any form
of demonstration even if such demonstration was
innocent and incapable of causing a breach of
public tranquillity. The Court said:
78
No doubt, if the rule were so framed as to
single out those types of demonstration which
were likely to lead to a disturbance of public
tranquillity or which would fall under the other
limiting criteria specified in Article 19(2) the
validity of the rule could have been sustained.
The vice of the rule, in our opinion, consists in
this that it lays a ban on every type of
demonstration-be the same however innocent
and however incapable of causing a breach of
public tranquillity and does not confine itself to
those forms of demonstrations which might lead
to that result.
Examining the action of the Education Authorities in
the light of Kharak Singh v. State of Uttar Pradesh and
Kameshwar Prasad v. State of Bihar (supra) we have
no option but to hold that the expulsion of the children
from the school for not joining the singing of the
National Anthem though they respectfully stood up in
silence when the Anthem was sung was violative of
Article 19(1)(a).”
82. Reliance has also been placed on State of M.P. & Anr. v. Thakur
Bharat Singh, AIR 1967 SC 1170 wherein it was pointed out that the
executive power of the State under Article 162 being only an executive
power and not a legislative power anything done in exercise of
executive power under Article 162 does not become law under the
Constitution. This Court in the factual matrix of the case that
executive order was issued during an emergency was pending under
Article 19. It was contended that Article 358 protects action of both
79
legislative and executive. The decision in the aforesaid case was not
supported by Article 358 of the Constitution. It was observed:
"(4). Counsel for the State did not challenge the
view that the restrictions which may be imposed
under cl. (b) of S. 3(1) requiring a person to leave
his hearth, home, and place of business and live
and remain in another place wholly unfamiliar to
him may operate seriously to his prejudice, and
may on that account be unreasonable. xx xxx.
(5) xx xx Counsel for the State while conceding
that if S. 3(1)(b) was, because it infringed the
fundamental freedom of citizens, void before the
proclamation of emergency, and that it was not
revived by the proclamation, submitted that Art.
358 protects action both legislative and executive
taken after proclamation of emergency and,
therefore any executive action taken by an officer
of the State or by the State will not be liable to be
challenged on the ground that it infringes the
fundamental freedoms under Art. 19. In our
judgment, this argument involves a grave fallacy.
All executive action which operates to the prejudice
of any person must have the authority of law to
support it, and the terms of Art. 358 do not detract
from that rule. Article 358 expressly authorises the
State to take legislative or executive action
provided such action was competent for the State
to make or take, but for the provisions contained in
Part III of the Constitution. Article 358 does not
purport to invest the State with arbitrary authority
to take action to the prejudice of citizens and
others : it merely provides that so long as the
proclamation of emergency subsists laws may be
enacted, and executive action may be taken in
pursuance of lawful authority, which if the
80
provisions of Art. 19 were operative would have
been invalid. Our federal structure is founded on
certain fundamental principles : (1) the sovereignty
of the people with limited Government authority,
i.e. the Government must be conducted in
accordance with the will of the majority of the
people. The people govern themselves through
their representatives, whereas the official agencies
of the executive Government possess only such
powers as have been conferred upon them by the
people; (2) There is distribution of powers between
the three organs of the State - legislative, executive
and judicial - each organ having some check direct
or indirect on the other; and (3) the rule of law
which includes judicial review of arbitrary executive
actions. As pointed out by Dicey in his "Introduction
to the study of the Law of the Constitution", 10th
Edn., at p. 202 the expression "rule of law" has
three meanings, or may be regarded from three
different points of view.
"It means, in the first place, the absolute
supremacy or predominance of regular law as
opposed to the influence of arbitrary power, and
excludes the existence of arbitrariness, of
prerogative, or even of wide discretionary authority
on the part of the Government."
At p. 188 Dicey points out :
"In almost every continental community the
executive exercises far wider discretionary
authority in the matter of arrest, of temporary
imprisonment, of expulsion from its territory, and
the like, than is either legally claimed or in fact
exerted by the government in England : and a
study of European politics now and again reminds
English readers that wherever there is discretion
there is room for arbitrariness and that in a
republic no less than under monarchy
discretionary authority on the part of the
government must mean insecurity for legal
freedom on the part of its subjects."
81
We have adopted under our Constitution not the
continental system but the British system under which
the rule of law prevails. Every Act done by the
Government or by its officers must if it is to operate to
the prejudice of any person, be supported by some
legislative authority.
xxx xxx xxx
7. We are therefore of the view that the order made
by the State in exercise of the authority conferred by
S. 3(1)(b) of the Madhya Pradesh Public
Security Act 25 of 1959 was invalid and for the acts
done to the prejudice of the respondent after the
declaration of emergency under Art. 352 no immunity
from the process of the Court could be claimed under
Art. 358 of the Constitution, since the order was not
supported by any valid legislation.”
83. For deciding the aforesaid submission pivotal question arises
whether imposition of condition tantamounts to a restriction imposed
within the purview of Article 19(6) of the Constitution. In our
considered opinion the High Court has erred in law in holding that
such stipulation could have been imposed only by a statutory law. In
our considered opinion, it is not a restriction on the right to carry on
medical profession, the medical profession has obligated itself by
such conditions by very nature of its professional activity and when
the State land is being held which is for the public good with no profit
motive, such land is held for the charitable purpose of public good.
The charitable purpose would include, as already discussed, the
aforesaid obligation of free treatment to the persons of economically
82
weaker strata of the society. It is not a restriction but the very
purpose of existence of medical profession and very purpose of
policy/Rules to grant land to institutions without public actions that
would have fetched market rate and does not amount to putting any
fetter to practice the medical profession or to carry on occupation. On
due consideration of the very object of the medical activity its
professional and other obligations for the proper treatment of the
persons of economically weaker sections of the society deprived of the
fruits of development. The benefits of various welfare schemes hardly
reach to them in spite of efforts made, economic disparity is writ large
and persists. They cannot afford such treatment and thus in lieu of
holding land of Government at concessional rate and enjoying huge
occupancy benefits inter alia for aforesaid reasons, the hospitals can
be asked to impart free treatment as envisaged in the Government
order.
84. The hospitals nowadays have fivestar facilities. The entire
concept has been changed to make commercial gains. They are
becoming unaffordable. The charges are phenomenally high, and at
times unrealistic to the service provided. The dark side of such
83
hospitals can be illuminated only by sharing obligation towards
economically weaker sections of the society. It would be almost
inhuman to deny proper treatment to the poor owing to economic
condition and when hospitals claim that they are doing charity at
their own level, we find impugned order dated 2.2.2012 is simply an
expression to the aforesaid activity which has been given a
channelized form.
85. We are of the considered opinion that there was no necessity of
enacting a law, as the policy/rules under which the land has been
obtained, the hospitals were obligated to render free treatment as the
land was allotted to them for earning no profit and held in trust for
public good. Similar is the provision in the rules of 1981 and apart
from that the regulations framed by the Medical Council of India also
enjoins upon the medical profession to extend such help and in view
of the object of the hospitals, trust, and missionaries it is apparent
that there was no necessity of any legislation and the Government
was competent to enforce in the circumstances, the contractual and
statutory liability and on common law basis.
84
86. The right to carry on the medical profession has not been
restricted, however, what was enjoined upon the respondenthospitals
to perform otherwise had been given a concrete shape.
