SUKH SAGAR MEDICAL COLLEGE & HOSPITAL versus STATE OF MADHYA PRADESH & ORS. on 31 July 2020

[2020] 11 S.C.R. 397

SUKH SAGAR MEDICAL COLLEGE & HOSPITALv.

STATE OF MADHYA PRADESH & ORS.

(Civil Appeal No. 2843 of 2020)

JULY 31, 2020

[A. M. KHANWILKAR, DINESH MAHESHWARI ANDSANJIV KHANNA, JJ.]

Education/Educational Institutions – Essentiality Certificategranted to appellant-Trust in 2014 for establishing a medical college– Eventually, Conditional Letter of Permission granted for academicyear 2016-17 – However, renewal permissions not issued by MCIfor three successive academic sessions due to gross deficiencies –Essentiality Certificate cancelled – Challenged by appellant –Rejected – On appeal, held: Appellant failed to fulfil even theminimum benchmark of standards specified by MCI allowing it torun the medical college – Even in Chintpurni Medical College andHospital & Anr. vs. State of Punjab & Ors. reported as [1976] 3SCR 202, relied upon by the appellant, Supreme Court clarified thatthe State Govt. can cancel/revoke/withdraw Essentiality Certificatein exceptional cases – Appellant misrepresented the State Govt. bygiving a sanguine hope of ensuring installation of minimuminfrastructure, setting up a robust organisational structure forrunning a medical college “in a time bound programme” –Therefore, it is a case of constructive fraud played upon the StateGovt. and would come within the excepted category – Substratumon the basis of which Essentiality Certificate was issued hadcompletely disappeared – Order of the High Court upheld – IndianMedical Council Act, 1956 – Medical Council of India Establishmentof Medical College Regulations, 1999 – General Clauses Act, 1897– s.21 – Constitution of India – Art.47.

Words & Expressions – “established” – Meaning of –Discussed.

Dismissing the appeal, the Court

HELD: 1.1 At the outset, this Court may straightaway agreewith the dictum in Chintpurnic Medical College that the act of the

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Conclusion

AState in issuing Essentiality Certificate is a quasi-judicial function.Having said that, it must follow that Section 21 of the 1897 Actcannot be invoked and in absence of an express provision in theIMC Act or the 1999 Regulations empowering the StateGovernment to revoke or cancel the Essentiality Certificate, sucha power cannot be arrogated by the State relying on Section 21.BThat, however, does not deprive the State Government to revokeor withdraw the Essentiality Certificate in case where (a) it issecured by playing fraud on the State Government, (b) thesubstratum for issuing the certificate has been lost or disappearsand (c) such like ground, where no enquiry is called for on theCpart of the State Government. Even in Chintpurni Medical College,the Court has clarified that the State Government can cancel/revoke/withdraw Essentiality Certificate in exceptional cases.Chintpurni Medical College does not lay down in absolute termsthat the State cannot revoke the Essentiality Certificate oncegranted for opening of a new medical college within the State.DThe first excepted category is where the appellant had obtainedthe Essentiality Certificate by playing fraud on the StateGovernment. Fraud vitiates any act or order passed by any quasi-judicial authority, even if no power of review is conferred upon it.As to when it would be a case of fraud played on the StateEGovernment, would depend on whether it was an attempt by theappellant to present facts, so as to misrepresent the State. Thefraud can either be actual or constructive fraud. The actual fraudis a concealment or false representation through an intentionalor reckless statement or conduct that injures another who relieson it in acting, whereas the constructive fraud is unintentionalFdeception or misrepresentation that causes injury to another.Indeed, in the present case, the State Government in its orderdated 5.9.2019 (withdrawing the Essentiality Certificate dated27.8.2014) has adverted to several aspects including theassessment report of the MCI and inspection report of theGCommittee. The substance of the reason weighed with the StateGovernment is that the appellant had failed to fulfil thecommitment given to the State at the relevant time- of providingminimum infrastructure and fulfilment of the norms of MCI andappointing the staff as per norms of MCI - for all this period andH

SUKH SAGAR MEDICAL COLLEGE & HOSPITAL v. STATE OFMADHYA PRADESH & ORS.

was incapable in doing so despite repeated opportunities givensince 2016 by the MCI. [Paras 13-15][415-C-E; 416-G; 417-B-C, D, G-H; 418-A; 419-A-B]

Indian National Congress (I) v. Institute of SocialWelfare & Ors. (2002) 5 SCC 685 : [2002] 3 SCR 1040– relied on.

Chintpurni Medical College and Hospital & Anr. v. Stateof Punjab & Ors. (2018) 15 SCC 1 : [1976] 3 SCR 202– referred to.

Black’s Law Dictionary 6[th]& 11[th] Edition – referred to.

1.2 The totality of the situation reinforces the fact that theappellant-College had failed and neglected to discharge itscommitment given to the State at the relevant time; and isincapable of fulfilling the minimum norms specified by the MCIfor starting and running a medical college. It had thusmisrepresented the State Government at the relevant time bygiving a sanguine hope of ensuring installation of minimuminfrastructure and setting up of a robust organisational structurefor running of a medical college “in a time bound programme”.Therefore, it is a case of constructive fraud played upon the StateGovernment. For, even after lapse of over five years from thedate of issuance of Essentiality Certificate (27.8.2014), theappellant-College is not in a position to secure the requisitepermission(s) from the MCI and the Central Government to runa medical college as per the scheme. The State Government whilstdischarging its role of parens patriae of the student communitycannot remain a mute spectator and expose them to a college,which is deficient in many respects. The fact that no renewalpermission has been granted by the MCI for three successiveacademic sessions due to gross deficiencies in the appellant-College, is itself indicative of the state of affairs in the appellant-College, warranting a legal inference that the substratum on thebasis of which Essentiality Certificate was issued to the appellant-College had completely disappeared. For, even the first batch ofstudents admitted in the appellant-College could not pursue theirmedical course and were eventually reallocated by the StateGovernment to other recognised private medical colleges within

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Athe State as per the obligation specified in the EssentialityCertificate, after obtaining permission of the Central Governmentin that behalf in November, 2019. This being a clear case of anon-functioning college, warranted immediate intervention of theState Government in larger public interest and also because thesubstratum had disappeared. It would certainly come within theBexcepted category, where the power of withdrawal of EssentialityCertificate ought to be exercised by the State and more particularlynot being a case of an established college per se. [Paras 16-18][419-E-H; 420-A-C, F]

