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Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.3155 OF 2017

UNION OF INDIA          … APPELLANT

VERSUS

MOOL CHAND KHAIRATI RAM TRUST         … RESPONDENT

WITH

CIVIL APPEAL NOS.3153­3154 OF 2017

CIVIL APPEAL NO. 3156 OF 2017

AND

CIVIL APPEAL NOS.3157­3158 OF 2017

J U D G M E N T

ARUN MISHRA, J.

1. The question involved in the appeals is  with respect to the

validity of Circular issued by the Government of NCT of Delhi

(GNCTD) on 2.2.2012 whereby it intimated the hospitals to implement

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the judgment of Delhi High Court with regard to free treatment to the

weaker sections of the society in terms of the judgment dated

22.3.2007 in the case of Social Jurists v. Government of NCT of Delhi

& Ors. Thereafter, the Land & Development Officer (in short, ‘L&DO')

passed an order dated 2.2.2012 wherein it was stated that the

Government of India had taken a policy decision that all the hospitals

which have been provided land by L&DO have to strictly follow the

policy of  providing  free treatment  as  provided  in it.  That the said

conditions were applicable to Moolchand Hospital and St. Stephens

Hospital as they  were  allotted land  by  L&DO.  Communication  on

similar lines was issued by Government of NCT of Delhi to Sitaram

Bhartia and the Foundation of Cancer Research imposing condition of

providing free treatment to 10% indoor patients and 25% to outdoor

patients of poor strata of the society. The decision was taken in the

light of the decision of Delhi High Court in Social Jurists case (supra)

which  was referred  by this  Court in  Special Leave  Petition [Civil]

No.18599  of  2007  vide  order  dated  1.9.2011 in  which this  Court

observed that 25% OPD and 10% IPD have to be given treatment free

of cost. Said patients should not be charged with anything. However,

the concerned  hospital could  make the arrangements of the cost

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either  by  meeting the treatment/medicines  cost from  its funds  or

resources or by way of sponsorships or endowments or donations. As

the respondents­hospitals  were  not a  party, they  have  questioned

imposition of  said  conditions in  the impugned order by filing  writ

applications.   The High Court has quashed the imposition of

conditions hence, the appeals have been preferred.

2. The factual matrix reflects that the Government of India in the

year 1949 took a decision to provide all possible help to the hospitals

by allotting land to the hospitals and schools at highly concessional

rates so as to involve them in achieving the larger social objective of

providing health and education to the people. Pursuant to the

decision taken in the meeting dated 10.6.1949 under the

Chairmanship of the Secretary (Finance) it was decided that the land

would be allotted to the hospitals and schools at the rate of

Rs.2000/­ to  Rs.5000/­  per  acre.  The  hospitals  and  schools  were

treated as charitable institutions. While the first safeguard relating to

institutions being secular and non­communal in character, free help

by allotment of land to schools and hospitals was unanimously

accepted. It was also agreed that non­profit making bodies be

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included under the term “charitable  institution” with the aforesaid

institutions. The test should be that the institute should be run for

the good of the public without any profit motive. The relevant portion

of policy decision dated 10.6.1949 is extracted hereunder:

“1) It should be clearly laid down that the land will be made available only for institutions of  secular and  non-communal  character,  schools  and hospitals  should be freely helped by allotment of land but applications from other types of charitable institutions  should  be  considered  individually  on merits. It would be risky to lay down a general rule as regards the latter.

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

             2) The first safeguard was unanimously accepted. It was understood that an institution of secular and non-communal  character  was  one  which  did  not discriminate  against  any  class  of  people  on  any ground  while  making  an  admission.  It  was  also agreed that institutions like Arts and Crafts Society and  other  non-profit  making  bodies  should  be included  under  the  term  "Charitable  Institution". The test should be that the institution should be run for  the  good  of  the  public  without  any  profit motive."

3. It was also deliberated upon on 10.6.1949 that what should be

premium and ground rent chargeable to a charitable institution. As

per the policy laid down by the Government of India in the letter of

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the Department of Education, Land, dated 25.7.1943, the premium

charged was too high, to be easily payable by any charitable

institution  much less by any  displaced institution from Pakistan.

According to that formula, any charitable institution will have to pay

a premium at the rate of 25,000 to 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 premium chargeable on land allocated

to charitable institutions in  Delhi should vary from Rs.2000/­ to

Rs.5000/­ per acre.

