UNION OF INDIA versus MOOLCHAND KHAIRATI RAM TRUST on 9 July 2018

[2018] 7 S.C.R. 939

UNION OF INDIA

v.

MOOLCHAND KHAIRATI RAM TRUST

(Civil Appeal No. 3155 of 2017)

JULY 09, 2018

[ARUN MISHRA AND UDAY UMESH LALIT, JJ.]

Social Justice:

Direction to Private Charitable Hospitals to follow the policyof providing free treatment to persons belonging to economicallyweaker sections – Validity of – Government of NCT of Delhi by itscircular dated 2.2.2012 intimated respondent-hospitals to implementjudgment of Delhi High Court with regard to free treatment to weakersections of society, passed in Social Jurists case – Order of Land &Development Officer (L&DO) asking the hospitals who had beenallotted land by L&DO to strictly follow policy of providing freetreatment to economically weaker sections – Respondent-hospitals,since were not party in the Social Jurists case, challenged theconditions imposed by the Government of NCT of Delhi and L&DO– High Court quashed the orders passed by Govt. of NCT of Delhiand L&DO – On appeal, held: Land was obtained by the respondent-hospitals for charitable purpose at concessional rates – When theGovernment land is allotted, the hospitals owe a duty to act in publicinterest – It is obligation of State as a welfare state to ensure basicnecessities food, nutrition, medical assistance etc. – Right to life u/Art. 21 includes right to health and thus also includes right ofpatients to be treated with dignity – u/Art. 47 State has to makeconstant endeavour to improve public health – It is also one of thefundamental duties enshrined u/Art. 51A(h) to develop scientifictemper, humanism and the spirit of inquiry and reform – The Statealso has to constantly make an endeavour for realization of humanrights agenda – Right to health is provided in Art. 25 of UniversalDeclaration of Human Rights of 10.12.1948 – Policy decision dated10.6.1949 as well as s. 2 of Charitable Endowments Act, 1890 makesit clear that running of hospitals is regarded as charitable activity– When the Government Land is obtained for charitable purpose,the Government is within its power to impose obligation of free

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Atreatment to economically weaker sections – On refusal to complyor on violation of the obligation, it is open to the lessor to terminatethe lease – Imposition of condition of free treatment to economicallyweaker section does not tantamount to a restriction imposed withinpurview of Art. 19(6) on the right enshrined u/Art. 19(1)(g) –Judgment in social jurists case is a binding precedent – The hospitalsBin question and other similarly situated hospitals are directed toscrupulously observe the conditions framed in order dated 2.2.2012and in case of violation, the lease shall be cancelled – Constitutionof India – Arts 19(1)(g), 19(6), 47 and 51A(h) – CharitableEndowments Act, 1890 – s.2 – Universal Declaration of HumanCRights – Art. 25 – Hospitals.

Hospitals:

Conduct of hospitals – Indulging in inhumane act for the sakeof commercial exploitation such as keeping the dead body as securityfor clearance of bills – Held: Such conduct of the hospitals is perDse illegal and criminal and tantamount to Criminal breach of trustreposed in the medical profession – In future whenever such act isreported to police, it is supposed to register a case againstmanagement of the hospital and the doctors involved in such act.

Constitution of India:E

Art. 162 – Executive orders – In absence of legislation –Validity of – Held: There can be executive orders in absence oflegislation in the field – It is open to the State to issue executiveorders even if there is no legislation in support thereof, providedthe State could legislate on the subject in respect of which action isFtaken.

Doctrines/Principles:

Cy-pres doctrine – Applicability of.

Words and Phrases:

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‘Charitable’, ‘Charitable purpose’, ‘Charitable Corporation’and ‘Charitable trust’ – Meaning of.

Allowing the appeals, the Court

HELD: 1.1 Charitable is the public purpose for the benefitHof the needy people, who cannot pay for benefits received. The

Conclusion

Internal Revenue Code may define it separately for its purposeswhat is charitable so as to claim the benefit under the Act. Thecharitable trust is a trust which is for the benefit of general public.Charitable is a kind and generous in giving money or other helpto those in need. If there is no statutory definition of charitablepurposes, to be a charitable purpose, it must satisfy certain tests.It must be for the public benefit and available to a sufficient sectionof the community. The reference to charity should be construedin their technical legal sense. For income tax purpose, the charitymay be defined in the Act and in that light, the interpretation ofthe Act has to be made. Public benefit is an essential ingredientof charitable activities. There are two distinct requirements, thepurpose itself must be beneficial and not harmful to the public. Itis difficult to believe that a trust would be held charitable if thepoor are excluded from its benefits.[Para 43][975-F-H; 976-A-B]

1.2 The cy-pres doctrine can be clearly pressed into servicein the instant matter when the Government land has been allottedto the hospitals even if the mode of giving charity was not specified.It can be specified later on and the Court is not powerless toenforce that purpose of the charitable trust, of which the particularmode of the application had not been defined by the donor orotherwise. Where a testator intends to benefit several charitableobjects, one of which fails, the fund must not be distributed amongother objects if the one that fails bears no resemblance to theother. When trusts have been altered by a scheme, and the trustsof the scheme become impossible so that a new cy-pres schemeis required, the trusts of the new scheme must be as close aspossible to the original trusts of the gift. [Para 44][976-C-E]

1.3 The relief of the poor is one of the essentialrequirements of the charity. All hospitals are not charitableinstitutions as there may be hospitals which run commercially.The hospitals, which are operating under the guise of charity, arein fact being run on a commercial basis and it has becomeimpossible for the poor to afford the life-saving drugs at anaffordable price. Their right to life is in jeopardy. Merely by theexpression hospital, it could not be successfully claimed by therespondent-hospitals that they are charitable. They can bedirected to fulfill their obligation and fulfill the purpose by AB

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Aundertaking charitable activities and give it the real meaning bygiving free services as envisaged in the policy. The claim of thehospitals that they are undertaking charity at their own levelcannot be used as a shield to the performance of charity in anorganized way. The very spirit of the argument that as they docharity, it cannot be fastened upon them, is self-destructive andBtends by its tenor to negate unjust obstruction created in thepath of real charity. [Para 46][976-F-H; 977-A]

1.4 Charitable purpose includes relief of the poor, educationand medical needs. As per the provisions of the CharitableEndowments Act, 1890, relief of the poor and medical relief isCincluded as such conditions which had been imposed are clearlywithin the parameters of aforesaid definition. [Para 46][977-B-C]

1.5 The charity in the broadest sense includes whateverproceeds from a sense of moral duty or from humane feelingstowards others uninfluenced by one’s own advantage or pleasure.DIn its widest sense, denotes all the good affections men ought tobear towards each other; in its most restricted and commonsense, relief of the poor. In the Mahommedan Law, the charityhas a more general import than under the English Law. A wakf ofproperty by a Mahommedan to defray the expenses of the poor,Ethe fakirs, the orphans, the needy and the indigent and to defraythe expenses of good deeds, creates a trust for public purposesof a charitable nature. In common parlance, the word charitymeans giving to someone in any necessitous circumstances andin law, it means a giving for public good. Thus, the charitableobject would be served if it is not to earn a profit. [Paras 47,F49][977-D-F; 979-D]

1.6 Medical profession deals with the life of human beings.There has to be a balancing of human rights with the commercialgains. In the wake of globalisation, it is a regime of IntellectualProperty Rights. Even these rights have to give way to the humanGrights. It is an obligation of the Government to provide life-savingdrugs to have-nots at affordable prices so as to save their lives,which is part of Article 21 of the Constitution of India. It is equallyan obligation of the State to devise such measures that have-notsare not deprived of the very treatment itself. AdministeringHmedicines is also a part of medical therapy. Thus, members of the medical profession owe a constitutional duty to treat the have-nots. They cannot refuse to treat a person who is in dire need oftreatment by a particular medicine or by a particular expert merelyon the ground that he is not in a position to afford the fee payablefor such an opinion/treatment. Thus, when the Government landhad been obtained for charitable purpose of running the hospital,the Government is within its right to impose such an obligation.[Paras 51, 52][980-H; 981-A-D]

1.7 When the Government land has been allotted to thehospitals, they would not be doing free service but being arecipient of Government largesse at concessional rates andcontinue to enjoy it, they owe a duty to act in public interest. Notonly have obtained the land at a concessional rate, the other twohospitals, namely, Sita Ram Bhartia Institute of Science &Research and Foundation for Applied Research in Cancer havealso obtained land at a lower pre-determined rate, not at marketrate. It was not by way of a public auction that they have receivedthe land. Besides, in their cases clause 7 was inserted in theallotment letters to the effect that “The DDA reserves its rightto alter any terms and conditions on its discretion.” As hospitalsare enjoying Government land it is open to the Government toimpose such riders and stipulations for free treatment to be givento economically weaker sections. [Paras 57, 58][983-C-E, H]

1.8 The realization of human rights vests responsibilitiesupon the State. The State has to constantly make an endeavor forrealization of human rights agenda, particularly in relation toeconomic, social and cultural rights. Right to health is providedin Article 25 of Universal Declaration of Human Rights of10.12.1948. [Para 59][984-A-B]

1.9 The State has to ensure the basic necessities like food,nutrition, medical assistance, hygiene etc. and contribute to theimprovement of health. Right to life includes right to health.Right to life and personal liberty under Article 21 of theConstitution also includes right of patients to be treated withdignity. Right to health i.e., right to live in a clean, hygienic andsafe environment is a right under Article 21 of the Constitution.Every doctor whether at a Government hospital or otherwise hasthe professional obligation to extend his services with due ABC

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Aexpertise for protecting life. The Constitution envisages theestablishment of a welfare State. In a welfare State, the primaryduty of the Government is to secure the welfare of the people.Providing adequate medical facilities for the people is an essentialpart of the obligations undertaken by the Government in a welfareState. The Government discharges this obligation by runningBhospitals and health centers which provide medical care to theperson seeking to avail of those facilities. Preservation of humanlife is thus of paramount importance. Government is duty-boundto provide timely care to persons in serious conditions. Medicalfacilities cannot be denied by the Government on the ground ofCnon-availability of bed. [Paras 60, 61 and 62][984-C-G; 985-B-D]

1.10 The State can also impose such obligation when theGovernment land is held by such hospitals and it is theconstitutional obligation imposed upon such hospitals. UnderArticle 47, State has to make constant endeavor to raise the levelDof nutrition and the standard of living and to improve public health.It is also one of the fundamental duties enshrined in Article 51A(h)to develop the scientific temper, humanism and the spirit ofinquiry and reform. [Para 63][985-E-F]

1.11 Even when the purpose of the charitable activity isEnot defined, it is open to the court to define it. The decision ofthe Government cannot be said to be foreign to the purpose forwhich land is held. Thus, the action of the State cannot be said tobe unauthorized, illegal or arbitrary in any manner whatsoeverand is in furtherance of the very objectives for which the medicalprofession exists. [Para 65][986-D-E]F

1.12 By and large the hospitals have now become centersof commercial exploitation and instances have come to noticewhen a dead body is kept as security for clearance of bills ofhospitals which is per se illegal and criminal act. In future,whenever such an act is reported to the police, it is supposed toGregister a case against management of Hospital and all concerneddoctors involved in such inhumane act, which destroys the basicprinciples of human dignity and tantamount to a criminal breachof the trust reposed in the medical profession. [Para 65][986-E-F]

1.13 It is the obligation on the medical professionals,Hhospitals, the State and all concerned to ensure that poor person is given treatment and not deprived of the same due to poverty.That is what is envisaged in the Constitution also. On the makingof a doctor, the State spends and invests a huge amount of publicmoney and it is the corresponding obligation to serve the needyand the treatment cannot be refused on the ground of financialinability of the patient to bear it. To such an extent, the right andmoral obligation can be enforced and that precisely has been doneby issuance of the impugned directions to provide free treatmentin IPD and OPD to economically weaker sections of society. [Para67][987-B-D]

1.14 It is apparent from the policy decision dated 10.6.1949and also the provisions contained in section 2 of the CharitableEndowments Act, 1890 that running of hospitals is regarded as acharitable activity. The further rider in policy was that suchinstitution claiming allotment should be secular and of non-communal character. [Para 67][987-E]

1.15 It cannot be said that the condition is not applicableto hospitals and would apply to Arts and Crafts Association, andthere was no specific stipulation with respect to providing freetreatment in the letter of allotments and lease deed. The riderthat the Arts and Crafts institution should be run for good of thepublic, without any profit motive is primarily applicable to thecharitable institutions like hospitals etc. then it has been onlyspecified as an obligation to Arts and Crafts institution etc. too.As such there would be an obligation upon hospitals beingcharitable by their very nature to provide free treatment toeconomically weaker sections of society. The expression ‘no profitmotive’ would also exclude the hospitals being run for commercialgains. That would be violative of the very foundational basis andfulcrum on which the allotment order had been issued and leasedeeds have been executed. Once having claimed themselves tobe charitable institutions, it does not lie in the armory of defenseto raise such plea and having obtained the benefit of the publiclargesse. [Para 68][987-F-H; 988-A-B]

1.16 As a matter of fact, as these hospitals are being runfor commercial gains, it would be open to the lessor to terminatethe lease. That can be done in case there is a refusal to complywith or violation in any manner of the obligation of providing free AB

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Amedical treatment to 10% IPD and 25% OPD patients belongingto economically weaker sections of the society. The impositionof the said condition is inherent in the policy and in the verygrant on the basis of which the land is held and even otherwise inthe case of two other institutes i.e. Sita Ram Bhartia Institute ofScience & Research and Foundation for Applied Research inBCancer, as they are holding the Government land for the hospitalpurpose and research functions in the hospital, the allotment wasalso made at a pre-determined rate and not by way of auction andconsidering the specific stipulation in clause 7 of the lease deedand considering the aforesaid other aspects, and it being charitableCactivity, it was open to the Government to obligate them byproviding free medical treatment. [Para 68][988-B-E]

1.17 The decision in *Social Jurists case has been renderedon the basis of the terms and conditions contained in the allotmentletters as well as stipulations made in the lease deeds. SomeDrepresentations were made relating to free treatment. The HighCourt, hence in Social Jurists case opined that it was not necessaryto incorporate each and every condition in the lease deed andother corresponding documents would also be seen and it wasnot only contractual but statutory, and public law obligationenjoined upon the hospitals to fulfil condition of free treatment.EThe order was affirmed by this Court by a reasoned order, henceit becomes binding as precedent. [Para 69][988-E-G]

1.18 In the case of Moolchand Kharaiti Ram Trust and St.Stephens Hospital, the lands were allotted for charitable purposesunder the Scheme of the year 1949, as further modified, thus, theFpolicy under which they had obtained lease deed would also be arelevant document and of paramount importance for entitlementto hold the land for purpose as specified in the policy, as that isthe basic document governing the rights of the parties, and theterms and conditions of lease deed, would be supplemental toGthe main objective of the policy. The lease deed can supplementnot supplant the main policy or rules as the case may be underwhich the allotment has been obtained and lease deed has beenexecuted. [Para 70][988-G-H; 989-A-B]

1.19 Not only by the policy that prevailed in 1949, the landHat concessional rates for charitable purposes, had been obtained

and free treatment being as stipulated in the order dated02.02.2012 issued by the Government of India, is within the realmof the policy under which allotment had been made at highlyconcessional rates in the heart of Delhi and the DelhiDevelopment Authority Rules framed in 1981. They cannotwriggle out of their obligation by contending that there was nosuch stipulation in the allotment letter or lease deed. Allotmentletter and lease deed are subject to the riders in the main policyand rules under which grant has been made. It is the foundationof the allotment letter and the lease deed. [Para 71][989-B-D]

1.20 It is not correct to say that this Court cannot proceedto make an order on account of sympathy in contravention ofsettled law and it will seriously damage the credibility of thisinstitution. The Trust cannot be permitted to wriggle out of itsobligation unjustly and unfairly. Originally the Trust was set upfor pure charity. Trust has lost its main objective and assumed acommercial character and it is regrettable that it has to bereminded of its responsibility by the Court for the purpose forwhich it exists and having obtained the land on a particular basis,is observed only in breach thereof. The adverse remarks in thereport of Justice Qureshi Committee with respect to theinstitution cannot be brushed aside on the sole ground thatcomments recorded in Justice Qureshi’s report were based onthe statement made by disgruntled employees of the hospitals,who were in dispute with the management of the hospital. [Para75][991-D-G]

1.21 On behalf of Moolchand Kharaiti Ram Trust, Will hasbeen relied upon to indicate the purpose of creation of Trust.The objects of the creation of Trust was inter-alia devising meansfor imparting education in and improving the “Ayurvedic systemof medicine” and preaching the same. In order to achieve thelatter object, it was not prohibited to take help from the Englishor Yunani or any other system of medicine and according to need,one or more than one Ayurvedic Hospital may be opened. Whenits object was of improving the Ayurvedic system of medicineonly as is apparent from the material on record that at presentthe said activities had been confined to one room and the changedmain activity is an Allopathic system of medicine which was not AB

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Aat all the intendment of the creator of the Trust. However, havingobtained the land for charitable purposes for the hospital, for noprofit and for the public good, whatever system of medicine isbeing administered, it can be obligated with such charitable riderof free treatment as envisaged in the impugned order issued bythe Government. [Para 77][992-B-F]

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1.22 Similarly, St. Stephens Hospital is Missionaries’hospital and its very objective admittedly is to provide thecharitable services free of charge but it has also become more orless a commercial venture as in the case of other hospitals interalia involved in the instant matter, how such provision for charityCis opposed is beyond comprehension, is it charity versus charity.They have to abide by the just and reasonable legal conditionsfor free treatment which are constitutionally envisaged also. [Para78][992-G-H]

State of Punjab & Ors. v. Mohinder Singh Chawla &DOrs. (1997) 2 SCC 83 : [1996]10 Suppl. SCR 279;Balram Prasad v. Kunal Saha & Ors. (2014) 1 SCC384 : [2013] 12 SCR 30; Occupational Health andSafety Association v. Union of India & Ors. AIR 2014SC 1469 : [2014] 4 SCR 10; Pt. Parmanand Katara v.EUnion of India & Ors. (1989) 4 SCC 286 : [1989] 3SCR 997; Paschim Banga Khet Mazdoor Samity & Ors.v. State of West Bengal & Anr. (1996) 4 SCC 37 : [1996]2 Suppl. SCR 331 – relied on.

P.C. Raja Ratnam Institution v. Municipal CorporationFof Delhi & Ors. 1990 (Supp) SCC 97 : [1989] Suppl.SCR 66; Municipal Corporation of Delhi v. ChildrenBook Trust (1992) 3 SCC 390 : [1992] 2 SCR 535;Divisional Manager, Aravali Golf Club & anr. v.Chander Hass & Anr. (2008) 1 SCC 683 : [2007] 12SCR 1084 – referred to.

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Incorporated Council of Law Reporting for Englandand Wales v. A-G (1971) 3 All ER I029 CA;Ironmongers’ Co. vs. A-G (1844) 10 CI & Fin 908 at027 HL; Lambeth Charities (1853) 22 LJ Ch 959 –referred to.

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Black’s Law Dictionary, Ninth Edition; Webster’s NewWorld Dictionary; Halsbury’s Laws of England, Vol.5,Fourth Edition; Law Lexicon, the Encyclopedic LawDictionary by P. Ramanatha Aiyer – referred to.

