Punjab-Haryana High Court
Ct Scan Research Centre Pvt. Ltd. vs Director General Of Health Services on 6 September, 1999
Equivalent citations: 2000(69)ECC570
Author: Mehtab S. Gill
Bench: Mehtab S. Gill
JUDGMENT G.S. Singhvi, J.
1. On the basis of Custom Duty Exemption Certificate (hereinafter referred to as CDEC) granted to it by the Director General of Health Services, Government of India, New Delhi (respondent No. 1) the petitioner imported Whole Body Scanner and a spare CT X-ray tube. The grant of CDEC was subject to the provisions contained in Notification No. 64/88-Customs, dated 1.3.1988, issued by the Ministry of Finance (Department of Revenue) the relevant extracts of which are reproduced below:
NOTIFICATION No. 64/88-CUSTOMS Exemption to hospital equipments imported by specified category of hospitals (charitable) subject to certification from DGHS etc. In exercise of the powers conferred by Sub-section (1) of Section 25 of the Customs Act, 1962 (52 of 1962). The Central Government being satisfied that it is necessary in the public interest so to do, hereby exempts all equipment, apparatus and appliances, including spare parts and accessories thereof, but excluding consumable items (hereinafter referred to as the "hospital equipment"), the import of which is approved either generally or in each case by the Government of India in the Ministry of Health and Family Welfare, or by the Directorate General of Health Services to the Government of India, as essential for use in any hospital specified in the Table below, from--
(i) the whole of the duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975); and
(ii) the whole of the additional duty leviable thereon under Section 3 of the said Customs Tariff Act.
2. In approving the import of any hospital equipment under paragraph 1 regard shall be had to the following factors namely:
(i) that the hospital equipment in respect of which the exemption is claimed under this notification is not manufactured in India; and
(ii) that the hospital equipment in respect of which the exemption is claimed is necessary for running or maintenance of the hospital.
X X X TABLE
1. All such hospitals as may be certified by the said Ministry of Health and Family Welfare, to be run or substantially aided by such charitable organisation as may be approved, from time to time, by the said Ministry of Health and Family Welfare.
2. All such hospitals which may be certified by the said Ministry of Health and Family Welfare, in each case, to be run for providing medical, surgical or diagnostic treatment not only without any distinction of caste, creed, race, religion or language but also--
(a) free, on an average, to at least 40 per cent of all their outdoor patients; and (b) free to all indoor patients belonging to families with an income of less than rupees five hundred per month, and keeping for this purpose at least 10 per cent of all the hospital beds reserved for such patients; and (c) at reasonable charges, either on the basis of the income of the patients concerned or otherwise, to patients other than those specified in Clauses (a) and (b).
X X X
4. Any such hospital which is in the process of being established and in respect of which the said Ministry of Health and Family Welfare is of opinion-
X X X Provided that-- X X X
(b) the importer shall give an undertaking in writing to the Assistant Collector at the time of clearance of the said hospital equipment that the importer shall furnish certificates from the said Ministry of Health and Family Welfare or from the Directorate General of Health Services, Government of India, within such period as the Assistant Collector Customs may specify in this behalf or within such extended period as the Assistant Collector of Customs on sufficient cause being shown may allow in each case to the effect--
(i) that such hospital equipment has been installed in the hospital; and
(ii) that such hospital has started functioning;
(c) the importer shall furnish, at the appropriate time, the certificates referred to in(b);
(d) the importer executes a bond in such form and for such sum as may be specified by the Assistant Collector of Customs binding himself to pay on demand, and amount equal to the duty leviable on the said hospital equipment--
(i) if such hospital starts functioning within the period specified therefor, as is not proved to the satisfaction of the Assistant Collector of Customs to have been installed in such hospital, or
(ii) if such hospital does not start functioning with the period specified therefore.
After about two years, the Assistant Director General(HA), New Delhi wrote letter No. Z.37038/2/92-MG dated 13.1.1993 to the Director of Health Services, Chandigarh Administration (respondent No. 2) that the petitioner should be asked to apply for installation certificate alongwith following documents:
Data regarding free-treatment rendered starting from commencement of the Centre.
2. An inspection report of your department clearly indicating the date on which the equipment has started functioning along with confirmation regarding the free treatment data furnished by the institution.
3. Copy of customs duty exemption certificate issued for main equipment.
Vide letter Annexure P. 7, respondent No. 2 informed respondent No. 1 that as per statement and advertisement in the newspaper CT Scan (whole body) model Hitachi CT w 450-20 had been installed by the petitioner on 8.9.1991 and the same has been functioning. On receipt of this communication, respondent No. 1 issued certificate Annexure P.6 dated 3.3.1993.
