w w w . L a w y e r S e r v i c e s . i n

Dr. C.S. Rex Sargunam, President, Tamilnadu Health Development Association v/s The State of Tamil Nadu, represented by its Secretary to Government, Health and Family Welfare Department & Others

    W.P. No. 4184 of 2012 & M.P. Nos. 1 to 3 of 2012

    Decided On, 01 February 2013

    At, High Court of Judicature at Madras


    For the Petitioner: S. Ayyathurai, Advocate. For the Respondents: R1, S. Navaneethan, AGP, R2, T.R. Rajagopal, SC for M/s. T.R. Rajaraman, R3, S. Vaidyanathan, Advocates.

Judgment Text

(Prayer: This writ petition is preferred under Article 226 of the Constitution of India praying for the issue of a writ of mandamus to direct the first respondent to consider the representation of the petitioner dated 09.01.2012 in the light of the main object of the second respondent mentioned in the Memorandum of Association.)

1. This writ petition came to be posted before this court on being specially ordered by the Hon'ble Chief Justice vide order dated 16.11.2012.

2. This writ petition is filed by the petitioner seeking for a direction to consider the representation, dated 09.01.2012 addressed to the Hon'ble Minister for Health and Family Welfare, Government of Tamil Nadu. The said representation is sent by one Tamil Nadu Health Development Association, claiming to be a registered trust and the petitioner claiming to be the President of the said association (a copy of the Trust Deed not produced).

3. In the said representation, they had requested the first respondent State to direct the second respondent hospital to stop the consortium method and make use of existing fund and they must use the same for the purpose of 24 hours emergency ward and other requirements. In the I.C.U., they should bring back the qualified medical team which existed before 17.10.2011. The pharmacy and the laboratory attached to the hospital should be allowed to function as before. They should also start a diploma course for Medical Laboratory Technology. The Diabetic department of the hospital with the Tag department should be scrapped. The Diabetic department of the hospital should function as before and that the income and expenditure for the last 3 years of the hospital should be audited by the Audit team. A copy of the said representation was also marked to the Secretary to the Government, Health and Family Welfare Department.

4. It is stated by the petitioner that he was a retired Director and Superintendent of the Institute of Child Health and Hospital for Children, Egmore, Chennai. Thereafter, he formed the President of the Tamil Nadu Health Development Association. He is working as a Paediatrician in an honorary capacity in the second respondent hospital. It is stated by the petitioner that the second respondent hospital is run by the society registered under the Tamil Nadu Societies Registration Act. It was established by late Dr.K.S.Sanjeevi for rendering free and charitable medical services or aid to the poor and the other needy. Even the motto of late Dr.K.S.Sanjeevi inscribed in his statue kept in front of the second respondent hospital reads as follows:

"Every citizen should be assured of the best that modern medicine can offer irrespective of his geographical, domicile or economic status removing all inequalities based on poverty, illiteracy and ignorance".

5. There was no Government hospital in the south Chennai except Government Royapettah Hospital. Therefore, late Dr.K.S.Sanjeevi had proposed to set up a hospital for providing medical care free of cost to the poor and at affordable cost to others based upon their economic conditions. The Government of Tamil Nadu had allotted 24 acres o

Please Login To View The Full Judgment!