1.3 The term “established” is not defined in the IMC ActCor the 1999 Regulations. In the present case, however, theappellant-College was at the threshold stage of only opening andstarting first year course for academic year 2016-17. It failed andneglected to fulfil even the minimum benchmark of standardsspecified by the MCI allowing it to run the medical college.DAdmittedly, no renewal permissions from the Central Governmentwere issued for the successive academic years. In that sense, itis not a case of withdrawal of the Essentiality Certificate of an“established” medical college as such. Had it been a case of well-established and a running medical college having basic minimuminfrastructure as per the specifications of the MCI and StateEGovernment was to withdraw its Essentiality Certificate, thatmatter would stand on a different footing than the case at hand,where the college has miserably failed to ensure completion ofmedical course even of the first batch for three successiveacademic sessions from 2016-17 due to non-renewal ofFpermission by the MCI. While dealing with the case of maintainingstandards in a professional college, a strict approach must beadopted because these colleges engage in imparting training andeducation to prospective medical professionals and impact theiracademic prospects. [Paras 19, 21][420-G; 421-B-D, G]

G1.4 Article 47 of the Constitution of India encompassed inDirective Principles of State Policy, enjoins the State with a dutyto provide for and ensure good public health and a constantendeavour to improve the same to effectuate the fundamentalright to life guaranteed by the Constitution to all. Thus H

understood, the State’s duty under Article 47 is to act as an“enabler” for the wholesome exercise of right to life. A right tohave access to proper public health care would be of little valueif the State does not create the requisite conditions for properexercise of such right. Access to medical college and hospital is,no doubt, a part of the said conditions. What is necessary in thepresent factual matrix is for the State to assess the dire need ofmedical infrastructure within the State or the locality, as the casemay be. The very fact that an Essentiality Certificate is issued inthe first place, in itself, is a testimony of the “essentiality” of suchinfrastructure. The authority of the State to grant EssentialityCertificate is both power coupled with a duty to ensure that thesubstratum of the spirit behind the Certificate does not disappearor is defeated. The exercise of power and performance of dutywith responsibility and in right earnest must co-exist. The dutyunder Article 47 is, in the constitutional sense, fundamental inthe governance of the State. This duty does not end with meregrant of a certificate, rather, it continues upto the point whenessentiality of basic medical infrastructure is properly taken careof within a reasonable time frame. This Court is conscious of theview taken and conclusion recorded in Chintpurni Medical College.Even though the fact situation in that case may appear to be similar,however in a case such as the present one, where the spiritbehind the Essentiality Certificate issued as back as on 27.8.2014remained unfulfilled by the appellant-College for all this period(almost six years), despite repeated opportunities given by theMCI, as noticed from the summary/observation in the assessmentreport, it can be safely assumed that the substratum for issuingthe Essentiality Certificate had completely disappeared. Theappellant-College is a failed institute thus far and is unable todeliver the aspirations of the student community and the publicat large to produce more medical personnel on year to year basisas per the spirit behind issuance of the subject EssentialityCertificate dated 27.08.2014. To this extent, this Courtrespectfully departs from the view taken in Chintpurni MedicalCollege. The order of the High Court rejecting the subject writpetition filed by the appellant-College is upheld. The appellant-College is at liberty, as given by the High Court, to forthwithremove all the deficiencies pointed out by the MCI in its order AB

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Adated 30.5.2019 and apply afresh for the Essentiality Certificate.[Paras 23-25, 27][422-D-F, G; 423-A-B, G; 424-B-C]

Paschim Banga Khet Mazdoor Samity & Ors. v. Stateof West Bengal & Anr. (1996) 4 SCC 37 : [1996]2 Suppl. SCR 331 – relied on.

BHind Charitable Trust Shekhar Hospital Private Limitedv. Union of India & Ors. (2015) 2 SCC 336 : [2014] 14 SCR 1367; Modern Dental College & Research Centrev. State of Madhya Pradesh (2016) 7 SCC 353 : [2016]3 SCR 579; Industrial Infrastructure DevelopmentCCorporation (Gwalior) Madhya Pradesh Limited v.Commissioner of Income Tax, Gwalior, Madhya Pradesh(2018) 4 SCC 494 : [2018] 10 SCR 481; GhaurulHasan & Ors. v. State of Rajasthan & Anr. AIR 1967SC 107 : [ 1962] SCR 772; Hari Shankar Jain v. SoniaGandhi (2001) 8 SCC 233 : [2001] 3 Suppl. SCR 38;DGovernment of Andhra Pradesh & Anr. v. Y.S.Vivekananda Reddy & Ors. AIR 1995 AP 1 – referredto.

From the Judgment and Order dated 06.01.2020 passed by theHigh Court of Madhya Pradesh, Principal seat at Jabalpur in W.P. No.17946 of 2019.

SUKH SAGAR MEDICAL COLLEGE & HOSPITAL v. STATE OFMADHYA PRADESH & ORS.

Saurabh Mishra, AAG for Madhya Pradesh, Dushyant Dave,Vikas Singh, Sr. Advs., Sankalp Kochar, Mayank Pandey, SunnyChoudhary, Gaurav Sharma, Dhawal Mohan, Prateek Bhatia, Advs. forthe appearing parties.

The Judgment of the Court was delivered by

A. M. KHANWILKAR, J.

1. Leave granted.

2. The seminal question in this appeal is: whether the StateGovernment had unjustly revoked the Essentiality Certificate granted toGyanjeet Sewa Mission Trust[1] for establishing a medical college atJabalpur in the State of Madhya Pradesh, being contrary to the decisionof a two-Judge Bench of this Court in Chintpurni Medical Collegeand Hospital & Anr. Vs. State of Punjab & Ors.[2]?