Thus, it was permissible to issue circular in the exercise of power
under Article 162 of the Constitution. It was urged on behalf of
hospitals that they were doing a charitable work at their own, thus, it
could not be said to be a restriction within the meaning contemplated
under Article 19(6) for which a law was required. No new restriction
has been imposed for the first time under Article 19(6) of the
Constitution of India, as such in our opinion, there was no necessity
for enacting a law, such guidelines could be issued under the
executive powers.
87. In Rai Sahib Ram Jawaya Kapur & Ors. v. The State of Punjab
(1955) 2 SCR 225= AIR 1955 SC 549, this Court observed that it is
open to the State to issue executive orders even if there is no
legislation in support thereof provided the State could legislate on the
subject in respect of which action is taken. There can be executive
orders in the absence of legislation in the field. This Court has
observed:
85
“7. Article 73 of the Constitution relates to the
executive powers of the Union, while the
corresponding provision in regard to the executive
powers of a State is contained in article 162. The
provisions of these articles are analogous to those
of section 8 and 49 respectively of the Government
of India Act, 1935 and lay down the rule of
distribution of executive powers between the Union
and the States, following the same analogy as is
provided in regard to the distribution of legislative
powers between them. Article 162, with which we
are directly concerned in this case, lays down:
"Subject to the provisions of this Constitution, the
executive power of a State shall extend to the
matters with respect to which the Legislature of
the State has the power to make laws:
Provided that in any matter with respect to which
the Legislature of a State and Parliament have
power to make laws, the executive power of the
State shall be subject to, and limited by, the
executive power expressly conferred by this
Constitution or by any law made by Parliament
upon the Union or authorities thereof."
Thus, under this article, the executive
authority of the State is executive in respect to
matters enumerated in List II of Seventh Schedule.
The authority also extends to the Concurrent List
except as provided in the Constitution itself or in
any law passed by the Parliament. Similarly, article
73 provides that the executive powers of the Union
shall extend to matters with respect to which the
Parliament has power to made laws and to the
exercise of such rights, authority and jurisdiction as
are exercisable by the Government of India by
virtue of any treaty or any agreement. The proviso
engrafted on clause (1) further lays down that
although with regard to the matters in the
Concurrent List the executive authority shall be
ordinarily left to be State it would be open to the
Parliament to provide that in exceptional cases the
86
executive power of the Union shall extend to these
matters also.
Neither of these articles contain any definition
as to what the executive function is and what
activities would legitimately come within its scope.
They are concerned primarily with the distribution
of the executive power between the Union on the
one hand and the States on the other. They do not
mean, as Mr. Pathak seems to suggest, that it is
only when the Parliament or the State Legislature
has legislated on certain items appertaining to their
respective lists, that the Union or the State
executive, as the case may be, can proceed to
function in respect to them.
On the other hand, the language of article
162 clearly indicates that the powers of the State
executive do extend to matters upon which the
state Legislature is competent to legislate and are
not confined to matters over which legislation has
been passed already. The same principle underlies
article 73 of the Constitution. These provisions of
the Constitution, therefore, do not lend any support
to Mr. Pathak's contention.
xxx xxx xxx
12. It may not be possible to frame an exhaustive
definition of what executive function means and
implies. Ordinarily, the executive power connotes
the residue of governmental functions that remain
after legislative and judicial functions are taken
away.
The Indian Constitution has not indeed
recognised the doctrine of separation of powers in
its absolute rigidity but the functions of the
different parts or branches of the Government have
been sufficiently differentiated and consequently it
can very well be said that our Constitution does not
87
contemplate assumption, by one organ or part of
the State, of functions that essentially belong to
another. The executive indeed can exercise the
powers of departmental or subordinate legislation
when such powers are delegated to it by the
legislature.
It can also when so empowered, exercise
judicial functions in a limited way. The executive
Government, however, can never go against the
provisions of the Constitution or of any law. This is
clear from the provisions of article 154 of the
Constitution but, as we have already stated, it does
not follow from this that in order to enable the
executive to function there must be a law already in
existence and that the powers of executive are
limited merely to the carrying out of these laws.
13. The limits within which the executive
Government can function under the Indian
Constitution can be ascertained without much
difficulty by reference to the form of the executive
which our Constitution has set up. Our
Constitution, though federal in its structure, is
modelled on the British Parliamentary system
where the executive is deemed to have the primary
responsibility for the formulation of governmental
policy and its transmission into law though the
condition precedent to the exercise of this
responsibility is it's retaining the confidence of the
legislative branch of the State.
The executive function comprises both the
determination of the policy as well as carrying it
into execution. This evidently includes the
initiation of legislation, the maintenance of order,
the promotion of social and economic welfare, the
direction of foreign policy, in fact, the carrying on or
supervision of the general administration of the
State.
88
xxx xxx xxx
17. Specific legislation may indeed be
necessary if the Government require certain powers
in addition to what they possess under ordinary law
in order to carry on the particular trade or business.
Thus when it is necessary to encroach upon private
rights in order to enable the Government to carry
on their business, a specific legislation sanctioning
such course would have to be passed.
18. In the present case it is not disputed that the
entire expenses necessary for carrying on the
business of printing and publishing the textbooks
for recognised schools in Punjab were estimated
and shown in the annual financial statement and
that the demands for grants, which were made
under different heads, were sanctioned by the
State Legislature and due Appropriation Acts were
passed.
For the purpose of carrying on the business
the Government do not require any additional
powers and whatever is necessary for their
purpose, they can have by entering into contracts
with authors and other people. This power of
contract is expressly vested in the Government
under article 298 of the Constitution. In these
circumstances, we are unable to agree with Mr.
Pathak that the carrying on of the business of
printing and publishing textbooks was beyond the
competence of the executive Government without a
specific legislation sanctioning such course."
88. In U. Unichoyi & Ors. v. State of Kerala, AIR 1962 SC 12, in
which notification issued by the Government of Kerala was
questioned that wages prescribed were something above the
89
minimum wages, the fixation was questioned on the ground that it
affected the rights of the industries to carry on their activities under
Article 19(1)(g) of the Constitution. The submissions were rejected
following the earlier decisions of this Court in Bijay Cotton Mills Ltd.
v. State of Ajmer, AIR 1955 SC 33. This Court observed that when a
Committee consisting of representatives of the industry and the
employees considered the problem and made its recommendation and
when they were accepted by the Government, it would ordinarily not
be possible to examine the merits of the recommendation. The
submission made upon infringement of Article 19(1)(g) read with
Article 19(6) was rejected. This Court observed thus:
“10. In the case of The Edward Mills Co. Ltd.,
Beawar v. State of Ajmer, 1955-I SCR 735: ( (S) AIR
1955 SC 25) the validity of S. 27 of the Act was
challenged on the ground of excessive delegation.
It was urged that the Act prescribed no principles
and laid down no standard which could furnish an
intelligent guidance to the administrative authority
in making selection while acting under S. 27 and
so the matter was left entirely to the discretion of
the appropriate Government which can amend the
schedule in any way it liked and such delegation
virtually amounted to a surrender by the
Legislature of its essential legislative function. This
contention was rejected by Mukherjea, J., as he
then was, who spoke for the Court. The learned
Judge observed that the Legislature undoubtedly
intended to apply the Act to those industries only
where by reason of unorganised labour or want of
90
proper arrangements for effective regulation of
wages or for other causes the wages of labourers
in a particular industry were very low. He also
pointed out that conditions of labour vary under
different circumstances and from State to State
and the expediency of including a particular trade
or industry within the schedule depends upon a
variety of facts which are by no means uniform
and which can best be ascertained by a person
who is placed in charge of the administration of a
particular State. That is why the Court concluded
that in enacting S. 27 it could not be said that the
Legislature had in any way stripped itself of its
essential powers or assigned to the administrative
authority anything but an accessory or subordinate
power which was deemed necessary to carry out
the purpose and the policy of the Act.