Facts relating to Mool Chand Khairati Ram Trust :

4. In the year 1927 one Lala Kharaiti Ram of Lahore made a Will

with a codicil registered at Lahore by which Moolchand Khairati Ram

Trust was constituted by Lala Kharaiti  Ram with the name of  his

father Shri Moolchand. The relevant clauses of the Will are extracted

hereunder :

"(8) After meeting the above-mentioned allotments the  following  instructions  shall  be  observed  with regard  to  the  property  of  every  description  that may remain after my death:-

(a) All the remaining property of every description shall  constitute  a  Trust  known  as  Moolchand

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Kharaiti  Ram  Trust,  Lahore,  the  objects  of  which shall be as follows:-

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

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

5. It was the case of the Trust that the author neither used the

word charity nor charitable while creating the Trust in the Will. In

law, it  became a  charitable trust  on  account  of the  provisions  of

section 2 of the Charitable Endowments Act, 1890.  Mool Chand

hospital acquired the perception of being charitable not from the Will

or the purpose set out for the Trust but from the very nature of the

activity of providing medical 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 of

Moolchand Kharaiti Ram Hospital. After partition, the trustees had to

leave Pakistan and migrate to India as refugees in 1947. The Ministry

of Rehabilitation allotted nine acres of land at Lajpat Nagar to the

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Trust on 17.4.1951 on which land at Lajpat Nagar, Delhi, the Trust

built a hospital which has been running since then. At the time of

allotment Lajpat Nagar was not a prime location of Delhi.

7. It was further the case of the Trust that in the allotment letter

there was no term or condition to provide free treatment to patients

belonging to economically weaker sections of the society at the

hospital. Subsequently, lease deed was formally executed between the

President of India and Moolchand Kharaiti Ram Trust which was to

be effective from 17.4.1951 for a period of 99 years. In this lease deed

also, there was no such condition regarding  free treatment to any

patient. Thus, it  was  not open to the  Government to impose the

obligation of providing free medical treatment by an executive order.

The policy of 1949 regarding institution should be run for the good of

the public without any profit motive was applicable to other

institutions  like Arts & Crafts Society and not to hospitals.  At the

most, the only rider in the policy was that the institution would be

run for the good of the public without any profit motive. This

policy/test was to be applied at the time of allotment of land and only

such institutions were to be allotted land which in the opinion of the

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Government fulfilled the said criteria. Since the policy has not been

converted into law by enactment of  an Act by the  legislature, only

insistence could be that the institution should be run without any

profit motive and not that the institution be required to provide free

treatment to any specified number of patients. The DDA (Disposal of

Developed Nazul Land) Rules, 1981 are not applicable in the case of

Trust. Clause 14 of the lease deed did not authorize the Government

to impose such conditions. That the decision of  Social Jurists  case

(supra) is not applicable as in that case there was either conditions of

allotment, or the stipulations in the lease deed  under  which the

hospitals were obliged to provide access to significant percentage of

the IPD and OPD facilities. Right to carry on any occupation, trade or

business is fundamental under Article 19(1)(g) as such, such

restriction could have been imposed by enacting a law under Article

19(6) of the Constitution of India by Parliament or the State

legislature. Such condition could not have been imposed by executive

feat in exercise of power under Article 162. In the decision in Social

Jurists (supra) which has been affirmed by this Court, the Trust was

not a party. The condition of lease could not have been altered

unilaterally. This Court while dismissing the SLP on 1.9.2011 by a

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speaking order, did not intend such result. This Court never intended

to pass adverse order against a person who had not been given notice

or heard  in the matter.  A contempt petition was  filed  in the High

Court for proceeding against the hospital run by the trust. The same

was dismissed by 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 a hospital in that locality because at that time not so

many people  were  willing to open  hospitals or schools. As these

services were to be provided by the State, the land was not given at

the concessional rate. It  was the market rate that prevailed in the

year 1951. Report of Justice Qureshi Committee was not relied upon

by the High Court while deciding the case of Social Jurists (supra) and

High  Court  had  appointed  a  Committee  namely  Mr.  N.N.  Khanna

Committee.  At that time when Justice Qureshi Committee’s  report

was prepared, it was based upon the statement made by disgruntled

workmen  who were having dispute  with the  management of the

hospital as such said report cannot be looked into. It was also

submitted  that there  are  specialist  doctors in  the Trust run since

1958 who devote one hour each day to OPD patients from the weaker

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sections of the society without charging them anything and they will

continue to do so.

Facts regarding St. Stephen hospital :

8. In the case of St. Stephen hospital, it was averred by the

hospital that it  was established in the year 1885 by a group of

missionary women in Chandni Chowk, Delhi. In 1908 it moved to its

present location to Tees Hazari, Delhi. Land admeasuring 1.37 acres,

2331 sq.yds. and 1.29 acres was allotted to it by L&DO vide allotment

letters dated 12.6.1970, 25.2.1972 and 19.1.1976 for its additional

requirements.  Subsequent to the  agreement, the lease  deeds  were

signed and perpetual lease deeds were executed. There was no such

condition in the allotment letters/lease deeds for providing free

care/treatment to the patients. The  hospital having regard to its

objective has always been providing substantial treatment to the

needy. In the writ petition, the order passed by L&DO on 2.2.2012

was questioned regarding the condition of free care as part of the

terms and conditions of the lease deed. Same has been allowed by the

High Court. Though land had been obtained for purpose of the

charitable institution it  was  not  open to imposing  such riders  by

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executive order.  There  was  no condition  of free care in the  1949

policy. Unilateral amendment of the lease deed could not have been

made. The decision of  Social Jurists  (supra) is not applicable as 20

hospitals were dealt with in the said decision. There was no

stipulation regarding free care in the allotment letters/lease deeds.

