Kerala High Court
Nila Hospital (Pvt) Ltd vs State Of Kerala And Another on 2 December, 2022
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE MOHAMMED NIAS C.P.
FRIDAY, THE 2ND DAY OF DECEMBER 2022 / 11TH AGRAHAYANA, 1944
WP(C) NO. 37630 OF 2010
PETITIONER/S:
1 KERALA PRIVATE HOSPITALS ASSOCIATION
REP BY ITS SECRETARY, HUSSAIN KOYA THANGAL,, AGED
39, NIMS HOSPITAL, P.B.NO.17, WANDOOR, MALAPPURAM
DISTRICT.
2 DR.V.K.JAYAKUMAR AGED 64 YEARS
S/O.KESAVAN VELAYUDHAN,
SABARIGIRI HOSPITAL ,R.O.JUCTION,, ANCHAL P.O.,
KOLLAM DISTRICT.
BY ADVS.
SRI.P.RAVINDRAN (SR.)
SMT.A.LOWSY
SRI.K.SHIBILI NAHA
RESPONDENT/S:
1 THE STATE OF KERALA, REPRESENTED BY THE
CHIEF SECRETARY, SECRETARIAT,THIRUVANANTHAPURAM.
2 THE DRUGS CONTROLLER OF KERALA
THIRUVANANTHAPURAM 695 001.
3 THE DRUGS INSPECTOR (IB)
OFFICE OF THE ASSISTANT DRUGS CONTROLLER OF
KOLLAM
OTHER PRESENT:
SENIOR GOVERNMENT PLEADER SRI. B. UNNIKRISHNA
KAIMAL
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR
ADMISSION ON 11-10-2022, ALONG WITH WP(C).14320/2011, THE
COURT 2-12-2022 DELIVERED THE FOLLOWING:
-2-
W.P.(C. Nos. 14320 of 2011
c/w. 37630/2010
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE MOHAMMED NIAS C.P.
FRIDAY, THE 2ND DAY OF DECEMBER 2022 / 11TH AGRAHAYANA, 1944
WP(C) NO. 14320 OF 2011
PETITIONER/S:
NILA HOSPITAL (PVT) LTD.
PATTAMBI, PALAKKAD DISTRICT, REPRESENTED BY ITS,
CHAIRMAN, SRI.P.ALI, S/O.ALIKUTTY (LATE),, AGED
55 YEARS, PALATHINGAL HOUSE, PATTAMBI,, PALAKKAD
DISTRICT.
BY ADV SRI.K.SHIBILI NAHA
RESPONDENT/S:
1 STATE OF KERALA AND ANOTHER
REP.BY THE CHIEF SECRETARY, SECRETARIAT,,
THIRUVANANTHAPURAM-695 001.
2 THE DRUGS INSPECTOR
OFFICE OF THE DRUGS INSPECTOR,, PALAKKAD-678 001.
SENIOR GOVERNMENT PLEADER SRI. B. UNNIKRISHNA
KAIMAL
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR
ADMISSION ON 11-10-2022, ALONG WITH WP(C).37630/2010, THE
COURT 2-12-2022 DELIVERED THE FOLLOWING:
-3-
W.P.(C. Nos. 14320 of 2011
c/w. 37630/2010
MOHAMMED NIAS C.P., JJ
..................................................................
W.P. (C ) Nos. 37630 of 2010
& 14320 of 2011
.....................................................................
Dated this the 2nd day of December, 2022
JUDGMENT
Mohammed Nias.C.P., J.
The above Writ Petitions are filed challenging Ext. P3 communication, issued by the Drugs Controller, Thiruvananthapuram, extending the exemption from taking out the drug license under the provisions of the Drugs and Cosmetics Act, 1940 (for short "the Act and the Rules"),to Clinics/Hospitals owned and maintained by single registered medical practitioners or hospitals owned and maintained by husband and wife as single entity.
2. Ext. P4 is a consequential demand from the Local Drug Inspector directing the second petitioner herein to take out the requisite license. In W.P.C. No. 14320 of 2011, the petitioners challenges the direction issued to them to take out license. W.P.C. -4- W.P.(C. Nos. 14320 of 2011 c/w. 37630/2010 No. 37630 of 2010 is treated as the leading case.
3 The learned counsel for the petitioner Sri. Shibili Naha argues that limiting the exemption to the Clinics/Hospitals owned and maintained by the single registered medical practitioners or hospitals owned and maintained by husband and wife as a single entity is not a valid classification at all, as no nexus to the object sought to be achieved. He argues that the hospital run by two medical practitioners who are brothers or any other close relationships are not granted exemption. He argues that there is no nexus in restricting the hospitals run by a couple alone and the said classification being wholly irrational is liable to be interfered. It is further argued by the learned counsel that Ext. P3 is in violation of the Section 18 and Rules 61 and 62 of the Act. He also questions the exemption granted to the hospitals run by Government or local authority and argues that the service rendered in the Government Hospitals as well as the private hospitals being the same, there is no justification for any differential treatment. It is thus, the submission of the learned counsel for the petitioner that the exemption must be enlarged to all the hospitals in the State and the benefit under Rule 5A cannot be confined to the group mentioned in Ext. P3.