2.1 It is not correct that imposition of condition tantamountsto a restriction imposed within the purview of Article 19(6) of theConstitution. High Court has erred in law in holding that suchstipulation could have been imposed only by a statutory law. It isnot a restriction on the right to carry on medical profession, themedical profession has obligated itself by such conditions by verynature of its professional activity and when the State land is beingheld which is for the public good with no profit motive, such landis held for the charitable purpose of public good. The charitablepurpose would include, the aforesaid obligation of free treatmentto the persons of economically weaker strata of the society. It isnot a restriction but the very purpose of existence of medicalprofession and very purpose of policy/Rules to grant land toinstitutions without public actions that would have fetched marketrate and does not amount to putting any fetter to practice themedical profession or to carry on occupation. The benefits ofvarious welfare schemes hardly reach to them in spite of effortsmade, economic disparity is writ large and persists. They cannotafford such treatment and thus in lieu of holding land ofGovernment at concessional rate and enjoying huge occupancybenefits inter alia for aforesaid reasons, the hospitals can be askedto impart free treatment as envisaged in the Government order.[Para 83][998-B-F]

2.2 The right to carry on the medical profession has notbeen restricted, however, what was enjoined upon the respondent-hospitals to perform otherwise had been given a concrete shape.Thus, it was permissible to issue circular in the exercise of powerunder Article 162 of the Constitution. It was urged on behalf ofhospitals that they were doing a charitable work on their own,thus, it could not be said to be a restriction within the meaningcontemplated under Article 19(6) for which a law was required.No new restriction has been imposed for the first time underArticle 19(6) of the Constitution of India, as such there was no A

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Anecessity for enacting a law, such guidelines could be issued underthe executive powers. [Para 86][999-C-E]

2.3 It is open to the State to issue executive orders even ifthere is no legislation in support thereof provided the State couldlegislate on the subject in respect of which action is taken. ThereBcan be executive orders in the absence of legislation in the field.[Para 87][999-F]

2.4 Therefore, such stipulation for free treatment does notamount to restriction under Article 19(6) on the right enshrinedunder Article 19(1)(g) and even otherwise it was not necessaryCto enact a statutory provision by the Government in view ofexisting liability as per policy/rules/statutory provisions as toethical standards and other statutory provisions in force. [Para95][1013-B-C]

Rai Sahib Ram Jawaya Kapur & Ors. v. The State ofDPunjab [1955] 2 SCR 225 : AIR 1955 SC 549; U.Unichoyi & Ors. v. State of Kerala AIR 1962 SC 12 :[1962] SCR 946; Minerva Talkies, Bangalore & Ors.v. State of Karnataka & Ors. (1988) Suppl. SCC 176 :[1988] SCR 511; T.V. Balakrishnan v. State of T.N. &Ors. 1995 Suppl. 4 SCC 236; State of Orrisa and AnrEvs. Radheyshyam Meher & Ors. AIR 1995 SC 855 :(1995) 1 SCC 652 : [1994] 6 Suppl. SCR 591; DalmiaCement (Bharat) Ltd. v. Union of India (1996) 10 SCC104 : [1996] 1 Suppl. SCR 825; Indian Drugs &Pharmaceuticals Ltd. & Ors. v. Punjab DrugsFManufacturers Association & Ors. (1999) 6 SCC 247– relied on.

Kharak Singh v. State of U.P. [1964] 1 SCR 322; BijoeEmmanuel & Ors. v. State of Kerala & Ors. (1986) 3SCC 615 : [1986] 3 SCR 518; State of M.P. & Anr. v.GThakur Bharat Singh AIR 1967 SC 1170 : [1967] SCR454; Bijay Cotton Mills Ltd. v. State of Ajmer AIR 1955SC 33 : [1955] SCR 752 – referred to.

3.1 It cannot be said that decision in Social Jurists case isnot applicable to the Trust. Condition of free treatment had beenthe primary objective, which would be applicable to hospitals inH

question and to all other similarly situated hospitals, whether theywere party to the aforesaid decision or not. The decision renderedin Social Jurists case would be applicable to similarly situatedinstitutions having been rendered in the public interest institutionand affirmed by this Court by a reasoned order. [Para 103][1023-A-C]

3.2 It is not the case of unilateral imposition of the conditionof free treatment on the hospitals. The inquiry was conducted,hospitals were heard and evidence was recorded by JusticeQureshi Committee and thereafter recommendation made in thereport had been accepted. The hospitals were required to showcause. Pursuant thereto, the reply had been filed. Thus, thedecision cannot be said to be unilateral. [Para 104][1023-C-D]

3.3 Before imposing the conditions in lease deeds, a HighLevel 10-Member Committee for hospitals in Delhi wasconstituted, headed by Mr. Justice A.S. Qureshi regarding theworking of the hospitals and nursing homes in Delhi, to reviewthe existing free treatment facilities extended by the charitableand other hospitals who had been allotted land on concessionalterms/rates pre-determined by the Government, and to suggestsuitable policy guidelines for free treatment facilities for needyand deserving patients uniformly in the beneficiary institutions,in particular, to specify the diagnostic, treatment, lodging, surgery,medicines and other facilities that would be given free or partiallyfree; to suggest a proper referral system for the optimumutilization of free treatment by deserving and needy patients; andto suggest a suitable enforcement and monitoring mechanismfor the above, including a legal framework. The Committee heldvarious meetings, conducted enquiries, various hospitals wereheard including Moolchand Kharaiti Ram Hospital. TheGovernment observed that there were resistance and persistentrefusal of the management of Moolchand Kharaiti Ram Hospitalto send a reply to the questionnaire and to submit the documentswhich they were required to submit at the end of the enquiry.The first visit made to Moolchand Kharaiti Ram Hospital was on16.1.2001 and the second on 21.3.2001. Various other hospitalswere also visited. The Committee observed that there was nolegal, social or moral justification for allowing such money-making ABC

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Acommercial concerns. The land was allotted for a charitablepurpose and to do charitable service which has now been totallyreplaced by exploitative commercial hospitals. [Para 105][1023-D-H; 1024-A-B]

3.4 With respect to Moolchand Kharaiti Ram Hospital,BJustice Qureshi Committee has discussed the matter in extensivedetails. It has been observed that initially the Trust was trulycharitable and continued to serve as a free Ayurvedic hospital forpatients in OPD and IPD sections. It also carried on the researchfor Ayurvedic medicines. Later on the trustees decided tointroduce Allopathic treatment also. The Allopathic Section hasCbeen upgraded with air-conditioned deluxe and super-deluxerooms which are called Wards. Presently the Allopathic sectioncovers about 90% of the hospital activities and the Ayurvedicsection is reduced to about 10%. There is only nominal Ayurvedictreatment of patients in OPD and IPD, which had originally 4Dwards. Now it is reduced to only one ward in which there are veryfew patients. The manufacturing of Ayurvedic medicines is alsoconsiderably reduced. After noting in detail the statements ofvarious witnesses working in the hospital, and after analysingthem, the Committee has found that the Moolchand Kharaiti Ram Hospital has acted not only contrary to the wishes of its founderEbut also violated the terms and conditions regarding freetreatment to the poor, openly both in letter and spirit. Themanagement of hospital does not consider it to be a charitablehospital at all. The land would not have been allotted to Trust if itwas not charitable. Nonetheless the land has been allotted forFcharitable purpose to the hospital. In addition, the High Court ofDelhi during the course of hearing of Social Jurists case has alsoconstituted a Committee headed by Shri N.N. Khanna and alsoconsidered the same and thereafter the decision had beenrendered in Social Jurists case. [Para 106][1024-A-H; 1025-A]

Delhi Development Authority & Anr. v. Joint ActionGCommittee Allottee of SFS Flats & Ors. (2008) 2 SCC672 : [2007] 13 SCR 811 – distinguished Asit Kumar Kar v. State of West Bengal & Ors. (2009)2 SCC 703 : [2009] 1 SCR 469 – referred to H

4. The hospitals in question and other similarly situatedhospitals, shall scrupulously observe the conditions framed inthe order dated 2.2.2012 and in case any violation is reported,the same shall be viewed sternly and the lease shall be cancelled.The Government of NCT of Delhi is directed to file a periodicalreport to this Court within a period of one year from the date ofthe present judgment with respect to compliance of conditionsby the respondents-hospitals and other similar hospitals in Delhi,not only governed by the decision of Social Jurists case but alsogoverned by the present judgment. [Para 109][1025-G-H; 1026-A-B]

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Case Law Reference

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ACIVIL APPELLATE JURISDICTION: Civil Appeal No. 3155of 2007.

From the Judgment and Order dated 28.04.2014 of the High Courtof Delhi at New Delhi in W.P. (C) No. 1478 of 2012.

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C.A. Nos. 3153-3154, 3156 and 3157-3158 of 2017.

Sandeep Sethi, Ajit Kumar Sinha, Shanti Bhushan, Ms. V. Mohana,Sr. Advs., Ms. Sadhana Sandhu, Ms. Asha Gopalan Nair, Shadman Ali,Mohan Prasad Gupta, Ms. Aakanksha Kaul, A. Thanvi, Raj BahadurCYadav, B.V. Balaramdas, Neeraj Yadav, Mukesh Kumar Maroria, B.Krishna Prasad, Ashok Agarwal, Ms. K. R. Chitra, Ms. Ritu Bhalla,Ms. Medha Sachdeva, Ms. Sanjana Sharma, S. S. Shroff, SumantBhushan, Rajeev Sharma, Ms. Radhalakshmi R., T. Rajat Krishna, Ms.Garima Prashad, Dr. Lalit Bhasin, Ms. Nina Gupta, Ms. Ratna D.DDhingra, Ms. P. Chadna, Mudit Sharma, Advs. for the appearing parties.

The Judgment of the Court was delivered by

The Judgment of the Court was delivered by ARUN MISHRA, J. 1. The question involved in the appeals iswith respect to the validity of Circular issued by the Government ofNCT of Delhi (GNCTD) on 2.2.2012 whereby it intimated the hospitalsEto implement the judgment of Delhi High Court with regard to freetreatment to the weaker sections of the society in terms of the judgmentdated 22.3.2007 in the case of Social Jurists v. Government of NCT ofDelhi & Ors. Thereafter, the Land & Development Officer (in short,‘L&DO’) passed an order dated 2.2.2012 wherein it was stated that theFGovernment of India had taken a policy decision that all the hospitalswhich have been provided land by L&DO have to strictly follow thepolicy of providing free treatment as provided in it. That the said conditionswere applicable to Moolchand Hospital and St. Stephens Hospital asthey were allotted land by L&DO. Communication on similar lines wasissued by Government of NCT of Delhi to Sitaram Bhartia and theGFoundation of Cancer Research imposing condition of providing freetreatment to 10% indoor patients and 25% to outdoor patients of poorstrata of the society. The decision was taken in the light of the decisionof Delhi High Court in Social Jurists case (supra) which was referredby this Court in Special Leave Petition [Civil] No.18599 of 2007 vide H

order dated 1.9.2011 in which this Court observed that 25% OPD and10% IPD have to be given treatment free of cost. Said patients shouldnot be charged with anything. However, the concerned hospital couldmake the arrangements of the cost either by meeting the treatment/medicines cost from its funds or resources or by way of sponsorships orendowments or donations. As the respondents-hospitals were not a party,they have questioned imposition of said conditions in the impugned orderby filing writ applications. The High Court has quashed the impositionof conditions hence, the appeals have been preferred.

2. The factual matrix reflects that the Government of India in theyear 1949 took a decision to provide all possible help to the hospitals byallotting land to the hospitals and schools at highly concessional rates soas to involve them in achieving the larger social objective of providinghealth and education to the people. Pursuant to the decision taken in themeeting dated 10.6.1949 under the Chairmanship of the Secretary(Finance) it was decided that the land would be allotted to the hospitalsand schools at the rate of Rs.2000/- to Rs.5000/- per acre. The hospitalsand schools were treated as charitable institutions. While the firstsafeguard relating to institutions being secular and non-communal incharacter, free help by allotment of land to schools and hospitals wasunanimously accepted. It was also agreed that non-profit making bodiesbe included under the term “charitable institution” with the aforesaidinstitutions. The test should be that the institute should be run for thegood of the public without any profit motive. The relevant portion ofpolicy decision dated 10.6.1949 is extracted hereunder:

“1) It should be clearly laid down that the land will be made availableonly for institutions of secular and non-communal character, schoolsand hospitals should be freely helped by allotment of land butapplications from other types of charitable institutions should beconsidered individually on merits. It would be risky to lay down ageneral rule as regards the latter.

2) Recognition by an appropriate authority to the Governmentshould be a condition precedent the allotment of land to schools,hospitals etc.

3) The first safeguard was unanimously accepted. It wasunderstood that an institution of secular and non-communalcharacter was one which did not discriminate against any class of AB

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Apeople on any ground while making an admission. It was alsoagreed that institutions like Arts and Crafts Society and other non-profit making bodies should be included under the term “CharitableInstitution”. The test should be that the institution should be runfor the good of the public without any profit motive.”

B3. It was also deliberated upon on 10.6.1949 that what should bepremium and ground rent chargeable to a charitable institution. As perthe policy laid down by the Government of India in the letter of theDepartment of Education, Land, dated 25.7.1943, the premium chargedwas too high, to be easily payable by any charitable institution much lessby any displaced institution from Pakistan. According to that formula,Cany charitable institution will have to pay a premium at the rate of 25,000to 35,000 per acre, plus ground rent @ 15% on the premium per annum,that would be obviously too high. Hence, it was agreed that the premiumchargeable on land allocated to charitable institutions in Delhi shouldvary from Rs.2000/- to Rs.5000/- per acre.

DFacts relating to Mool Chand Khairati Ram Trust :

4. In the year 1927 one Lala Kharaiti Ram of Lahore made a Willwith a codicil registered at Lahore by which Moolchand Khairati RamTrust was constituted by Lala Kharaiti Ram with the name of his fatherShri Moolchand. The relevant clauses of the Will are extracted hereunder :

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“(8) After meeting the above-mentioned allotments the followinginstructions shall be observed with regard to the property of everydescription that may remain after my death:- (a) All the remaining property of every description shall constitutea Trust known as Moolchand Kharaiti Ram Trust, Lahore, theFobjects of which shall be as follows:-

(1) Imparting education in and preaching Sanskrit accordingto Sanatan Dharm Methods, and

(2) Devising means for imparting education in and improvingGthe Ayurvedic System of Medicine and preaching the same. Inorder to gain object No.2 it is not prohibited to take help from theEnglish or Yunani or any other system of medicine and accordingto need one or more than one Ayurvedic Hospital may be opened.”

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5. It was the case of the Trust that the author neither used theword charity nor charitable while creating the Trust in the Will. In law, itbecame a charitable trust on account of the provisions of section 2 ofthe Charitable Endowments Act, 1890. Mool Chand hospital acquiredthe perception of being charitable not from the Will or the purpose setout for the Trust but from the very nature of the activity of providingmedical relief, more so in view of section 2(15) of the Income Tax Act,1961 which defines charitable purpose.

6. The Trust was running a hospital in Lahore in the name ofMoolchand Kharaiti Ram Hospital. After partition, the trustees had toleave Pakistan and migrate to India as refugees in 1947. The Ministry ofRehabilitation allotted nine acres of land at Lajpat Nagar to the Trust on17.4.1951 on which land at Lajpat Nagar, Delhi, the Trust built a hospitalwhich has been running since then. At the time of allotment Lajpat Nagarwas not a prime location of Delhi.

7. It was further the case of the Trust that in the allotment letterthere was no term or condition to provide free treatment to patientsbelonging to economically weaker sections of the society at the hospital.Subsequently, lease deed was formally executed between the Presidentof India and Moolchand Kharaiti Ram Trust which was to be effectivefrom 17.4.1951 for a period of 99 years. In this lease deed also, therewas no such condition regarding free treatment to any patient. Thus, itwas not open to the Government to impose the obligation of providingfree medical treatment by an executive order. The policy of 1949regarding institution should be run for the good of the public without anyprofit motive was applicable to other institutions like Arts & Crafts Societyand not to hospitals. At the most, the only rider in the policy was that theinstitution would be run for the good of the public without any profitmotive. This policy/test was to be applied at the time of allotment of landand only such institutions were to be allotted land which in the opinion ofthe Government fulfilled the said criteria. Since the policy has not beenconverted into law by enactment of an Act by the legislature, onlyinsistence could be that the institution should be run without any profitmotive and not that the institution be required to provide free treatmentto any specified number of patients. The DDA (Disposal of DevelopedNazul Land) Rules, 1981 are not applicable in the case of Trust. Clause14 of the lease deed did not authorize the Government to impose suchconditions. That the decision of Social Jurists case (supra) is not AB

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Aapplicable as in that case there was either conditions of allotment, or thestipulations in the lease deed under which the hospitals were obliged toprovide access to significant percentage of the IPD and OPD facilities.Right to carry on any occupation, trade or business is fundamental underArticle 19(1)(g) as such, such restriction could have been imposed byenacting a law under Article 19(6) of the Constitution of India byBParliament or the State legislature. Such condition could not have beenimposed by executive feat in exercise of power under Article 162. In thedecision in Social Jurists (supra) which has been affirmed by this Court,the Trust was not a party. The condition of lease could not have beenaltered unilaterally. This Court while dismissing the SLP on 1.9.2011 byCa speaking order, did not intend such result. This Court never intended topass adverse order against a person who had not been given notice orheard in the matter. A contempt petition was filed in the High Court forproceeding against the hospital run by the trust. The same was dismissedby the High Court as they were not parties to the case of Social Jurists

(supra). Land was given by way of incentivizing the Trust to open aDhospital in that locality because at that time not so many people werewilling to open hospitals or schools. As these services were to be providedby the State, the land was not given at the concessional rate. It was themarket rate that prevailed in the year 1951. Report of Justice QureshiCommittee was not relied upon by the High Court while deciding theEcase of Social Jurists (supra) and High Court had appointed a Committeenamely Mr. N.N. Khanna Committee. At that time when Justice QureshiCommittee’s report was prepared, it was based upon the statement madeby disgruntled workmen who were having dispute with the managementof the hospital as such said report cannot be looked into. It was alsosubmitted that there are specialist doctors in the Trust run since 1958Fwho devote one hour each day to OPD patients from the weaker sectionsof the society without charging them anything and they will continue todo so.

Facts regarding St. Stephen hospital :

G8. In the case of St. Stephen hospital, it was averred by the hospitalthat it was established in the year 1885 by a group of missionary womenin Chandni Chowk, Delhi. In 1908 it moved to its present location toTees Hazari, Delhi. Land admeasuring 1.37 acres, 2331 sq.yds. and1.29 acres was allotted to it by L&DO vide allotment letters dated12.6.1970, 25.2.1972 and 19.1.1976 for its additional requirements.H

Subsequent to the agreement, the lease deeds were signed and perpetuallease deeds were executed. There was no such condition in the allotmentletters/lease deeds for providing free care/treatment to the patients. Thehospital having regard to its objective has always been providingsubstantial treatment to the needy. In the writ petition, the order passedby L&DO on 2.2.2012 was questioned regarding the condition of freecare as part of the terms and conditions of the lease deed. Same hasbeen allowed by the High Court. Though land had been obtained forpurpose of the charitable institution it was not open to imposing suchriders by executive order. There was no condition of free care in the1949 policy. Unilateral amendment of the lease deed could not havebeen made. The decision of Social Jurists (supra) is not applicable as20 hospitals were dealt with in the said decision. There was no stipulationregarding free care in the allotment letters/lease deeds. The order iswithout jurisdiction. Hence, the writ petition was filed in the High Court.

Facts regarding Sitaram Bhartiya Institute of Science &Research:

9. Sitaram Bhartiya Institute of Science & Research was aregistered society. On 30.3.1984, it applied for allotment of landadmeasuring 3 acres for establishing a multi-disciplinary research complexin New Delhi. On 22.10.1984 the DDA allotted land admeasuring 1.52acres @ Rs.6 lakhs per acre. Request was made by the said society tocharge at the concessional rate that was declined on 20.11.1984. On2.9.1985 lease deed was signed by which a consideration of Rs.8,76,000/

- for 1.46 acres was transferred to the petitioner. The case of SocialJurists (supra) was filed in the High Court. The writ petition was disposedof by the High Court. Pursuant to the decision in Social Jurists (supra),Circular was issued by the Government on 20.1.2012 to the hospitals/societies to whom land had been allotted at concessional rates to providefree treatment to the eligible patients or weaker sections category freeof charge. The society took the stand that it was not allotted the land forthe purpose of hospital at concessional rate. Hospital was asked by thedepartment on 28.6.2012 to provide free treatment. On 28.6.2012 itdirected that it was making arrangement to comply with the order. On12.7.2012 the society informed the Director of Health Services aboutthe stand taken by it to comply with the said directions. However, on13.3.2012 contempt application filed against it for not complying withthe directions, was disposed of by the High Court holding that no contempt AB

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Awas made out. On 18.4.2013 and 29.4.2013, Director of Health Servicesrequired the accounts of hospitals for the purpose of scrutiny for the lasttwo years from the date on which the possession of land was given.Petitioner pointed out on 4.5.2013 that there was no condition to providefree treatment to economically weaker sections category as such thehospital was not similarly situated. Condition was not applicable. However,Bname of petitioner was not removed from the hospitals that failed toprovide free treatment hence the writ petition was filed in the High Court.Moreover, similar are the facts of Foundation for Applied Research inCancer.

The stand of the Government:C

10. On behalf of the State it was contended that the stand of theGovernment was that as per the policy decision taken in the year 1949,it was decided to allot the land at concessional rates i.e. @ Rs.2000/- toRs.5000/- per acre to the institutions which was far lesser than the alreadyprevailing concessional rate of Rs.25,000/- to Rs.30,000/- per acre fixedDvide letter dated 25.7.1943.