land free of cost on long lease and are contributing Rs.60 lakhs every year to the hospital. The hospital was put up in the land allotted by the Government in the Old Mahabaliuram Road (presently known as Rajiv Gandhi Salai). It was intended to cater to the medical care needs of the people in and around Adyar upto Thirupporur in the South and Nanganallur in the West. There are four categories of beneficiaries in the said hospital. They are free group (FG), Low income group (LIC), Middle Income group (MIG) and High income group (HIG). In view of the allotment of land and payment of Rs.60 lakhs per annum by the Government, the second respondent hospital has become a Quasi Government hospital.6. It was stated by the petitioner that the hospital is managed by the Central Committee consisting of the President and other members elected in the annual general meeting. The trust was also formed for taking care of the property. The Board of Trustees includes the Accountant General as well as the Advocate General of Tamil Nadu, besides several eminent men in the society including the Collector of Chennai and there are 55 members in the Central Committee. After the death of Dr.N.S.Murali in the year 2009, the character and the nature of medical services in the hospital started changing. They were running a diploma courses in Medical Laboratory Technology and in Dietics and Hospital Administration with 15 students. However, the course was stopped in the year 2009. Likewise, the VHS Laboratory which was rendering services and earning revenue of Rs.1 lakh per month was closed from April, 2011 by the present Secretary. Similar was the case of the pharmacy run by the hospital. The laboratory and pharmacy were handed over to Med All Healthcare Private Ltd. and Med Plus Pharmacy respectively. M/s.Vimta Laboratory and Guna Pharmacy were permitted to function along with VHS Laboratory and Pharmacy. The present outsourcing was done by the new Secretary and his supporters without calling for tenders. Further, a comprehensive medical care provided free as well as with affordable cost was dispensed with by introducing a system of Consortium under which each departmental head will have certain amount of funds allotted by the management at his disposal to run the department. For this purpose, the new management used a sum of Rs.3 crores received from the Highways Department as compensation for the land acquisition for widening the road as well as Rs.1 Crore received from the family. Instead of using the said amount for running 24 hours casuality ward, they are using the amount with an ulterior motive. By introduction of consortium, the earlier system of centralized administration was completely abolished. The petitioner as well as the other Doctors have submitted a memorandum protesting against the action of the new management under the administration of Mr.M.S.Swaminathan, the President of VHS and Dr.E.S.Krishnamoorthy, the Secretary. Even one member, who is a senior advocate made a strong note of protest. Finally, the petitioner through his association submitted a representation, dated 09.01.2012 to the Hon'ble Minister for taking action.7. When the matter came up on 23.02.2012, the writ petition was admitted. In the applications for an interim direction to restart the laboratory and pharmaceutical services and also for an interim injunction from outsourcing the laboratory, pharmacy and the scanning medical services, only notice was ordered. Subsequent to the admission of the writ petition, the third respondent has filed M.P.No.4 of 2012 to get themselves impleaded as third respondent in the writ petition. The third respondent is the union affiliated to the ruling party with registration No.1858/MDS. The impleading petition was ordered by this court on 23.4.2012. The impleaded union had also sent a representation on 10.2.2012 to the State Government. But curiously one of the demand was that the workers in the hospital should be made as Government servants. The impleaded third respondent also has filed a counter affidavit, dated 22.11.2012 and demanded that in order to go into the function of the second respondent hospital, a Commission may be appointed for giving its recommendation so as to safeguard the public interest and the objects for which the hospital was started. But, Mr.S.Vaidyanathan, learned counsel for the third respondent fairly admitted that at present, after protest made by the trade union, a wage revision had taken place and there is no dispute with reference to their service grievances and that no industrial dispute is pending before the authority under the Industrial Disputes Act.8. A counter affidavit was filed by the second respondent, dated 09.05.2012 together with supporting documents in the form of typed set. The petitioner has filed a reply affidavit, dated Nil (July, 2012).9. The stand of the second respondent hospital was that the second respondent Voluntary Health Services is a charitable organization, which is deemed to have been registered under the Tamil Nadu Societies Registration Act. The objects were set out in the memorandum of Association. The State of Tamil Nadu had acquired the land for the purpose of establishment of a hospital on 26.12.1959. The acquisition was made at the request of the second respondent society. An agreement was entered into by the VHS with His Excellency the Governor of Madras in terms of Section 41 of the Land Acquisition Act on 25.3.1961. As per the agreement, the second respondent had agreed to pay the cost of the land inclusive of interest and expenses incurred by the State for acquisition. On such payment, the State Government