3. Shorn of unnecessary details, the Government of MadhyaPradesh, on an application made by the appellant-Trust, issued the statedEssentiality Certificate as prescribed in Form-2 appended to the MedicalCouncil of India Establishment of Medical College Regulations, 1999[3].The same reads thus: - “Government of Madhya Pradesh Medical Education Department, Bhopal F.No. F-5-56/2014/1/55

Date: 27.08.2014

To,

The Chairman,GhyanjeetSewa Mission Trust,SukhSagar Medical College & Hospital Jabalpur Jabalpur Sir, The desired certificate is as follows: - 1 For short, “the appellant-Trust” or “the appellant-College”

2 (2018) 15 SCC 1

3 For short, “the 1999 Regulations”

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GThe Ghyanjeet Sewa Mission Trust, has applied for establishmentof a new Medical College at Jabalpur. On careful consideration of theproposal, the Government of Madhya Pradesh has decided to issue anessentiality certificate to the [sic] applicant for the establishment of aSukh Sagar Medical College & Hospital Jabalpur with 150 seats in MBBSProgramme under following conditions: -H

SUKH SAGAR MEDICAL COLLEGE & HOSPITAL v. STATE OFMADHYA PRADESH & ORS. [A. M. KHANWILKAR, J.]

1. Institute will fulfil the norms of MCI before inspection ofMedical Council of India.

2. Institute will appoint the staff as per norms of MCI.

3. Government will neither bear any financial burden nor providegrant to the institute.

4. Institute will follow all the rules/conditions of MCI andState/Central Government.

5. Institute will admit the student only after written permissionfrom Central Government, MCI and State Government.

6. Institute will admit the students by adopting transparentprocedure as decided by admission and fee regulatory committeeappointed by the State Government.

7. Institute will charge the fee as decided by the State Government(admission and fee regulatory committee). No other fee will be admissible.

It is certified that: -

i. The applicant owns and manages a 300 bedded hospital.

j. It is desirable to establish a Medical College in the public interest.

k. Adequate clinical material as per the Medical Council of Indianorms is available.

It is further certified that in case the applicant fails to createinfrastructure for the medical college as per MCI norms andadmissions are stopped by the Central Government, the StateGovernment shall take over the responsibility of the studentsalready admitted in the college with the permission of the CentralGovernment.

By order in the name of Governor of Madhya Pradesh.

Sd/-

27.08.2014

(Sanjeev Shrivastava)Deputy SecretaryGovt. of Madhya PradeshMedical Education Deptt.Dated /08/2014"

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A4. After issuance of the aforementioned Essentiality Certificate,the appellant-Trust submitted a scheme to the Medical Council of India[4],for establishment of a new medical college at Jabalpur in the name andstyle of Sukh Sagar Medical College & Hospital with annual intake of150 students in MBBS course for the academic year 2016-17. The MCIafter due inspection had submitted a negative report to the CentralBGovernment due to gross deficiencies, including fake records regardingthe patients and resident staff, as a result of which the Ministry of Healthand Family Welfare, Government of India vide letter dated 10.6.2016,rejected the proposed scheme. However, in light of the directions dated13.6.2016 issued by the Supreme Court Mandated Oversight CommitteeC(OC)[5], the Ministry of Health and Family Welfare issued a letter on20.8.2016 in supersession of its earlier letter, according permission tothe appellant-Trust for establishing a medical college on certain conditionsmentioned therein. This permission was valid for a period of one year, tobe renewed on yearly basis subject to the verification of the achievementof annual targets as indicated in the scheme submitted by the Trust andDrevalidation of performance Bank Guarantee. It was made clear thatthe process of renewal of permission will continue till such time theestablishment of medical college and expansion of hospital facilities wereto be completed and a formal recognition of the medical college is grantedin furtherance thereof. It was also made clear to the Trust that the nextEbatch of students in MBBS course for the academic year 2017-18 beadmitted in the college only after obtaining prior permission of CentralGovernment and fulfilling conditions stipulated by the SCMOC referredto in paragraph 2 of the Letter of Permission (LoP). The MCI inspectedthe college and found that the undertaking given by the managementwas breached and violated, as a result of which the Central GovernmentFdebarred the college for academic years 2017-18 and 2018-19.

5. It is an admitted position that for the subsequent academicyears i.e. 2017-18, 2018-19 and 2019-20, no renewal of permission wasaccorded to the appellant-College. The latest assessment report of theMCI dated 3[rd] and 4[th] January, 2019, would indicate that the appellant-GCollege was unable to rectify the deficiencies pointed out by the InspectingCommittee of the MCI. The deficiencies noted in the assessment reportread thus: - 4 For short, “the MCI”H5 For short, “the SCMOC”

“…

1. No orientation & basic course undergone by MEU.

2. One Lecture theatre for college lacking, hospital LectureTheatre not gallery type.

3. In Central Library:

- Number of books less by 798

- Indian Journals less by 14

- Foreign Journals less by 06

4. Hostel accommodation less by 176 (Required 360 –available 224).

5. Biometric device not yet installed.

6. Bed Occupancy 3.65% (15 patients on 410 beds).

7. Minor surgeries, normal deliveries, caesarean section– Nil

8. Ba, IVP – Nil, CT Scan not installed.

9. Number of admissions only 2, casualty attendance one (01).

10. Cytopathology Nil, Static X-ray in casualty – Nil

11. Separate casualty for OBGY not available.

12. Defibrillators total 04 in OT block and are being shared betweenvarious theatres.

13. No patients in ICCU, ICU, SICU, NICU and PICU.

14. 01 mobile 60 mA, 01 Static 800 mA, CT not available inRadiology department.

15. No mannequins available in Pharma department.

16. No accommodation available for students in RHTC,Students go to RHTC but not in UHTC.

17. Deficiency of Faculty 88.03% (103/117)

18. Deficiency of Residents 90.9% (60-66)

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AResultantly, the Board of Governors in Supersession of MCI, videletter dated 30.5.2019, declined to accept the request for renewal ofpermission for admission to 150 students in MBBS course for theacademic year 2019-20.

6. In this backdrop, the Additional Secretary, Medical EducationBDepartment of Government of Madhya Pradesh, issued a show-causenotice dated 7.8.2019, calling upon the appellant to show cause as towhy the Essentiality Certificate issued in favour of the appellant-Trustshould not be cancelled.