11. In the same year another attempt was made to
challenge the validity of the Act in Bijay Cotton
Mills Ltd. v. State of Ajmer (1955)-1 SCR 752; ((S)
AIR 1955 SC 33). This time the crucial sections of
the Act, namely, Ss. 3, 4 and 5 were attacked, and
the challenge was based on the ground that the
restrictions imposed by them upon the freedom of
contract violated the fundamental right
guaranteed under Art. 19(1)(g) of the Constitution.
This challenge was repelled by Mukherjea, J., as he
then was, who again spoke for the Court. The
learned Judge held that the restrictions were
imposed in the interest of the general public and
with a view to carry out one of the directive
principles of State policy as embodied in Art. 43
and so the impugned sections were protected by
the terms of Cl. (6) of Art. 19. In repelling the
argument of the employers' inability to meet the
burden of the minimum wage rates it was
observed that "the employers cannot be heard to
complain if they are compelled to pay minimum
wages to their labourers even though the
labourers on account of their poverty and
91
helplessness are willing to work on lesser wages,
and that if individual employers might find it
difficult to carry on business on the basis of
minimum wages fixed under the Act that cannot
be the reason for striking down the law itself as
unreasonable. The inability of the employers may
in many cases be due entirely to the economic
conditions of those employers." It would thus be
seen that these two decisions have firmly
established the validity of the Act, and there can
no longer be any doubt that in fixing the minimum
wage rates as contemplated by the Act the
hardship caused to individual employers or their
inability to meet the burden has no relevance.
Incidentally, it may be pointed out that in dealing
with the minimum wage rates intended to be
prescribed by the Act Mukherjea, J., has in one
place observed that the labourers should be
secured adequate living wages. In the context it is
clear that the learned Judge was not referring to
living wages properly so-called but to the
minimum wages with which alone the Act is
concerned. In view of these two decisions we have
not allowed Mr. Nambiar to raise any contentions
against the validity of the Act. It is true that Mr.
Nambiar attempted to argue that certain aspects
of the matter on which he wished to rely had not
been duly considered by the Court in Bijay Cotton
Mills Ltd.'s case (1955)-1 SCR 752; ((S) AIR 1955
SC 33). In our opinion it is futile to attempt to
reopen an issue which is clearly concluded by the
decisions of this Court. Therefore, we will proceed
to deal with the present petition, as we must, on
the basis that the Act under which the Committee
was appointed and the notification was ultimately
issued is valid.”
92
89. In Minerva Talkies, Bangalore & Ors. v. State of Karnataka &
Ors. 1988 Suppl. SCC 176 in which Rule 41A of the Karnataka
Cinemas (Regulation) Rules, 1971 came to be questioned as violative
of Article 19(1)(g) of the Constitution of India. The argument that the
income would be reduced as such the rule was prohibitive not
restrictive, this Court rejected the submission of violation of Article
19(1)(g) and observed thus :
“12. The appellants’/petitioners' contention that
restriction under Rule 41-A is unreasonable is
founded on the premise that Rule 41-A is not
regulatory in nature instead it totally prohibits
exhibition of cinematograph films for one show
and its impact is excessive as it reduces
appellants’/petitioners' income to the extent of
one-fifth. The appellants/petitioners have no
unrestricted fundamental right to carry on
business of exhibiting cinematograph films. Their
right to carry on business is regulated by the
provisions of the Act and the Rules framed
thereunder. These provisions are necessary to
ensure public safety, public health and other allied
matters. As already discussed Rule 41-A has
placed limit on the number of shows which a
licensee can hold in a day. The rule does not
prohibit exhibition of cinematograph films instead
it regulates it by providing that instead of five
shows only four shows should be exhibited in a
day. In Narender Kumar v. Union of India, (1960) 2
SCR 375, this Court held that a law made in the
public interest prohibiting a business would be
valid as the 'prohibition' is only a kind of
'restriction'. The expression "restriction" includes
"prohibition" also. Rule 41-A, however, does not
93
take away the licensees' right to carry on business
of exhibiting cinematograph films. It merely
regulates it. No rule or law can be declared to be
unreasonable merely because there is reduction in
the income of a citizen on account of the
regulation of the business. In our opinion, Rule 41-
A does not place any unreasonable restriction on
the appellants’/petitioners' fundamental right
guaranteed to them under Article 19(1)(g) of the
Constitution.”
90. In T.V. Balakrishnan v. State of T.N. & Ors., 1995 Suppl. 4 SCC
236, wherein Rules 1A (3)(b), 2, 3(ii) and 7(4) of Tamil Nadu Timber
Transit Rules, 1968 had been questioned on the ground of violation of
Article 19 (1)(g). It was held that it was not restrictive but regulatory,
hence was intra vires. This Court has discussed the matter thus:
4. The High Court further found that the impugned
Rules were only regulatory and did not in any
manner infract the right of the petitioners
guaranteed under Article 19(1)(g) of the
Constitution of India. The High Court rejected the
argument on the following reasoning:
“When the rules as framed are intended to
subserve the aims of the Act which was meant
to consolidate the law relating to the forest
produce, the transit thereof and the duty
leviable thereon; and hence those rules were
meant to effectuate same of all of these
objects. Having noticed the uphill task faced
by the Government in preventing illicit felling
of trees, over large extents with limited man
power, and checking at check-posts at forest
frontiers having been found to be insufficient,
ineffective and being no match to the swift
manner in which they are carried away by
94
lorries; and on raids conducted in places like
Mettupalayam, Tambaram and elsewhere large
stocks of illicit timber having been found in
saw-mills and with dealers, the impugned
rules, which insist on a Form II pass to
accompany during every movement of timber,
and hammer mark being affixed on the
transported timber, are absolutely necessary
for the protection and management of forest
wealth in the State of Tamil Nadu. Hence, the
impugned rules are not violative of Article
19(1)(g).”
5. Having found that the rules were regulatory and
not prohibitive, the High Court also rejected the
argument based on Articles 301-304 of the
Constitution of India. So far as the enhancement of
fee is concerned, the High Court examined the
scheme and operation of the rules and came to the
conclusion that the State Government was
providing sufficient services to the timber
merchants at every check-point and as such the
principle of quid pro quo was satisfied.”
91. In State of Orrisa and Anr vs. Radheyshyam Meher & Ors. AIR
1995 SC 855 = 1995 (1) SCC 652 the question which arose for
consideration was about the power of the State Government in the
absence of rule or regulations to permit the opening of medical store
in campus of hospital remaining open day and night. Objection was
raised by storekeepers across road close to hospital that opening of
store in campus will jeopardise their interest and they will not be able
to sustain themselves. This Court observed that the intention in
95
starting day and night store within the campus has direct nexus with
the public interest particularly with that of patients and that the
policy decision of the Government in absence of rules and regulations
was not liable to be interfered with. This Court has observed thus:
“5. Learned Counsel appearing for the appellants
vehemently urged before us that the said
advertisement inviting applications for settling the
shop to have a medical store inside the hospital
premises was issued in pursuance of the
Government policy and with the sole object to
make the medicines available to the patients even
at odd hours and, therefore, the High Court should
not have interfered with the administrative
decision of the Government taken in the public
interest. We find considerable force and much
substance in these submissions.