will vest the title of the land on the VHS subject to condition that the use of the land should be for the purpose for which it was acquired. The second respondent paid the consideration fixed by the Government and that the property now vest with the VHS. Accordingly, an health centre, i.e., hospital, was established and the conditions imposed by the State Government has been observed. The VHS has become an absolute owner of the property. The foundation stone was laid on 08.10.1961 by Pandit Jawaharlal Nehru, the then Prime Minister of India.10. It was stated by the second respondent that the VHS medical centre was fully equipped and completed during 1963. The medical centre consists of 468 beds with almost all the specialities. Nearly 60% to 70% of the patients admitted are given either free treatment, including drugs and diet or highly subsidized treatment. The Tamil Nadu Government gives annual recurring grant for maintenance of the hospital. The hospital is running to cater to the needs of poor, low and middle income groups of community without any discrimination of caste, colour or creed. It is being run on "No loss No profit" basis. The VHS is strictly adhering to the ideals and wishes of its founder Dr.K.S.Sanjeevi. The ownership is solely vest with the second respondent hospital and it can be seen from the fact that the Government repossessed certain lands for expansion of IT Highway and paid Rs.3 Crores as compensation vide order dated 24.07.2007. The annual grant given by the State Government is only Rs.50 lakhs. It is based upon reimbursement of expenses on non paying patients and subsidized patients as per the data provided by the VHS and audited by the Director of Medical Services on annual basis. The calculation is based on an average bed occupancy of 220 patients treated in the free and subsidized groups. The calculation is on the basis of amount of Rs.125/- per patient per day, of which the Government grants reimbursement at 50% and to a maximum of Rs.50,18,750/-. The grant is released in periodic instalments based on audit.11. It was stated that the VHS is not a quasi Government hospital. They are covered by their own by-laws. The presence of some Government functionaries in the Board of management is only to maintain good relationship with the Government and to exercise transparency. The Government functionaries who are in the Board of Trustees, includes the Accountant General, Advocate General of Tamil Nadu and in addition to this, the Collector of Madras is an Ex-officio member of the VHS Central Committee. The decisions of the hospital are taken by the Central Committee and the Government has no control over the same. There is no change in the character and the nature of medical services even after the death of Dr.N.S.Murali. 60% to 70% of the patients of VHS continue to receive free and subsidized services. For the period from April, 2010 to March, 2011, out of 2714 patients, 56.96% free group, 16.6% LIG, 21.62% MIG and 5.45% HIG were treated in the hospital. Even in the subsequent year from April, 2011 to March 2012, figures are almost same. Though VHS was running certified courses in Medical services, like Diploma in Medical Laboratory Technology and in Dietetics and Hospital Administration, the courses were closed. Further the VHS laboratory was closed because the equipment in the lab were outdated and the lab was managed by a part time honorary consultant with Microbiology qualification. There was no qualified Bio-Chemist or Pathologist with relevant qualification available in the lab. This was posing difficulties with respect to post graduate medical training under the aegis of the National Board of Examinations. The VHS was not able to perform number of tests due to the above cause and that the patients were referred to outside hospital.12. It was further stated that the VHS was offering courses to science graduates with the approval of the State Government. But, however, the Deputy Director of Medical Education on 20.04.2009 informed the hospital that the Government had not given permission to the institution to run the course. Further, those who got graduation from the VHS were unable to secure employment in the Government institution. Hence the VHS had discontinued the course. This fact was placed before the Central Committee in its meeting held on 20.8.2011. It was also decided to approach Dr.M.G.R. Medical University for affiliation to the course. In view of this fact, it was decided to engage a comprehensive lab within the VHS. M/s.Med All Healthcare Private Ltd. was established at considerable expenses and this has ameliorated the difficulties experienced by the patients of VHS. The patients were not made to pay any extra charges in the non paying and subsidized groups. The laboratory cost for the free group is maintained as per the earlier VHS rates. Even for other groups, it was comparable to the rates found elsewhere. By reason of the establishment of the comprehensive lab, all necessary services for the large multi speciality hospital are available in the campus and that all VHS Medical Aid plan members receive scaled discounts. The starting of comprehensive lab by M/s.Med All Healthcare Private Ltd., is very beneficial to VHS and its patients.13. The VHS also had a retail pharmacy, which was open during day. It had only a small range of essential medicines and not a full-fledged pharmacy. The outsourcing agency M/s.Optimal Healthcare Solutions is operating the pharmacy in a full-fledged manner of 24 hours x 7 days. It also gives 10% discount to all, 20% to lower income group patients and 30% discount on a broad range of generic