11. In the case of Moolchand Khairati Ram Trust vide allotmentletter dated 17.4.1951 land was allotted at the rate of Rs.2000/- toRs.5000/- per acre and ground rent @ 5% on the premium per annum.Thereafter, a lease deed was executed for 99 years on 24.4.1968 inEfavour of Moolchand Khairati Ram Trust.

12. St. Stephens hospital was similarly allotted 1.37 acres of landvide allotment letter dated 12.6.1970 which was followed by lease deeddated 3.7.1970, whereafter, further land admeasuring 2331 sq. yds. wasallotted vide allotment letter dated 25.2.1972 at the rate of Rs.5000/- perFacre and ground rent at the rate of 5% per annum.

13. Sitaram Bhartiya Institute of Science & Research was allotted1.52 acres of land at the rate of Rs.6/- lakhs per acre on 22.10.1984followed by lease deed dated 2.9.1985 in respect of another plot of 1.46acres for a consideration of Rs.8,76,000/-. The Government of DelhiGwith the approval of Lt. Governor of Delhi constituted a Committeeheaded by Mr. Justice A.S. Qureshi to review the existing free facilityextended by the charitable hospitals and various other hospitals whichhad been allotted land at concessional terms/rates by the Government.Amongst other measures the Committee opined as under:

“1. Most of the representatives of the hospital submitted that 25%of beds earmarked for poor patients were excessive since thecost of medicines was too high. It was agreed that it should not bemore than 15% in any case, but 10% would be ideal. Therefore,the Committee recommended 10% indoor beds free for poorpatients for all purposes including medicines and consumables.The free treatment services should be available to 25% of totalOPD patients. This condition should be made applicable toall hospitals that have been allotted land by the govt.”

(emphasis supplied)

14. The recommendations of the Qureshi Committee wereaccepted with some variation in the meeting of the GNCTD presidedover by the Chief Secretary on 23.10.2002.

15. Earlier, a writ petition was filed by Social Jurists under Article226 of the Constitution of India in the High Court of Delhi seeking thatconditions of allotment of land to hospital particularly in regard to freetreatment to poor people be complied with and action be taken in respectof recommendations of the Justice Qureshi Committee. The writ petitionwas decided on 22.3.2007. Various directions were issued, inter alia, asunder:

“A. All the 20 hospitals stated in this judgment and/or all otherhospitals identically situated shall strictly comply with the term offree patient treatment to indigent/poor persons of Delhi as specifiedabove i.e. 25 OPD and 10% IPD patients completely free ofcharges in all respects.”

16. The High Court of Delhi vide order dated 17.7.2007 directedall the hospitals which had been given land on concessional rates toabide by the order of free treatment. The special leave petitions werepreferred by the hospitals which were dismissed by a speaking order bythis Court. This Court observed that 25% OPD and 10% of IPD patientshave to be given treatment free of cost. The said patients should not becharged with anything.

17. Thereafter the GNCTD came out with a Circular on 20.1.2012intimating hospitals to implement the directions of the High Court withregard to free treatment in terms of judgment dated 2.3.2007. Land &Development Officer passed an order in this regard to follow the policy.

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ASimilar letters were issued to Sitaram Bhartiya and Foundation for AppliedResearch in Cancer.

18. The Foundation for Applied Research in Cancer was allotteda plot admeasuring 0.9 acres @ Rs.28,50,000/- per acre provisionallywith annual ground rent at 2.5% per annum, the premium was revised toBRs.39,00,000/- per acre on 22.10.1991. In August 1992, it represented tothe Lt. Governor that as per notification dated 11.09.1991, the price ofthe land allotted to it was fixed at Rs.3,25,000/- and sought a refund,however, the request was declined.

19. The High Court of Delhi had allowed the writ applications,Chence, the appeals have been preferred. Social Jurists, a civil rights grouphas filed Civil Appeal Nos.3157-3158 of 2017 against the judgment andorder passed in the case of Moolchand Kharaiti Ram Trust and others.Other appeals have been filed by Union of India/NCT of Delhi.

Rival SubmissionsD

20. It was urged by Mr. Sandip Sethi, learned Additional SolicitorGeneral on behalf of the appellants that the High Court erred in allowingthe writ applications. The condition of providing 10% IPD and 25%OPD free medical treatment to poor strata of the society cannot beconsidered to be a restriction in terms of Article 19(6) of the ConstitutionEof India putting fetters on the right of the respondent hospitals to carryon their trade and profession under Article 19(1)(g) of the Constitutionof India. The direction has been issued in terms of the policy of allotmentin public interest which must override the business interest of an individual.The High Court erred in holding it to be a restraint under Article 19(6)which can be imposed only by a legislation. It was within the competenceFof the Government to pass Government Order to implement therecommendations of Mr. Justice A.S. Qureshi Committee. Therespondents Moolchand Khairati Ram Trust and St. Stephens hospitalwere given land at the concessional rate being charitable institutionswith the purpose of providing medical aid to poor and needy sections ofGthe society. The concessional rates in 1949 were reduced substantiallyas per policy from the rates in 1943 with respect to charitable institutions.The Moolchand Khairati Ram Trust and St. Stephens hospital have takenbenefit of State largesse on account of being charitable institutions cannotturn around and question the conditions imposed by the Government toprovide free medical aid to the percentage of patients. It was also urgedHby learned counsel on behalf of the appellants that in Writ Petition [C]

No.2866 of 2002 - Social Jurists v. GNCTD & Ors. decided by theHigh Court, the cases were similarly placed. The allotment was made inthose cases also at the concessional rate by the Government. Thoughthere was some stipulation in some of the lease deeds of the said hospitalsto provide free service to the extent from 10% to 70%. However, JusticeA.S. Qureshi Committee recommended a uniform standard of 10% IPDand 25% OPD free treatment in all hospitals that had been given land bythe Government at a concessional rate.

21. It was also urged that in the cases of Sitaram Bhartia Instituteof Science & Research and Foundation for Applied Research in Cancer,there was a stipulation in the lease deed under clause 7 as under:

“7. The DDA reserves its right to alter any terms and conditionson its discretion.”

The Government was well within its powers to impose the conditionin terms of the aforesaid clause.

22. It was also urged that Sunder Lal Jain Charitable hospital hadchallenged the said order by preferring a special leave petition that wasdismissed by this Court on 1.9.2011 by a speaking order. Thus, the issuehad attained finality and it was incumbent upon the hospitals in questionto provide free services to the poor.

23. Sitaram Bhartia Institute of Science & Research andFoundation for Applied Research in Cancer were given land as per theDDA, 1981 Rules, in particular Rules 3, 4, 5, 6 and 20 at concessionalrates. The pre-determined rates are nowhere close to market rates. Abare reading of the rules would reflect that a separate process is givenfor the sale of plots by auction or tender. Thus, allotment of land at pre-determined rates is also concessional.

24. It was also urged that the definition of ‘charitable’ as given inIncome-tax Act would not govern the field in the present case. Word‘charitable’ is to be seen in the legal sense. Word ‘charitable’ is usedand has been relied upon in the Law Lexicon by P. Ramanatha Aiyar,2[nd] Edition, 1997, which defines the ‘charitable’ as under:

“includes every gift for a general public use, to be applied consistentwith existing laws, for benefit of an indefinite number of persons,and designed to benefit them from an educational, religious, moral,physical or social standpoint.”

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A25. On the other hand, learned senior counsel appearing on behalfof the respondents-hospitals contended that legal obligation of a personcan be created by an agreement or statutory law and in no other manner.The court cannot pass an order on account of sympathy in contraventionof the settled law as the function of this court is to protect and preservethe rule of law which has been held to be basic feature of the ConstitutionBin the case of Kesavananda Bharti. In the case of Moolchand KhairatiRam Trust, in the Will, the executor of the Will by which he created theTrust, never intended that free treatment should be provided to the poorand needy. Reliance has been placed on the definition of ‘charity’ inCharitable Endowment Act, 1890 and Income Tax Act, 1961 and theCland had been allotted to the Trust as per the directions issued by theMinistry of Rehabilitation as the trustees came to India as refugees fromPakistan. The policy decision in 1949 did not envisage free treatment tothe patients neither the conditions in allotment letter nor in the leasedeed executed for 99 years. The condition in the policy dated 10.6.1949

that the institution should be run for good of the public without any profitDmotive was not applicable to hospitals. Even if it was applicable to hospitalsit only provided that the institutions would be run for the public goodwithout any profit motive. Thus, condition of free treatment could nothave been imposed. The DDA Rules of 1981 are not applicable. Clause14 of the lease deed would not cover imposition of such onerous condition.EThe decision in Social Jurists (supra) is not applicable. Thus, such acondition could have been imposed in view of provision under Article19(6) of the Constitution by enacting a statutory law as defined in Article13. It was not open to the Executive to impose such conditions. Theorder of this Court dated 1.9.2011 is not applicable to respondent-hospitalsas they were not parties to the said decision and this Court could notFhave issued such directions without hearing them. Contempt petitionfiled in the High Court against the Trust for violating decision in SocialJurists (supra), was dismissed. As a matter of fact allotment was madeat the market rates prevailing in 1951. Free services are being providedin the hospital since 1958 at its own level.G

26. In the case of St. Stephens hospital similar arguments havebeen raised, apart from that it was urged by learned senior counsel thatthough charity is being performed by the missionaries as such conditionscould not have been imposed by the appellants. There was no suchstipulation in the allotment letters/sale deeds. The interpretation of the H

lease deed made by L&DO was impermissible. Unilaterally suchconditions could not have been imposed. It could have been done byenacting statutory law. The conditions were impermissible, arbitrary andviolative of Article 14. The lease deeds are not governed by the provisionsof the Government Grants Act. The Executive power referred to inArticles 73 and 298 of the Constitution did not empower the State tounilaterally amend the terms of a perpetual lease deed granted by it. Thefundamental rights cannot be abridged by an executive order. Decisionin Social Jurists (supra) is distinguishable. There was no similar stipulationin the lease deeds of respondents. Judgment of the High Court in SocialJurists (supra) was faulty to the extent that it imposed a condition offree care on hospitals in whose lease deeds there was no such condition.It was not open to the court to first create a law or an obligation and thenseek to enforce it. Charity would not mean free services to be provided.Medical relief itself is a charitable purpose. It would not mean that itcannot charge for services provided by it. Though while seeking allotmentby the missionaries as charitable society, do not get actuated by a profitmotive. Surplus income is also utilized for charitable purpose for providingmedical care. The fact that the land was allotted on concessional rateswould not confer any right on the Government of India to unilaterallyamend the lease deed. There was no provision for free care in 1949policy.

27. On behalf of Sitaram Bhartiya Institute of Science & Research,inter alia, it was urged that it was not covered by the judgment of DelhiHigh Court in Social Jurists (supra). The land was not given torespondent No.1 at concessional rates. No condition for providing freetreatment was prescribed in the allotment letter or in the lease deed.Since lease was in perpetuity there was no right to impose a furthercondition on the lessee which may have financial implications. Clause 7of the allotment letter does not authorize the lessee to change or alterany terms of the lease. As no such condition was there in the letter ofallotment, as such new condition could not have been imposed. Leaserental is liable to be increased after every 30 years. The condition offree treatment is not legally tenable or justified. Since the work of theinstitute was not charitable in nature, such conditions could not havebeen imposed. Respondent No.1 Sitaram Bhartiya Institute providesmedical services as part of its agenda, as the same generates valuableresearch data and funds for respondent No.1’s research activities. A

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Ashow cause notice was issued to the society on 9.2.2005 alleging that itwas running a hospital on commercial lines. It was required to showcause as to why the allotment and lease deed should not be canceled,and it was informed to the Commissioner, Institutional Branch, DDAthat it was pursuing its mission of research in healthcare and medicine.The clinical/hospital portion generates valuable research data and fundsBwhich enable respondent No.1 to finance research activities. It wasfurther contended that there were three categories, governmentorganisations, charitable organisations and other institutions, for thepurposes of allotment of land. Other institutions were allotted land at thezonal variant rates that were the rate paid by the respondent. There wasCno such condition. The condition would have serious financialconsequences as entire feasibility and viability would have to be workedout, whether it would be economically viable to undertake the project atall or not. Such unconscionable, unreasonable and arbitrary conditioncould not have been imposed. Some of the medicines are very expensive.

Its cost cannot be borne by the hospital and it cannot form part of freeDmedical treatment except possibly in Government hospitals. No profitno loss condition would not mean that it was allotted on a concessionalbasis. Respondent No.1 is a self-supporting society, is doing medicalresearch also. In case free medical treatment is provided it would diminishthe respondent’s ability to invest in research. Populist and misplacedEpolicies could not have been framed or imposed. Similar arguments havebeen raised by the Foundation for Applied Research in Cancer.

28. Following questions arise for consideration:

1. Whether by virtue of fact that Moolchand Kharaiti Ram Trustand St. Stephens Hospital have obtained the land for charitable purposesFat a concessional rate, it was open to the Government to impose a conditionof 10% in IPD and 25% in OPD services to be provided free of cost topatients of economically weaker sections?

2. Whether in view of the condition No.7 of the allotment letterissued in the case of Sitaram Bhartiya Institute and Foundation for AppliedGResearch in Cancer, the imposition of the aforesaid condition of freetreatment was permissible?

3. Whether the imposition of aforesaid conditions amounts torestriction under Article 19(6) to carry on profession, trade or businessunder Article 19(1)(g) of the Constitution of India?H

4. What is the effect of the previous decision rendered in the caseof Social Jurists (supra)?

In reference to question nos.1 & 2:

29. In order to decide the main question, it is necessary to ponderon the question with respect to the meaning of charity. In the backgroundof the fact that Government of India in the year 1949 took a decision forallotment of land at the concessional rate to the charitable institutions.The hospitals and schools inter alia were treated as charitable institutionsof secular and non-communal character with a further rider that thesame should be run for the good of public without any profit motive. Itwas observed that as per the policy decision dated 25.7.1943, the premiumcharged was too high. As per that formula, the premium was Rs.25,000to Rs.35,000 per acre per annum plus ground rent at 5% on the premiumper annum. It was decided to allot the land at the concessional ratesbetween Rs.2,000/- to Rs.5,000/- per acre. A substantial area of 9 acresin Lajpat Nagar the heart of Delhi to Moolchand Khairati Ram Trustand 2.66 acres & 2331 sq. yards to St. Stephens hospital was allotted.

30. It was urged on behalf of the Moolchand Kharaiti Ram Trustthat creator of the Trust never intended that free treatment should beprovided to the poor and needy. Reliance has been placed on the definitionof charity in Charitable Endowment Act, 1890 and Income Tax Act,1961. The policy decision taken in 1949, did not envisage free treatmentto the patients. In the allotment letter, there was no such condition thatfree treatment shall have to be provided to the patients belonging toeconomically weaker sections of the society at the hospital. The leasedeed was executed for 99 years. The only condition was that theinstitution should be run for the good of the public without any profitmotive. The aforesaid condition was not applicable to the hospitals,even if it was applicable, the only rider was that it should run without anyprofit motive. The free treatment was not envisaged in the aforesaidexpression.

31. It was urged that the hospital by itself is a charitable institution.It carries out obligation and stipulations of free treatment at its ownlevel. In order to appreciate the submission made, we deem it appropriateto consider the meaning of charitable, charitable purpose, charitablecorporation and charitable trust in common parlance.

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A32. The Black’s Law Dictionary, Ninth Edition defines‘charitable’, ‘charitable purpose’, ‘charitable corporation’ and ‘charitabletrust’ thus:

“Charitable - Dedicated to a general public purpose, usu. for thebenefit of needy people who cannot pay for benefits received.B

Charitable purpose – The purpose for which an organizationmust be formed so that it qualifies as a charitable organizationunder the Internal Revenue Code – Also termed charitable use.

Charitable corporation – A nonprofit corporation that isdedicated to benevolent purposes and thus entitled to special taxCstatus under the Internal Revenue Code. – Also termedeleemosynary corporation.

Charitable trust – A trust created to benefit a specific charity,specified charities, or the general public rather than a privateindividual or entity. Charitable trusts are often eligible for favorableDtax treatment. If the trust’s terms do not specify a charity or aparticular charitable purpose, a court may select a charity. – Alsotermed public trust; charitable use.”

33. In Webster’s New World Dictionary, the expressions of‘charitable’ and ‘charity’ are defined thus:E“

“Charitable – 1. Kind and generous in giving money or otherhelp to those in need. 2. of or for charity. 3. kindly in judgingothers; lenient.

Charity – 1. in Christianity, the love of God for man or of manfor his fellow men. 2. an act of good will or affection. 3. theFfeeling of good will; benevolence. 4. the quality of being kind orlenient in judging others. 5. a giving of money or other help tothose in need; benefaction. 6. an institution, organization, or fundfor giving help to those in need.”

34. The Halsbury’s Laws of England, Vol.5, Fourth Edition whileGdealing with the definition of ‘charity’ for the purpose of the CharitiesAct, 1960, has discussed the matter thus:

“501. Definition of “charity”. For the purposes of the CharitiesAct, 1960 “charity” means any institution, corporate or not, whichis established for charitable purposes and is subject to the control H

of the High Court in the exercise of its jurisdiction with respect tocharities. “Institution” includes any trust or undertaking; and“charitable purposes” means purposes which are exclusivelycharitable according to the law of England and Wales. The questionof whether purposes are or are not charitable is thereforedetermined according to the same principles as before 1960.

The requirement that an institution is subject to the control of theHigh Court in the exercise of the court’s jurisdiction with respectto charities is satisfied if the institution is subject to that jurisdictionin any significant respect. It does not have to be subject to thatjurisdiction which the court only exercises over charities and notover other trusts or other corporate bodies, and it is sufficient ifthe court could restrain the institution from applying its propertyultra vires or in breach of trust.

The Charities Act 1960 establishes a register of charities and it isthe duty of the charity trustees of any charity which is required tobe registered to apply for registration. The effect of registrationis that an institution is for all purposes other than rectification ofthe register conclusively presumed to be or to have been a charityat any time when it is or was on the register of charities. The Actdoes not provide that an institution which, if it were a charity,would be required to be registered, but which is not registered, isfor that reason, not a charity.”

35. Again, the Halsbury’s Laws of England while dealing with themeaning of charity, has discussed the matter thus:

“502. Meaning of “charity”. Since the Charities Act, 1960 providesno statutory definition of what purposes are and what are notcharitable, all the cases previously decided on the subject are stillrelevant. The legal meaning of “charitable purposes” is said to beprecise and technical, and the phrase is a term of art, but it isprobably incapable of definition. The popular use of the expressions“charity”, “charitable”, “charitable objects” and “charitablepurposes” does not coincide with their technical legal meaningaccording to the law of England. The word “charitable”, whenused in its legal sense, covers many objects which a layman mightnot consider to be included under that word, but it excludes somebenevolent or philanthropic activities which a layman might considercharitable.

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ACharitable uses or trusts form a distinct head of equity, and it isthe court’s duty to determine whether particular purposes arecharitable. To be charitable a purpose must satisfy certain tests;it must either fall within the list of purposes enumerated in thepreamble to the ancient statute of Elizabeth I (sometimes referredto as the Statute of Charitable Uses or the Charitable Uses Act,B1601) or within one of the four categories of charitable purposeslaid down by Lord Macnaghten and derived from the preambleand in the case of the fourth of those categories it must be withinthe spirit and intendment of the ancient statute, either directly orby analogy with decided cases on the same point, or it must haveCbeen declared to be charitable by some other statute. In addition,it must be for the public benefit, that is to say, it must be bothbeneficial and available to a sufficient section of the community.

References to “charity” in any legislative Act should be construedin their technical legal sense unless a contrary intention appearsDfrom the context. For income tax purposes “charity” means anybody of persons or trust established for charitable purposes only.References in any enactment or document to a charity within themeaning, purview, and interpretation of the ancient statute ofElizabeth I, or of the preamble to it, are to be construed asreferences to a charity within the meaning which the word bearsEas a legal term according to the law of England and Wales.

An activity which is charitable in the legal sense is not any theless charitable because it is being carried on without any regularorganization by a person who may discontinue it at any time. Suchan activity would come within the statutory definition of charityFas a trust or undertaking.”

36. The charitable trust can be enforced by the Court, which knowsabout what charitable purposes are. In the Halsbury’s Laws of England,the following discussion has been made in this regard :

G“504. Purposes must be exclusively charitable. To be a charity inlaw, a trust or institution must be established for purposes whichare exclusively charitable; a charitable trust can be enforced bythe court at the suit of the Attorney General, for the court knowswhat are charitable purposes and can apply the trust propertyaccordingly, but a trust for benevolent purposes cannot be soHenforced and is therefore void for uncertainty.”