7. The appellant assailed the said show-cause notice by filing aCwrit petition before the High Court of Madhya Pradesh, Principal Seatat Jabalpur[6], being Writ Petition No. 17946/2019. During the pendencyof the said writ petition, the appellant submitted response to the show-cause notice and questioned the authority of the State Government torevoke the Essentiality Certificate, mainly relying on the decision of thisCourt in Chintpurni Medical College (supra).D

8. Additional Secretary, Medical Education Department,Government of Madhya Pradesh, after giving due opportunity to theappellant and considering its response to the show-cause notice, eventuallyproceeded to pass an order directing cancellation/revocation/withdrawalof the Essentiality Certificate dated 27.8.2014. It is apposite to advert toEthe reasons that weighed with the authority in cancelling the EssentialityCertificate. The authority has taken into account that the appellant hadfailed to remove the deficiencies pointed out by the MCI from time totime and no renewal of permission was granted for academic years2017-18, 2018-19 and 2019-20 on that count. Thus, the appellant hadFfailed to provide even the minimum clinical material for running of amedical college, contrary to the conditions specified in clause numbers1, 2 and 4 of the Essentiality Certificate. In substance, the college hadfailed and neglected to provide for the minimum standards specified bythe MCI for running of a medical college, despite several opportunitiesgiven in that regard since academic year 2016-17. The deficiencies (asGnoted in the assessment report of the MCI), were gross and had evenjeopardised the academic career of the first batch of 150 students admittedin the college during academic year 2016-17. It had also come to thenotice of the State authorities that the College had declined to imparteducation to those students who had not deposited fees, which was againH6 For short, “the High Court”

in violation of the conditions specified in the Essentiality Certificate.During a joint meeting between the Collector, Jabalpur, management ofthe College and students, convened on 19.7.2019, the grievances of thestudents were considered and direction was issued to the managementto take corrective measures within ten days and provide the basicminimum facilities to the students and resume the classes. However,that did not happen. In the concluding part of the order dated 5.9.2019,therefore, it is noted as follows:- “…..

“…..

(xvii) Also regarding the Sukh Sagar Medical College & Hospital,the acts of not providing proper infrastructure facilities for thestudy of medical students, lack of necessary academic staff forteaching the course, non-availability of clinical material due to thevery less numbers of patients to be admitted in the hospital, andthe fact of not granting recognition by the MCI for the Sessions2017-18, 2018-19 and 2019-20 due to the different deficiencies,misbehaving with the students, are the gross violation of theconditions and basis conditions of grant of EssentialityCertificate issued by the State Government. In this regard,due to the failure of College Management in takingnecessary action continuously for a period of 3 years, it isitself clear that they have been completely failed in servingthe main objective of issuance of Essentiality Certificatei.e. providing better medical facility to the patients andincreasing the numbers of medical professionals. On theother hand, in the lack of necessary facilities required forthe medical training of the students admitted in the session2016-17, their future has gone in dark. Therefore, Show CauseNotice (SCN) issued by the State Government to the Sukh SagarCollege, is in accordance with law.

(xviii) In W.P. No. 17946/2019, Sukhsagar Medical College &Hospital vs. State of M.P. & Ors., the Hon’ble High Court hasdirected the Competent Authority to decide the present case aftertaking into cognizance all the aspects related to the present case.In this continuation, the Report of Collector, Jabalpur and thedifferent objections submitted by the Sukh Sagar Medical CollegeManagement, were examined in detail and pointwise examinationwas made in compliance of the directions issued by the Hon’ble AB

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ASupreme Court in the matter of Chintpurni Medical College &Hospital (supra). On the basis of detailed examination of all thepoints, the decision to be taken by the Government is in accordancewith the interim order passed by the Hon’ble High Court in W.P.No. 17946/2019.

BTherefore, after due consideration, the State Governmenthas decided that the Essentiality Certificate (Desirability& Feasibility Certificate) issued to the Sukh Sagar MedicalCollege & Hospital, Jabalpur vide Letter No. F 5-56/2014/1/55 dated 27[th] August, 2014 of the Department, is herebyCcancelled with immediate effect.

This order, shall subject to the final order passed by the Hon’bleHigh Court, Jabalpur, in W.P. No. 17946/2019 titled as SukhsagarMedical College & Hospital vs. State of M.P. & Ors.

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9. The appellant, therefore, amended the pending writ petitionand challenged the order dated 5.9.2019 passed by the AdditionalSecretary, cancelling the Essentiality Certificate (dated 27.8.2014).Before we advert to the impugned decision of the High Court, in passing,Eit is relevant to note that the students who were admitted in the firstbatch for academic year 2016-17, had filed a writ petition before theHigh Court being Writ Petition No. 12682/2019 for issuing direction tothe State Government to accommodate the students of appellant-Collegein some other recognised Government/private colleges in the State, inFlight of the conditions specified in the Essentiality Certificate, which wasstill in vogue. The High Court had disposed of the said writ petition on9.7.2019 with direction to the State authorities to consider therepresentation of the concerned students and take necessary measuresas per law. Eventually, after the Essentiality Certificate was cancelledby the State Government vide order dated 5.9.2019, the concernedGstudents belonging to the first batch of 2016-17 came to be adjusted/reallocated in six recognised private colleges within the State of MadhyaPradesh as per the permission granted by the Ministry of Health andFamily Welfare, Government of India vide letter dated 25.11.2019.

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10. Reverting to the impugned judgment, summarily rejecting thesubject writ petition filed by the appellant, by a speaking order, the HighCourt proceeded to hold that the decision in Chintpurni Medical College(supra) does not completely forbid the State Government from exercisingpower to revoke the Essentiality Certificate. The High Court also heldthat the State Government acted within the excepted categories referredto in the reported decision of this Court. Inasmuch as, the StateGovernment has taken into account the fraud played by the college insecuring the Essentiality Certificate, the inability of the college to providefor the minimum standards of infrastructure and other facilities specifiedby the MCI for running of a medical college and also complete loss ofsubstratum and larger public interest, as reasons for revocation ofEssentiality Certificate by the State. While rejecting the writ petition,however, the High Court gave liberty to the appellant to remove thedeficiencies pointed out by the MCI in its order dated 30.5.2019 andapply afresh for the Essentiality Certificate to the State Governmentand if the same is refused thereafter, the appellant was free to questionsuch decision being a fresh cause of action. The writ petition has beendisposed of by the High Court with these observations.