6. In the aforesaid background the question arises
whether, in the absence of any rule or regulation
to the contrary, can the power of the State be
abridged on the basis of an individual interest of
certain trader, even to the extent of restricting the
State's capacity to advance larger public goods. It
can hardly be disputed that the consideration of
availability of the medicines to the patients should
be the uppermost consideration as compared to
the right of a person to derive income and make
profits for his sustenance by running a medical
store for the reason that the medical stores are
primarily meant for the patients and not the
patients for the medical stores or those who run
the same. The submission of the respondents that
if a medical store is opened within the campus of
the hospital, the same will jeopardise their interest
adversely affecting their business and that they
will not be able to sustain themselves could not be
96
a valid ground to disallow the appellants to open a
shop within the hospital campus. Undoubtedly, the
opening of a medical store within the hospital
campus will provide a great facility to the patients
who may not be having any attendant of their own
in the hospital for their assistance at odd hours in
the event of an emergency to go out to purchase
the medicines. There may be patients having an
attendant who may not find it convenient or safe
to go out of the campus to purchase the medicines
in the night hours. In these facts and
circumstances, the paramount consideration
should be the convenience of the patients and
protection of their interest and not the hardship
that may be caused to the medical store keepers
who may be having their shops outside the
hospital campus. Thus the intention of the
appellants to open a medical store within the
hospital campus is to salvage the difficulties of the
patients admitted in the hospital and this object of
the appellants has direct nexus with the Public
Interest particularly that of the patients and,
therefore, the High Court should not have
interfered with the decision of the State
Government to settle the holding of a medical
store in the Hospital premises. However, if the
respondents so choose, they may keep their
medical stores also open day and night.
Consequently, the impugned order could not be
sustained."
92. In Dalmia Cement (Bharat) Ltd. v. Union of India 1996 (10) SCC
104, compulsory packing of specified commodities with jute
packaging material (gunny bags) was held not to be violative of
Articles 14, 19(1)(g) and 301 of the Constitution. This Court held that
97
the Act primarily intended to provide socioeconomic justice to
agriculturist. This Court observed that the role of Article 14 in
ushering in healthy social order by providing equal opportunities to
all citizens to make fundamental rights meaningful and life worth
living should also consider the role of Article 38 in securing and
protecting social, economic and political justice and in the case of
economic legislation presumption of constitutionality arises in favour
of legislation. It is empowered to make experiments on economic
legislation having regard to various socioeconomic aspects. Court
should not adjudge crudities and inequities arising from economic
legislation. With respect to human rights and fundamental freedom,
in the Universal Declaration of Human Rights, democracy,
development, and respect for human rights, this Court has observed
thus:
“15. In Valsamma Paul v. Cochin University, (1996)
3 SCC 545, a Bench of this Court has held that
human rights are derived from the dignity and
worth inherent in the human person. Human rights
and fundamental freedoms have been reiterated in
the Universal Declaration of Human Rights.
Democracy, development, and respect for human
rights and the fundamental freedoms are
interdependent and have mutual reinforcement.
Article 29(2) of the Declaration of Human Rights
provides that:
98
"…in the exercise of this right and freedoms,
everyone shall be subject only to such
limitations as are determined by law solely for
the purpose of securing due recognition and
respect for the rights and freedoms of others
and of leading the just requirements of
morality, public order and general welfare in a
democratic society."
The concept of equality and equal protection of
law guaranteed by Article 14 of the Constitution in
its proper spectrum encompasses social and
economic justice in a political democracy as its
species to eliminate inequalities in status and to
provide facilities and opportunities among the
individual and groups of people to secure
adequate means of livelihood which is the
foundation for stability of political democracy.”
xxx xxx xxx
18. Article 14 of the Constitution is a shining star
among the fundamental rights which guarantees
equality to every citizen and equal protection of
laws to all persons. Equality before law is a
correlative to the concept of rule of law for allaround
evaluation healthy social order. Directives
set forth social principles to eliminate inequalities
in income, in status and opportunity and to provide
facilities and opportunities to every citizen to make
the fundamental rights meaningful and the life of
every citizen worth living and at its best, with the
dignity of person and fraternity, lest they remain
empty vessels and teasing illusions to majority
population.
xxx xxx xxx
21. Article 38 of the Constitution enjoins the
State to strive to promote the welfare of the
people by securing and protecting, as effectively
as it may, the social order in which justice - social,
economic and political - shall, inform all the
99
institutions of the national life striving to minimise
inequalities in income and endeavour to eliminate
inequalities in status, facilities, opportunities
amongst individuals and groups of people residing
in different areas or engaged in different
avocations. As stated earlier, agriculture is the
mainstay of rural economic and empowerment of
the agriculturists. Agriculture, therefore, is an
industry. To the tiller of the soil, livelihood depends
on the production and return of the agricultural
produce and sustained agro-economic growth. The
climatic conditions throughout Bharat are not
uniform. They vary from tropical to moderate
conditions. Tillers of the soil being in unorganised
sector, their voice is scarcely heard and was not
even remotely voiced in these cases. Their
fundamental right to cultivation is as a part of right
to livelihood. It is a bastion of economic and social
justice envisaged in the Preamble and Article 38 of
the constitution. As stated earlier, the rights,
liberties, and privileges assured to every citizen
are linked with corresponding concepts of duty,
public order, and morality. Therefore, the jural
postulates form the foundation for the functioning
of a just society. The fundamental rights ensured in
Part III are, therefore, made subject to restrictions
i.e., public purpose in Part IV Directives, public
interest or public order in the interest of general
public. In enlivening the fundamental rights and
the public purpose in the Directives, Parliament is
the best Judge to decide what is good for the
community, by whose suffrage it comes into
existence and the majority political party assumes
governance of the country. The Directive Principles
are the fundamentals in their manifestos. Any
digression is unconstitutional. The Constitution
enjoins upon the Executive, Legislature, and the
Judiciary to balance the competing and conflicting
claims involved in a dispute so as to harmonise the
competing claims to establish an egalitarian social
order. It is a settled law that the Fundamental
100
Rights and the Directive Principles are two wheels
of the chariot; none of the two is less important
than the other. Snap one, the other will lose its
efficacy. Together, they constitute the conscience
of the Constitution to bring about social revolution
under rule of law. The Fundamental Rights and the
Directives are, therefore, harmoniously interpreted
to make the law a social engineer to provide flesh
and blood to the dry bones of law. The Directives
would serve the Court as a beacon light to
interpretation. Fundamental Rights are rightful
means to the end, viz., social and economic justice
provided in the Directives and the Preamble. The
Fundamental Rights and the Directives establish
the trinity of equality, liberty, and fraternity in an
egalitarian social order and prevent exploitation.
22. Social Justice, therefore, forms the basis of
progressive stability in the society and human
progress. Economic justice means abolishing such
economic conditions which remove the inequality
of economic value between man and man,
concentration of wealth and means of production
in the hands of a few and are detrimental to the
vast. Law, therefore, must seek to serve as a
flexible instrument of socio-economic adjustment
to bring about peaceful socio-economic revolution
under rule of law. The Constitution, the
fundamental supreme lex distributes the sovereign
power between the Executive, the Legislature, and
the Judiciary. The three instrumentalities, within
their play endeavour to elongate the constitutional
basic structure built in the Preamble, Fundamental
Rights and Directives, namely, establishment of an
egalitarian social order in which every citizen
receives equality of opportunity and of status,
social and economic justice. The Court, therefore,
must strive to give harmonious interpretation to
propel forward march and progress towards
establishing an egalitarian social order.”