37. Public welfare is one of the essential requirements of legalcharity, which has been discussed in Halsbury’s Laws of England inparagraph 505, which is extracted hereunder:

“505. Public benefit essential. It is a clearly established principleof the law of charities that a purpose is not charitable unless it isdirected to the public benefit so that the element of public benefitis the necessary condition of legal charity. There are two distinctelements in this requirement: the purpose itself must be beneficialand not harmful to the public, and the benefit of the purpose mustbe available to a sufficient section of the public. The line ofdistinction between purposes of a public and a private nature isfine and practically incapable of definition.”

38. The benefit to the poor is one of the essential requirements ofcharity. The concept has been discussed in paragraph 509 of Halsbury’sLaws of England, which reads thus:

“509. Benefit to rich as well as poor. An object may becharitable in the legal sense notwithstanding that it will benefit therich as well as the poor, but it is difficult to believe that a trustwould be held charitable if the poor were excluded from itsbenefits.”

39. In Incorporated Council of Law Reporting for Englandand Wales vs. A-G (1971) 3 All ER I029, CA, it was observed thatwhen a purpose has been proved to be of general public welfare orbeneficial to the community, it will be held to be charitable unless there issome reason for holding that it is not within the spirit and intendment ofthe Preamble.

40. The Cy-pres doctrine is applied by the Courts in England toadminister a charitable trust of which the particular mode of applicationhas not been defined. Where a clear charitable intention is expressed, itwill not be permitted to fail because the mode, if specified, cannot beexecuted, but the law will substitute another mode. The Cy-pres doctrinehas been discussed in paragraph 696 of Halsbury’s Laws of England,which is extracted hereunder:

“696. The cy-pres doctrine. Where a clear charitable intentionis expressed, it will not be permitted to fail because the mode, ifspecified, cannot be executed, but the law will substitute another A

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Amode cy-pres, that is, as near as possible to the mode specified bythe donor.

An application cy-pres results from the exercise of the court’sordinary jurisdiction to administer a charitable trust of which theparticular mode of application has not been defined by the donor.BWhere he has in fact prescribed a particular mode of applicationand that mode is incapable of being performed, but he had acharitable intention which transcended the particular mode ofapplication prescribed, the court, in the exercise of this jurisdiction,can carry out the charitable intention as though the particulardirection had not been expressed at all.C

However, where the particular mode of application prescribed bythe donor was the essence of his intention, which may be shownby a condition or by particularity of language, and that mode isincapable of being performed, there is nothing left upon which thecourt can found its jurisdiction, so that in such circumstances theDcourt has no power to direct any other charitable application inplace of that which has failed.

Where the particular mode of application does not exhaust a gift,these principles apply to the surplus.

EThere can be no question under English law of a cy-presapplication of property subject to trusts which are not charitablein law.”

41. It has also been observed in the Halsbury’s Laws that not allhospitals are charitable institutions, for there may be hospitals runcommercially, with a view to the profit of private individuals or hospitals,Fthe services of which are not available to a sufficient section of thepublic. The mere fact that a hospital is supported by the payment of feesdoes not prevent its being a charitable corporation. In paragraph 707,the following discussion has been made:

“707. Hospital supported partly by fees. Not all hospitals areGcharitable institutions, for there may be hospitals run commercially,with a view to the profit of private individuals, or hospitals theservices of which are not available to a sufficient section of thepublic. The mere fact that a hospital is supported by the paymentof fees does not prevent it’s being a charitable corporation, and H

the same is true of schools. Furthermore, the CharityCommissioners have the power to authorize the committee ofmanagement of a voluntary hospital to provide facilities for payingpatients in certain circumstances.”

42. In the Law Lexicon, the Encyclopedic Law Dictionary by P.Ramanatha Aiyer, the discussion has been made with the help of certaindecisions and dictionaries, with regard to charitable, charitable object,charitable purpose, charity and charitable trust of public nature, relevantparts of which are reproduced hereunder:

“Charitable. Having the character or purpose of a charity. Theword “charitable”, in a legal sense, includes every gift for a generalpublic use, to be applied consistent with existing laws, for benefitof an indefinite number of persons, and designed to benefit themfrom an educational, religious, moral, physical or social standpoint.This term is synonymous with “beneficent”, “benevolent”, and“eleemosynary”. (Black)

Connected with an object of charity, of the nature of charity [S.49,Indian Evidence Act and S.92(1), C.P.C.]

Charitable purpose. In Charitable Endowments Act “Charitablepurpose” includes relief of the poor, education, medical relief, andadvancement of any other object of general public utility, but doesnot include a purpose which related exclusively to religious teachingor worship. Act VI of 1890 (Charitable Endowments), S. 2.

Per MUKERJI, J. The expression “charitable purposes” in ActXXI of 1860 should be understood in a wide sense. If relief wantsof occasioned by lack of pecuniary means is charity, adoption ofpreventive measures to ward off pecuniary wants is also charity.51 CLJ 272 = AIR 1930 Cal 397.

CHARITABLE PURPOSES, technically, and in the eye of a Courtof justice, “has a meaning so extensive as to include everythingwhich is expressly described as a ‘charitable use’ in 43 Eliz. c. 4,S. 1, or is within what has been called the equity of the statute, butthere is perhaps not one person in a thousand who knows what isthe technical and legal meaning of the word ‘charity’. Per LordCAIRNS in Dolan v. Macdermott, (1868) 3 Ch App 678.

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This term has the legal technical meaning given it by English law.Commissioners of Income Tax v. Pemsel, (1891), App Cas 532;and see Cunnack v. Edwards, (1896) 2 Ch 679 (CA). [In theIncome Tax Act, 1842 (5 & 6 Vic. c. 35), sch. A, S. 61]

“Charitable purposes” in S. 4 of the Income-tax Act wouldinclude relief of the poor, education, medical relief and theadvancement of any other object of general public utility. Trustsfor the benefit of the inhabitants of a particular locality are regardedas charitable, but trusts for the benefit of a particular politicalparty or for the advancement of particular political purposes oropinions are not regarded as charitable. A gift for such purposesas a particular individual or individuals may consider to becharitable is not a good charitable purpose although a gift for suchcharitable purposes as the managing committee of a trust maythink fit would be good, because the committee would be boundto keep within the ambit of charity, and if they go beyond the legalboundary, they can be controlled by the Court. 43 Bom LR 1027= 1942 Bom 61.

The definition includes relief of the poor. Relief of the poor byitself would not be a charitable object unless it involved an objectof general public utility. Relief for the poor relations of the settloror donor will not be a charitable purpose within the definition.Trustees of Gordhandas Govindram Family Charity Trust v.Commissioner of Income Tax, AIR 1952 Bom 346. [S. 4(3)(i)Income Tax Act 1992]

‘Charitable purpose’ – the dominant purpose of a State Bar Councilis to ensure quality service of competent lawyers to the litigatingpublic, a spread legal literacy, promote law reforms and providelegal assistance to the poor, such purpose is the advancement ofthe object of general public utility and it will be a charitable purpose.C.I.T. Bombay v. Bar Council of Maharashtra, AIR 1981 SC 1462,1467. [Income Tax Act (43 of 1961), Ss. 2(15) and 11.]

Charity. “In the broadest sense charity includes whateverproceeds from a sense of moral duty or from humane feelingstowards others, uninfluenced by one’s own advantage orpleasure.” (Doyle v. Lyun, 19 Am Rep 431.). In Jones v.Williams, Ambll. 651, Lord CAMDEN defined a charity to be “a gift to a general public use, which may extend to the poor as wellas to the rich.” It embraces all that is usually understood by thewords “benevolence, “Philanthropy” and “good will”. A gift to ahome for the friendless is a gift to charity.

This “word”, in its widest sense, denotes all the good affectionsmen ought to bear towards each other; in its most restricted andcommon sense, Relief of the Poor. In neither of these senses is itemployed in the English Chancery Courts. Here its significationis derived chiefly from the Statute of Elizabeth (43 Eliz. c. 4.).Those purposes are considered charitable which that statuteenumerates, or which by analogies are deemed within its spiritand intendment”. Per GRANT, M.R., Morice v. Dhurhan Bp., 9Ves. 405.

The term “charity” under the Hanafi School of MahommedanLaw has a more general import than under the English Law. Awakf of property by a Mahommedan to defray the expenses ofthe poor, the fakirs, the orphans, the needy and the indigent, andto defray the expenses of good deeds, creates a trust for publicpurposes of a charitable nature. (32 All 499 = 7 ALJ 420=6 IC188.)

In common parlance, the word ‘charity’ means a giving to someone in necessitous circumstances and in law it means a giving forpublic good. A private gift to one’s own self or Kith and Kin maybe meritorious and pious but is not a charity in the legal sense.Fazlul Rabhi v. State of West Bengal, AIR 1965 SC 1722, 1727.[West Bengal Estates Acquisition Act, 1953 (1 of 1954), S. 6(1)(i)]

A benevolence, specially to the poor [S. 378, ill. (n), I.P.C.]”

43. From the aforesaid discussion, it is apparent that charitable isthe public purpose for the benefit of the needy people, who cannot payfor benefits received. The Internal Revenue Code may define itseparately for its purposes what is charitable so as to claim the benefitunder the Act. The charitable trust is a trust which is for the benefit ofgeneral public. Charitable is a kind and generous in giving money orother help to those in need as defined in Webster’s New World Dictionaryand Black’s Law Dictionary. The Halsbury’s Laws of England discussedthe meaning of charity, which provides that if there is no statutory definitionof charitable purposes, to be a charitable purpose, it must satisfy certain A

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Atests. It must be for the public benefit and available to a sufficientsection of the community. The reference to charity should be construedin their technical legal sense. For income tax purpose, the charity maybe defined in the Act and in that light, the interpretation of the Act has tobe made. Public benefit is an essential ingredient of charitable activities.There are two distinct requirements, the purpose itself must be beneficialBand not harmful to the public. In paragraph 509 of Halsbury’s Laws ofEngland, it has been discussed that it is difficult to believe that a trustwould be held charitable if the poor are excluded from its benefits.

44. The cy-pres doctrine has been discussed in paragraph 696 ofHalsbury’s Laws of England. The said doctrine can be clearly pressedCinto service in the instant matter when the Government land has beenallotted to the hospitals even if the mode of giving charity was notspecified. It can be specified later on and the Court is not powerless toenforce that purpose of the charitable trust, of which the particular modeof the application had not been defined by the donor or otherwise. In DIronmongers’ Co. vs. A-G (1844) 10 CI & Fin 908 at 927, HL, it wasobserved that where a testator intends to benefit several charitable objects,one of which fails, the fund must not be distributed among other objectsif the one that fails bears no resemblance to the other. In referenceLambeth Charities (1853) 22 LJ Ch 959, it was observed that whentrusts have been altered by a scheme, and the trusts of the schemeEbecome impossible so that a new cy-pres scheme is required, the trustsof the new scheme must be as close as possible to the original trusts ofthe gift.

45. The relief of the poor is one of the essential requirements ofthe charity. All hospitals are not charitable institutions as there may beFhospitals which run commercially. The hospitals, which are operatingunder the guise of charity, are in fact being run on a commercial basisand it has become impossible for the poor to afford the life-saving drugsat an affordable price. Their right to life is in jeopardy. Merely by theexpression hospital, it could not be successfully claimed by the respondent-Ghospitals that they are charitable. They can be directed to fulfill theirobligation and fulfill the purpose by undertaking charitable activities andgive it the real meaning by giving free services as envisaged in the policy.The claim of the hospitals that they are undertaking charity at their ownlevel cannot be used as a shield to the performance of charity in anorganized way. The very spirit of the argument that as they do charity, itH

cannot be fastened upon them, is self-destructive and tends by its tenorto negate unjust obstruction created in the path of real charity.

46. The definition of “charitable purpose” as defined in theCharitable Endowments Act, 1890 is extracted hereunder:

“2. Definition. – In this Act “charitable purpose” includes reliefof the poor, education, medical relief and the advancement of anyother object of general public utility, but does not include a purposewhich relates exclusively to religious teaching or worship.”

It is apparent from the definition that charitable purpose includesrelief of the poor, education and medical needs. As per the provisions ofthe Charitable Endowments Act, 1890, relief of the poor and medicalrelief is included as such conditions which had been imposed are clearlywithin the parameters of aforesaid definition.

47. The charity in the broadest sense includes whatever proceedsfrom a sense of moral duty or from humane feelings towards othersuninfluenced by one’s own advantage or pleasure. In its widest sense,denotes all the good affections men ought to bear towards each other; inits most restricted and common sense, relief of the poor. In theMahommedan Law, the charity has a more general import than underthe English Law. A wakf of property by a Mahommedan to defray theexpenses of the poor, the fakirs, the orphans, the needy and the indigentand to defray the expenses of good deeds, creates a trust for publicpurposes of a charitable nature. In common parlance, the word charitymeans giving to someone in any necessitous circumstances and in law, itmeans a giving for public good.

48. In P.C. Raja Ratnam Institution vs. Municipal Corporationof Delhi & Ors., 1990 (Supp) SCC 97, wherein this Court consideredthe definition of ‘charitable purpose’ under Section 115 (4) (a) of theDelhi Municipal Corporation Act, 1957, the school in question was runby a Society. It was claimed that it was a non-profit making registeredsociety and its object was to organize and run schools in Delhi andelsewhere with a view to promoting education and welfare. The questionarose whether it was necessary for the educational institution to qualifyfor exemption from the tax liability to offer medical relief. In that context,it was observed by this Court that the test of charitable purpose wouldbe satisfied by the proof of any of the three conditions, namely, relief ofthe poor, education or medical relief. The fact that some fee was charged A

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Afrom the students was not decisive. The explanation was held inclusiveand not exhaustive. This Court observed thus:

“3. The learned Counsel for the petitioner has contended that inview of the language of Section 115(4)(a), quoted below, it is notcorrect to suggest that to qualify for exemption from the tax liabilityBit is necessary for a society to offer medical relief:

“(a) lands and buildings or portions of lands and buildingsexclusively occupied and used for public worship or by a societyor body for a charitable purpose:

Provided that such society or body is supported wholly or inCpart by voluntary contributions, applies its profits, if any, orother income in promoting its objects and does not pay anydividend or bonus to its members.

Explanation-”Charitable purpose” includes relief of the poor,education and medical relief but does not include a purposeDwhich relates exclusively to religious teaching;”

The argument is well founded. The test of ‘charitable purpose’is satisfied by the proof of any of the three conditions, namely,relief of the poor, education, or medical relief. The fact thatsome fee is charged from the students is also not decisiveEinasmuch as the proviso indicates that the expenditure incurredin running the society may be supported either wholly or inpart by voluntary contributions. Besides, the explanation is interms inclusive and not exhaustive. The impugned judgmentmust, therefore, be held to be erroneous.”

FThe question in the aforesaid case was altogether different withrespect to the meaning of charitable purpose as defined under Section115 (4) (a).

49. In Municipal Corporation of Delhi vs. Children Book Trust,(1992) 3 SCC 390, this Court considered the provisions of SectionG115(4)(a) of Delhi Municipal Corporation Act, 1957 and dealt with thequestion of charitable purpose, context of property tax in respect oflands and buildings and exemption to lands and buildings occupied andused by a society for charitable purpose. It was held that conditions forapplicability of the tax exemption were firstly on the society must becharitable and not earn a profit. This Court considered the meaning of H

charitable purpose for imparting education sans an element of publicwelfare not per se charitable. Secondly, society must be supported whollyor in part by voluntary contribution and lastly, society must utilize itsincome in promoting its object and must not pay any dividend or bonus toits members. This Court observed that the tax liability of a registeredsociety running recognized private unaided school should be consideredin the light of the above conditions. Transfer of funds by the school tothe society even in the name of contribution would amount to transfer bythe society itself and, therefore, cannot be considered for the purposesof the exemption. It was also observed that where running of school bythe society generating positive income from the fees and donationsreceived from the students/parents, the activity of the school was notfor a charitable purpose but for commercial purpose. The conditions ofcharitable purposes having not been fulfilled, society was not entitled totax exemption. This Court has further observed that where thepredominant object is to sub-serve charitable purpose and not to earn aprofit, it would be a charitable purpose. This Court has observed thus:

“68. Therefore, an element of public benefit orphilanthropy has to be present. The reason why we stress on thisaspect of the matter is if education is run on commercial lines,merely because it is a school, it does not mean it would be entitledto the exemption under Section 115(4) of the Act.

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76. In view of the above rulings, it would be clear that where thepredominant object is to subserve charitable purpose and not toearn profit it would be a charitable purpose. However, the argumentof the appellant is as per the Delhi School Education Act and therules framed thereunder, if the society cannot utilise the fund andthe school cannot be run for private gain in the absence of anyprofit, it would be a charitable purpose.

77. We have already seen that merely because education isimparted in the school, that by itself, cannot be regarded as acharitable object. Today, education has acquired a widermeaning. If education is imparted with a profit motive, to hold, insuch a case, as charitable purpose, will not be correct. We areinclined to agree with Mr. B. Sen, learned counsel for the DelhiMunicipal Corporation in this regard. Therefore, it wouldnecessarily involve public benefit.

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A78. The rulings arising out of Income Tax Act may not be of greathelp because in the Income Tax Act “charitable purpose” includesthe relief of the poor, education, medical relief and the advancementof any other object of general public utility. The advancement ofany other object of general public utility is not found under theDelhi Municipal Corporation Act. In other words, the definition isBnarrower in scope. This is our answer to question No. 1.

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85. The last aspect of the matter is utilisation of the income inpromoting its objects and not paying any dividend or bonus to itsCmembers. The learned counsel for the appellant and the intervenorwould urge that on the basis of Cane (Valuation Officer) vs.Royal College of Music, (1961) 2 QBD 89, the position in theinstant case is the same. At page 121 the following observation isfound:

D“One, I think, that enriches the corporation itself or relieves itof a burden or furthers its objects or powers.”

Thus, it is apparent from the aforesaid discussion that thecharitable object would be served if it is not to earn a profit.

50. The medical and legal professions stand on a different pedestalEin the matter of fulfilling the obligations towards the society. They arenot meant to be for commercial activity which by and large has becomea bitter reality of the day. ‘Free treatment’ to economically weaker sectionsis a normal obligation by very nature of charity, and it was also contendedon behalf of the hospitals that the medical treatment itself is regarded ascharitable one. The question arises when medical profession is charitable,Fwhat meaning is to be given to charity and whether by virtue ofcommercial gains only by giving treatment, it would still retain charitablecharacter in its true meaning. Charity in common parlance is a relief tothe poor and needy.

51. What may be proper for others in the society, may still beGimproper for members of the legal profession. The same ethical standardapplies with equal force to the medical profession. Medical professiondeals with the life of human beings. There has to be a balancing ofhuman rights with the commercial gains.

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52. In the wake of globalisation, we are in a regime of IntellectualProperty Rights. Even these rights have to give way to the human rights.It is an obligation of the Government to provide life-saving drugs to have-nots at affordable prices so as to save their lives, which is part of Article21 of the Constitution of India. It is equally an obligation of the State todevise such measures that have-nots are not deprived of the verytreatment itself. Administering medicines is also a part of medical therapy.Thus, in our considered opinion members of the medical profession owea constitutional duty to treat the have-nots. They cannot refuse to treata person who is in dire need of treatment by a particular medicine or bya particular expert merely on the ground that he is not in a position toafford the fee payable for such an opinion/treatment. The moment it ispermitted, the medical profession would become purely a commercialactivity, it is not supposed to be so due to its nobleness. Thus, in ouropinion, when the Government land had been obtained for charitablepurpose of running the hospital, the Government is within its right toimpose such an obligation.

53. The nobility and obligation of the medical profession have alsofound statutory recognition in the form of regulations framed by theMedical Council of India in the exercise of the power conferred undersection 20A read with section 33(m) of the Indian Medical Council Act,1956. The Medical Council of India with prior approval of the CentralGovernment has made the regulations relating to the standards ofprofessional conduct and etiquette and code of ethics for registeredmedical practitioners. Chapter 1 whereof contains the code of medicalethics. Part B of Regulation 1.1 deals with the character of a physician.Regulation 1.1.1 provides that the institution shall uphold the dignity andhonour of the profession. Regulation 1.1.2 is self-explanatory and thesame is extracted hereunder:

“1.1.2 The prime object of the medical profession is to renderservice to humanity; reward or financial gain is a subordinateconsideration. Whosoever chooses his profession, assumes theobligation to conduct himself in accordance with its ideals. Aphysician should be an upright man, instructed in the art of healings.He shall keep himself pure in character and be diligent in caringfor the sick; he should be modest, sober, patient, prompt indischarging his duty without anxiety; conducting himself withpropriety in his profession and in all the actions of his life.”