11. We have heard Mr. Dushyant Dave, learned senior counselfor the appellant, Mr. Vikas Singh, learned senior counsel for the MedicalCouncil of India and Mr. Saurabh Mishra, learned Additional AdvocateGeneral for the State of Madhya Pradesh.

12. At the outset, we deem it apposite to closely analyse the two-Judge Bench decision of this Court in Chintpurni Medical College(supra). For, much emphasis has been placed on the said decision asinvolving similar fact situation. Even in that case, the medical collegehad started in the year 2011 in the State of Punjab. The permission forthe first batch was granted in the year 2011-12. For subsequent academicyears i.e. 2012-13 and 2013-14, no renewal of permission was grantedto the college, as it was found to be deficient during the inspection carriedout by the MCI. For the academic year 2014-15, however, a Letter ofPermission (LoP) was granted in terms of order of this Court in HindCharitable Trust Shekhar Hospital Private Limited vs. Union of India& Ors.[7]. Thereafter, no renewal of permission was granted to thepetitioner for the academic year 2015-16. The college had applied forgrant of recognition under Section 11 of the Indian Medical Council Act, 7 (2015) 2 SCC 336

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7 (2015) 2 SCC 336

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A1956[8] in the year 2015. During the inspection carried out by the MCI,deficiencies to the extent of 100% came to be noted. Despite that, interms of the decision of this Court in Modern Dental College &Research Centre vs. State of Madhya Pradesh[9], the scheme submittedby the college was processed further. The SCMOC directed the MCI toconduct inspection and in case the college was found deficient, it was toBbe banned for a period of two years. The MCI conducted inspection ofthe concerned college on 7.3.2017 and found it deficient, thusrecommended to the Central Government to debar the college fromadmitting students against the allowed intake for two academic yearsi.e. 2017-18 and 2018-19. The above decision was unsuccessfullyCchallenged by the concerned college by way of a writ petition. In themeantime, the State Government decided to withdraw the EssentialityCertificate issued to the concerned college. That decision was challengedby way of a separate writ petition before this Court. While consideringthat challenge, the Court examined the scheme of the provisions of theIMC Act and the purpose for which Essentiality Certificate was requiredDto be issued by the State Government. It noted that the same has beenmade condition precedent at the time of submitting the scheme for grantof Letter of Intent (LoI)/Letter of Permission (LoP) to start a newmedical college. It noted that the State Government is required to certifyby way of Essentiality Certificate, its approval for establishment of aEmedical college with a specified number of seats in public interest, andfurther that such establishment is feasible. Thus, an EssentialityCertificate from the State Government mentioning therein that it isessential to have a medical college, as proposed by the applicant, is toprevent the establishment of a college where none is required or to preventunhealthy competition between too many medical colleges. Further, theFonly purpose of the Essentiality Certificate is to enable the CentralGovernment acting under Section 10-A of the IMC Act to facilitate thecompetent authority to take an informed decision for permitting theopening or establishment of a new medical college and once the collegeis established, its functioning and performance and even the derecognitionGof its courses is governed by the provisions of the IMC Act and not anyother law. Having said that, in paragraph 17, the Court observed asfollows: - 8 For short, “the IMC Act”H9 (2016) 7 SCC 353

“17. It would be impermissible to allow any authority including aState Government which merely issues an essentiality certificate,to exercise any power which could have the effect of terminatingthe existence of a medical college permitted to be established bythe Central Government. This the State Government may not doeither directly or indirectly. Moreover, the purpose of theessentiality certificate is limited to certifying to the CentralGovernment that it is essential to establish a medical college. Itdoes not go beyond this. In other words, once the StateGovernment has certified that the establishment of amedical college is justified, it cannot at a later stage saythat there was no justification for the establishment of thecollege. Surely, a person who establishes a medical college uponan assurance of a State Government that such establishment isjustified cannot be told at a later stage that there was no justificationfor allowing him to do so. Moreover, it appears that the powerto issue an essentiality certificate is a power that must betreated as exhausted once it is exercised, except of coursein cases of fraud. The rules of equity and fairness and promissoryestoppel do not permit this Court to take a contrary view.”

The Court then went on to hold that the State Government isdesignated by the 1999 Regulations only for the purpose of EssentialityCertificate to justify the establishment of a medical college within itsterritories and that too when approached by a person seeking to establisha medical college. There is no direct conferral of any power of generalinspection on the State and neither can such a power be read into theRegulations nor be implied as necessary to carry out an expresslyconferred power which does not exist. While rejecting the argument ofthe State about the inherent right of the State to withdraw the EssentialityCertificate, in paragraph 24, the Court observed thus: - “24. The learned counsel for the State of Punjab submitted thatsince the essentiality certificate certifies the availability of adequateclinical material for the proposed medical college, as per theRegulations, the State has the necessary power of inspection ofthe college even after its establishment to ensure that there isadequate clinical material. This submission must also berejected since the State is enjoined to certify adequate AB

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Aclinical material only at the time of proposal of the medicalcollege and not after it is established. But we find from thesubmissions that the State has misinterpreted the term “adequateclinical material” completely. According to the State, “adequateclinical material” means “people” i.e. doctors, patients, staff, etc.Whereas, the term is understood in the field of medical educationBto mean data about number of admissions, number of discharges,number of deaths, number of surgeries, number of procedures,X-rays and laboratories investigations. Thus, what the State isrequired to certify is the data available in the region to justify theestablishment of the proposed medical college. Obviously, for theCpurpose of justifying the existence of a medical college, the State’sclaim that it must have the right to inspect a college after it isestablished to see whether there are adequate numbers of doctors,patients, etc. to justify its continued existence is completely hollowand unfounded.”