101
93. This Court has observed that above economic justice means
abolition of such economic conditions which remove inequality
between man and man. In our opinion, there has to be positive
action for that equality.
94. In Indian Drugs & Pharmaceuticals Ltd. & Ors. v. Punjab Drugs
Manufacturers Association & Ors. (1999) 6 SCC 247 constitutional
validity of the policy of the Government of the State of Punjab was
challenged whereby directions issued to the purchasing authorities
that certain medicines used in the government hospitals and
dispensaries were to be purchased from public sector manufacturers
only was quashed by the High Court while allowing writ petition.
Whereas Rajasthan High Court has dismissed a similar writ petition.
Both the matters were decided by this Court. This Court relied upon
the decision in Rai Sahib Ram Jawaya Kapur v. State of Punjab, AIR
1955 SC 549 (quoted above) and observed that such restriction could
be imposed by framing policy by exercising powers of the State under
Article 162 of the Constitution. Therefore, the contention of the
appellants in regard to creation of monopoly and violation of the
102
fundamental rights under Articles 19(1)(g) and 19(6) was turned
down. This Court has observed thus:
“16. It is clear from the various judgments
referred to above that a decision which would
partially affect the sale prospects of a company,
cannot be equated with creation of monopoly. In
Ram Jawaya Kapur AIR 1955 SC 549 and
Naraindas's [1974] 4 SCC 788 cases, the
Constitution Bench also held that the policy
restrictions, as discussed above, can be imposed
by exercise of executive power of the State under
Article 162 of the Constitution. Therefore, the
contention of the appellants in regard to creation
of monopoly and violation of the fundamental right
under Articles 19(1)(g) and 19(6) should fail. The
judgment cited above also show that preference
shown to cooperative institutions or public sector
undertakings being in public interest, will not be
construed as arbitrary so as to give rise to a
contention of violation of Article 14 of the
Constitution. We have noted above that this Court
in the cases of Oil & Natural Gas Commission v.
Association of Natural Gas Consuming Industries of
Gujarat (1990) Supp SCC 397 ; Krishna Kakkanth
(1997) 9 SCC 495 and Hindustan Paper Corpn. Ltd.
v. Govt. of Kerala (1986) 3 SCC 398, has held that
the preference shown to cooperative institutions or
public sector undertakings being in public interest,
will not be construed as arbitrary so as to give rise
to a contention of violation of Article 14 of the
Constitution.
xxx xxx xxx
19. For the above reasons, we are of the opinion
that the High Court was right in coming to the
conclusion that by the impugned policy, there was
no creation of any monopoly nor is there any
violation Of Articles 14, 19(1)(g) or 19(6) of the
Constitution. In view of the above, we are of the
103
opinion that these appeals should fail and the
same are dismissed accordingly. No costs.
CA Nos. 3723 and 3744 of 1988:
20. These appeals are preferred against the
judgment and order of the High Court of Punjab
and Haryana dated 3-6-1988 made in Civil WP No.
6144 of 1987 wherein the High Court was pleased
to allow the writ petition filed by the respondents
in these civil appeals, quashing the policy decision
of the State of Punjab whereby the State had
directed its authorities concerned to purchase
certain medicines from the public sector
undertakings only. We have today in CA Nos. 4550-
51 of 1989 held that a similar policy decision
issued by the State of Rajasthan does not amount
to creation of monopoly nor is there any violation
of Article 14 or 19(1)(g) of the Constitution. The
facts giving rise to the writ petitions before the
Punjab and Haryana High Court from which the
above civil appeals have arisen being the same,
we allow these civil appeals and set aside the
judgment and order of the Punjab and Haryana
High Court dated 3-6-1988 made in Civil WP No.
6144 of 1987. Consequently, the said writ petition
stands dismissed. No costs."
(emphasis supplied)
95. In our considered opinion such stipulation for free treatment
does not amount to restriction under Article 19(6) on the right
enshrined under Article 19(1)(g) and even otherwise it was not
necessary to enact a statutory provision by the Government in view of
existing liability as per policy/rules/statutory provisions as to ethical
standards and other statutory provisions in force.
104
In Reference to question No.4 – decision in Social Jurists v. Govt.
of NCT
96. In the decision rendered by Delhi High Court in Social Jurists, A
Lawyer Group v. Government of NCT of Delhi, (supra), there were 20
hospitals as respondents. Out of these 20 hospitals, 18 hospitals
were allotted land by Delhi Development Authority (DDA) and in the
case of Veerawali and Vimhans hospitals, the land was allotted by
Land and Development Office (L&DO). The Head of L&DO allotted the
lands to the aforesaid two hospitals on concessional rates. Out of
remaining 18 hospitals, 16 hospitals were provided lands on the
condition of free patient treatment specifically mentioned in the lease
deed. However, according to remaining two hospitals i.e., Escort
Heart Institute and Research Centre and Dharam Shila Cancer
Foundation and Research Centre, who were also allotted land by
DDA, there was no condition requiring them to provide free patient
care and treatment to the poor sections of the society. Though in the
letter of allotment, the said condition was specifically incorporated.
The terms and conditions of the lease deed certainly did not contain
the stipulation of free treatment, however, in view of the conditions of
105
letter of allotment, the High Court of Delhi in paragraphs 47 and 48
observed thus:
“47. The first letter of allotment issued to both
these hospitals contained the term of free
treatment to poorer sections. The relevant terms of
the letter has been referred by us supra. Without
execution of any document, the hospitals had in
furtherance to the letter of allotment accepted the
terms and conditions of the letter including this
condition and (a) paid the money demanded in
terms of the letter of allotment and (b) took
possession thereof, without any protest or
reservation.
48. In other words, a party's right had to be
controlled in accordance with the terms of letter of
allotment and, therefore, a complete contract
existed between the parties. The terms and
conditions of the letter of allotment empowered the
authorities to add or impose such other conditions
which the allottee was obliged to agree having
taken benefit thereof. The terms and conditions of
the Lease Deed certainly does not contain the
condition of free treatment to poorer sections of the
Society but the same was part of the letter of
allotment itself and they would be applicable to the
allotments mutatis mutandis particularly when
there is no conflict between them and they duly are
supplement to each other."
97. The High Court of Delhi also referred to Rules 5 and 21 of the
Delhi Development Authority (Disposal of Developed Nazul Land)
Rules, 1981. Rule 5 deals with rules of premium for allotment of
Nazul land to certain public institutions, whereas Rule 20 deals with
106
allotment to certain public institutions. Rule 5 provides that the
Authority may allot Nazul land to schools, colleges, universities,
hospitals, other social charitable institutions, religious, political,
semipolitical organizations and local bodies for remunerative, semiremunerative
or unremunerative purposes at the premia and ground
rent in force immediately before the coming into force of these rules,
or at such rates as the Central Government may determine from time
to time. Rule 20 (a) (i) provides that no allotment of Nazul land to
public institution, referred to in Rule 5 shall be made unless,
according to the aims and objects of public institution, it directly subserves
the interests of the population of the Union Territory of Delhi.