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54. Under Regulation 1.2.1 it is the duty of the member of theBmedical profession to make available to the patients the benefits of theirprofessional attainments. Regulation 1.2.1 is extracted hereunder:

“1.2.1 The principal objective of the medical profession is torender service to humanity with full respect for the dignity ofprofession and man. Physicians should merit the confidence ofCpatients entrusted to their care, rendering to each a full measureof service and devotion. Physicians should try continuously toimprove medical knowledge and skills and should make availableto their patients and colleagues the benefits of their professionalattainments. The physician should practice methods of healingfounded on a scientific basis and should not associate professionallyDwith anyone who violates this principle. The honoured ideals ofthe medical profession imply that the responsibilities of thephysician extend not only to individuals but also to society.”

55. Under Regulation 1.8, the physician engaged in the practiceof medicine has to give priority to the medical interests of the patientsEand not to the personal financial interests. Regulation 1.8 is extractedhereunder:

“1.8 Payment of Professional Services: The physician,engaged in the practice of medicine shall give priority to theinterests of patients. The personal financial interests of a physicianFshould not conflict with the medical interests of patients. A physicianshould announce his fees before rendering service and not afterthe operation or treatment is underway. Remuneration receivedfor such services should be in the form and amount specificallyannounced to the patient at the time the service is rendered. It isGunethical to enter into a contract of “no cure no payment”.Physician rendering service on behalf of the state shall refrainfrom anticipating or accepting any consideration.”

56. Under Regulation 2.1 it is provided that in the case ofemergency the physician must treat the patient. No physician shallarbitrarily refuse treatment to a patient. At the time of registration, theH

medical practitioner has to submit a declaration that “I solemnly pledgemyself to consecrate my life to service of humanity” and that “I willmaintain the utmost respect for human life from the time of conception.”And he is duty-bound to maintain all means in his power to honour thenoble provisions of the medical profession and he has to abide by theregulations framed by the Medical Council of India. Considering theobject of the statutory rules also, medical profession owes a duty toserve the poor and have-nots, irrespective of financial status, they haveto treat everybody equally with respect to social standing and economicdisparity, that cannot be achieved without free treatment to the needy.

57. When the Government land has been allotted to the hospitals,they would not be doing free service but being a recipient of Governmentlargesse at concessional rates and continue to enjoy it, they owe a dutyto act in public interest. In our opinion, not only Moolchand KharaitiRam Trust and St. Stephens Hospital have obtained the land at aconcessional rate, the other two hospitals, namely, Sita Ram BhartiaInstitute of Science & Research and Foundation for Applied Researchin Cancer have also obtained land at a lower pre-determined rate, not atmarket rate. It was not by way of a public auction that they have receivedthe land. Besides in the cases of Sita Ram Bhartiya Institute of Science& Research and Foundation for Applied Research in Cancer, clause 7was inserted in the allotment letters to the effect that “The DDA reservesits right to alter any terms and conditions on its discretion.”

58. It was contended on behalf of Sita Ram Bhartia Institute ofScience & Research and Foundation for Applied Research in Cancerthat their request for allotment of land at concessional rate had beenturned down. It was urged on behalf of the State that DDA (Disposal ofDeveloped Nazul Land) Rules, 1981, in particular Rules 3 to 6 and 20indicate that the land was allotted to the charitable institutions at pre-determined rates and not on market rates. The allotment of land toaforesaid two institutes was at pre-determined rates. The pre-determinedrates are nowhere close to the market rates. As per the DDA Rules,land has to be disposed of by way of open auction or tender. The pre-determined rates are nowhere near market rates fetched in auction ortender thus they are also the concessional ones. Apart from that, asalready discussed, as hospitals are enjoying Government land it is opento the Government to impose such riders and stipulations for freetreatment to be given to economically weaker sections.

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A59. The realization of human rights vests responsibilities upon theState. The State has to constantly make an endeavor for realization ofhuman rights agenda, particularly in relation to economic, social andcultural rights. Right to health is provided in Article 25 of UniversalDeclaration of Human Rights of 10.12.1948 (the UDHR). The Articleprovides that:B

“Everyone has the right to a standard of living adequate for thehealth and well-being of himself and of his family, including food,clothing, housing and medical care and necessary social services,and the right to security in the event of unemployment, sickness,disability, widowhood, old age or other lack of livelihood inCcircumstances beyond his control.”

60. The State has to ensure the basic necessities like food, nutrition,medical assistance, hygiene etc. and contribute to the improvement ofhealth. Right to life includes right to health as observed in State of Punjab& Ors. v. Mohinder Singh Chawla & Ors. (1997) 2 SCC 83. Right toDlife and personal liberty under Article 21 of the Constitution also includesright of patients to be treated with dignity as observed by this Court inBalram Prasad v. Kunal Saha & Ors. (2014) 1 SCC 384. Right tohealth i.e., right to live in a clean, hygienic and safe environment is aright under Article 21 of the Constitution as observed in OccupationalEHealth and Safety Association v. Union of India & Ors., AIR 2014SC 1469. The concept of emergency medical aid has been discussed bythis Court in Pt. Parmanand Katara v. Union of India & Ors. (1989)4 SCC 286. In Paschim Banga Khet Mazdoor Samity & Ors. v. Stateof West Bengal & Anr. (1996) 4 SCC 37, right to medical treatment hasbeen extended to prisoners also.F

61. In Parmanand Katara (supra) this Court has observed thatevery doctor whether at a Government hospital or otherwise has theprofessional obligation to extend his services with due expertise forprotecting life. The obligation being total, absolute and paramount, lawsof procedure whether in statutes or otherwise, which would interfereGwith the discharge of this obligation cannot be sustained and must,therefore, give way, and there is an obligation upon the doctor to treatthe injured victim on his appearance before him either by himself orbeing carried by others. It has also been observed by this Court that theeffort to save the person should be the top priority not only of the medicalHprofessional but even of the Police or any other person who happens to be connected with the matter or who happens to notice such an incidentor a situation. Apprehensions that the doctor will have to face policeinterrogation and stand as a witness in court and face all the harassments,should not prevent them from discharging their duty as medicalprofessionals to save a human life and to do all that is necessary.

62. In Paschim Banga Khet Mazdoor Samity (supra), this Courthas observed that the Constitution envisages the establishment of awelfare State. In a welfare State, the primary duty of the Government isto secure the welfare of the people. Providing adequate medical facilitiesfor the people is an essential part of the obligations undertaken by theGovernment in a welfare State. The Government discharges this obligationby running hospitals and health centers which provide medical care tothe person seeking to avail of those facilities. Preservation of human lifeis thus of paramount importance. Government is duty-bound to providetimely care to persons in serious conditions. Medical facilities cannot bedenied by the Government on the ground of non-availability of bed. Denialof medical assistance on unjust ground was held to be in violation ofright to life under Article 21 and the State was directed to pay thecompensation of Rs.25,000 to the petitioner and requisite directions wereissued by this Court. The State cannot avoid its constitutional obligationin that regard on account of financial constraints and was directed toallocate funds for providing adequate medical infrastructure.

63. In our opinion, the State can also impose such obligation whenthe Government land is held by such hospitals and it is the constitutionalobligation imposed upon such hospitals. Under Article 47, State has tomake constant endeavor to raise the level of nutrition and the standardof living and to improve public health. It is also one of the fundamentalduties enshrined in Article 51A(h) to develop the scientific temper,humanism and the spirit of inquiry and reform. It would be inhuman todeny a person who is not having sufficient means or no means, the life-saving treatment, simply on the ground that he is not having enoughmoney. Due to financial reasons, if treatment is refused, it would beagainst the very basic tenets of the medical profession and the conceptof charity in whatever form we envisage the same, besides beingunconstitutional would be violative of basic human rights. In our opinion,when the State largesse is being enjoyed by these hospitals in the formof land beside it is their obligation by the very nature of the medicalservices to extend the reciprocal obligation to the public by providing A

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Afree treatment as envisaged in the impugned order. In case they want towriggle out of it and not to comply with it, they have to surrender theland and orge out the benefit which they have received by virtue ofholding the Government land in an aforesaid manner.

64. It is regrettable that the land had been obtained by MoolchandBKharaiti Ram Trust which claims to be charitable and St. StephensHospital run by the Missionaries admittedly for charity, are questioningthe very conditions for which they have come into being and it appearswith the passage of time they have lost the very purpose of theirestablishment. In our opinion they should have welcomed the conditionsimposed by the Government, considering their objectives and for theCpurpose, they have obtained the land. Two other hospitals, namely, SitaRam Bhartia Institute of Science & Research and Foundation for AppliedResearch in Cancer also cannot wriggle out of their such obligations.

65. Even when the purpose of the charitable activity is not defined,it is open to the court to define it. The decision of the Government cannotDbe said to be foreign to the purpose for which land is held. Thus, theaction of the State cannot be said to be unauthorized, illegal or arbitraryin any manner whatsoever and is in furtherance of the very objectivesfor which the medical profession exists. It is very unfortunate that byand large the hospitals have now become centers of commercialEexploitation and instances have come to notice when a dead body is keptas security for clearance of bills of hospitals which is per se illegal andcriminal act. In future, whenever such an act is reported to the police, itis supposed to register a case against management of Hospital and allconcerned doctors involved in such inhumane act, which destroys thebasic principles of human dignity and tantamount to a criminal breach ofFthe trust reposed in the medical profession.

66. It is unfortunate that most of the hospitals are being run on acommercial basis and various ills have sunk in the noble medical profession.Right from wrong reporting, uncalled for investigation inclusive of invasiveone, even as to heart and other parts of the body, which are whollyGunnecessary, are performed, it is time for soul-searching for such bighospitals in and around Delhi, Gurgaon etc. and other places. They mustponder what they are doing. Is it not a criminal act? Simply by the factthat action is not taken does not absolve the responsibility. Time hascome to fix accountability and to set right the evils which have rotten theHsystem. The medical profession had never been intended to be an exploitative device to earn money at the cost of patients who requiregodly approach and helping hand of doctors. Every prescription startsfrom Rx, not from the amount of bill. Being big commercial internationalhospitals in and around Delhi, they are not above the ethical standardswhich they have to maintain at all costs even by extending financial helpto the have-nots.

67. The poor cannot be deprived of the treatment by the bestphysician due to his economic disability in case he requires it. It is theobligation on the medical professionals, hospitals, the State and allconcerned to ensure that such person is given treatment and not deprivedof the same due to poverty. That is what is envisaged in the Constitutionalso. On the making of a doctor, the State spends and invests a hugeamount of public money and it is the corresponding obligation to servethe needy and the treatment cannot be refused on the ground of financialinability of the patient to bear it. To such an extent, the right and moralobligation can be enforced and that precisely has been done by issuanceof the impugned directions to provide free treatment in IPD and OPD toeconomically weaker sections of society. They have suffered so longand benefit has not percolated down to them of distributive justice andthey are deprived of equal justice and proper treatment due to lack offinancial means. It is apparent from the policy decision dated 10.6.1949and also the provisions contained in section 2 of the CharitableEndowments Act, 1890 that running of hospitals is regarded as a charitableactivity. The further rider in policy was that such institution claimingallotment should be secular and of non-communal character.

68. The Arts and Crafts Society and other non-profit making bodieswere also included under the term ‘charitable institution’ with the riderthat the institution should be run for the good of the public without anyprofit motive. It was contended on behalf of the hospitals that the aforesaidcondition is not applicable to hospitals and would apply to Arts and CraftsAssociation, and there was no specific stipulation with respect to providingfree treatment in the letter of allotments and lease deed. In our opinion,the rider that the Arts and Crafts institution should be run for good of thepublic, without any profit motive is primarily applicable to the charitableinstitutions like hospitals etc. then it has been only specified as anobligation to Arts and Crafts institution etc. too. As such there would bean obligation upon hospitals being charitable by their very nature to providefree treatment to economically weaker sections of society. The A

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Aexpression ‘no profit motive’ would also exclude the hospitals being runfor commercial gains. That would be violative of the very foundationalbasis and fulcrum on which the allotment order had been issued andlease deeds have been executed. Once having claimed themselves to becharitable institutions, it does not lie in the armory of defense to raisesuch plea and having obtained the benefit of the public largesse. It is notBopen to raising the aforesaid challenge within the framework of legalparameters. As a matter of fact, as these hospitals are being run forcommercial gains, it would be open to the lessor to terminate the lease.That can be done in case there is a refusal to comply with or violation inany manner of the obligation of providing free medical treatment to 10%CIPD and 25% OPD patients belonging to economically weaker sectionsof the society. The imposition of the said condition is inherent in thepolicy and in the very grant on the basis of which the land is held andeven otherwise in the case of two other institutes i.e. Sita Ram BhartiaInstitute of Science & Research and Foundation for Applied Research

in Cancer, as they are holding the Government land for the hospitalDpurpose and research functions in the hospital, the allotment was alsomade at a pre-determined rate and not by way of auction and consideringthe specific stipulation in clause 7 of the lease deed and considering theaforesaid other aspects, and it being charitable activity, it was open tothe Government to obligate them by providing free medical treatment.E

69. It is apparent that decision in Social Jurists (supra) has beenrendered on the basis of the terms and conditions contained in the allotmentletters as well as stipulations made in the lease deeds. Somerepresentations were made relating to free treatment. The High Court,hence in Social Jurists (supra), opined that it was not necessary to Fincorporate each and every condition in the lease deed and othercorresponding documents would also be seen and it was not onlycontractual but statutory, and public law obligation enjoined upon thehospitals to fulfil condition of free treatment. The order was affirmedby this Court by a reasoned order, hence it becomes binding as precedent.

G70. It is apparent that in the case of Moolchand Kharaiti RamTrust and St. Stephens Hospital, the lands were allotted for charitablepurposes under the Scheme of the year 1949, as further modified, thus,the policy under which they had obtained lease deed would also be arelevant document and of paramount importance for entitlement to holdthe land for purpose as specified in the policy, as that is the basic documentH

governing the rights of the parties, and the terms and conditions of leasedeed, would be supplemental to the main objective of the policy. Thelease deed can supplement not supplant the main policy or rules as thecase may be under which the allotment has been obtained and leasedeed has been executed.

71. In our considered opinion, not only by the policy that prevailedin 1949, the land at concessional rates for charitable purposes, had beenobtained and free treatment being as stipulated in the order dated02.02.2012 issued by the Government of India, is within the realm of thepolicy under which allotment had been made at highly concessional ratesin the heart of Delhi and the Delhi Development Authority Rules framedin 1981. They cannot wriggle out of their obligation by contending thatthere was no such stipulation in the allotment letter or lease deed.Allotment letter and lease deed are subject to the riders in the mainpolicy and rules under which grant has been made. It is the foundationof the allotment letter and the lease deed.

72. In the case of Sitaram Bhartia Institute of Science & Researchand Foundation for Applied Research in Cancer, the allotment had beenmade by the DDA when the Delhi Development Authority (Disposal ofDeveloped Nazul Land) Rules, 1981 were in vogue.

73. In the case of Sitaram Bhartia Institute of Science & Research,applications were made to the DDA for allotment of land for establishinga multi-disciplinary research complex in New Delhi. Theallotment was made for 1.52 acres of land at Rs.6 lacs per acre on22.10.1984, followed by lease deed dated 02.09.1985 in respect of anotherplot of land of 1.46 acres for a consideration of Rs.8,76,000. Thus, itwas clearly subject to Rules 5 and 20 of aforesaid DDA Rules, 1981.Rules 5 and 20 are extracted hereinbelow:

“5. Rules of premium for allotment of Nazul land to certain publicinstitutions.- The Authority may allot Nazul land to schools, colleges,universities, hospitals, other social or charitable institutions, religious,political, semi-political organisations and local bodies forremunerative, semi-remunerative or unremunerative purposes atthe premia and ground rent in force immediately before the cominginto force of these rules, or at such rates as the Central Governmentmay determine from time to time.

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A[Explanation.- For the purpose of this rule the expression‘hospitals’ do not include the hospitals/dispensaries established bya company, firm or trust as referred to in Sub-rule (2) of Rule(4).]

20. Allotment to certain public institutions. - [***] No allotment ofBNazul land to public institution referred to in Rule 5 shall be madeunless - (a) according to the aims and objects of that public institution -

(i) it directly subserves the interests of the population of theUnion Territory of Delhi; C

(ii) it is generally conducive to the planned development of theUnion Territory of Delhi;

(iii) it is apparent from the nature of work to be carried out bythat public institution, that the same cannot, with equal efficiencyDbe carried out elsewhere than in that Union Territory.

(b) it is a society registered under the Societies Registration Act,1860 (21 of 1860) or such institution is owned and run by theGovernment or any Local Authority, or is constituted orestablished under any law [for the time being in force or it is acompany, firm or trust for the purpose of establishment of hospitalEor dispensary];

(c) it is of non-profit making character; (d) it is in possession of sufficient funds to meet the cost of landand the construction of buildings for its use; and F

(e) allotment to such institution is sponsored or recommended bya [Department of the Government of National Capital Territoryof Delhi] or a Ministry of the Central Government:

[Provided that in case of allotment to a company, firm or trust forthe purpose of establishment of hospital or dispensary by tendersGor auction, as the case may be, such company, firm or trust, as thecase may be, shall not be required to be sponsored by a Departmentof the Government of National Capital Territory of Delhi or aMinistry of the Central Government.]”

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74. It is apparent from Rule 5 that allotment of lands to thecharitable institutions would be at pre-determined rates and not on marketrates. According to Rule 20 above, the allotment is subject to the furtherrider that public institution should sub-serve the interests of the populationof the Union Territory of Delhi and such institutions should be of non-profit motive character. There was a clear stipulation by way of thecondition in clause 7 of the allotment letter to the effect that DDA reservesthe right to alter any terms and conditions on its discretion. Thus, itappears that the land was obtained for research purposes. Later on, itwas noticed that hospitals were set up and were running on commerciallines, which was objected to by the DDA as it was in clear violation ofthe terms and conditions. As the land was obtained at concessionalrates, not on market rates, the hospitals were bound to serve the publicgood and the imposition of such condition in the lease deed could not besaid to be impermissible, arbitrary or irrational. The allotments that weremade in favour of Sitaram Bhartiya Institute and Foundation for AppliedResearch in Cancer were at pre-determined rates, which were lesserthan the market rates.

75. The contention raised on behalf of Moolchand Kharaiti RamTrust to the effect that this Court cannot proceed to make an order onaccount of sympathy in contravention of settled law and it will seriouslydamage the credibility of this institution. In our view, it is whollyimpermissible submission. The Trust cannot be permitted to wriggle outof its obligation unjustly and unfairly. Originally the Trust was set up forpure charity. In raising such unworthy and untenable submission, Trusthas lost its main objective and assumed a commercial character and it isregrettable that it has to be reminded of its responsibility by the Court forthe purpose for which it exists and having obtained the land on a particularbasis, is observed only in breach thereof. The adverse remarks in thereport of Justice Qureshi Committee with respect to the institution cannotbe brushed aside on the sole ground that comments recorded in JusticeQureshi’s report were based on the statement made by disgruntledemployees of the hospitals, who were in dispute with the managementof the hospital.

76. Learned senior counsel appearing on behalf of St. StephensHospital has also relied on the decision rendered in Divisional Manager,Aravali Golf Club & anr. v. Chander Hass & anr., (2008) 1 SCC 683,to contend that it is not open to the Court to create a law or an obligation ABC

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Aand then seek to enforce it. The statement in the factual matrix has nolegs to stand and we are conscious that we are not trying to create anynew obligation. It was a self-created obligation on missionaries to docharity for which they exist while obtaining the land and Court is dutybound to enforce it. By the stipulation in the question of free treatment,the policy rules of allotment have been given a shape that is enforceableBand cannot be termed to be a new imposition not contemplated initially.

77. On behalf of Moolchand Kharaiti Ram Trust, Will has beenrelied upon to indicate the purpose of creation of Trust. It is apparentthat Moolchand Kharaiti Ram Trust was created by a Will executed byLala Kharaiti Ram resident of Lahore in 1927. The Will was producedCfor perusal. The objects of the creation of Trust were imparting educationin and preaching Sanskrit according to Sanatan Dharam methods; and,secondly, for devising means for imparting education in and improvingthe “Ayurvedic system of medicine” and preaching the same. In orderto achieve the latter object, it was not prohibited to take help from theDEnglish or Yunani or any other system of medicine and according toneed, one or more than one Ayurvedic Hospital may be opened. It wascontended that it was not in the deed of the Trust to impart free medicalaid. The ground raised and what is contained in the Will is against thevery purpose for which the Moolchand Kharaiti Ram Hospital is beingrun. When its object was of improving the Ayurvedic system of medicineEonly as is apparent from the material on record that at present the saidactivities had been confined to one room and the changed main activityis an Allopathic system of medicine which was not at all the intendmentof the creator of the Trust. We leave the matter at that in theseproceedings. However, having obtained the land for charitable purposesFfor the hospital, for no profit and for the public good, whatever system ofmedicine is being administered, it can be obligated with such charitablerider of free treatment as envisaged in the impugned order issued by theGovernment.