The order is without 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 a

registered society.  On 30.3.1984, it applied for allotment of land

admeasuring 3 acres for  establishing a  multi­disciplinary research

complex in New Delhi. On 22.10.1984 the DDA allotted land

admeasuring 1.52 acres @ Rs.6 lakhs per acre. Request was made by

the said society to charge at the concessional rate that was declined

on 20.11.1984. On 2.9.1985 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  Social  Jurists  (supra)  was  filed  in the High

Court. The writ petition was disposed of by the High Court. Pursuant

to the decision in  Social Jurists  (supra), Circular was issued by the

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Government on 20.1.2012 to  the hospitals/societies to whom land

had been allotted at concessional rates to provide free treatment to

the eligible patients or weaker sections category free of charge. The

society took the stand that it was not allotted the land for the purpose

of hospital at concessional rate. Hospital was asked by the

department on 28.6.2012 to provide free treatment. On 28.6.2012 it

directed that it was making arrangement to comply with the order.

On 12.7.2012 the society  informed the Director  of  Health Services

about the stand taken by it to comply  with the said directions.

However, on 13.3.2012 contempt application filed against it for not

complying with  the directions,  was  disposed of  by the High Court

holding that no contempt was made out. On 18.4.2013 and

29.4.2013, Director of Health Services required the accounts of

hospitals for the purpose of scrutiny for the last two 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 provide free treatment

to economically weaker sections category as such the hospital was

not similarly situated. Condition was not applicable. However, name

of petitioner was not removed from the hospitals that failed to provide

free treatment hence the writ petition was filed in the High Court.

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Moreover, similar are the facts of Foundation for Applied Research in

Cancer.

The stand of the Government:

10. On behalf of the State it was contended that the stand of the

Government 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/­ to Rs.5000/­ per acre to the  institutions which was far

lesser than the already prevailing concessional rate of Rs.25,000/­ to

Rs.30,000/­ per acre fixed vide letter dated 25.7.1943.

11. In the  case  of  Moolchand Khairati  Ram Trust  vide  allotment

letter dated 17.4.1951 land was allotted at the rate of Rs.2000/­ to

Rs.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 in favour of Moolchand Khairati Ram Trust.

12. St. Stephens hospital was similarly allotted 1.37 acres of land

vide allotment letter  dated 12.6.1970 which was  followed by  lease

deed dated 3.7.1970, whereafter, further land admeasuring 2331 sq.

yds. was allotted vide allotment letter dated 25.2.1972 at the rate of

Rs.5000/­ per acre and ground rent at the rate of 5% per annum.

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13. Sitaram Bhartiya Institute of Science & Research was allotted

1.52 acres of land at the rate of Rs.6/­ lakhs per acre on 22.10.1984

followed by lease deed dated 2.9.1985 in respect of another plot of

1.46 acres for a consideration of Rs.8,76,000/­. The Government of

Delhi with the approval of Lt. Governor of Delhi constituted a

Committee headed by Mr. Justice A.S. Qureshi to review the existing

free facility extended by the charitable hospitals and various other

hospitals which had 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 the cost of medicines was too high. It was agreed that it should not be more  than  15% in  any  case,  but  10% would  be ideal. Therefore, the Committee recommended 10% indoor beds free for poor patients for all purposes including  medicines  and  consumables.  The  free treatment services should be available to 25% of total  OPD  patients.  This  condition  should  be made  applicable  to  all  hospitals  that  have been allotted land by the govt.”

(emphasis supplied)

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14. The recommendations of the Qureshi Committee were accepted

with some variation in the meeting of the GNCTD presided over by the

Chief Secretary on 23.10.2002.

15. Earlier, a writ petition was filed by  Social Jurists under Article

226 of the Constitution of India in the High Court of Delhi seeking

that conditions of allotment of land to hospital particularly in regard

to free treatment to poor people be complied with and action be taken

in respect of recommendations of the Justice Qureshi Committee. The

writ petition was decided on 22.3.2007. Various directions were

issued, inter alia, as under:

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

16. The High Court of Delhi vide order dated 17.7.2007 directed all

the hospitals  which had been given  land on concessional rates to

abide by the order of free treatment. The special leave petitions were

preferred by the hospitals which were dismissed by a speaking order

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by this Court. This Court observed that 25% OPD and 10% of IPD

patients have to be given treatment free of  cost.  The said patients

should not be charged with anything.