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The Court then noted the argument of the State about the existenceof its power ascribable to Section 21 of the General Clauses Act, 1897[10].In that regard, the Court noted that the certificate is neither a notificationnor an order or rule or bye-law as contemplated by Section 21 of theE1897 Act. Further, the act of issuance of Essentiality Certificate by theState is a quasi-judicial function. It is neither a legislative nor anexecutive function as such, so as to attract Section 21 of the 1897 Act.Further, advisedly, there is no provision in the IMC Act or the 1999Regulations empowering the State to revoke or cancel the EssentialityCertificate once granted by it in respect of an established medical college.FIn absence of an express provision in that regard and issuance of anEssentiality Certificate being a quasi-judicial function, Section 21 ofthe 1897 Act will be of no avail. In other words, the State had no powerto withdraw the Essentiality Certificate once granted in respect of anestablished college. At the same time, the Court following earlier decisionsGof this Court observed that even in such a situation, the State would becompetent to withdraw the certificate, where it is obtained by fraud or incircumstances where the very substratum on which the EssentialityCertificate was granted disappears or any other reason of the like nature.For that, the Court has referred to the decisions of this Court in Indian National Congress (I) vs. Institute of Social Welfare & Ors.[11],Industrial Infrastructure Development Corporation (Gwalior)Madhya Pradesh Limited vs. Commissioner of Income Tax, Gwalior,Madhya Pradesh[12], Ghaurul Hasan & Ors. vs. State of Rajasthan& Anr.[13] and Hari Shankar Jain vs. Sonia Gandhi[14]and of the HighCourt of Andhra Pradesh in Government of Andhra Pradesh & Anr.vs. Y.S. Vivekananda Reddy & Ors.[15].

13. At the outset, we may straightaway agree with the dictum inChintpurni Medical College (supra) that the act of the State in issuingEssentiality Certificate is a quasi-judicial function, which view issupported by the analogy deduced from the reported decisions referredto above. Having said that, it must follow that Section 21 of the 1897 Actcannot be invoked and in absence of an express provision in the IMCAct or the 1999 Regulations empowering the State Government to revokeor cancel the Essentiality Certificate, such a power cannot be arrogatedby the State relying on Section 21. That, however, does not deprive theState Government to revoke or withdraw the Essentiality Certificate incase where (a) it is secured by playing fraud on the State Government,(b) the substratum for issuing the certificate has been lost or disappearsand (c) such like ground, where no enquiry is called for on the part of theState Government. In Indian National Congress (I) (supra), the Courtwhile dealing with similar argument to assail the decision of the ElectionCommission to review its order registering the political party, observedas follows: - “33. However, there are three exceptions where theCommission can review its order registering a political party. Oneis where a political party obtained its registration by playingfraud on the Commission, secondly, it arises out of sub-section (9) of Section 29-A of the Act and thirdly, any likeground where no enquiry is called for on the part of theElection Commission, for example, where the political partyconcerned is declared unlawful by the Central Governmentunder the provision of the Unlawful Activities (Prevention)Act, 1967 or any other similar law.”

11 (2002) 5 SCC 68512 (2018) 4 SCC 49413 AIR 1967 SC 10714 (2001) 8 SCC 23315 AIR 1995 AP 1

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And again, in paragraphs 41(3) and 41(4), while summing up thejudgment, the Court held as follows: - “41. To sum up, what we have held in the foregoing paragraph isas under:

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3. However, there are exceptions to the principle stated inparagraph 2 above where the Election Commission is not deprivedof its power to cancel the registration. The exceptions are these:

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(a) where a political party has obtained registration bypractising fraud or forgery; (b) where a registered political party amends itsnomenclature of association, rules and regulationsabrogating therein conforming to the provisions ofDSection 29-A(5) of the Act or intimating the ElectionCommission that it has ceased to have faith andallegiance to the Constitution of India or to theprinciples of socialism, secularism and democracy orit would not uphold the sovereignty, unity andintegrity of India so as to comply with the provisions ofESection 29-A(5) of the Act; and D

(c) any like ground where no enquiry is called for on thepart of the Commission.

4. The provisions of Section 21 of the General Clauses Act cannotFbe extended to the quasi-judicial authority. Since the ElectionCommission while exercising its power under Section 29-A of theAct acts quasi-judicially, the provisions of Section 21 of the GeneralClauses Act have no application.”

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As noted earlier, even in Chintpurni Medical College (supra),the Court has clarified that the State Government can cancel/revoke/withdraw Essentiality Certificate in exceptional cases, by observing thus:- “36. We may not be understood to be laying down that under nocircumstances can an essentiality certificate be withdrawn. The H

State Government would be entitled to withdraw suchcertificate where it is obtained by playing fraud on it or anycircumstances where the very substratum on which theessentiality certificate was granted disappears or any otherreason of like nature.”

In other words, we hold that Chintpurni Medical College (supra)does not lay down in absolute terms that the State cannot revoke theEssentiality Certificate once granted for opening of a new medical collegewithin the State. The observations in paragraph 36 of the reporteddecision also reiterate this position and make it amply clear that inexceptional circumstances referred to therein, the State is free to do so.

14. The core issue in the present appeal, therefore, is whether thedecision of the State Government, dated 5.9.2019, falls within one of theexcepted categories. The first excepted category is where the appellanthad obtained the Essentiality Certificate by playing fraud on the StateGovernment. It is well-settled that fraud vitiates any act or order passedby any quasi-judicial authority, even if no power of review is conferredupon it, as held in paragraph 34 of the decision in Indian NationalCongress (I) (supra) in the following words: - “34. Coming to the first exception, it is almost settled law thatfraud vitiates any act or order passed by any quasi-judicial authorityeven if no power of review is conferred upon it. In fact, fraudvitiates all actions. In Smith v. East Elloe Rural Distt. Council[(1956) 1 All ER 855], it was stated that the effect of fraud wouldnormally be to vitiate all acts and orders. In Indian Bank v. SatyamFibres (India) (P) Ltd. [(1996) 5 SCC 550] it was held that apower to cancel/recall an order which has been obtained by forgeryor fraud applies not only to courts of law, but also to statutorytribunals which do not have power of review. Thus, fraud or forgerypractised by a political party while obtaining a registration, if comesto the notice of the Election Commission, it is open to theCommission to deregister such a political party.”

As to when it would be a case of fraud played on the StateGovernment, would depend on whether it was an attempt by the appellantto present facts, so as to misrepresent the State. The fraud can either beactual or constructive fraud. The actual fraud is a concealment or false A

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Arepresentation through an intentional or reckless statement or conductthat injures another who relies on it in acting, whereas the constructivefraud is unintentional deception or misrepresentation that causes injuryto another. The actual or constructive fraud as predicated in Black’sLaw Dictionary[16] is as follows: - B“actual fraud. A concealment or false representation through anintentional or reckless statement or conduct that injures anotherwho relies on it in acting. – Also termed fraud in fact; positivefraud; moral fraud.”