78. Similarly, St. Stephens Hospital is Missionaries’ hospital andGits very objective admittedly is to provide the charitable services free ofcharge but it has also become more or less a commercial venture as inthe case of other hospitals inter alia involved in the instant matter, howsuch provision for charity is opposed is beyond comprehension, is it charityversus charity. They have to abide by the just and reasonable legalconditions for free treatment which are constitutionally envisaged also.H

79. It was also urged on behalf of Moolchand Kharaiti RamHospital that though nine acres of land was allotted at Lajpat Nagar, itwas not a prime locality at the relevant time and the land was given atthe market rate. The submissions are wholly baseless and against therecord and cannot be countenanced. The record belies the same.

In Reference to question No.3 relating to Article 19(1)(g)and 19(6):

80. It was contended on behalf of the respondents/hospitals thatimposition of such a stipulation for free treatment tantamounts to imposingrestriction on the right enshrined in Article 19(1)(g) of the Constitutionwhich confers a Fundamental Right on all citizens of India to practiceany profession or to carry on any occupation, trade or business in India.Since the Trustees are Indian citizens, they are exercising theirfundamental right in running the hospitals. If any restriction was to beplaced on their right to run the institution by providing the manner inwhich they must run their hospitals by providing free treatment to aparticular percentage of patients, this could only be done by enacting a‘law’ under Article 19(6) of the Constitution. It was further contendedthat ‘law’ is clearly defined in Article 13 of the Constitution as ‘statutorylaw’ which has a foundation in a legislation enacted either by theParliament or State Legislatures. Reliance has been placed on KharakSingh v. State of U.P. (1964) 1 SCR 322 in which this Court observedthat the provisions contained in Police Regulations had no statutory basisbut were merely executive or departmental instructions and that theycould therefore not be “a law” which the State was entitled to makeunder Article 19(2) to (6) to regulate or curtail Fundamental Rights norwould it constitute a procedure established by law in furtherance ofArticle 21 of the Constitution and if any action under those executiveinstructions violated the Fundamental Rights of a person, the personconcerned would be entitled to relief from the courts.

81. Reliance has also been placed on Bijoe Emmanuel & Ors. v.State of Kerala & Ors. (1986) 3 SCC 615 wherein the Governmenthad issued circulars requiring all students to join in the singing of theNational Anthem. It might have been a very laudable object of theGovernment and its policy but this Court held that the Circular beingonly executive instructions of the Government, could not infringe uponthe Fundamental Rights of the students and stated that “The law is nowwell settled that any law which be made under clauses (2) to (6) of A

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AArticle 19 to regulate the exercise of the right to the freedoms guaranteedby Article 19(1)(a) to (e) and (g) must be ‘a law’ having statutory forceand not a mere executive or departmental instruction.” This Courtobserved:

“15. If the two circulars are to be so interpreted as to compelBeach and every pupil to join in the singing of the National Anthemdespite his genuine, conscientious religious objection, then suchcompulsion would clearly contravene the rights guaranteed byArticle 19(1)(a) and Article 25(1).

16. We have referred to Article 19(1)(a) which guarantees to allCcitizens freedom of speech and expression and to Article 19(2)which provides that nothing in Article 19(1)(a) shall prevent aState from making any law, in so far as such law imposesreasonable restrictions on the exercise of the right conferred byArticle 19(1)(a) in the interests of the sovereignty and integrity ofIndia, the security of the State, friendly relations with foreign States,Dpublic order, decency or morality, or in relation to contempt ofCourt, defamation or incitement to an offence. The law is nowwell settled that any law which may be made, under Clauses (2)to (6) of Article 19 to regulate the exercise of the right to thefreedoms guaranteed by Article 19(1)(a) to (e) and (g) must be ‘aElaw’ having statutory force and not a mere executive ordepartmental instruction. In Kharak Singh v. State of U.P. AIR1963 SC 1295, 1299, the question arose whether a police regulationwhich was a mere departmental instruction, having no statutorybasis could be said to be a law for the purpose of Article 19(2) to(6). The Constitution Bench answered the question in the negativeFand said:

Though learned counsel for the respondent started byattempting such a justification by invoking Section 12 of theIndian Police Act he gave this up and conceded that theregulations contained in Chapter XX had no such statutorybasis but were merely executive or departmental instructionsframed for the guidance of the police officers. They wouldnot, therefore, be “a law” which the State is entitled to makeunder the relevant Clauses (2) to (6) of Article 19 in order toregulate or curtail fundamental rights guaranteed by the severalsub-clauses of Article 19(1), nor would the same be “a G

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procedure established by law” within Article 21. The position,therefore, is that if the action of the police which is the arm ofthe executive of the State is found to infringe any of thefreedoms guaranteed to the petitioner the petitioner would beentitled to the relief of mandamus which he seeks, to restrainthe State from taking action under the regulations.

17. The two circulars on which the department has placed reliancein the present case have no statutory basis and are meredepartmental instructions. They cannot, therefore, form thefoundation of any action aimed at denying a citizen’s FundamentalRight under Article 19(1)(a). Further it is not possible to hold thatthe two circulars were issued ‘in the interest of the sovereigntyand integrity of India, the security of the State, friendly relationwith foreign States, public order, decency or morality, or in relationto contempt of Court, defamation or incitement to an offence’and if not so issued, they cannot again be invoked to deny a citizen’sFundamental Right under Article 19(1)(a). In Kameshwar Prasadv. State of Bihar (1962) Supp 3 SCR 369, a Constitution Bench ofthe court had to consider the validity of Rule 4A of the BiharGovernment Servants Conduct Rules which prohibited any formof demonstration even if such demonstration was innocent andincapable of causing a breach of public tranquillity. The Courtsaid:

No doubt, if the rule were so framed as to single out thosetypes of demonstration which were likely to lead to a disturbanceof public tranquillity or which would fall under the other limitingcriteria specified in Article 19(2) the validity of the rule couldhave been sustained. The vice of the rule, in our opinion, consistsin this that it lays a ban on every type of demonstration-be thesame however innocent and however incapable of causing abreach of public tranquillity and does not confine itself to thoseforms of demonstrations which might lead to that result.

Examining the action of the Education Authorities in the light ofKharak Singh v. State of Uttar Pradesh and Kameshwar Prasadv. State of Bihar (supra) we have no option but to hold that theexpulsion of the children from the school for not joining the singingof the National Anthem though they respectfully stood up in silencewhen the Anthem was sung was violative of Article 19(1)(a).”

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A82. Reliance has also been placed on State of M.P. & Anr. v.Thakur Bharat Singh, AIR 1967 SC 1170 wherein it was pointed outthat the executive power of the State under Article 162 being only anexecutive power and not a legislative power anything done in exerciseof executive power under Article 162 does not become law under theConstitution. This Court in the factual matrix of the case that executiveBorder was issued during an emergency was pending under Article 19. Itwas contended that Article 358 protects action of both legislative andexecutive. The decision in the aforesaid case was not supported by Article358 of the Constitution. It was observed:

“(4). Counsel for the State did not challenge the view that theCrestrictions which may be imposed under cl. (b) of S. 3(1) requiringa person to leave his hearth, home, and place of business and liveand remain in another place wholly unfamiliar to him may operateseriously to his prejudice, and may on that account be unreasonable.xx xxx.

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(5) xx xx Counsel for the State while conceding that if S. 3(1)(b)was, because it infringed the fundamental freedom of citizens,void before the proclamation of emergency, and that it was notrevived by the proclamation, submitted that Art. 358 protects actionboth legislative and executive taken after proclamation ofEemergency and, therefore any executive action taken by an officerof the State or by the State will not be liable to be challenged onthe ground that it infringes the fundamental freedoms under Art.

19. In our judgment, this argument involves a grave fallacy. Allexecutive action which operates to the prejudice of any personmust have the authority of law to support it, and the terms of Art.F358 do not detract from that rule. Article 358 expressly authorisesthe State to take legislative or executive action provided suchaction was competent for the State to make or take, but for theprovisions contained in Part III of the Constitution. Article 358does not purport to invest the State with arbitrary authority toGtake action to the prejudice of citizens and others : it merely providesthat so long as the proclamation of emergency subsists laws maybe enacted, and executive action may be taken in pursuance oflawful authority, which if the provisions of Art. 19 were operativewould have been invalid. Our federal structure is founded on certainfundamental principles : (1) the sovereignty of the people with H

limited Government authority, i.e. the Government must beconducted in accordance with the will of the majority of the people.The people govern themselves through their representatives,whereas the official agencies of the executive Governmentpossess only such powers as have been conferred upon them bythe people; (2) There is distribution of powers between the threeorgans of the State - legislative, executive and judicial - each organhaving some check direct or indirect on the other; and (3) the ruleof law which includes judicial review of arbitrary executive actions.As pointed out by Dicey in his “Introduction to the study of theLaw of the Constitution”, 10th Edn., at p. 202 the expression “ruleof law” has three meanings, or may be regarded from threedifferent points of view.

“It means, in the first place, the absolute supremacy orpredominance of regular law as opposed to the influence ofarbitrary power, and excludes the existence of arbitrariness, ofprerogative, or even of wide discretionary authority on the part ofthe Government.”

At p. 188 Dicey points out :

“In almost every continental community the executive exercisesfar wider discretionary authority in the matter of arrest, oftemporary imprisonment, of expulsion from its territory, andthe like, than is either legally claimed or in fact exerted by thegovernment in England : and a study of European politics nowand again reminds English readers that wherever there isdiscretion there is room for arbitrariness and that in a republicno less than under monarchy discretionary authority on thepart of the government must mean insecurity for legal freedomon the part of its subjects.”

We have adopted under our Constitution not the continental systembut the British system under which the rule of law prevails. EveryAct done by the Government or by its officers must if it is tooperate to the prejudice of any person, be supported by somelegislative authority.

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APradesh Public Security Act 25 of 1959 was invalid and for theacts done to the prejudice of the respondent after the declarationof emergency under Art. 352 no immunity from the process ofthe Court could be claimed under Art. 358 of the Constitution,since the order was not supported by any valid legislation.”

B83. For deciding the aforesaid submission pivotal question ariseswhether imposition of condition tantamounts to a restriction imposedwithin the purview of Article 19(6) of the Constitution. In our consideredopinion the High Court has erred in law in holding that such stipulationcould have been imposed only by a statutory law. In our consideredopinion, it is not a restriction on the right to carry on medical profession,Cthe medical profession has obligated itself by such conditions by verynature of its professional activity and when the State land is being heldwhich is for the public good with no profit motive, such land is held forthe charitable purpose of public good. The charitable purpose wouldinclude, as already discussed, the aforesaid obligation of free treatment Dto the persons of economically weaker strata of the society. It is not arestriction but the very purpose of existence of medical profession andvery purpose of policy/Rules to grant land to institutions without publicactions that would have fetched market rate and does not amount toputting any fetter to practice the medical profession or to carry onoccupation. On due consideration of the very object of the medical activityEits professional and other obligations for the proper treatment of thepersons of economically weaker sections of the society deprived of thefruits of development. The benefits of various welfare schemes hardlyreach to them in spite of efforts made, economic disparity is writ largeand persists. They cannot afford such treatment and thus in lieu of holding Fland of Government at concessional rate and enjoying huge occupancybenefits inter alia for aforesaid reasons, the hospitals can be asked toimpart free treatment as envisaged in the Government order.

84. The hospitals now-a-days have five-star facilities. The entireconcept has been changed to make commercial gains. They areGbecoming unaffordable. The charges are phenomenally high, and attimes unrealistic to the service provided. The dark side of such hospitalscan be illuminated only by sharing obligation towards economically weakersections of the society. It would be almost inhuman to deny propertreatment to the poor owing to economic condition and when hospitalsclaim that they are doing charity at their own level, we find impugnedH

order dated 2.2.2012 is simply an expression to the aforesaid activitywhich has been given a channelized form.

85. We are of the considered opinion that there was no necessityof enacting a law, as the policy/rules under which the land has beenobtained, the hospitals were obligated to render free treatment as theland was allotted to them for earning no profit and held in trust for publicgood. Similar is the provision in the rules of 1981 and apart from that theregulations framed by the Medical Council of India also enjoins upon themedical profession to extend such help and in view of the object of thehospitals, trust, and missionaries it is apparent that there was no necessityof any legislation and the Government was competent to enforce in thecircumstances, the contractual and statutory liability and on commonlaw basis.

86. The right to carry on the medical profession has not beenrestricted, however, what was enjoined upon the respondent-hospitals toperform otherwise had been given a concrete shape. Thus, it waspermissible to issue circular in the exercise of power under Article 162of the Constitution. It was urged on behalf of hospitals that they weredoing a charitable work at their own, thus, it could not be said to be arestriction within the meaning contemplated under Article 19(6) for whicha law was required. No new restriction has been imposed for the firsttime under Article 19(6) of the Constitution of India, as such in our opinion,there was no necessity for enacting a law, such guidelines could beissued under the executive powers.

87. In Rai Sahib Ram Jawaya Kapur & Ors. v. The State ofPunjab (1955) 2 SCR 225= AIR 1955 SC 549, this Court observed thatit is open to the State to issue executive orders even if there is nolegislation in support thereof provided the State could legislate on thesubject in respect of which action is taken. There can be executiveorders in the absence of legislation in the field. This Court has observed:

“7. Article 73 of the Constitution relates to the executive powersof the Union, while the corresponding provision in regard to theexecutive powers of a State is contained in article 162. Theprovisions of these articles are analogous to those of section 8and 49 respectively of the Government of India Act, 1935 and laydown the rule of distribution of executive powers between theUnion and the States, following the same analogy as is provided A

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in regard to the distribution of legislative powers between them.Article 162, with which we are directly concerned in this case,lays down:

“Subject to the provisions of this Constitution, the executivepower of a State shall extend to the matters with respect towhich the Legislature of the State has the power to make laws:

Provided that in any matter with respect to which the Legislatureof a State and Parliament have power to make laws, the executivepower of the State shall be subject to, and limited by, the executivepower expressly conferred by this Constitution or by any law madeby Parliament upon the Union or authorities thereof.”

Thus, under this article, the executive authority of the State isexecutive in respect to matters enumerated in List II of SeventhSchedule. The authority also extends to the Concurrent List exceptas provided in the Constitution itself or in any law passed by theParliament. Similarly, article 73 provides that the executive powersof the Union shall extend to matters with respect to which theParliament has power to made laws and to the exercise of suchrights, authority and jurisdiction as are exercisable by theGovernment of India by virtue of any treaty or any agreement.The proviso engrafted on clause (1) further lays down that althoughwith regard to the matters in the Concurrent List the executiveauthority shall be ordinarily left to be State it would be open to theParliament to provide that in exceptional cases the executive powerof the Union shall extend to these matters also.

Neither of these articles contain any definition as to what theexecutive function is and what activities would legitimately comewithin its scope. They are concerned primarily with the distributionof the executive power between the Union on the one hand andthe States on the other. They do not mean, as Mr. Pathak seemsto suggest, that it is only when the Parliament or the StateLegislature has legislated on certain items appertaining to theirrespective lists, that the Union or the State executive, as the casemay be, can proceed to function in respect to them.

On the other hand, the language of article 162 clearly indicatesthat the powers of the State executive do extend to matters uponwhich the state Legislature is competent to legislate and are not confined to matters over which legislation has been passed already.The same principle underlies article 73 of the Constitution. Theseprovisions of the Constitution, therefore, do not lend any supportto Mr. Pathak’s contention.

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12. It may not be possible to frame an exhaustive definition ofwhat executive function means and implies. Ordinarily, theexecutive power connotes the residue of governmental functionsthat remain after legislative and judicial functions are taken away.

The Indian Constitution has not indeed recognised the doctrine ofseparation of powers in its absolute rigidity but the functions ofthe different parts or branches of the Government have beensufficiently differentiated and consequently it can very well besaid that our Constitution does not contemplate assumption, byone organ or part of the State, of functions that essentially belongto another. The executive indeed can exercise the powers ofdepartmental or subordinate legislation when such powers aredelegated to it by the legislature.

It can also when so empowered, exercise judicial functions in alimited way. The executive Government, however, can never goagainst the provisions of the Constitution or of any law. This isclear from the provisions of article 154 of the Constitution but, aswe have already stated, it does not follow from this that in orderto enable the executive to function there must be a law already inexistence and that the powers of executive are limited merely tothe carrying out of these laws.

13. The limits within which the executive Government can functionunder the Indian Constitution can be ascertained without muchdifficulty by reference to the form of the executive which ourConstitution has set up. Our Constitution, though federal in itsstructure, is modelled on the British Parliamentary system wherethe executive is deemed to have the primary responsibility for theformulation of governmental policy and its transmission into lawthough the condition precedent to the exercise of this responsibilityis it’s retaining the confidence of the legislative branch of theState.

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The executive function comprises both the determination of thepolicy as well as carrying it into execution. This evidently includesthe initiation of legislation, the maintenance of order, the promotionof social and economic welfare, the direction of foreign policy, infact, the carrying on or supervision of the general administrationof the State.

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17. Specific legislation may indeed be necessary if the Governmentrequire certain powers in addition to what they possess underordinary law in order to carry on the particular trade or business.Thus when it is necessary to encroach upon private rights in orderto enable the Government to carry on their business, a specificlegislation sanctioning such course would have to be passed.

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18. In the present case it is not disputed that the entire expensesnecessary for carrying on the business of printing and publishingDthe textbooks for recognised schools in Punjab were estimatedand shown in the annual financial statement and that the demandsfor grants, which were made under different heads, weresanctioned by the State Legislature and due Appropriation Actswere passed.

EFor the purpose of carrying on the business the Government donot require any additional powers and whatever is necessary fortheir purpose, they can have by entering into contracts with authorsand other people. This power of contract is expressly vested inthe Government under article 298 of the Constitution. In thesecircumstances, we are unable to agree with Mr. Pathak that theFcarrying on of the business of printing and publishing textbookswas beyond the competence of the executive Government withouta specific legislation sanctioning such course.”

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88. In U. Unichoyi & Ors. v. State of Kerala, AIR 1962 SC 12,in which notification issued by the Government of Kerala was questionedGthat wages prescribed were something above the minimum wages, thefixation was questioned on the ground that it affected the rights of theindustries to carry on their activities under Article 19(1)(g) of theConstitution. The submissions were rejected following the earlierdecisions of this Court in Bijay Cotton Mills Ltd. v. State of Ajmer,AIR 1955 SC 33. This Court observed that when a Committee consistingH

of representatives of the industry and the employees considered theproblem and made its recommendation and when they were acceptedby the Government, it would ordinarily not be possible to examine themerits of the recommendation. The submission made upon infringementof Article 19(1)(g) read with Article 19(6) was rejected. This Courtobserved thus:

“10. In the case of The Edward Mills Co. Ltd., Beawar v. Stateof Ajmer, 1955-I SCR 735: ( (S) AIR 1955 SC 25) the validity ofS. 27 of the Act was challenged on the ground of excessivedelegation. It was urged that the Act prescribed no principles andlaid down no standard which could furnish an intelligent guidanceto the administrative authority in making selection while actingunder S. 27 and so the matter was left entirely to the discretion ofthe appropriate Government which can amend the schedule inany way it liked and such delegation virtually amounted to asurrender by the Legislature of its essential legislative function.This contention was rejected by Mukherjea, J., as he then was,who spoke for the Court. The learned Judge observed that theLegislature undoubtedly intended to apply the Act to thoseindustries only where by reason of unorganised labour or want ofproper arrangements for effective regulation of wages or for othercauses the wages of labourers in a particular industry were verylow. He also pointed out that conditions of labour vary underdifferent circumstances and from State to State and the expediencyof including a particular trade or industry within the scheduledepends upon a variety of facts which are by no means uniformand which can best be ascertained by a person who is placed incharge of the administration of a particular State. That is why theCourt concluded that in enacting S. 27 it could not be said that theLegislature had in any way stripped itself of its essential powersor assigned to the administrative authority anything but anaccessory or subordinate power which was deemed necessary tocarry out the purpose and the policy of the Act.