2. After about four years, respondent No 1 issued notice dated 3.7.1997 (Annexure P. 16) to the petitioner to show cause as to why CDEC issued in terms of the notification dated 1.3.1988 may not be withdrawn because of its failure to abide by the condition enumerated therein and vide letter Annexure P. 13 dated 1.11.1997 the certificate was withdrawn. This was challenged by the petitioner in C.W. P. No. 823 of 1998 filed in Delhi High Court which was allowed by a Division Bench of that Court on 27.2.1998. The Delhi High Court held that the notice dated 3.7.1997 issued by respondent No. 1 had not been served upon the petitioner and, therefore, the order dated 4.11.1997 was liable to be treated as nullity. On that very day, i.e. 27.2.1998 copy of the notice dated 3.7.1997 was delivered to the petitioner through its counsel. In its reply dated 2.3.1998, the petitioner controverted the allegation of non-compliance of the conditions specified in the notification dated 1.3.1988. On receipt of the same an inspection team comprising of Dr. B.K. S. Chohan, Consultant and HOD, Radiology, Dr. R. M.L. Hospital, New Delhi, Dr. (Mrs.) A. Kothari, Senior Regional Director, R.O. ,Health & FW, Chandigarh and Dr. P. Ravinderan, ADG (M), DGHS, New Delhi, duly approved by respondent No. 1 inspected the establishment of the petitioner on 12.3.1998 and submitted its report. The salient features of which are extracted below:
X X X
(i) The equipment for which CDEC was sought by CT Scan Research Centre i.e. CTW 450 Hitachi Whole Body Scanner is installed at SCO No. 1134, Sector 22-B, Chandigarh and is functioning.
(ii) That the Managing Director Dr. S.P.S. Chawala is operating another company by the name of MRI Scan Research Centre (P) Ltd., from the same premises.
(iii) Except CT Scan machine, all other imaging services are under MRI Scan Research Centre.
(iv) The free services provided are mostly on CT Scan imaging services.
(v) The percentage of OPD patients treated free for the year 1993-94 (30.4%), 1994 (31%) and 1997-98 (37%) is less than 40%.
(vi) For the year 1995-96 and 1996-97, the receipt books when compared with OPD register showed that most of CT Scan done under concessional rates were recorded as free in OPD registers. Hence, it was felt futile to compute percentage of free OPD CT Scan services for 1995-96 and 1996-97.
(vii) The 4 beds infrastructure of indoor facility is not supported by requisite professional, para-professional, ancillary and supportive services. No records were available to verify the facts that how many of OPD patients among the 56 patients treated in past 6 years, were really treated free.
X X X
3. After considering the reply of the petitioner and report of the Inspecting Committee, respondent No. 1 issued the impugned order dated 19.3.1998 for withdrawal of CDEC granted to the petitioner in 1991 on the ground of noncompliance of the conditions laid down in the notification dated 1 3.1988.
The petitioner has challenged the impugned action on the following grounds:
(i) the order of cancellation of CDEC is violative of the principles of natural justice, inasmuch as, it has been held guilty of the allegations which did not form part of the show cause notice;
(ii) the impugned decision suffers from lack of authority, inasmuch as, the notification dated 1.3.1988 does not contain any provision for cancellation CDEC and, even if the power of cancellation is treated as implicit in the power of grant of CDEC, the same cannot be exercised after lapse of 6 years from the date of grant;
(iii) the installation certificate Annexure P.6 issued by respondent No. 1 should be treated as conclusive proof of the fact that the petitioner has complied with the conditions subject to which CDEC was issued;
(iv) the petitioner cannot be held guilty of its alleged failure to treat 40% patients free of charge because the centre was not attached to any of the hospitals in accordance with the instructions issued by respondent No. 1; and
(v) the report of the inspection team could not have been relied upon for passing an order adversely affecting the petitioner because the said team did not give notice of the date and time of inspection and no opportunity was given to the management of the petitioner to demonstrate full compliance of the conditions laid down by the Government.
In their reply, respondents No. 1 and 3 have not only justified their decision to withdraw CDEC granted to the petitioner but they have also accused the management of the petitioner of fabricating the record to make a show of compliance of the mandatory conditions embodied in the Notification dated 1.3.1988. They have also controverted the allegation of violation of the principles of natural justice and have averred that the impugned order was passed after giving full opportunity of hearing to the petitioner. In his written statement, respondent No. 2 has, by and large, adopted the same line of defence.