drugs to VHS free group patients. This enables the patients to have an access to a comprehensive, well stocked pharmacy at all times. These arrangements were made after 12 months process of internal review and discussions in VHS. Though no tenders were called for for outsourching, but the VHS found that M/s.Medall have over 40 diagnostic centres in Tamil Nadu, Andhra Pradesh and Kerala and they are running diagnostic service for 4 District hospitals in Andhra Pradesh. It is managing a training centre for foetal diagnostic ultrasound for the Government of Tamil Nadu. Likewise, M/s.Optimal Healthcare Solutions (Medplus) is concerned, it has a chain of over 900 pharmacies nationwide and is one of the large chains of pharmacies in the Country. A transparent discussion took place for the benefit of the VHS. The Hospital Development Committee, Special Committee (Projects) and the Central Committee were kept well apprised of the decisions on number of occasions. In a recent meeting of the Central Committee and the Board of Trustees of VHS, the members had reaffirmed this transparency. Some members have raised objections about this arrangement in the meeting held in September, 2011. Thereafter, the VHS had decided to review the arrangement and explore the possibility of modification after going through the opinions of legal and taxation experts. The VHS is awaiting for the overall outcome of the review and thereafter, intend to place the views before the Central Committee and the Board of Trustees. The engagement of two outsourcing agencies is only for the benefit of the VHS and it has not changed the objectives of the VHS.14. It was stated that the Central Committee in its meeting held on 20.8.2011 only held that "while awaiting the approval of the re-drawn MoUs, the Central Committee gave its consent for these partnership arrangements to continue, as its services were essential". The Central Committee also took note of the objections raised by some of the members and proposed that a team of experts consisting of a lawyer, an auditor and a statutory auditor would examine the MOUs along with the advice of an external legal expert and suitably modify them. The Central Committee had not invalidated the decisions as contended by the petitioner. The VHS system of consortium, i.e., groups of Doctors assuming duties based on their specialities and working as a team, was introduced in order to enhance the comprehensiveness of care in VHS. Previously, the VHS was reliant on volunteer senior Doctors and junior Doctors. But the purpose of consortium was to ensure that teams of senior Doctors were available to patients and they took direct responsibility for their care. The introduction of consortium is the decision of the management and it does not add to the costs of care of the VHS patients and is in keeping with contemporary practice of not being profit hospitals. The petitioner has no locus standi to question the decision as what is essentially is the management decision made by the Trustees as well as the Central Committee of the VHS. The consortium have enhanced comprehensive care in the intensive care unit in the VHS which is now managed 24 hours by a competent team of 6 Doctors who are serving round the clock. These steps have ensured that the VHS has become the cheapest ICU in the city and also provides quality care. The allegation that Rs.4 Crores were used for this purpose was erroneous. The amount received as compensation from the Highways Department still remains in the fixed deposit with the nationalized banks yielding interest to VHS. If these amounts were used for such purpose, the petitioner has no locus standi to question as to how the amount should be used.15. It was further stated that the contention that the VHS is a quasi Government or a Government hospital is erroneous. It is a registered society and has got right to take a decision consistent with its Memorandum of Association. The decisions were supported by its elected members, many of whom are eminent individuals and leaders in society. The petitioner is neither a member of the VHS Board of Trustees nor the member of the Central Committee. He is not even the member of the VHS society. He is only an honorary consultant in Pediatrics and is serving at the pleasure of the institution. He has been the instigating elements of the press and disgruntled sections of the employees who attempt to destroy harmonious working relationship within the organization and the impeccable reputation the organization enjoys in the society. The consortium arrangement aims to provide 24 hours cover to VHS patients irrespective of their ability to pay. The changes effected had not resulted in commercialization of the medical services nor it has increased the cost of medical care provided by the VHS. The patients are not made to pay anything extra. On the other hand, they are getting the best medical care from the institution. In a recent meeting of the hospital development committee, members who had attended the meeting expressed satisfaction in the service arrangements. Whatever complaints received were discussed and addressed in a transparent manner. The members of the family of late Dr.K.S.Sanjeevi remain active participants in the VHS management. The allegation that one Professor K.Srinivas Krishnamurthy had shifted his private clinic into the hospital was done in a transparent manner and known to all concerned. He has been associated with the VHS from 1965. He was a student of late Dr.K.S.Sajveevi. At his personal invitation, soon after his training in Canada and U.K., he came back to serve in India. He was an honorary professor