11. In the same year another attempt was made to challenge thevalidity of the Act in Bijay Cotton Mills Ltd. v. State of Ajmer(1955)-1 SCR 752; ((S) AIR 1955 SC 33). This time the crucialsections of the Act, namely, Ss. 3, 4 and 5 were attacked, and thechallenge was based on the ground that the restrictions imposed A

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by them upon the freedom of contract violated the fundamentalright guaranteed under Art. 19(1)(g) of the Constitution. Thischallenge was repelled by Mukherjea, J., as he then was, whoagain spoke for the Court. The learned Judge held that therestrictions were imposed in the interest of the general public andwith a view to carry out one of the directive principles of Statepolicy as embodied in Art. 43 and so the impugned sections wereprotected by the terms of Cl. (6) of Art. 19. In repelling theargument of the employers’ inability to meet the burden of theminimum wage rates it was observed that “the employers cannotbe heard to complain if they are compelled to pay minimum wagesto their labourers even though the labourers on account of theirpoverty and helplessness are willing to work on lesser wages, andthat if individual employers might find it difficult to carry on businesson the basis of minimum wages fixed under the Act that cannotbe the reason for striking down the law itself as unreasonable.The inability of the employers may in many cases be due entirelyto the economic conditions of those employers.” It would thus beseen that these two decisions have firmly established the validityof the Act, and there can no longer be any doubt that in fixing theminimum wage rates as contemplated by the Act the hardshipcaused to individual employers or their inability to meet the burdenhas no relevance. Incidentally, it may be pointed out that in dealingwith the minimum wage rates intended to be prescribed by theAct Mukherjea, J., has in one place observed that the labourersshould be secured adequate living wages. In the context it is clearthat the learned Judge was not referring to living wages properlyso-called but to the minimum wages with which alone the Act isconcerned. In view of these two decisions we have not allowedMr. Nambiar to raise any contentions against the validity of theAct. It is true that Mr. Nambiar attempted to argue that certainaspects of the matter on which he wished to rely had not beenduly considered by the Court in Bijay Cotton Mills Ltd.’s case(1955)-1 SCR 752; ((S) AIR 1955 SC 33). In our opinion it isfutile to attempt to reopen an issue which is clearly concluded bythe decisions of this Court. Therefore, we will proceed to dealwith the present petition, as we must, on the basis that the Actunder which the Committee was appointed and the notificationwas ultimately issued is valid.”

89. In Minerva Talkies, Bangalore & Ors. v. State of Karnataka& Ors. 1988 Suppl. SCC 176 in which Rule 41-A of the KarnatakaCinemas (Regulation) Rules, 1971 came to be questioned as violative ofArticle 19(1)(g) of the Constitution of India. The argument that theincome would be reduced as such the rule was prohibitive not restrictive,this Court rejected the submission of violation of Article 19(1)(g) andobserved thus :

“12. The appellants’/petitioners’ contention that restriction underRule 41-A is unreasonable is founded on the premise that Rule41-A is not regulatory in nature instead it totally prohibits exhibitionof cinematograph films for one show and its impact is excessiveas it reduces appellants’/petitioners’ income to the extent of one-fifth. The appellants/petitioners have no unrestricted fundamentalright to carry on business of exhibiting cinematograph films. Theirright to carry on business is regulated by the provisions of the Actand the Rules framed thereunder. These provisions are necessaryto ensure public safety, public health and other allied matters. Asalready discussed Rule 41-A has placed limit on the number ofshows which a licensee can hold in a day. The rule does not prohibitexhibition of cinematograph films instead it regulates it by providingthat instead of five shows only four shows should be exhibited ina day. In Narender Kumar v. Union of India, (1960) 2 SCR 375,this Court held that a law made in the public interest prohibiting abusiness would be valid as the ‘prohibition’ is only a kind of‘restriction’. The expression “restriction” includes “prohibition”also. Rule 41-A, however, does not take away the licensees’ rightto carry on business of exhibiting cinematograph films. It merelyregulates it. No rule or law can be declared to be unreasonablemerely because there is reduction in the income of a citizen onaccount of the regulation of the business. In our opinion, Rule 41-A does not place any unreasonable restriction on the appellants’/petitioners’ fundamental right guaranteed to them under Article19(1)(g) of the Constitution.”

90. In T.V. Balakrishnan v. State of T.N. & Ors., 1995 Suppl. 4SCC 236, wherein Rules 1-A (3)(b), 2, 3(ii) and 7(4) of Tamil NaduTimber Transit Rules, 1968 had been questioned on the ground of violationof Article 19 (1)(g). It was held that it was not restrictive but regulatory,hence was intra vires. This Court has discussed the matter thus:

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A4. The High Court further found that the impugned Rules wereonly regulatory and did not in any manner infract the right of thepetitioners guaranteed under Article 19(1)(g) of the Constitutionof India. The High Court rejected the argument on the followingreasoning:

B“When the rules as framed are intended to subserve the aimsof the Act which was meant to consolidate the law relating tothe forest produce, the transit thereof and the duty leviablethereon; and hence those rules were meant to effectuate sameof all of these objects. Having noticed the uphill task faced bythe Government in preventing illicit felling of trees, over largeCextents with limited man power, and checking at check-postsat forest frontiers having been found to be insufficient,ineffective and being no match to the swift manner in whichthey are carried away by lorries; and on raids conducted inplaces like Mettupalayam, Tambaram and elsewhere largeDstocks of illicit timber having been found in saw-mills and withdealers, the impugned rules, which insist on a Form II pass toaccompany during every movement of timber, and hammermark being affixed on the transported timber, are absolutelynecessary for the protection and management of forest wealthin the State of Tamil Nadu. Hence, the impugned rules are notEviolative of Article 19(1)(g).”

5. Having found that the rules were regulatory and not prohibitive,the High Court also rejected the argument based onArticles 301-304 of the Constitution of India. So far as theenhancement of fee is concerned, the High Court examined theFscheme and operation of the rules and came to the conclusionthat the State Government was providing sufficient services tothe timber merchants at every check-point and as such the principleof quid pro quo was satisfied.”

91. In State of Orrisa and Anr vs. Radheyshyam Meher &GOrs. AIR 1995 SC 855 = 1995 (1) SCC 652 the question which arosefor consideration was about the power of the State Government in theabsence of rule or regulations to permit the opening of medical store incampus of hospital remaining open day and night. Objection was raisedby store-keepers across road close to hospital that opening of store inHcampus will jeopardise their interest and they will not be able to sustain

themselves. This Court observed that the intention in starting day andnight store within the campus has direct nexus with the public interestparticularly with that of patients and that the policy decision of theGovernment in absence of rules and regulations was not liable to beinterfered with. This Court has observed thus:

“5. Learned Counsel appearing for the appellants vehementlyurged before us that the said advertisement inviting applicationsfor settling the shop to have a medical store inside the hospitalpremises was issued in pursuance of the Government policy andwith the sole object to make the medicines available to the patientseven at odd hours and, therefore, the High Court should not haveinterfered with the administrative decision of the Government takenin the public interest. We find considerable force and muchsubstance in these submissions.

6. In the aforesaid background the question arises whether, in theabsence of any rule or regulation to the contrary, can the powerof the State be abridged on the basis of an individual interest ofcertain trader, even to the extent of restricting the State’s capacityto advance larger public goods. It can hardly be disputed that theconsideration of availability of the medicines to the patients shouldbe the uppermost consideration as compared to the right of aperson to derive income and make profits for his sustenance byrunning a medical store for the reason that the medical stores areprimarily meant for the patients and not the patients for the medicalstores or those who run the same. The submission of therespondents that if a medical store is opened within the campusof the hospital, the same will jeopardise their interest adverselyaffecting their business and that they will not be able to sustainthemselves could not be a valid ground to disallow the appellantsto open a shop within the hospital campus. Undoubtedly, theopening of a medical store within the hospital campus will providea great facility to the patients who may not be having any attendantof their own in the hospital for their assistance at odd hours in theevent of an emergency to go out to purchase the medicines. Theremay be patients having an attendant who may not find it convenientor safe to go out of the campus to purchase the medicines in thenight hours. In these facts and circumstances, the paramountconsideration should be the convenience of the patients and A

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Aprotection of their interest and not the hardship that may be causedto the medical store keepers who may be having their shops outsidethe hospital campus. Thus the intention of the appellants to open amedical store within the hospital campus is to salvage the difficultiesof the patients admitted in the hospital and this object of theappellants has direct nexus with the Public Interest particularlyBthat of the patients and, therefore, the High Court should not haveinterfered with the decision of the State Government to settle theholding of a medical store in the Hospital premises. However, ifthe respondents so choose, they may keep their medical storesalso open day and night. Consequently, the impugned order couldCnot be sustained.”

92. In Dalmia Cement (Bharat) Ltd. v. Union of India 1996(10) SCC 104, compulsory packing of specified commodities with jutepackaging material (gunny bags) was held not to be violative of Articles14, 19(1)(g) and 301 of the Constitution. This Court held that the ActDprimarily intended to provide socio-economic justice to agriculturist. ThisCourt observed that the role of Article 14 in ushering in healthy socialorder by providing equal opportunities to all citizens to make fundamentalrights meaningful and life worth living should also consider the role ofArticle 38 in securing and protecting social, economic and political justiceand in the case of economic legislation presumption of constitutionalityEarises in favour of legislation. It is empowered to make experiments oneconomic legislation having regard to various socio-economic aspects.Court should not adjudge crudities and inequities arising from economiclegislation. With respect to human rights and fundamental freedom, inthe Universal Declaration of Human Rights, democracy, development,Fand respect for human rights, this Court has observed thus:

“15. In Valsamma Paul v. Cochin University, (1996) 3 SCC 545, aBench of this Court has held that human rights are derived fromthe dignity and worth inherent in the human person. Human rightsand fundamental freedoms have been reiterated in the UniversalGDeclaration of Human Rights. Democracy, development, andrespect for human rights and the fundamental freedoms areinterdependent and have mutual reinforcement. Article 29(2) ofthe Declaration of Human Rights provides that:

“…in the exercise of this right and freedoms, everyone shallbe subject only to such limitations as are determined by law H

solely for the purpose of securing due recognition and respectfor the rights and freedoms of others and of leading the justrequirements of morality, public order and general welfare in ademocratic society.”

The concept of equality and equal protection of law guaranteedby Article 14 of the Constitution in its proper spectrumencompasses social and economic justice in a political democracyas its species to eliminate inequalities in status and to providefacilities and opportunities among the individual and groups of peopleto secure adequate means of livelihood which is the foundationfor stability of political democracy.”

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18. Article 14 of the Constitution is a shining star among thefundamental rights which guarantees equality to every citizen andequal protection of laws to all persons. Equality before law is acorrelative to the concept of rule of law for all-around evaluationhealthy social order. Directives set forth social principles toeliminate inequalities in income, in status and opportunity and toprovide facilities and opportunities to every citizen to make thefundamental rights meaningful and the life of every citizen worthliving and at its best, with the dignity of person and fraternity, lestthey remain empty vessels and teasing illusions to majoritypopulation.

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21. Article 38 of the Constitution enjoins the State to strive topromote the welfare of the people by securing and protecting, aseffectively as it may, the social order in which justice - social,economic and political - shall, inform all the institutions of thenational life striving to minimise inequalities in income andendeavour to eliminate inequalities in status, facilities, opportunitiesamongst individuals and groups of people residing in different areasor engaged in different avocations. As stated earlier, agricultureis the mainstay of rural economic and empowerment of theagriculturists. Agriculture, therefore, is an industry. To the tiller ofthe soil, livelihood depends on the production and return of theagricultural produce and sustained agro-economic growth. Theclimatic conditions throughout Bharat are not uniform. They vary A

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from tropical to moderate conditions. Tillers of the soil being inunorganised sector, their voice is scarcely heard and was not evenremotely voiced in these cases. Their fundamental right tocultivation is as a part of right to livelihood. It is a bastion ofeconomic and social justice envisaged in the Preamble and Article38 of the constitution. As stated earlier, the rights, liberties, andprivileges assured to every citizen are linked with correspondingconcepts of duty, public order, and morality. Therefore, the juralpostulates form the foundation for the functioning of a just society.The fundamental rights ensured in Part III are, therefore, madesubject to restrictions i.e., public purpose in Part IV Directives,public interest or public order in the interest of general public. Inenlivening the fundamental rights and the public purpose in theDirectives, Parliament is the best Judge to decide what is goodfor the community, by whose suffrage it comes into existence andthe majority political party assumes governance of the country.The Directive Principles are the fundamentals in their manifestos.Any digression is unconstitutional. The Constitution enjoins uponthe Executive, Legislature, and the Judiciary to balance thecompeting and conflicting claims involved in a dispute so as toharmonise the competing claims to establish an egalitarian socialorder. It is a settled law that the Fundamental Rights and theDirective Principles are two wheels of the chariot; none of thetwo is less important than the other. Snap one, the other will loseits efficacy. Together, they constitute the conscience of theConstitution to bring about social revolution under rule of law.The Fundamental Rights and the Directives are, therefore,harmoniously interpreted to make the law a social engineer toprovide flesh and blood to the dry bones of law. The Directiveswould serve the Court as a beacon light to interpretation.Fundamental Rights are rightful means to the end, viz., social andeconomic justice provided in the Directives and the Preamble.The Fundamental Rights and the Directives establish the trinity ofequality, liberty, and fraternity in an egalitarian social order andprevent exploitation.

22. Social Justice, therefore, forms the basis of progressive stabilityin the society and human progress. Economic justice meansabolishing such economic conditions which remove the inequality

of economic value between man and man, concentration of wealthand means of production in the hands of a few and are detrimentalto the vast. Law, therefore, must seek to serve as a flexibleinstrument of socio-economic adjustment to bring about peacefulsocio-economic revolution under rule of law. The Constitution,the fundamental supreme lex distributes the sovereign powerbetween the Executive, the Legislature, and the Judiciary. Thethree instrumentalities, within their play endeavour to elongatethe constitutional basic structure built in the Preamble, FundamentalRights and Directives, namely, establishment of an egalitariansocial order in which every citizen receives equality of opportunityand of status, social and economic justice. The Court, therefore,must strive to give harmonious interpretation to propel forwardmarch and progress towards establishing an egalitarian socialorder.”

93. This Court has observed that above economic justice meansabolition of such economic conditions which remove inequality betweenman and man. In our opinion, there has to be positive action for thatequality.

94. In Indian Drugs & Pharmaceuticals Ltd. & Ors. v. PunjabDrugs Manufacturers Association & Ors. (1999) 6 SCC 247constitutional validity of the policy of the Government of the State ofPunjab was challenged whereby directions issued to the purchasingauthorities that certain medicines used in the government hospitals anddispensaries were to be purchased from public sector manufacturersonly was quashed by the High Court while allowing writ petition. WhereasRajasthan High Court has dismissed a similar writ petition. Both thematters were decided by this Court. This Court relied upon the decisionin Rai Sahib Ram Jawaya Kapur v. State of Punjab, AIR 1955 SC549 (quoted above) and observed that such restriction could be imposedby framing policy by exercising powers of the State under Article 162 ofthe Constitution. Therefore, the contention of the appellants in regard tocreation of monopoly and violation of the fundamental rights under Articles19(1)(g) and 19(6) was turned down. This Court has observed thus:

“16. It is clear from the various judgments referred to above thata decision which would partially affect the sale prospects of acompany, cannot be equated with creation of monopoly. In RamJawaya Kapur AIR 1955 SC 549 and Naraindas’s A

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[1974] 4 SCC 788 cases, the Constitution Bench also held thatthe policy restrictions, as discussed above, can be imposed byexercise of executive power of the State under Article 162 of theConstitution. Therefore, the contention of the appellants in regardto creation of monopoly and violation of the fundamental rightunder Articles 19(1)(g) and 19(6) should fail.The judgment citedabove also show that preference shown to cooperative institutionsor public sector undertakings being in public interest, will not beconstrued as arbitrary so as to give rise to a contention of violationof Article 14 of the Constitution. We have noted above that thisCourt in the cases of Oil & Natural Gas Commission v. Associationof Natural Gas Consuming Industries of Gujarat (1990) Supp SCC397 ; Krishna Kakkanth (1997) 9 SCC 495 and Hindustan PaperCorpn. Ltd. v. Govt. of Kerala (1986) 3 SCC 398, has held thatthe preference shown to cooperative institutions or public sectorundertakings being in public interest, will not be construed asarbitrary so as to give rise to a contention of violation of Article 14of the Constitution.

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19. For the above reasons, we are of the opinion that the HighCourt was right in coming to the conclusion that by the impugnedpolicy, there was no creation of any monopoly nor is there anyviolation Of Articles 14, 19(1)(g) or 19(6) of the Constitution. Inview of the above, we are of the opinion that these appeals shouldfail and the same are dismissed accordingly. No costs.

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CA Nos. 3723 and 3744 of 1988:F

20. These appeals are preferred against the judgment and orderof the High Court of Punjab and Haryana dated 3-6-1988 made inCivil WP No. 6144 of 1987 wherein the High Court was pleasedto allow the writ petition filed by the respondents in these civilappeals, quashing the policy decision of the State of Punjabwhereby the State had directed its authorities concerned topurchase certain medicines from the public sector undertakingsonly. We have today in CA Nos. 4550- 51 of 1989 held that asimilar policy decision issued by the State of Rajasthan does notamount to creation of monopoly nor is there any violation of Article14 or 19(1)(g) of the Constitution. The facts giving rise to the writ G

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petitions before the Punjab and Haryana High Court from whichthe above civil appeals have arisen being the same, we allowthese civil appeals and set aside the judgment and order of thePunjab and Haryana High Court dated 3-6-1988 made in CivilWP No. 6144 of 1987. Consequently, the said writ petition standsdismissed. No costs.”

(emphasis supplied)

95. In our considered opinion such stipulation for free treatmentdoes not amount to restriction under Article 19(6) on the right enshrinedunder Article 19(1)(g) and even otherwise it was not necessary to enacta statutory provision by the Government in view of existing liability asper policy/rules/statutory provisions as to ethical standards and otherstatutory provisions in force.

In Reference to question No.4 – decision in Social Juristsv. Govt. of NCT

96. In the decision rendered by Delhi High Court in Social Jurists,A Lawyer Group v. Government of NCT of Delhi, (supra), there were20 hospitals as respondents. Out of these 20 hospitals, 18 hospitalswere allotted land by Delhi Development Authority (DDA) and in thecase of Veerawali and Vimhans hospitals, the land was allotted by Landand Development Office (L&DO). The Head of L&DO allotted thelands to the aforesaid two hospitals on concessional rates. Out ofremaining 18 hospitals, 16 hospitals were provided lands on the conditionof free patient treatment specifically mentioned in the lease deed.However, according to remaining two hospitals i.e., Escort Heart Instituteand Research Centre and Dharam Shila Cancer Foundation and ResearchCentre, who were also allotted land by DDA, there was no conditionrequiring them to provide free patient care and treatment to the poorsections of the society. Though in the letter of allotment, the said conditionwas specifically incorporated. The terms and conditions of the leasedeed certainly did not contain the stipulation of free treatment, however,in view of the conditions of letter of allotment, the High Court of Delhi inparagraphs 47 and 48 observed thus:

“47. The first letter of allotment issued to both these hospitalscontained the term of free treatment to poorer sections. Therelevant terms of the letter has been referred by us supra. Withoutexecution of any document, the hospitals had in furtherance to A

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Athe letter of allotment accepted the terms and conditions of theletter including this condition and (a) paid the money demanded interms of the letter of allotment and (b) took possession thereof,without any protest or reservation.

48. In other words, a party’s right had to be controlled inBaccordance with the terms of letter of allotment and, therefore, acomplete contract existed between the parties. The terms andconditions of the letter of allotment empowered the authorities toadd or impose such other conditions which the allottee was obligedto agree having taken benefit thereof. The terms and conditionsof the Lease Deed certainly does not contain the condition of freeCtreatment to poorer sections of the Society but the same was partof the letter of allotment itself and they would be applicable to theallotments mutatis mutandis particularly when there is no conflictbetween them and they duly are supplement to each other.”

97. The High Court of Delhi also referred to Rules 5 and 21 of theDDelhi Development Authority (Disposal of Developed Nazul Land) Rules,1981. Rule 5 deals with rules of premium for allotment of Nazul land tocertain public institutions, whereas Rule 20 deals with allotment to certainpublic institutions. Rule 5 provides that the Authority may allot Nazulland to schools, colleges, universities, hospitals, other social charitableEinstitutions, religious, political, semi-political organizations and local bodiesfor remunerative, semi-remunerative or unremunerative purposes at thepremia and ground rent in force immediately before the coming intoforce of these rules, or at such rates as the Central Government maydetermine from time to time. Rule 20 (a) (i) provides that no allotmentof Nazul land to public institution, referred to in Rule 5 shall be madeFunless, according to the aims and objects of public institution, it directlysub-serves the interests of the population of the Union Territory of Delhi.Rule 20 (c) provides that public institution should be a non-profit makingcharacter. There is no such stipulation running contrary to the aforesaidprovisions. The condition of free patient treatment to the poor withGreference to Delhi Development Authority (Disposal of Developed NazulLand) Rules, 1981, was examined by the High Court of Delhi, the relevantportion is extracted hereunder:

“56. The condition of 25% free patient treatment to the poor thusis a condition which has been imposed in furtherance to the policyof the Government which in turn is in strict consonance to theH

spirit contained in Rules 5 and 20 of the Rules and theConstitutional mandate. The DDA had specifically incorporatedthis condition at/after the time when on the tall representationsand negotiations made by the hospitals and their undertaking toabide by such conditions, was repeatedly accepted that it issuedthe letter of allotment containing these terms. On facts of thecase and in law, they cannot abrogate themselves from completelysatisfying the condition of ‘free patient treatment’.