“constructive fraud. 1. Unintentional deception ormisrepresentation that causes injury to another. 2. Fraud in law.CFraud that is presumed under the circumstances, without regardto intent, usu. through statutorily created inference. • Fraud maybe presumed, for example, when a debtor transfers assets andthereby impairs creditors’ efforts to collect sums due. This typeof fraud arises by operation of law, from conduct that, if sanctioned,Dwould (either in the particular circumstance or in commonexperience) secure an unconscionable advantage, irrespective ofevidence of an actual intent to defraud. – Also termed legal fraud;fraud in contemplation of law; equitable fraud; fraud inequity.”

It may be also useful to advert to the meaning of “actionableEfraud” in the Sixth Edition of the same Law dictionary, as follows: - “Actionable fraud. Deception practiced in order to induce anotherto part with property or surrender some legal right. A falserepresentation made with an intention to deceive; such may becommitted by stating what is known to be false or by professingFknowledge of the truth of a statement which is false, but in eithercase, the essential ingredient is a falsehood uttered with intent todeceive. To constitute “actionable fraud,” it must appear thatdefendant made a material representation; that it was false; thatwhen he made it he knew it was false, or made it recklessly withoutGany knowledge of its truth and as a positive assertion; that hemade it with intention that it should be acted on by plaintiff; thatplaintiff acted in reliance on it; and that plaintiff thereby sufferedinjury…. Essential elements are representation, falsity, scienter,deception, reliance and injury.”

H16 Black’s Law Dictionary 11th Edition

15. Indeed, in the present case, the State Government in its orderdated 5.9.2019, has adverted to several aspects including the assessmentreport of the MCI and inspection report of the Committee. The substanceof the reason weighed with the State Government, as can be culled outfrom the stated order, is that the appellant had failed to fulfil thecommitment given to the State at the relevant time - of providing minimuminfrastructure and fulfilment of the norms of MCI and appointing thestaff as per norms of MCI - for all this period and was incapable in doingso despite repeated opportunities given since 2016 by the MCI. Further,even though the appellant was granted conditional Letter of Permission(LoP) for academic year 2016-17, it had failed to remove the deficiencies,as a result of which not even the first batch could pursue or completethe medical course in the appellant-College. The concerned studentskept on making earnest representation to the State authorities to rescuethem from the hiatus situation in which they were trapped. Indisputably,the concerned students (admitted in the first batch of 2016-17) wereeventually reallocated to another recognised college after November,2019, as no renewal of permission to the appellant-College wasforthcoming for three successive academic sessions i.e. 2017-18, 2018-19 and 2019-20.

16. Such circumstances reckoned by the State, by no stretch ofimagination, can be disregarded as irrelevant, intangible or imaginary.Rather, the totality of the situation reinforces the fact that the appellant-College had failed and neglected to discharge its commitment given tothe State at the relevant time; and is incapable of fulfilling the minimumnorms specified by the MCI for starting and running a medical college.It had thus misrepresented the State Government at the relevant time bygiving a sanguine hope of ensuring installation of minimum infrastructureand setting up of a robust organisational structure for running of a medicalcollege “in a time bound programme”. Therefore, it can be safely deducedthat it is a case of constructive fraud played upon the State Government.For, even after lapse of over five years from the date of issuance ofEssentiality Certificate (27.8.2014), the appellant-College is not in aposition to secure the requisite permission(s) from the MCI and theCentral Government to run a medical college as per the scheme.

17. The State Government whilst discharging its role of parenspatriae of the student community cannot remain a mute spectator andexpose them to a college, which is deficient in many respects. The fact AB

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Athat no renewal permission has been granted by the MCI for threesuccessive academic sessions due to gross deficiencies in the appellant-College, is itself indicative of the state of affairs in the appellant-College,warranting a legal inference that the substratum on the basis of whichEssentiality Certificate was issued to the appellant-College had completelydisappeared. For, even the first batch of students admitted in the appellant-BCollege could not pursue their medical course and were eventuallyreallocated by the State Government to other recognised private medicalcolleges within the State as per the obligation specified in the EssentialityCertificate, after obtaining permission of the Central Government in thatbehalf in November, 2019.C

18. The Essentiality Certificate was issued on the representationof the appellant-College that it would give 150 fully trained and qualifieddoctors each year to the State, thereby improving the doctor-patientratio and provide healthcare to the nearby population in the attachedhospital. All this has become a mirage due to the failure of the appellant-DCollege to get permission of Central Government for four successiveacademic sessions starting from 2016-17 till 2019-20. Not even one doctorhas been produced by the appellant-College after issuance of theEssentiality Certificate nor the hospital attached to the college is providedwith minimum standards specified by the MCI and is found to be grosslydeficient. On a comprehensive view of the state of affairs, the fulfilmentEof MCI norms and other allied conditions must be understood as animplied imperative for the consideration/continuation of EssentialityCertificate. For, there can be no deviation from the standards. This beinga clear case of a non-functioning college, warranted immediateintervention of the State Government in larger public interest and also Fbecause the substratum had disappeared. It would certainly come withinthe excepted category, where the power of withdrawal of EssentialityCertificate ought to be exercised by the State and more particularly notbeing a case of an established college per se.

19. The term “established” is not defined in the IMC Act or theG1999 Regulations. The common parlance meaning of this expression, aspredicated in the Black’s Law Dictionary 11[th] Edition, reads thus: - “established, 1. Having been brought about or into existence.2. Having existed for a long period; already in long-term use.3. Proven; demonstrated beyond doubt. 4. Known to do aHparticular job well because of long experience with good results.

5. (Of a church or religion) officially recognised and sponsoredby the government.”

In the present case, however, the appellant-College was at thethreshold stage of only opening and starting first year course for academicyear 2016-17. It failed and neglected to fulfil even the minimumbenchmark of standards specified by the MCI allowing it to run themedical college. Admittedly, no renewal permissions from the CentralGovernment were issued for the successive academic years. In thatsense, it is not a case of withdrawal of the Essentiality Certificate of an“established” medical college as such. Had it been a case of well-established and a running medical college having basic minimuminfrastructure as per the specifications of the MCI and State Governmentwas to withdraw its Essentiality Certificate, that matter would stand ona different footing than the case at hand, where the college has miserablyfailed to ensure completion of medical course even of the first batch forthree successive academic sessions from 2016-17 due to non-renewalof permission by the MCI.