in the Government General Hospital and madras Medical College till his retirement. He had founded two Community Neurology Departments of excellence, one in VHS and another not for profit hospital. The institute of Neurological Sciences is a unique multi-disciplinary unit. Due to the effort of Professor Srinivas Krishnamurthy, the department has been affiliated with the Tamil Nadu Dr.M.G.R. Medical University for teaching and research leading to Ph.D and Post Graduate Fellowship. The department has been recognised in the World Health Report released on 7.4.2011. It is also receiving donations in excess of more than Rs.1 Crore from various philanthropists and corporate bodies employ in excess of 25 staff, who has M.Sc., Ph.D. Programmes that benefit about 20 students annually. Dr.Srinivas Krishnamurthy is presently 80 years and has voluntarily shifted his clinic to the campus. The income derived are remitted in full to the VHS.16. The other allegations made raising specific objections have been denied point by point in paragraph 15 of the counter and it is unnecessary to reproduce the same. The petitioner's conduct in filing such a writ petition as an instigating element is unwarranted. It does not speak about is service mentality. On the other hand, eminent Doctors of VHS have expressed their displeasure about the conduct of the petitioner and his attempt to file such a writ petition is only to tarnish the image of the members of the society and it is mala fide.17. In the light of these facts, it has to be seen whether the petitioner has any locus standi to seek for a direction to consider his representation?18. As noted already, the petitioner is neither a member of the society nor a member of the Trust which runs the hospital. He is not even a member of the Central Committee which guides the running of the hospital. As contended by the respondents, the Central Committee comprise of several leading personalities including the Accountant General, Advocate General of Tamil Nadu and the District Collector. If there is any irregularity, it will not go out of their attention. Unless the petitioner is the member of the society, he cannot compel an action to be initiated on the representation made by him. Similarly, if a public charitable trust is not functioning for the purpose for which it has been established, the only remedy is to correct such a trust by taking a recourse to Section 92 C.P.C by filing a scheme suit. Even for filing such a suit, it requires two persons to apply for the same and the court must grant leave taking into account the interest shown by such applicant.19. The description that the hospital is a "quasi government" also does not stand to reason. Only because it is receiving some aid from the Government it does not become a quasi Government. As to what is the meaning of the term "quasi Government agency" came to be considered by the Supreme Court in Pradeep Kumar Biswas v. Indian Institute of Chemical Biology reported in(2002) 5 SCC 111 and in paragraph 74, it was observed as follows:74. Black's Law Dictionary (7th Edn.) defines “instrumentality” to mean “a means or agency through which a function of another entity is accomplished, such as a branch of a governing body”. “Agency” is defined as:“A fiduciary relationship created by express or implied contract or by law, in which one party (the agent) may act on behalf of another party (the principal) and bind that other party by words or actions.”Thus instrumentality and agency are the two terms which to some extent overlap in their meaning; “instrumentality” includes “means” also, which “agency” does not, in its meaning. “Quasi-governmental agency” is “a government-sponsored enterprise or corporation (sometimes called a government-controlled corporation)”. Authority, as Webster's Comprehensive Dictionary (International Edition) defines, is “the person or persons in whom government or command is vested; often in the plural”. The applicable meaning of the word “authority” given in Webster's Third New International Dictionary, is “a public administrative agency or corporation having quasi-governmental powers and authorized to administer a revenue-producing public enterprise”. This was quoted with approval by the Constitution Bench in RSEB case6 wherein the Bench held: (AIR p. 1862, para 5)“This dictionary meaning of the word ‘authority’ is clearly wide enough to include all bodies created by a statute on which powers are conferred to carry out governmental or quasi-governmental functions. The expression ‘other authorities’ is wide enough to include within it every authority created by a statute and functioning within the territory of India, or under the control of the Government of India; and we do not see any reason to narrow down this meaning in the context in which the words ‘other authorities’ are used in Article 12 of the Constitution.”