Rule 20 (c) provides that public institution should be a nonprofit
making character. There is no such stipulation running contrary to
the aforesaid provisions. The condition of free patient treatment to
the poor with reference to Delhi Development Authority (Disposal of
Developed Nazul Land) Rules, 1981, was examined by the High Court
of Delhi, the relevant portion is extracted hereunder:
“56. The condition of 25% free patient treatment
to the poor thus is a condition which has been
imposed in furtherance to the policy of the
Government which in turn is in strict consonance to
the spirit contained in Rules 5 and 20 of the Rules
107
and the Constitutional mandate. The DDA had
specifically incorporated this condition at/after the
time when on the tall representations and
negotiations made by the hospitals and their
undertaking to abide by such conditions, was
repeatedly accepted that it issued the letter of
allotment containing these terms. On facts of the
case and in law, they cannot abrogate themselves
from completely satisfying the condition of 'free
patient treatment'.
57. The letter of allotment, thus, is a concluded
contract between the parties and the Lease Deed,
as per the language of the letter of allotment, is
executed in compliance to one of the terms of that
letter and as contemplated under the Nazul Land
Rules.
58. The hospitals cannot pick up the document of
lease in exclusion to preceding and subsequent
documents which complete the rights, privileges,
and obligations between the parties in relation to
the allotment. In the case of Union of India and v.
Jain Sabha, New Delhi (supra), the Supreme Court
had clearly held that an offer extended by an
allotment letter/revised offer once accepted, would
bind the parties and that for reconsideration of the
action, the allottee could only make a request to
the authorities for a sympathetic consideration and
cannot breach the terms of the allotment. The
Court specifically observed as under:
".....The allotment of land belonging to the
people at practically no price is meant for
serving the public interest i.e., spread of
education or other charitable purposes; it is not
meant to enable the allottees to make money
or profiteer with the aid of public property."
108
98. The High Court held that it was not open to hospitals to wriggle
out of their contractual, statutory and public law obligation. There
was no scope for reading and confining the rights and obligations of
the parties in isolation.
99. The recommendation made in the report of Justice Qureshi
Committee was also considered by the High Court of Delhi, the
relevant part is extracted hereunder:
“66. The Lieutenant Governor of Delhi had
constituted a special committee being Justice
Qureshi Committee for this purpose. This
committee after taking into consideration various
aspects including workability of this condition had
recommended that 10% IPD and 25% OPD patients
should be treated free in all respects in every such
hospital. Such patients belonging to the poor strata
of the society should not be required to pay any
charges. The relevant part of the report of the
committee reads as under:
“1. Most of the representative of the hospital
submitted that 25% beds earmarked for poor
patients were excessive since the cost of
medicines was too high. It was agreed that it
should not be more than 15% in any case, but
10% would be ideal. Therefore, committee
recommended 10% indoor beds free for poor
patients for all-purpose including medicines
and consumables. The free treatment services
should be available to 25% of total OPD
patients. This condition should be applicable to
all the hospitals that have been allotted land
by the govt.
109
xxx xxx
xxx
3. The free treatment should be totally free and
not partly free and should be uniform for all
hospitals that have been allotted land by the
Government.
4. It is also suggested that all those institutions
should provide the free services to the extent
of 10% also who have not been allotted
Government land. Even Nursing Homes should
provide 5% of their beds for poor and needy
patients.
5. In consideration of persistent violation of
expressed and implied terms by the
institutions, the allotment of land should be
cancelled and should be reallotted by a new
lease deed on new and uniform terms and
conditions for thirty years, on commercial rates
of ground rent, to a new management in which
Government should have at least 3 nominees
nominated by Lt. Governor having wide
experience of rendering free services. The
renewed lease must clearly mention that the
lease is not transferable and any contravention
would result in automatic cancellation."
100. The Government of NCT of Delhi accepted the recommendation
of the Justice Qureshi Committee as reasonable and took the decision
that it should be enforced. However, Union of India stated that the
matter was under its consideration and they had not taken a final
view in the matter. At the relevant time, the similar view was
expressed by Maninder Acharya Committee that the condition of free
treatment of poor strata of society should be reasonable, but its
110
implementation should be strictly enforced and in the event of
default, strict action should be taken. The High Court in Social
Jurists (supra) has further observed with respect to land in Delhi and
allotment of vital assets thus:
"95. No right exists without any obligation and no
obligation can be dissected from the duty tagged
with it. Right should correlate to a duty. The wider
interpretations given to Article 21 read with Article
47 of the Constitution of India are not only meant
for the State but they are equally true for all who
are placed at an advantageous situation because of
the help or allotment of vital assets. Such assets
would be impossible to be gathered in a city like
Delhi where the land is not available in feet, much
less in acres, which the State at the cost of its own
projects had provided land at concessional rates to
these hospitals. The principle of equality, fairness,
and equity would command these hospitals to
discharge their obligations of free patient treatment
to poor strata of Delhi."
101. The aforesaid decision in Social Jurists (supra) was questioned
before this Court by way of several special leave petitions filed by
Dharamshila Hospital & Research Centre etc. and Sundar Lal Jain
Charitable Hospital also challenged the abovesaid decision by
preferring SLP (C) No.5630 of 2008. The said special leave petitions
were dismissed by reasoned order dated 01.09.2011. The order in
entirety is extracted hereunder:
111
“The special leave petitions are dismissed.
25% OPD and 10% IPD patients have to be given
treatment free of cost. The said patients should not
be charged with anything. But that will not
come in the way of the concerned hospital making
its own arrangements for meeting the
treatment/medicines cost, either by meeting the
cost from its funds or resources or by way of
sponsorships or endowments or donations."
102. Thereafter, the Government of India on 2.2.2012, issued the
impugned order with respect to the policy of free patient treatment to
indigent/poor persons of Delhi to be followed by the private hospitals
allotted land by Land & Development Office on concessional rates.
The said order is reproduced hereinbelow:
“Government of India
Ministry of Urban Development
Land & Development Office
Nirman Bhawan, New Delhi
No.L&DO/L-II-B-18(107)/2012/42-47 Dated
2/2/2012
Order
SUB: Policy of free patient treatment to indigent/poor
persons of Delhi to be followed by the private
hospitals allotted land by Land & Development
Office on concessional rates – regarding.
112
Land & Development Office, Ministry of Urban
Development, Govt. of India had allotted land to the
registered societies and trusts on concessional rates
for establishment of hospitals. As per the Government
policy for allotment of land in force in 1943, a
charitable institution was required to pay a premium at
the rate of about Rs.25,000/- to Rs.35,000/- per acre.
In 1949, the policy was reviewed and it was felt that
these prevailing land rates were on the higher side. It
was then decided that land should be allotted to
Charitable Trusts and Institutions for opening schools
and hospitals at a nominal premium ranging from
Rs.2,000 to Rs.5,000/- per acre depending on the
locality in which the land is situated subject to an
annual ground rent of 5% of the premium. In order to
avail the concessional rate, the institution should be
non-profit making and function for the welfare of the
public.