-5-W.P.(C. Nos. 14320 of 2011 c/w. 37630/2010
4. Learned Counsel for the petitioner further argues that there is no sale when the practitioners dispense or sell medicines in a hospital and relies on the judgment of the Full Bench in Sanjose Parish Hospital (M/s.) and Others v. Commercial Tax Officer and Others [ 2019 (1) KHC 377] for the said proposition . As a sequel, he argues that there being no sale, there is no requirement to take out a license under the provisions of the Act. He also relies on the definition of retail sale and wholesale sale set out in Rule 2 (f) and 2 (g) of the Rules.
5. The learned counsel also argues that Rule 123 confers the power of exemption and that exercise of power has not been used properly while issuing Ext. P3. He refers to Schedule 'K', particularly table No. 5 and argues that the drugs supplied by registered medical practitioner to his own patients or any drug specified in Schedule 'C' supplied by registered by a medical practitioner at the request of another such practitioner are exempted and that as Table 5-A, the drugs supplied by a hospital or dispensary maintained or supported by Government or local body subjected to the conditions enumerated -6- W.P.(C. Nos. 14320 of 2011 c/w. 37630/2010 there under are exempted. According to the learned counsel, there is no justification at all for not extending the same benefit to the private hospitals. For these reasons he seeks to quash Ext. P3 and P4 in W.P.C. 37630 of 2010 and Ext. P1 in W.P.C. 14320 of 2011. Petitioner also seek a declaration that they are not legally bound to take out license under Chapter IV of the Drugs and Cosmetics Act, 1945.
6. The learned Government Pleader Sri. Unnikrishna Kaimal on the other hand submitted that the matter is covered by the judgment in Qualified Private Medical Practitioners' Association and Others v. State of Kerala and Others [2010 (2) KLT 375] where the challenge mounted by private hospitals was repelled and it was found that they are obliged to take out license under the Act. Thus, it was specifically found that the Government Hospitals and Private Hospitals belong to different class and they cannot be equated as a class and such classification was found to be based on an intelligible differentia. The learned Government Pleader also argues that the judgment relied on by the petitioners in Sanjose Parish (supra) was considering the meaning of the sale under the Kerala Value Added Tax Act "for short "KVAT Act" as well as in the context of Article 366 (29A) and has -7- W.P.(C. Nos. 14320 of 2011 c/w. 37630/2010 nothing to do with the issue in hand.
7. Heard both sides and perused the pleadings and the record.
8. The question as to the exemption granted to Government Hospitals owned and controlled by the Government and the Local Bodies qua the private hospsitals, is no more res integra. The issue stands squarely covered by the judgment reported in Qualified Private Medical Practitioners' Association (supra). The Special Leave Petition filed against the said judgment also stands dismissed and the review filed before this Court was dismissed with costs.
9. The only contention that remains to be considered is whether exempting Clinics/hospitals owned and maintained by the doctor couples as a single medical practitioners or hospitals owned and maintained by single entity is a valid classification as it does not include all the hospitals. It is pertinent to note that under Section 18 (c ) of the Act, license is mandatory for manufacture, sale or for distribution, or sell, or stocking or exhibiting or offer for sale, or distributing any drug or cosmetics. Rule 61 Part VI of the Rules deals -8- W.P.(C. Nos. 14320 of 2011 c/w. 37630/2010 with the forms of licenses to sell drugs. The licenses in Form 20 and 20-A is prescribed for retail sellers of drugs other than those specified in Schedules C, C (1) and X. Form 20 (B) is the form of license prescribed for sale of drugs by wholesale other than those specified in Schedules C, C(1) and X. Rule 123 provides for exemption under Chapter IV of the Act viz., the group exempted from taking out license under Section 18 of the Drugs and Cosmetics Act, 1940. The exempted groups under Rule 123 are enumerated in Schedule K. Table 5 of Schedule K exempts drugs supplied by "a registered medical practitioner to his own patient" while 5-A exempts drugs supplied by "a hospital or dispensary maintained or supported by the government or local body". The contention that the said exemption is not extended to the private hospital is bad was specifically repelled in the judgment mentioned above [Qualified Private Medical Practitioners' Association (supra)] judgment and accordingly the contentions of the petitioner in that regard is rejected.