4. The first contention of Shri ML. Sarin, learned Senior Councel appearing for the petitioner is that the impugned order should be quashed because the finding recorded therein is beyond the purview of the show cause notice. Learned Counsel read out the show cause notice Annexure P.16 and the impugned order to show that the petitioner was not charged with the allegation of having failed to comply with the requirement of free examination of 40% patients and submitted that in the absence of such allegation, the petitioner cannot be held guilty of having acted in violation of the instructions issued by the Government. Shri Ashutosh Mohunta controverted the argument of Shri Sarin and submitted that if the notice and the order are read together, it becomes clear that the petitioner was made aware of the allegation relating to violation of the condition of free service to 40% of the outdoor patients and free treatment to indoor patients belonging to the families with an income of less than Rs. 500 per month and also of keeping at least 10% beds reserved for such patients. Shri Mohunta pointed out that the petitioner not only failed to abide by the condition of providing free service to 40% outdoor patients but also failed to provide indoor facility to the poor patients.
5. Having thoughtfully considered the respective contentions, we are inclined to agree with Shri Mohunta that the petitioner cannot complain of the violation of the principles of natural justice on the ground that no specific charge was levelled against it about the non-compliance of the conditions incorporated in the notification dated 1.3.1988. A conjoint reading of the snow cause notice, the impugned order and other documents available on the record unmistakably shows that the petitioner was made aware of the fact that the action was being taken against it due to noncompliance of the conditions embodied in the notification dated 1.3.1988, one of which required to treat at least 40% of the patients free of charge. This is clearly borne out from the reply Annexure P.18 filed by the petitioner's representative in which he categorically stated that all the conditions embodied in the notification dated 1.3.1988 had been fulfilled. The representation Annexure P.19 dated. 16.3.1998 submitted by the petitioner's representative also supports the conclusion. In these documents, an attempt was made on behalf of the petitioner to show that all efforts we made to treat the required number of patients free of cost. Therefore, it is not possible to accept the submission of Shri Sarin that the petitioner has been condemned unheard.
6. In support of the second ground of challenge, Shri Sarin argued that the impugned decision should be declared as nullity because the notification dated 1.3.1988 does not provide for withdrawal of CDEC. He further argued that even if the Court comes to the conclusion that the power to grant CDEC includes the power to withdraw the same, the action taken by the respondents after 6 years of the issuance of CDEC should be declared as unreasonable and violative of the petitioner's fundamental right guaranteed under Articles 14 and 21 of the Constitution of India. According to the learned Counsel, 3 years should be treated as the outer limit within which the competent authority could exercise the implied power of cancellation of CDEC. In our opinion, there is no substance in this argument of the learned Counsel. No doubt, the notification dated 1.3.1988 does not contain an express provision for cancellation/withdrawal of CDEC but this is not sufficient to denude the competent authority of its power to cancel CDEC on the ground of non-compliance of the conditions subject to which the same was granted. In our opinion, the power vested in the competent authority to grant CDEC includes the power to withdraw the same. The view of ours is in consonance with the settled principle of law that the power vested in the public authority to do a particular thing includes the power to undo.
7. We are also unable to agree with Shri Sarin that the exercise of power of cancellation of CDEC in the petitioner's case should be invalidated on the ground of unreasonable delay. The reasons for this conclusion are:
(i) The provisions, contained in the notification dated 1.3.1988 do not prescribe any period of limitation within which an action for cancellation of CDEC can be taken.
(ii) The respondents initiated action against the petitioner in compliance of the directions given by the Delhi High Court in C.W. P. No. 409 of 1996:1997(1) RCR(Civil) 720 (SC), People Union for Civil Liberties v. Union of India and others and the following observations made by the Supreme Court in Mediwell Hospital and Health Care Pvt. Ltd. v. Union of India JT 1997(1) SC 270 : 1996(3) RCR (Civil) 31 (P&H)(DB):
But at the same time we would like to observe that the very notification granting exemption must be construed to cast continuing obligation on the part of all those who have obtained the certificate from the appropriate authority and on the basis of that to have imported equipments without payment of customs duty to give free treatment at least to 40 per cent of the out door patients as well as would give free treatment to all the indoor patients belonging to the families with an income of less than Rs. 500 per month. The competent authority, therefore, should continue to be vigilant and check whether the undertakings given by the applicants are being duly complied with after getting the benefit of the exemption notification and importing the equipment without payment of customs duty and if on such enquiry the authorities are satisfied that the continuing obligations are not being carried out then it would be fully open to the authority to ask the persons who have availed of the benefit of exemption to pay the duty payable in respect of the equipments which have been imported without payment of customs duty. Needless to mention the Government has granted exemption from payment of customs duty with the sole object that 40% of all outdoor patients and entire indoor patients of the low income group whose income is less than Rs. 500 p.m. would be able to receive free treatment in the institute. That objective must be achieved at any cost, and the very authority who have granted such certificate of exemption would ensure that the obligations imposed on the persons availing of the exemption notification are being duly carried out and on being satisfied that the said obligations have not been discharged they can enforce realisation of the customs duty from them.