2. Thereafter, the allotments of land were made by the
Land & Development Office at the rate of Rs.2,000/-
to Rs.5,000/- per acre to 5 hospitals, namely (1) Sir
Ganga Ram Hospital, (2) Mool Chand Khairati Ram
Hospital, (3) St. Stephen's Hospital, (4) Veeranwali
International Hospital (Delhi Hospital Society)/PRIMUS
ORTHO and (5) R.B. Seth Jassa Ram Hospital (initial
allotment of land was made by DDA and after that an
additional strip of land 773 sq. yds. was allotted by
L&DO), during the period 1951 to 1976 in accordance
with the said policy and at the rate of Rs.10,000/- per
acre to one hospital namely VIMHANS as per the
prevailing concessional rate in 1981 keeping in mind
that these hospitals were genuinely charitable in
nature and would provide free treatment for the poor
patients and function for the welfare of the public. Out
of these 6 hospitals, the lease deed of two hospitals
namely, Veeranwali International Hospital (Delhi
Hospital Society)/PRIMUS ORTHO and VIMHANS had
the free treatment condition to the extent of 70% of
total beds whereas, in respect of remaining four
113
hospitals, conditions for free treatment have not been
provided.
3. The Govt. of NCT of Delhi has issued guidelines for
the provision of Free Treatment facilities to patients of
EWS category in private hospitals in pursuance of
directions issued on 22.3.2007 by the Hon'ble High
Court of Delhi in WP (C) No.2866/2002 in the matter of
Social Jurist vs. GNCT Delhi, which inter-alia includes as
follows: -
i. The conditions of free patient treatment shall be
25% of patients for OPD and 10% of beds in
the IPD for free treatment. The
percentage of patients will not be liable to pay
any expenses in the hospital for admission, bed,
medication, treatment, surgery facility, nursing
facility, consumables, and nonconsumables
etc. The hospital charging
any money shall be liable for action under the
law and it would be treated as a violation of the
orders of the court. The Director/M.S./member of
the trust or the society running the hospital shall
be personally liable in the event of
breach/violation/default.
ii. The hospital shall maintain the records which
would reflect the name of the patient,
father's/husband's name, residence, name of the
disease suffering from, details of expenses
incurred on treatment, the facilities provided,
identification of the patient as poor and its
verification done by the hospital.
iii. The hospital shall also maintain details of
reference from Government hospital and the
reports submitted by the private hospital to
Government hospital in the form of feedback of
treatment provided to the patient. The records
so maintained shall have to be produced to the
Inspection team, constituted by the Delhi High
Court, as and when required for its
verification and quarterly details should have to
114
be sent to Directorate of Health Services (DHS),
Govt. of NCT of Delhi (GNCTD) under intimation
to the office of Land and Development Office.
iv. The details shall have also to be made available
to the Monitoring Committee constituted by
Govt. of NCT of Delhi also as and when required.
v. Every private hospital shall have to establish a
referral centre/desk functional round the
clock, where the patients referred from Govt.
hospital would be able to report. The referral
desk shall be managed by a nodal responsible
person whose name, telephone, e-mail address
and fax number is to be sent to the Govt.
Hospitals, DHS and should be
prominently displayed. The hospital shall also
display the facilities available at the hospital
and the daily position of availability of free beds
quota so that the patients coming directly to
the hospital would know the position in advance.
vi. In case of any change in the nodal person, the
same should also be intimated within 24 hours to
Govt. Hospitals and DHS, the list of which shall
be provided shortly.
vii. The establishment of the referral desk should be
ensured within two weeks from the issue of this
letter and the Director/In charge of the
hospital shall be personally liable in the event of
default.
viii. The hospital shall send daily information of
availability of free beds to the DHS, GNCTD twice
a day between 9 AM – 9.30 AM and at 5 PM-5.30
PM on all working days and also to the concerned
nearby Govt. hospital to which the private
hospital is proposed to be linked for general and
for specialized purposes. The details of
geographical linkage, the telephone numbers/fax
numbers and the name of the nodal officer of
Govt. hospitals shall be intimated shortly. In case
no information is received within the stipulated
time from the private hospitals then it shall be
presumed that the beds are available in private
115
hospitals and the patient referred shall be
accommodated.
ix. The patient referred by Govt. hospitals or directly
reporting to the private hospital shall be
admitted if required, and be treated totally free.
As per court’s directions, these patients shall not
incur any expenditure for their entire treatment
in the hospital.
x. After the discharge of such patients provided
with the treatment, the hospital shall submit a
report to the referring hospital with a copy to the
DHS, GNCTD indicating therein the complete
details of treatment provided and the
expenditure incurred thereon.
xi. The criteria of providing free treatment would be
such persons who have no income or have
income below Rs.4,000/- per month for the time
being which can be revised from time to time.
xii. Besides admission of the patient referred from
Govt. hospitals, the hospital shall also
provide OPD/IPD/Casualty treatment free to the
patients directly reporting to the private
hospitals and would inform the nearest Govt.
hospital and to the DHS within two days of
his/her admission.
xiii. The patients admitted in any other manner, not
covered by the above guidelines shall not be
entitled for claiming compliance of the
conditions imposed.
xiv. As per directions of the court, all the hospitals
stated in the judgment and/or all other hospitals
identically situated shall strictly comply with the
term of free patient treatment to indigent/poor
persons.
xv. No benefits shall be applicable to such hospitals
that had provided free treatment fully or partially
in the past with the higher conditions as
applicable for that time with regard to any set off
of the expenses or otherwise on that ground.
xvi. The above revised conditions i.e. 25% free OPD
patient's and 10% free IPD beds and treatment
116
on these beds shall be prospective from the date
of pronouncement of judgment.
xvii. Such hospitals which have not complied with the
conditions at all and persist with the default, for
them the conditions shall operate from the date
their hospitals have become functional.
xviii. An Inspection Committee constituted by the High
Court would also inspect any of the private
hospitals. The Inspection Committee
shall, have to be entertained and would be
facilitated to carry out physical inspection of the
hospital where the free treatment has been
provided and would also be shown the records of
having provided free treatment. The said
committee has been given the liberty to revive
the petition or for issuance of any directions from
the court and wherever necessary for action
against violators/defaulters under the
provisions of Contempt of Court Act read with
Article 215 of the Constitution of India.
4. The Hon’ble Supreme Court of India while
dismissing the bunch of Special Leave Petitions in the
SLP Civil No.18599/2007 vide its order dated 1.9.2011
has ordered that:
"25% OPD and 10% IPD patients have to be
given treatment free of cost. The said patients
should not be charged anything. But
that will not come in the way of the concerned
hospital making its own arrangements for
meeting the treatment/medicines cost, either by
meeting the cost from its funds or resources or
by way of sponsorships or endowments
or donations."
5. The Hon'ble Supreme Court has affirmed the
aforesaid directions passed by the Hon'ble High Court of
Delhi. The Government of India has taken a policy
decision on the basis of the judgment passed by the
Hon'ble Supreme Court that all the six hospitals which
117
have been provided land by Land & Development Office
must strictly follow the policy of providing treatment
free of cost to 25% OPD and 10% IPD patients. The
Government of India further incorporates the aforesaid
conditions mentioned in the para 3 (i) to (xviii) above as
a part of the terms and conditions of lease/allotment.
6. Non-observance or violation of any of the above-said
guidelines shall mean or be construed as violation of
the terms of lease/allotment.
(Mahmood Ahmed)
Land & Development Officer”
103. It was also submitted that decision in Social Jurists (supra) is
not at all applicable to the Trust. We have examined the case
thoroughly and we find that condition of free treatment had been the
primary objective, which would be applicable to hospitals in question
and to all other similarly situated hospitals, whether they were party
to the aforesaid decision or not. The decision rendered in Social
Jurists (supra) would be applicable to similarly situated institutions
having been rendered in the public interest institution and affirmed
by this Court by a reasoned order.