10. It is to be noticed that a single medical practitioner cannot be identified with a group of medical practitioners nor can it be identified as a hospital. The argument of the learned counsel that a registered medical practitioner would take within its purview a hospital -9- W.P.(C. Nos. 14320 of 2011 c/w. 37630/2010 with a group of medical practitioners cannot be countenanced at all. Eventhough Section 13 of the General Clauses Act states that a singular word would include the plural and vice versa applies only if there was nothing repugnant in the subject or context. In as much as Clause 5 specifically mentions 'a' registered medical practitioner, the same word would not, therefore, include the plural in so far as the word 'a' qualifies the word medical practitioner. The alphabet 'a' is used in the place of one to denote a singular term. It was after the judgment in [Qualified Private Medical Practitioners' Association (supra) that discussions were held and a decision arrived on consensus whereby the benefit of exemption was enlarged to the hospitals owned and maintained by Single registered medical practitioner and also when it was carried on by the medical practitioners' couples as a single entity. Those hospitals, dispensaries, nursing homes and clinics, which cater to a large number of patients and which are being conducted with the involvement of a number of medical practitioners or doctors cannot be identified with a single medical practitioner. The doctrine of equality before law is a necessary corollary to the concept of rule of law accepted by Constitution. It is well settled that if a person complains of unequal treatment, the burden lies on that person to place before the court sufficient materials which leads to an influence of unequal -10- W.P.(C. Nos. 14320 of 2011 c/w. 37630/2010 treatment. In the absence of the same, the plea of provisions being violative of Article 14, cannot be entertained. It is pertinent to note that there are making provisions which accord special treatment to a husband and wife. Provisions like Sections 120 and 122 of the Indian Evidence Act are typical examples. The basis of the said grouping can only be because both husband and wife are conceived, in such circumstances as a single legal entity on the basis of the sociological conceptualization of the institution of marriage. The inviolability and sanctimony of the domestic life was treated as important aspect of human existence. For this reason also giving a special treatment cannot be faulted. The contention of the learned counsel for the petitioners, for the above reasons, has necessarily to fail.
11. In the decision in Ram Krishna Dalmia v. Justice S.R. Tendolkar - [1959 SCR 279], the Court enumerated the principles thus:
" ... The principle enunciated above has been consistently adopted and applied in subsequent cases. The decisions of this Court further establish -- (a) that a law may be constitutional even though it relates to a single individual if, on account of some special circumstances or reasons applicable to him and not applicable to others, that single individual may be treated as a class by himself; (b) that there is always a presumption in favour of the constitutionality of an enactment and the burden is upon -11- W.P.(C. Nos. 14320 of 2011 c/w. 37630/2010 him who attacks it to show that there has been a clear transgression of the constitutional principles; W.A.Nos.131 & 202 of 2022 :: 11 :: (c) that it must be presumed that the legislature understands and correctly appreciates the need of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds; (d) that the legislature is free to recognise degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest;
(e) that in order to sustain the presumption of constitutionality the court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived existing at the time of legislation;
and (f) that while good faith and knowledge of the existing conditions on the part of a legislature are to be presumed, if there is nothing on the face of the law or the surrounding circumstances brought to the notice of the court on which the classification may reasonably be regarded as based, the presumption of constitutionality cannot be carried to the extent of always holding that there must be some undisclosed and un-known reasons for subjecting certain individuals or corporations to hostile or discriminating legislation. (at page 297, 298)"
12. In Union of India and Others v. N.S. Rathnam and Sons
- [(2015) 10 SCC 681], it was observed as follows at paragraphs 13 and 14 of the said judgment:
"13. It is, thus, beyond any pale of doubt that the justiciability of particular Notification can be tested on the touchstone of Article 14 of the Constitution. Article 14, which is treated as basic feature of the Constitution, ensures equality before the law or equal protection of -12- W.P.(C. Nos. 14320 of 2011 c/w. 37630/2010 laws. Equal protection means the right to equal treatment in similar circumstances, both in the privileges conferred and in the liabilities imposed. Therefore, if the two persons or two sets of persons are similarly situated/placed, they have to be treated equally. At the same time, the principle of equality does not mean that every law must have universal application for all persons who are not by nature, attainment or circumstances in the same position. It would mean that the State has the power to classify persons for legitimate purposes. The legislature is competent to exercise its discretion and make classification. Thus, every classification is in some degree likely to produce some inequality W.A.Nos.131 & 202 of 2022 :: 18 :: but mere production of inequality is not enough. Article 14 would be treated as violated only when equal protection is denied even when the two persons belong to same class/category. Therefore, the person challenging the act of the State as violative of Article 14 has to show that there is no reasonable basis for the differentiation between the two classes created by the State. Article 14 prohibits class legislation and not reasonable classification. 14. What follows from the above is that in order to pass the test of permissible classification two conditions must be fulfilled, namely, (i) that the classification must be founded on an intelligible differential which distinguishes persons or things that are grouped together from others left out of the group; and (ii) that, that differential must have a rational relation to the object sought to be achieved by the statute in question. If the Government fails to support its action of classification on the touchstone of the principle whether the classification is reasonable having an intelligible differentia and a rational basis germane to the purpose, the classification has to be held as arbitrary and discriminatory...................................................................."