It is needless to reiterate that all the persons including the appellant who had the benefit of importing the hospital equipment with exemption of customs duty under the notification should notify in the local newspaper every month the total number of patients they have treated and the 40% of them are the indigent persons below stipulated income of Rs. 500 per month with full particulars and address thereof which would ensure that the application (obligation?) to treat 40% of the patients free of cost would continuously be fulfilled. In the event of default, there should be coercive official action to perform their obligation undertaken by all such persons. This condition becomes a part of the exemption order applicable and strictly be enforced by all concerned including the Police personnels when complaints of noncompliance were made by the indigent persons, on denial of such treatment in the concerned hospital or diagnostic centres, as the case may be.
We may hasten to add that the judgment in Mediwell Hospital's case (supra) was overruled in M/s Faridabad C.T. Stan Centre v. D.G. Health Services JT I997(8) SC 171 on the issue of applicability of Article 14 of the Constitution, but the directions given by their Lordships that continued compliance of the conditions enumerated in the notification dated 1.3.1988 should be ensured by the concerned authorities have remained untouched. Therefore, the impugned order cannot be invalidated on the ground that the respondents have taken action after long lapse of time. We are further of the view that in matters involving the interest of the weaker and poorer sections of the society, no amount of delay can justify invalidation of the corrective action taken by the competent authority.
8. The argument of Shri Sarin that the installation certificate (Annexure P.6) should be treated as a conclusive evidence of the compliance of the requirement of free treatment and facility of indoor treatment to 10% of such patients whose family income is less than Rs. 500 per month is based on a misreading of Annexure P.6 and other related documents. A careful reading of the undertaking (Annexure P.4) furnished by the petitioner to the Assistant Collector of Customs, New Delhi, the letter dated 13.1.1993 (Annexure P.5) written by respondent No. 1 to respondent No. 2 and the reply (Annexure P.7) sent by respondent No. 2 to respondent No. 1 shows that the installation certificate was issued to the petitioner solely on the basis of the recommendations of respondent No. 2 who, in turn, did not bother to find out whether the petitioner was, in fact, treating at least 40% of the outdoor patients free of cost and whether fee treatment is being provided to all indoor patients belong to the families having an income of less than Rs. 500 per month. In fact, the said respondent wrote letter Annexure P.7 to respondent No. 1 only on the basis of statement and advertisement given by the petitioner. On his part, respondent No. 2 did not inspect the establishment of the petitioner with a view to find out whether it has taken steps to fulfil the conditions enumerated in the notification dated 1.3.1988. Therefore, the installation certificate Annexure P.6. cannot be made basis for giving a clean chit to the petitioner.
9. The next contention put forth by Shri Sarin is that the petitioner cannot be penalised on the ground of alleged non-compliance of the conditions contained in the notification dated 1.3.1988 because the Chandigarh Administration failed to attach the petitioner with the Government Hospital for the purpose of reference of poor patients. In support of this submission, learned Counsel relied on the letter Annexure P.8 dated 10.3.1992 addressed by respondent No. 1 to respondent No. 2 and the letters Annexures P.10, P.ll and P.12 submitted by the petitioner to the authorities of the Chandigarh Administration and P.G. I/General Hospital. He submitted that in pursuance of the letter Annexure P.17 dated 17.2.1998 issued by respondent No. 2 the patients are being referred to the petitioner and they are being provided with free service. Shri Sarin also laid considerable emphasis on the fact that the petitioner has already given free treatment to more than 40% of outdoor patients during the years 1995-96 and 1996-97. In this respect, he tried to draw support from the averments made in paragraph 10 of the written statement of respondent No. 2. As against this, Shri Ashutosh Mohunta pointed out that the petitioner is guilty of fabricating the record to make a show of compliance of the conditions contained in the notification dated 1.3.1988. He invited our attention to the patients registers produced by the petitioner to show that most of the C.T. Scan done on concessional rates were recorded as 'free' in OPD registers. He also made reference to the findings of the Inspection Committee to show that four beds in frastructure of indoor facility is not supported by requisite professional, para - professional, ancillary and supportive services. Shri Mohunta submitted that failure of the petitioner to record the address of any of the patients is clearly indicative of the manipulative mechanism adopted by it to make a farcical show of compliance with the mandatory conditions laid down by the Government.