(Emphasis added)In the present case, there is nothing on record to show that the hospital run by the respondents is the Government sponsored enterprise or Corporation.20. The Supreme Court, in a case of a society which is neither State nor an instrumentality of the State under Article 12 of the Constitution, had cautioned that a direction cannot be issued to such a society which will tend to frustrate the very object with which the society was formed. In Lieutenant Governor of Delhi v. V.K. Sodhi reported in(2007) 15 SCC 136, the Supreme Court dealt with the scope of the amenability of the writ jurisdiction in respect of the State Council Educational Research and Training (SCERT) and after applying the test in Pradeep Kumar Biswas case (cited supra), in paragraphs 21 and 23, it was observed as follows :"21. As we understand it, even going by para 40 of the judgment in Pradeep Kumar Biswas2, which we have quoted above, we have to consider the cumulative effect of all the facts available in the case. So considered, we are inclined to hold that SCERT is not State or other authority within the meaning of Article 12 of the Constitution of India. As we see it, the High Court has not independently discussed the relevant rules governing the functioning and administration of SCERT. It has proceeded on the basis that in the face of Pradeep Kumar Biswas2 decision, the decision in Chander Mohan Khanna1 must be taken to be overruled and no further discussion of the question is necessary. But, in our view, even going by Pradeep Kumar Biswas2 each case has to be considered with reference to the facts available for determining whether the body concerned is State or other authority within the meaning of Article 12 of the Constitution of India. So considered, we find that the Government does not have deep and pervasive control over the working of SCERT. It does not have financial control in the sense that once the finances are made available to it, the administration of those finances is left to SCERT and there is no further governmental control. In this situation, we accept the submission on behalf of the appellants and hold that SCERT is not State or other authority within the meaning of Article 12 of the Constitution of India. After all, the very formation of an independent society under the Societies Registration Act would also suggest that the intention was not to make the body a mere appendage of the State. We reverse the finding of the High Court on this aspect.23. It appears to us that in the case of bodies like SCERT, the court cannot ignore the financial implications of implementing the directions that it is called upon to issue. The object of SCERT is laudable and it has to coordinate and promote education in the State. Its resources are limited and the main income is by way of grant from the State Government. When SCERT pleads that it cannot spend the whole of the grant or a major portion of the grant in paying salaries and emoluments to its employees and if it does so, that may tend to frustrate the very object with which the Society was formed, it is an argument that has to be considered weighty by a court called upon to exercise jurisdiction under Article 226 of the Constitution of India. A court cannot issue a direction which would tend to frustrate the very object with which a society like SCERT is formed or a body like SCERT is created. After all, there may be a point of time in a welfare State where the right of the employees must be subservient to the right of the society. In the matter of education, surely, the interests of the society at large should prevail and issue of any direction that may endanger such interests must be done with extreme caution and only after careful deliberation."(Emphasis added)21. It was further argued that the lands were under mortgage of the State Government and therefore, the Government has duty to consider his representation also does not stand to reason. The lands were acquired on behalf of the society and that the amounts were fully paid by the society. They are having patta in their name. Insofar as the other question that payment of certain amounts towards reimbursement of hospital expenses to the economically poor sections, the trust deed does not show that it has been intended to be made as a free hospital. On the other hand, the object of the trust is to have a "no loss no profit" running institution. Even for payment of grant towards reimbursement, it is subject to audit by the Director of Medical Services. Only on the basis of occupancy of bed facilities, a partial amount is refunded and it is also subject to audit by the department concerned.22. The other decisions taken by the hospital in consultation with the Central Committee are all matters comes within the internal administration of the society. Further, each one of the objections raised by the petitioner, i.e., outsourcing of pharmacy and lab, discontinuing the M.L.T. Course and introduction of consortium have been satisfactorily explained by the respondents in their counter affidavit, which was referred to above.23. The trade union was seeking to implead themselves to justify the stand of the petitioner also does not stand to reason. If the trade union has any grievance relating to the service conditions, they are always at liberty to raise an industrial dispute under Section 2(k) of the Industrial Disputes Act and get them adjudicated by the competent Tribunal or the Labour Court, as the case may be. In respect of the other issues relating to reorganization of the working of the institution or the decision to outsource some of the activities, they have no say in such matters as such reorganization of the working of the institution is the managerial discretion and that the Union has no say in such matters, as held by the Supreme Court in Parry & Co. Ltd. v. P.C. Pal reported in(1969) 2 SCR 976 = AIR 1970 SC 1334 and in paragraph 14, it was observed as follows :14. It is well established that it is within the managerial discretion of an employer to organise and arrange his business in the manner he considers best. So long as that is done bona fide it is not competent of a tribunal to question its propriety......."24. In the light of the above, the petitioner has not made out any case for entertaining the writ petition. Hence the writ petition will stand dismissed. No costs. Consequently connected miscellaneous petitions stand closed.