104. It is not the case of unilateral imposition of the condition of free
treatment on the hospitals. The inquiry was conducted, hospitals
were heard and evidence was recorded by Justice Qureshi Committee
118
and thereafter recommendation made in the report had been
accepted. The hospitals were required to show cause. Pursuant
thereto, the reply had been filed. Thus, the decision cannot be said to
be unilateral.
105. It is apparent that before imposing the conditions in lease
deeds, a High Level 10Member Committee for hospitals in Delhi was
constituted, headed by Mr. Justice A.S. Qureshi regarding the
working of the hospitals and nursing homes in Delhi, to review the
existing free treatment facilities extended by the charitable and other
hospitals who had been allotted land on concessional terms/rates
predetermined by the Government, and to suggest suitable policy
guidelines for free treatment facilities for needy and deserving
patients uniformly in the beneficiary institutions, in particular, to
specify the diagnostic, treatment, lodging, surgery, medicines and
other facilities that would be given free or partially free; to suggest a
proper referral system for the optimum utilization of free treatment by
deserving and needy patients; and to suggest a suitable enforcement
and monitoring mechanism for the above, including a legal
framework. The Committee held various meetings, conducted
119
enquiries, various hospitals were heard including Moolchand Kharaiti
Ram Hospital. The Government observed that there were resistance
and persistent refusal of the management of Moolchand Kharaiti Ram
Hospital to send a reply to the questionnaire and to submit the
documents which they were required to submit at the end of the
enquiry. The first visit made to Moolchand Kharaiti Ram Hospital was
on 16.1.2001 and the second on 21.3.2001. Various other hospitals
were also visited. The Committee observed that there was no legal,
social or moral justification for allowing such moneymaking
commercial concerns. The land was allotted for a charitable purpose
and to do charitable service which has now been totally replaced by
exploitative commercial hospitals.
106. With respect to Moolchand Kharaiti Ram Hospital, Justice
Qureshi Committee has discussed the matter in extensive details. It
has been observed that initially the Trust was truly charitable. It was
granted 9 acres of prime land situated on the Ring Road in Lajpat
Nagar in South Delhi. Initially the hospital continued to serve as a
free Ayurvedic hospital for patients in OPD and IPD sections. It also
carried on the research for Ayurvedic medicines. Later on the trustees
120
decided to introduce Allopathic treatment also. The Allopathic Section
has been upgraded with airconditioned deluxe and superdeluxe
rooms which are called Wards. Presently the Allopathic section covers
about 90% of the hospital activities and the Ayurvedic section is
reduced to about 10%. There is only nominal Ayurvedic treatment of
patients in OPD and IPD, which had originally 4 wards. Now it is
reduced to only one ward in which there are very few patients. There
were only 4 or 5 Ayurvedic patients in the ward on 21.3.2001. The
manufacturing of Ayurvedic medicines is also considerably reduced.
After noting in detail the statements of various witnesses working in
the hospital, and after analysing them, the Committee has found that
the Moolchand Kharaiti Ram Hospital has acted not only contrary to
the wishes of its founder but also violated the terms and conditions
regarding free treatment to the poor, openly both in letter and spirit.
The management of hospital does not consider it to be a charitable
hospital at all. The land would not have been allotted to Trust if it
was not charitable. Be that as it may, nonetheless the land has been
allotted for charitable purpose to the hospital. Their stand was that
the word ‘poor’ was not defined in the lease deed or anywhere else,
was adversely commented upon. Some adverse comments were also
121
made with respect to the interpolation in the Will. We are not
considering the aforesaid question of interpolation in the instant
matter as nothing turns on it. The Committee observed that if the
hospital was not saved immediately it may be too late because it
appears to be in the process of being sold out. The facts are writ large
along with the statements of witnesses recorded in the course of the
inquiry. In addition, the High Court of Delhi during the course of
hearing of Social Jurists (supra) has also constituted a Committee
headed by Shri N.N. Khanna and also considered the same and
thereafter the decision had been rendered in Social Jurists case
(supra).
107. Reliance has been placed on behalf of Moolchand Kharaiti Ram
Trust to the decision rendered in Asit Kumar Kar v. State of West
Bengal & Ors., (2009) 2 SCC 703, wherein it was observed that no
adverse orders to be passed against a party without hearing him. On
this account, it was contended that the Court could not have passed
the adverse order against the hospitals, who were not heard in the
matter of Social Jurists (supra). It was also contended that a
contempt petition was filed by Union of India, which was dismissed
122
on the ground that the hospitals in question were not impleaded as a
party to the writ petition, that does not help the hospitals in question.
We have examined the matter on merits in the present case afresh
unfettered by previous decision and have found Government's order
dated 2.2.2012, to be absolutely proper.
108. Reliance has also been placed on Delhi Development Authority &
Anr. v. Joint Action Committee Allottee of SFS Flats & Ors., (2008) 2
SCC 672, wherein it was held that novation of contract cannot be
done unilaterally, and the new terms must be brought to the
knowledge of the offeree and his acceptance thereto must be
obtained. It was further observed that when a contract has been
worked out, a fresh liability cannot be thrust upon a contracting
party and it was beyond the scope of the original terms contained in
the offer letter and the allotment letter, in which the imposition of
extra charges was not contemplated. In factual matrix being different
decision has no application to the instant case as it was stipulated
right from the beginning in the policy/rules that land to such
institution has been given for charitable purposes of hospitality,
research etc. at concessional rates and/or with nonprofit motive. It
123
is not the case of new obligation being fastened at the time of renewal
of the contract.
109. However, we make it clear that the hospitals in question and
other similarly situated hospitals, shall scrupulously observe the
conditions framed in the order dated 2.2.2012 and in case any
violation is reported, the same shall be viewed sternly and the lease
shall be cancelled. We are constrained to pass this order as there
had been resistance to wholesome policy violation of the aforeconditions
contained in order dated 2.2.2012. Such violation cannot
be permitted to prevail. We hereby direct the Government of NCT
of Delhi to file a periodical report to this Court within a period of one
year from today with respect to compliance of conditions by the
respondentshospitals and other similar hospitals in Delhi, not only
governed by the decision of Social Jurists case (supra), but also
governed by this judgment.
110. Resultantly, in our considered opinion, the judgment and order
passed by the High Court are not sustainable and the same is liable
124
to be set aside and is hereby quashed. The appeals are accordingly
allowed. Parties to bear their own costs.
…………………………..J.
(Arun Mishra)
……..…………………..J.
(Uday Umesh Lalit)
July 9, 2018
New Delhi.
advocatemmmohan
- advocatemmmohan
- since 1985 practicing as advocate in both civil & criminal laws
Tuesday, July 10, 2018
Government of India had taken a policy decision that all the hospitals which have been provided land by L&DO have to strictly follow the policy of providing free treatment as provided in it. = novation of contract cannot be done unilaterally, and the new terms must be brought to the knowledge of the offeree and his acceptance thereto must be obtained. It was further observed that when a contract has been worked out, a fresh liability cannot be thrust upon a contracting party and it was beyond the scope of the original terms contained in the offer letter and the allotment letter, in which the imposition of extra charges was not contemplated. In factual matrix being different decision has no application to the instant case as it was stipulated right from the beginning in the policy/rules that land to such institution has been given for charitable purposes of hospitality, research etc. at concessional rates and/or with nonprofit motive. It 123 is not the case of new obligation being fastened at the time of renewal of the contract.