10. In our opinion, the petitioner cannot take advantage of the so-called failure of respondents No. 1 and 2 to issue instructions to the Government Hospitals etc. to refer poor patients to the petitioner because the notification dated 1.3.1988 does not envisage the petitioner's attachment with a Government Hospital as a condition precedent for compliance of the requirement of free service to 40% of outdoor patients. What the petitioner was required to do was to give free service to 40% of the total outdoor patients and free indoor patients services to those persons whose family income does not exceed Rs. 500 per month. This the petitioner has miserably failed to do. Therefore, the finding recorded by the competent authority on this issue cannot be treated as erroneous.
11. We have gone through the outdoor patients registers maintained by the petitioner for the years 1995-96 and 1996-97. A bare perusal of the same makes the following startling revelations:
(i) In the register for the year 1995-96, on pages 1 to 44 all the entries from Sr. No 1 to 1485 (from 1.4.1995 to 11.9.1995) have bee n made in one hand with the use of same ball pen. The entries from second portion of page 44 to page 84 are un-numbered. They have also been made with a ball pen containing black and blue ink. Similar entries have been made up to page 116--some of them are with black ball pen and the others are with blue ball pen. A perusal with naked eye shows that all the entries have been made by one person in one go.
(ii) The register of 1996-97 also starts w.e.f. 1.4.1996. No serial numbers have been given in this register but entries appear to have been made by one person in one go who has tried to make a show of recording these entries on different dates by using different inks on pages 1 to 111. From pages 112 to 140 same ball pen has been used for making entries.
(iii) The entries made in this register with the receipt books maintained by the petitioner show that the entries is made on several dates (shows as free), in fact, relate to the patients who were provided service on concessional rates. By way of illustration, we may give the names of such patients.
Date Name of patient
2.4.1996 Mr. B.S Chivari, Mr. Amar Singh, Mr. D.P. Gurang.
5.4.1995 Mrs. Mohinder Kaur, Mrs. Harjinder Prasha, Mr. Kashmiri Lal.
8.4.1996 Ms. Sonia and Mr. Kumud Giri.
9 4.1996 Mr. Santosh Jain, Mr. Paranjit Singh,
Mr. Siri Ram, Mr. Umesh Yadav.
(iv) Address of none of the patients has been given in either of these registers making it impossible for the inspection team or any one else to verify the entries.
(v) The indoor patients register contains 57 entries made from 2.4.1992 to 17.7 1998. Addresses of these patients have been given but not a single of them relates to a person having income of less than Rs. 500 per month. Not only this, the failure of the petitioner to provide indoor facility for the patients proves beyond any manner of doubt that it has failed to take steps for fulfilling its obligation in terms of the notification dated 1.3.1988.
These revelations leave no room for doubt that the record has been manipulated by the petitioner to create evidence in support of its plea that it has complied with the conditions subject to which CDEC was given. We are unable to approve such machination and, therefore, hold that the impugned order does not suffer from any legal error justifying interference by the Court.
12. The argument of Shri Sarin that the impugned order should be declared as void on the ground of violation of the principles of natural justice because the Inspection Committee did not give opportunity to the petitioner to produce evidence to prove that it had complied with the conditions laid down in the notification dated 1.3.1988 cannot be accepted for the simple reason that as per the petitioner's own showing the Inspection Committee had visited its establishment and its Managing Director, Shri S.P. Chawla, was present at the time of inspection. Moreover, as the record produced by the petitioner itself clearly proves the non-compliance of the provisions contained in the notification dated 1.3.1988, the absence of prior notice to the petitioner about the proposed inspection of the establishment cannot be made a ground for nullifying the impugned action.
13. For the reasons mentioned above, the writ petition is dismissed. The interim order passed in the petitioner's favour on 4.5.1998 stands vacated automatically. The petitioner shall be free to approach the concerned competent authority for grant of further time to fulfil the conditions laid down in the notification Annexure P.2.