20. Be that as it may, there would be legitimate expectation amongstthe stakeholders, after issuance of Essentiality Certificate by the StateGovernment, that the applicant-college shall fulfil the basic normsspecified by the MCI in a time bound manner, so as to open the medicalcollege and operate it as per the norms. That, however, has not happenedin the present case since August, 2014 until the issuance of subject show-cause notice in August, 2019 and passing of the impugned order ofwithdrawal of Essentiality Certificate. The fact that the applicant hasmade certain investments for starting the medical college, by itself, cannotbe the basis to undermine power of the State Government coupled withduty to ensure that the medical college is established in terms of theEssentiality Certificate within a reasonable time.

21. While dealing with the case of maintaining standards in aprofessional college, a strict approach must be adopted because thesecolleges engage in imparting training and education to prospective medicalprofessionals and impact their academic prospects. Thus, the future ofthe student community pursuing medical course in such deficient collegeswould get compromised besides producing inefficient and incompetentdoctors from such colleges. That would be posing a bigger risk to thesociety at large and defeat the sanguine hope entrenched in theEssentiality Certificate issued by the State.

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A22. Indeed, the fact that the Essentiality Certificate given to theappellant-College stands withdrawn, it does not follow that the need tohave a new medical college in the concerned locality or the State ceasesto exist. For, the raison d’etre behind Essentiality Certificate, amongstothers, is likely improvement of doctor-patient ratio and access tohealthcare for the population in the attached hospital. As a matter ofBfact, the need would get bigger due to the failure of the new medicalcollege to fulfil the scheme in a time bound manner in right earnest.That entails in enhancing the mismatch of demand and supply ratio ofdoctors required to achieve the medical manpower of the State. It wouldnot be in public interest nor appropriate for the State Government toCremain a mute spectator and not move into action when the collegemiserably fails to translate the spirit behind the Essentiality Certificatewithin a reasonable time. By no stretch of imagination, five years period,to fulfil the minimum requirement and standards specified by the MCI,can be countenanced.D23. Article 47 of the Constitution of India encompassed in Directive D23. Article 47 of the Constitution of India encompassed in DirectivePrinciples of State Policy, enjoins the State with a duty to provide forand ensure good public health and a constant endeavour to improve thesame to effectuate the fundamental right to life guaranteed by theConstitution to all. Thus understood, the State’s duty under Article 47 isto act as an “enabler” for the wholesome exercise of right to life. AEright to have access to proper public health care would be of little valueif the State does not create the requisite conditions for proper exerciseof such right. Access to medical college and hospital is, no doubt, a partof the said conditions. In Paschim Banga Khet Mazdoor Samity &Ors. vs. State of West Bengal & Anr.[17], this Court observed that it isFthe “Constitutional obligation of the State to provide adequatemedical services to the people. Whatever is necessary for this purposehas to be done.”

24. What is necessary in the present factual matrix, as discussedabove, is for the State to assess the dire need of medical infrastructureGwithin the State or the locality, as the case may be. The very fact that anEssentiality Certificate is issued in the first place, in itself, is a testimonyof the “essentiality” of such infrastructure. The authority of the State togrant Essentiality Certificate is both power coupled with a duty to ensurethat the substratum of the spirit behind the Certificate does not disappear

or is defeated. The exercise of power and performance of duty withresponsibility and in right earnest must co-exist. Notably, the duty underArticle 47 is, in the constitutional sense, fundamental in the governanceof the State. This duty does not end with mere grant of a certificate,rather, it continues upto the point when essentiality of basic medicalinfrastructure is properly taken care of within a reasonable time frame.Any future application for such certificate, be it by the present appellant(in terms of directions in this judgment) or by a different applicant, mustbe dealt with accordingly, and supervision of the State must continue toensure that the purpose and substratum for grant of such certificatedoes not and has not disappeared.

25. We are conscious of the view taken and conclusion recordedin Chintpurni Medical College (supra). Even though the fact situationin that case may appear to be similar, however, in our opinion, in a casesuch as the present one, where the spirit behind the Essentiality Certificateissued as back as on 27.8.2014 has remained unfulfilled by the appellant-College for all this period (almost six years), despite repeated opportunitiesgiven by the MCI, as noticed from the summary/observation in theassessment report, it can be safely assumed that the substratum forissuing the Essentiality Certificate had completely disappeared. The StateGovernment cannot be expected to wait indefinitely, much less beyondperiod of five years, thereby impacting the interests of the studentcommunity in the region and the increased doctor-patient ratio and denialof healthcare facility in the attached hospital due to gross deficiencies.Such a situation, in our view, must come within the excepted category,where the State Government ought to act upon and must take correctivemeasures to undo the hiatus situation and provide a window to someother institute capable of fulfilling the minimum standards/norms specifiedby the MCI for establishment of a new medical college in the concernedlocality or within the State. Without any further ado, we are of the viewthat the appellant-College is a failed institute thus far and is unable todeliver the aspirations of the student community and the public at largeto produce more medical personnel on year to year basis as per the spiritbehind issuance of the subject Essentiality Certificate dated 27.08.2014.To this extent, we respectfully depart from the view taken in ChintpurniMedical College (supra).

26. To complete the record, we may mention the argument of theappellant that the attached hospital of the appellant has now been taken AB

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Aover by the State Government recently for providing treatment to Covidpatients. That, however, will be of no avail to answer the matter in issue.We do not intend to dilate on this argument any further.

27. Taking overall view of the matter, in the facts of the presentcase, we uphold the order of the High Court rejecting the subject writBpetition filed by the appellant-College, whereby it had assailed the orderof the State Government dated 5.9.2019, withdrawing the EssentialityCertificate dated 27.8.2014. At the same time, we reiterate the libertygiven by the High Court to the appellant-College to forthwith remove allthe deficiencies pointed out by the MCI in its order dated 30.5.2019 andapply afresh for the Essentiality Certificate to the State GovernmentCand if that request is refused, to pursue appropriate remedy as per lawbeing a fresh cause of action.

28. The appeal is accordingly dismissed being devoid of merits.No order as to costs. Pending applications, if any, are also disposed of.

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Divya Pandey

Appeal dismissed.

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