13. Regarding the contention on the basis of the Full Bench decision in Sanjose Parish Hospital (M/s.) and Others (supra) the said contention has also to fail. The Full Bench in the above case was considering the scope of definition of 'sale' appearing in Article 366 (29A) of the Constitution and also that of Kerala Value Added Tax Act, 2003. The fine point that fell for consideration in Sanjose Parish -13- W.P.(C. Nos. 14320 of 2011 c/w. 37630/2010 Hospital (M/s.) and Others (supra) was whether the administration of drugs on patients as part of treatment would amount to sale. Considering the constitutionality of the levy under the KVAT Act in the backdrop of Entry 54 of the Constitution, it was held that dispensing of medicines in the hospitals cannot be taken as a sale. The said principles of law can have no relevance at all in the context of the Drugs and Cosmetics Act, 1940 and Rules made thereunder. Apart from that, it has to be noted that the KVAT Act, 2003 is a taxing statute while the Drugs and Cosmetics Act, 1940 and Rules has to fall under the category of regulatory legislation made under Entry 19 of List III. It cannot be treated as a statute in pari materia. The definition under both the enactments do not denote the same meaning or context. As observed by Justice G.P. Singh in his text o Interpretation of Statutes:
"It is hazardous to interpret a statute in accordance with a definition in another statute and more so when such statute is not dealing with any cognate subject or the statutes are not in pari materia".
14. The Hon'ble Supreme Court has also held on multiple occasions that the definition of a term in one statute does not accord to the construction of the same term in another statute. It is also -14- W.P.(C. Nos. 14320 of 2011 c/w. 37630/2010 been held that importing of a definition in a statute in the regulatory regime into a fiscal statute would not be warranted in view of the fact that the exemptions or concessions granted in a fiscal statute are to be strictly construed. (See the decision in Maheswari Fish Seed Farm v. T.N. Electricity Board [(2004) 4 SCC 705, CIT v. Benoy Kumar (AIR 1957 SC 768) ; Himalaya Drug Company v. State of Kerala [2020 (3) KLT 799).
15. In the light of the principles of law discussed above, the contention of the petitioner has to necessary fail. No grounds are made out to invalidate the action in the orders impugned in the Writ Petition.
Accordingly, these Writ Petitions are dismissed.
Sd/-MOHAMMED NIAS C.P., JUDGE ani.
/true copy/ -15- W.P.(C. Nos. 14320 of 2011 c/w. 37630/2010 APPENDIX EXHIBITS IN W.P.C. NO. 37630 OF 2010 EXT.P1: TRUE COPY OF THE FORMAT OF FORM 20B EXT.P2: TRUE COPY OF THE JUDGMENT IN W.P.C. NO. 38494/03 DATED 25-3-2010 EXT. P3: TRUE COPY OF THE CIRCULAR DATED 14-08-2020 EXT.P4: TRUE COPY OF THE COMMUNICATION DATED 9-9-2020 EXT. R1 A:TRUE COPY OF THE ORDER DISMISSING THE SPECIAL LEAVE PETITIONS EXT. R1B: A TRUE COPY OF THE ORDER ISSUED IN THE REVIEW PETITION EXT. R1 C: TRUE COPY OF THE LICENSE ISSUED TO THE FIRST PETITIONER EXT. R1D: TRUE COPY OF THE LICENSE ISSUED TO THE SECOND PETITIONER EXHIBITS IN W.P.C. NO. 14320 OF 2011 EXT. P1: TRUE COPY OF THE NOTICE ISSUED BY THE 2ND RESPONDENT ON 29-4-2011 EXT. P2: TRUE COPY OF THE FORMAT OF FORM 20 B EXT. P3: TRUE COPY OF THE JUDGMENT IN W.P.C. NO. 38494/03 DATED 25-3-2020 EXT. R1 A:TRUE COPY OF THE ORDER DISMISSING THE SPECIAL LEAVE PETITIONS EXT. R1B: A TRUE COPY OF THE ORDER ISSUED IN THE REVIEW PETITION EXT. R1 C: TRUE COPY OF THE LICENSE ISSUED TO THE FIRST PETITIONER EXT. R1D: TRUE COPY OF THE LICENSE ISSUED TO THE SECOND PETITIONER