57. The letter of allotment, thus, is a concluded contract betweenthe parties and the Lease Deed, as per the language of the letterof allotment, is executed in compliance to one of the terms of thatletter and as contemplated under the Nazul Land Rules.

58. The hospitals cannot pick up the document of lease in exclusionto preceding and subsequent documents which complete the rights,privileges, and obligations between the parties in relation to theallotment. In the case of Union of India and v. Jain Sabha, NewDelhi (supra), the Supreme Court had clearly held that an offerextended by an allotment letter/revised offer once accepted, wouldbind the parties and that for reconsideration of the action, theallottee could only make a request to the authorities for asympathetic consideration and cannot breach the terms of theallotment. The Court specifically observed as under:

“.....The allotment of land belonging to the people at practicallyno price is meant for serving the public interest i.e., spread ofeducation or other charitable purposes; it is not meant to enablethe allottees to make money or profiteer with the aid of publicproperty.”

98. The High Court held that it was not open to hospitals to wriggleout of their contractual, statutory and public law obligation. There wasno scope for reading and confining the rights and obligations of the partiesin isolation.

99. The recommendation made in the report of Justice QureshiCommittee was also considered by the High Court of Delhi, the relevantpart is extracted hereunder:

“66. The Lieutenant Governor of Delhi had constituted a specialcommittee being Justice Qureshi Committee for this purpose. This A

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committee after taking into consideration various aspects includingworkability of this condition had recommended that 10% IPD and25% OPD patients should be treated free in all respects in everysuch hospital. Such patients belonging to the poor strata of thesociety should not be required to pay any charges. The relevantpart of the report of the committee reads as under:

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“1. Most of the representative of the hospital submitted that25% beds earmarked for poor patients were excessive sincethe cost of medicines was too high. It was agreed that it shouldnot be more than 15% in any case, but 10% would be ideal.Therefore, committee recommended 10% indoor beds free forpoor patients for all-purpose including medicines andconsumables. The free treatment services should be availableto 25% of total OPD patients. This condition should beapplicable to all the hospitals that have been allotted land bythe govt.

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3. The free treatment should be totally free and not partly freeand should be uniform for all hospitals that have been allottedland by the Government.

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4. It is also suggested that all those institutions should providethe free services to the extent of 10% also who have not beenallotted Government land. Even Nursing Homes should provide5% of their beds for poor and needy patients.

5. In consideration of persistent violation of expressed andFimplied terms by the institutions, the allotment of land shouldbe cancelled and should be reallotted by a new lease deed onnew and uniform terms and conditions for thirty years, oncommercial rates of ground rent, to a new management inwhich Government should have at least 3 nominees nominatedGby Lt. Governor having wide experience of rendering freeservices. The renewed lease must clearly mention that thelease is not transferable and any contravention would result inautomatic cancellation.”

100. The Government of NCT of Delhi accepted theHrecommendation of the Justice Qureshi Committee as reasonable and took the decision that it should be enforced. However, Union of Indiastated that the matter was under its consideration and they had not takena final view in the matter. At the relevant time, the similar view wasexpressed by Maninder Acharya Committee that the condition of freetreatment of poor strata of society should be reasonable, but itsimplementation should be strictly enforced and in the event of default,strict action should be taken. The High Court in Social Jurists (supra)has further observed with respect to land in Delhi and allotment of vitalassets thus:

“95. No right exists without any obligation and no obligation canbe dissected from the duty tagged with it. Right should correlateto a duty. The wider interpretations given to Article 21 read withArticle 47 of the Constitution of India are not only meant for theState but they are equally true for all who are placed at anadvantageous situation because of the help or allotment of vitalassets. Such assets would be impossible to be gathered in a citylike Delhi where the land is not available in feet, much less inacres, which the State at the cost of its own projects had providedland at concessional rates to these hospitals. The principle ofequality, fairness, and equity would command these hospitals todischarge their obligations of free patient treatment to poor strataof Delhi.”

101. The aforesaid decision in Social Jurists (supra) wasquestioned before this Court by way of several special leave petitionsfiled by Dharamshila Hospital & Research Centre etc. and Sundar LalJain Charitable Hospital also challenged the abovesaid decision bypreferring SLP (C) No.5630 of 2008. The said special leave petitionswere dismissed by reasoned order dated 01.09.2011. The order in entiretyis extracted hereunder:

“The special leave petitions are dismissed.

25% OPD and 10% IPD patients have to be given treatment freeof cost. The said patients should not be charged with anything.But that will not come in the way of the concerned hospital makingits own arrangements for meeting the treatment/medicines cost,either by meeting the cost from its funds or resources or by wayof sponsorships or endowments or donations.”

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102. Thereafter, the Government of India on 2.2.2012, issued theimpugned order with respect to the policy of free patient treatment toindigent/poor persons of Delhi to be followed by the private hospitalsallotted land by Land & Development Office on concessional rates.The said order is reproduced hereinbelow:

“Government of India

Ministry of Urban Development

Land & Development OfficeNirman Bhawan, New Delhi No.L&DO/L-II-B-18(107)/2012/42-47

Dated 2/2/2012

Order

SUB: Policy of free patient treatment to indigent/poor persons ofDelhi to be followed by the private hospitals allotted landby Land & Development Office on concessional rates –regarding.

Land & Development Office, Ministry of Urban Development,Govt. of India had allotted land to the registered societies andtrusts on concessional rates for establishment of hospitals. Asper the Government policy for allotment of land in force in 1943,a charitable institution was required to pay a premium at the rateof about Rs.25,000/- to Rs.35,000/- per acre. In 1949, the policywas reviewed and it was felt that these prevailing land rates wereon the higher side. It was then decided that land should be allottedto Charitable Trusts and Institutions for opening schools andhospitals at a nominal premium ranging from Rs.2,000 to Rs.5,000/- per acre depending on the locality in which the land is situatedsubject to an annual ground rent of 5% of the premium. In orderto avail the concessional rate, the institution should be non-profitmaking and function for the welfare of the public.

2. Thereafter, the allotments of land were made by the Land &Development Office at the rate of Rs.2,000/- to Rs.5,000/- peracre to 5 hospitals, namely (1) Sir Ganga Ram Hospital, (2) MoolChand Khairati Ram Hospital, (3) St. Stephen’s Hospital, (4)Veeranwali International Hospital (Delhi Hospital Society)/PRIMUS ORTHO and (5) R.B. Seth Jassa Ram Hospital (initialallotment of land was made by DDA and after that an additionalstrip of land 773 sq. yds. was allotted by L&DO), during the

period 1951 to 1976 in accordance with the said policy and at therate of Rs.10,000/- per acre to one hospital namely VIMHANSas per the prevailing concessional rate in 1981 keeping in mindthat these hospitals were genuinely charitable in nature and wouldprovide free treatment for the poor patients and function for thewelfare of the public. Out of these 6 hospitals, the lease deed oftwo hospitals namely, Veeranwali International Hospital (DelhiHospital Society)/PRIMUS ORTHO and VIMHANS had the freetreatment condition to the extent of 70% of total beds whereas, inrespect of remaining four hospitals, conditions for free treatmenthave not been provided.

3. The Govt. of NCT of Delhi has issued guidelines for theprovision of Free Treatment facilities to patients of EWS categoryin private hospitals in pursuance of directions issued on 22.3.2007by the Hon’ble High Court of Delhi in WP (C) No.2866/2002 inthe matter of Social Jurist vs. GNCT Delhi, which inter-alia includesas follows: -

i. The conditions of free patient treatment shall be 25% ofpatients for OPD and 10% of beds in the IPD for freetreatment. The percentage of patients will not be liable topay any expenses in the hospital for admission, bed,medication, treatment, surgery facility, nursing facility,consumables, and non-consumables etc. The hospitalcharging any money shall be liable for action under the lawand it would be treated as a violation of the orders of thecourt. The Director/M.S./member of the trust or the societyrunning the hospital shall be personally liable in the event ofbreach/violation/default.

ii. The hospital shall maintain the records which would reflectthe name of the patient, father’s/husband’s name, residence,name of the disease suffering from, details of expensesincurred on treatment, the facilities provided, identificationof the patient as poor and its verification done by thehospital.

iii. The hospital shall also maintain details of reference fromGovernment hospital and the reports submitted by theprivate hospital to Government hospital in the form of A

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feedback of treatment provided to the patient. The recordsso maintained shall have to be produced to the Inspectionteam, constituted by the Delhi High Court, as and whenrequired for its verification and quarterly details should haveto be sent to Directorate of Health Services (DHS), Govt.of NCT of Delhi (GNCTD) under intimation to the officeof Land and Development Office.

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iv. The details shall have also to be made available to theMonitoring Committee constituted by Govt. of NCT of Delhialso as and when required.

Cv. Every private hospital shall have to establish a referralcentre/desk functional round the clock, where the patientsreferred from Govt. hospital would be able to report. Thereferral desk shall be managed by a nodal responsible personwhose name, telephone, e-mail address and fax number isto be sent to the Govt. Hospitals, DHS and should beDprominently displayed. The hospital shall also display thefacilities available at the hospital and the daily position ofavailability of free beds quota so that the patients comingdirectly to the hospital would know the position in advance.

vi. In case of any change in the nodal person, the same shouldalso be intimated within 24 hours to Govt. Hospitals andDHS, the list of which shall be provided shortly.

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vii. The establishment of the referral desk should be ensuredwithin two weeks from the issue of this letter and theDirector/In charge of the hospital shall be personally liablein the event of default.

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viii. The hospital shall send daily information of availability offree beds to the DHS, GNCTD twice a day between 9 AM– 9.30 AM and at 5 PM-5.30 PM on all working days andalso to the concerned nearby Govt. hospital to which theprivate hospital is proposed to be linked for general and forspecialized purposes. The details of geographical linkage,the telephone numbers/fax numbers and the name of thenodal officer of Govt. hospitals shall be intimated shortly.In case no information is received within the stipulated timefrom the private hospitals then it shall be presumed that the G

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beds are available in private hospitals and the patient referredshall be accommodated.

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ix. The patient referred by Govt. hospitals or directly reportingto the private hospital shall be admitted if required, and betreated totally free. As per court’s directions, these patientsshall not incur any expenditure for their entire treatment inBthe hospital.

x. After the discharge of such patients provided with thetreatment, the hospital shall submit a report to the referringhospital with a copy to the DHS, GNCTD indicating thereinthe complete details of treatment provided and theexpenditure incurred thereon.

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xi. The criteria of providing free treatment would be suchpersons who have no income or have income belowRs.4,000/- per month for the time being which can be revisedfrom time to time.

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xii.Besides admission of the patient referred from Govt.hospitals, the hospital shall also provide OPD/IPD/Casualtytreatment free to the patients directly reporting to theprivate hospitals and would inform the nearest Govt. hospitaland to the DHS within two days of his/her admission.

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xiii. The patients admitted in any other manner, not covered bythe above guidelines shall not be entitled for claimingcompliance of the conditions imposed.

xiv. As per directions of the court, all the hospitals stated in thejudgment and/or all other hospitals identically situated shallstrictly comply with the term of free patient treatment toindigent/poor persons.

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xv. No benefits shall be applicable to such hospitals that hadprovided free treatment fully or partially in the past withthe higher conditions as applicable for that time with regardto any set off of the expenses or otherwise on that ground.

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xvi. The above revised conditions i.e. 25% free OPD patient’sand 10% free IPD beds and treatment on these beds shallbe prospective from the date of pronouncement ofjudgment.

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Axvii. Such hospitals which have not complied with the conditionsat all and persist with the default, for them the conditionsshall operate from the date their hospitals have becomefunctional.

xviii. An Inspection Committee constituted by the High CourtBwould also inspect any of the private hospitals. TheInspection Committee shall, have to be entertained andwould be facilitated to carry out physical inspection of thehospital where the free treatment has been provided andwould also be shown the records of having provided freetreatment. The said committee has been given the libertyCto revive the petition or for issuance of any directions fromthe court and wherever necessary for action againstviolators/defaulters under the provisions of Contempt ofCourt Act read with Article 215 of the Constitution of India.

4. The Hon’ble Supreme Court of India while dismissing the bunchDof Special Leave Petitions in the SLP Civil No.18599/2007 videits order dated 1.9.2011 has ordered that:

“25% OPD and 10% IPD patients have to be given treatmentfree of cost. The said patients should not be chargedanything. But that will not come in the way of the concernedEhospital making its own arrangements for meeting the treatment/medicines cost, either by meeting the cost from its funds orresources or by way of sponsorships or endowments ordonations.”

5. The Hon’ble Supreme Court has affirmed the aforesaiddirections passed by the Hon’ble High Court of Delhi. TheFGovernment of India has taken a policy decision on the basis ofthe judgment passed by the Hon’ble Supreme Court that all thesix hospitals which have been provided land by Land &Development Office must strictly follow the policy of providingtreatment free of cost to 25% OPD and 10% IPD patients. TheGGovernment of India further incorporates the aforesaid conditionsmentioned in the para 3 (i) to (xviii) above as a part of the termsand conditions of lease/allotment.

6. Non-observance or violation of any of the above-said guidelinesshall mean or be construed as violation of the terms of lease/allotment.H

(Mahmood Ahmed)Land & Development Officer”

103. It was also submitted that decision in Social Jurists (supra)is not at all applicable to the Trust. We have examined the case thoroughlyand we find that condition of free treatment had been the primaryobjective, which would be applicable to hospitals in question and to allother similarly situated hospitals, whether they were party to the aforesaiddecision or not. The decision rendered in Social Jurists (supra) wouldbe applicable to similarly situated institutions having been rendered inthe public interest institution and affirmed by this Court by a reasonedorder.

104. It is not the case of unilateral imposition of the condition offree treatment on the hospitals. The inquiry was conducted, hospitalswere heard and evidence was recorded by Justice Qureshi Committeeand thereafter recommendation made in the report had beenaccepted. The hospitals were required to show cause. Pursuant thereto,the reply had been filed. Thus, the decision cannot be said to be unilateral.

105. It is apparent that before imposing the conditions in leasedeeds, a High Level 10-Member Committee for hospitals in Delhi wasconstituted, headed by Mr. Justice A.S. Qureshi regarding the workingof the hospitals and nursing homes in Delhi, to review the existing freetreatment facilities extended by the charitable and other hospitals whohad been allotted land on concessional terms/rates pre-determined bythe Government, and to suggest suitable policy guidelines for freetreatment facilities for needy and deserving patients uniformly in thebeneficiary institutions, in particular, to specify the diagnostic, treatment,lodging, surgery, medicines and other facilities that would be given freeor partially free; to suggest a proper referral system for the optimumutilization of free treatment by deserving and needy patients; and tosuggest a suitable enforcement and monitoring mechanism for the above,including a legal framework. The Committee held various meetings,conducted enquiries, various hospitals were heard including MoolchandKharaiti Ram Hospital. The Government observed that there wereresistance and persistent refusal of the management of MoolchandKharaiti Ram Hospital to send a reply to the questionnaire and to submitthe documents which they were required to submit at the end of theenquiry. The first visit made to Moolchand Kharaiti Ram Hospital wason 16.1.2001 and the second on 21.3.2001. Various other hospitals were A

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Aalso visited. The Committee observed that there was no legal, social ormoral justification for allowing such money-making commercial concerns.The land was allotted for a charitable purpose and to do charitable servicewhich has now been totally replaced by exploitative commercial hospitals.

106. With respect to Moolchand Kharaiti Ram Hospital, JusticeBQureshi Committee has discussed the matter in extensive details. It hasbeen observed that initially the Trust was truly charitable. It was granted9 acres of prime land situated on the Ring Road in Lajpat Nagar inSouth Delhi. Initially the hospital continued to serve as a free Ayurvedichospital for patients in OPD and IPD sections. It also carried on theresearch for Ayurvedic medicines. Later on the trustees decided toCintroduce Allopathic treatment also. The Allopathic Section has beenupgraded with air-conditioned deluxe and super-deluxe rooms which arecalled Wards. Presently the Allopathic section covers about 90% of thehospital activities and the Ayurvedic section is reduced to about 10%.There is only nominal Ayurvedic treatment of patients in OPD and IPD,Dwhich had originally 4 wards. Now it is reduced to only one ward inwhich there are very few patients. There were only 4 or 5 Ayurvedicpatients in the ward on 21.3.2001. The manufacturing of Ayurvedicmedicines is also considerably reduced. After noting in detail thestatements of various witnesses working in the hospital, and afteranalysing them, the Committee has found that the Moolchand KharaitiERam Hospital has acted not only contrary to the wishes of its founderbut also violated the terms and conditions regarding free treatment tothe poor, openly both in letter and spirit. The management of hospitaldoes not consider it to be a charitable hospital at all. The land would nothave been allotted to Trust if it was not charitable. Be that as it may,Fnonetheless the land has been allotted for charitable purpose to the hospital.Their stand was that the word ‘poor’ was not defined in the lease deedor anywhere else, was adversely commented upon. Some adversecomments were also made with respect to the interpolation in the Will.We are not considering the aforesaid question of interpolation in theinstant matter as nothing turns on it. The Committee observed that if theGhospital was not saved immediately it may be too late because it appearsto be in the process of being sold out. The facts are writ large along withthe statements of witnesses recorded in the course of the inquiry. Inaddition, the High Court of Delhi during the course of hearing of SocialJurists (supra) has also constituted a Committee headed by Shri N.N.

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Khanna and also considered the same and thereafter the decision hadbeen rendered in Social Jurists case (supra).

107. Reliance has been placed on behalf of Moolchand KharaitiRam Trust to the decision rendered in Asit Kumar Kar v. State of WestBengal & Ors., (2009) 2 SCC 703, wherein it was observed that noadverse orders to be passed against a party without hearing him. Onthis account, it was contended that the Court could not have passed theadverse order against the hospitals, who were not heard in the matter ofSocial Jurists (supra). It was also contended that a contempt petitionwas filed by Union of India, which was dismissed on the ground that thehospitals in question were not impleaded as a party to the writ petition,that does not help the hospitals in question. We have examined thematter on merits in the present case afresh unfettered by previous decisionand have found Government’s order dated 2.2.2012, to be absolutelyproper.

108. Reliance has also been placed on Delhi DevelopmentAuthority & Anr. v. Joint Action Committee Allottee of SFS Flats &Ors., (2008) 2 SCC 672, wherein it was held that novation of contractcannot be done unilaterally, and the new terms must be brought to theknowledge of the offeree and his acceptance thereto must be obtained.It was further observed that when a contract has been worked out, afresh liability cannot be thrust upon a contracting party and it was beyondthe scope of the original terms contained in the offer letter and theallotment letter, in which the imposition of extra charges was notcontemplated. In factual matrix being different decision has no applicationto the instant case as it was stipulated right from the beginning in thepolicy/rules that land to such institution has been given for charitablepurposes of hospitality, research etc. at concessional rates and/or withnon-profit motive. It is not the case of new obligation being fastened atthe time of renewal of the contract.

109. However, we make it clear that the hospitals in question andother similarly situated hospitals, shall scrupulously observe the conditionsframed in the order dated 2.2.2012 and in case any violation is reported,the same shall be viewed sternly and the lease shall be cancelled. Weare constrained to pass this order as there had been resistance towholesome policy violation of the afore-conditions contained in orderdated 2.2.2012. Such violation cannot be permitted to prevail. We herebydirect the Government of NCT of Delhi to file a periodical report to this ABC

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ACourt within a period of one year from today with respect to complianceof conditions by the respondents-hospitals and other similar hospitals inDelhi, not only governed by the decision of Social Jurists case (supra),but also governed by this judgment.

110. Resultantly, in our considered opinion, the judgment and orderBpassed by the High Court are not sustainable and the same is liable to beset aside and is hereby quashed. The appeals are accordingly allowed.Parties to bear their own costs.

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Kalpana K. Tripathy Appeals allowed.

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