Social Jurist v. Government of NCT of Delhi and Ors

The Delhi Development Authority (DDA) and the Land and Development Office (L&DO) allocated land to some hospitals in the city of Delhi at rates which were much lower than the market value of the land (concessional rate) but with some conditions. Hospitals which were being awarded land at concessional rates were to provide free treatment to a limited percentage both in-patient (IPD) and out-patient departments (OPD).

Social Jurist, the Petitioner, filed a writ petition in the Delhi High Court under Article 226 of the Constitution of India (original writ jurisdiction of High Courts) contending that hospitals were not fulfilling conditions regarding free treatment. The Petitioner prayed to the Court to direct the concerned authorities to take action against defaulting hospitals.

Out of the twenty hospitals with which the Court was dealing, two hospitals denied that they were bound by the conditions. The main argument forwarded by the two hospitals was that the conditions were mentioned in the letter of allotment which was not binding on them. They argued that they were bound only by the lease deed, which was granted under the Governments Grant Act, 1895 (the Act).

During the course of the litigation, the Court passed various orders directing the state authorities to ensure compliance and to set up a committee for monitoring compliance. In deciding the dispute, the Court referred to primarily the Act and the Delhi Development Authority (Disposal of Developed Nazul Land) Rules, 1981 (the Rules).

The Court first went on to answer whether the allocation of land at concessional rates was a grant under the Act. It held that the allocation could not be considered a “government grant in absolute terms.” According to it, the lease deed under the Act was only a secondary document and the allocation was a concluded contract between the parties. It held that the letters of allotment which contained the conditions were the main documents and were not under the provisions of the Act. The Court further held that the land was being allocated under the Rules which were in furtherance of the legislative intent of public health and the State’s constitutional mandate of achieving public equality.

On the issue of whether the State could impose conditions on the hospitals, the Court placed reliance on State of Punjab v. Ram Lubhaya Bugga, ((1998) 1 SCR 1120). It held that under the constitutional mandate of Article 47 (duty of the state to improve public health) and Article 21 (right to life), the State could impose conditions on hospitals to make it more accessible. The Court also held that obligations under these Articles lay not only on the state but also to those placed at an “advantageous situation because of the help or allotment of vital assets.”

The Court rejected the argument that a super specialty hospital could not be expected to open a “general hospital.” It held that “general hospital” did not refer to general treatment but, as specified in the clauses, was meant to make it accessible to the general public especially to the poorer sections. The Court, however, went on to hold that even super specialty clinics were expected to have emergency services so that any patient could be given first aid treatment and could be arranged to be sent to an appropriate hospital.

As to whether the conditions imposed were financially viable, the Court held that not all the conditions should be reasonably construed. It held that if undue financial burden was put on the hospitals, they would run into losses and would eventually shut down. To avoid this, the Court limited the percentage of free treatment patients. It held that only “10% IPD and 25% OPD patients should be treated free in all respects in every such hospital.”

Regarding the meaning of free treatment and its eligibility, the Court held that free treatment meant all facilities were to be free of charge including services, treatment or consumables and non-consumables. Further, it held that the percentage determined as free treatment patients was to be used to treat poor and indigent people. People with no income or income below Rs. 5,000 were to be treated in this category.

To give full effect to the conditions, the Court held that referrals should be made by the government hospitals to private hospitals according to the specialty. It also directed hospitals to maintain a thorough record of all patients being treated or referred. Referrals to private hospitals were to be made in consultation with the Head of the Department. It directed all hospitals to open ‘Special Referral Centres’ within two weeks from the date of the judgment.

The Court also directed the hospitals who had been given land at concessional rates to “deposit money proportionate to the number of patients treated by them during the relevant period in a central corpus/pool which shall be created by government authorities and utilized for the welfare, health care and treatment of the poorer section of the society in Government hospitals.” A special committee was constituted by the Court to overlook the creation and maintenance of this pool as well as to monitor compliance with the rest of the conditions imposed by it.

The Court also held that if any hospital was found not to complying with the conditions and the directions issued by it, the head of such a hospital would be liable to be proceeded against in accordance with law.

The Court constituted an Inspection Committee to carry out inspections at the twenty hospitals dealt with in the petition. It was granted the power to “revive this petition…against the defaulters under the Contempt of Courts Act.”

“The purpose and object appears to be that the hospital should be available to the general public with particular reference to poorer sections and not a generalized multi-specialist treatment. Certain enough, all these hospitals essentially must have a first aid or emergency unit so that in the case of emergency relating to any specialty, if a patient particularly in a dire need of medical help is brought to that hospital, they should be in a position to provide the first aid/emergent treatment and arrange for the patient to be sent to the appropriate hospital for treatment. This limited counter facility is expected to be opened by all these hospitals.” Para. 63.

“The condition besides being reasonable has to be one which can be implemented without frustrating the very object of the scheme. If these super-specialty hospitals are required to treat 70% of the patients free …then in all probability, they would not be able to survive and they may have to shut such hospitals. If that happens, the very object of formulating such a policy would stand defeated. Thus, it is in the interest of all concerned, that this condition should be reasonably construed.” Para. 64.

“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…The principle of equality, fairness and equity would command these hospitals to discharge their obligations of free patient treatment to poor strata of Delhi.” Para. 94.