17. Thereafter the GNCTD came out with a Circular on 20.1.2012

intimating hospitals to implement the directions of  the High Court

with regard to free treatment in terms of judgment dated 2.3.2007.

Land & Development Officer passed an order in this regard to follow

the policy. Similar letters were issued to Sitaram Bhartiya and

Foundation for Applied Research in Cancer.

18. The Foundation for Applied Research in Cancer was allotted a

plot admeasuring 0.9 acres @ Rs.28,50,000/­ per acre provisionally

with annual ground rent at 2.5%  per annum, the premium  was

revised to Rs.39,00,000/­ per acre on 22.10.1991. In August 1992, it

represented to the Lt. Governor that as per notification dated

11.09.1991, the price of the land allotted to it was fixed at

Rs.3,25,000/­ and sought a refund, however, the request was

declined.

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19. The  High  Court of  Delhi had allowed the  writ applications,

hence, the appeals have been preferred. Social Jurists, a civil rights

group has filed Civil Appeal Nos.3157­3158 of 2017 against the

judgment and order passed in the case of Moolchand Kharaiti Ram

Trust and others. Other appeals have been filed by Union of

India/NCT of Delhi.

Rival Submissions

20. It was urged by Mr. Sandip Sethi, learned Additional Solicitor

General on  behalf of the  appellants that the  High  Court erred in

allowing the writ  applications. The condition of  providing 10% IPD

and 25% OPD free medical treatment to poor strata of  the society

cannot be considered to be a restriction in terms of Article 19(6) of the

Constitution of India putting fetters on the right of the respondent

hospitals to carry on their trade and profession under Article 19(1)(g)

of the Constitution of India. The direction has been issued in terms of

the policy of  allotment in  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 competence of the Government to pass

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Government Order to implement the recommendations of Mr. Justice

A.S. Qureshi Committee. The respondents Moolchand Khairati Ram

Trust and St. Stephens hospital were given land at the concessional

rate being charitable institutions with the purpose of providing

medical aid to poor and needy sections of the society. The

concessional rates in 1949 were reduced substantially as per policy

from the rates  in 1943 with respect to charitable  institutions. The

Moolchand Khairati Ram Trust and St. Stephens hospital have taken

benefit of State largesse on account of being charitable institutions

cannot turn around and question the conditions imposed by the

Government to provide free medical aid to the percentage of patients.

It was also urged by learned counsel on behalf of the appellants that

in Writ Petition [C] No.2866 of 2002 ­ Social Jurists v. GNCTD & Ors.

decided by the  High  Court, the cases  were similarly placed. The

allotment was made in those cases also at the concessional rate by

the Government. Though there was some stipulation in some of the

lease deeds of the said hospitals to provide free service to the extent

from 10% to 70%. However, Justice A.S. Qureshi Committee

recommended a uniform standard of  10%  IPD and 25% OPD  free

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treatment in all hospitals that had been given land by the

Government at a concessional rate.

21. It was also urged that in the cases of Sitaram Bhartia Institute

of 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 conditions on its discretion.”

The Government was well within its powers to impose the

condition in terms of the aforesaid clause.

22. It was also urged that Sunder Lal Jain Charitable hospital had

challenged the said order by preferring a special leave petition that

was dismissed by this Court on 1.9.2011 by a speaking order. Thus,

the issue had attained finality and it was incumbent upon the

hospitals in question to provide free services to the poor.

23. Sitaram Bhartia Institute of Science & Research and

Foundation for Applied Research in Cancer were given land as per the

DDA, 1981 Rules, in particular Rules 3, 4, 5, 6 and 20 at

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concessional rates.  The  pre­determined rates  are  nowhere  close to

market rates. A bare reading of the rules would reflect that a separate

process is  given  for the  sale  of  plots  by  auction  or tender.  Thus,

allotment of land at pre­determined rates is also concessional.  

24. It was also urged that the definition of ‘charitable’ as given in

Income­tax Act would not govern the field in the present case. Word

‘charitable' is to be seen in the legal sense. Word ‘charitable' is used

and has been relied upon in the Law Lexicon by P. Ramanatha Aiyar,

2nd Edition, 1997, which defines the ‘charitable’ as under:  

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

25. On the other hand, learned senior counsel appearing on behalf

of the respondents­hospitals contended that legal obligation of a

person can be created by an agreement or statutory law and in no

other manner. The court cannot pass an order on account of

sympathy in contravention of the settled law as the function of this

court is to protect and preserve the rule of law which has been held to

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be  basic feature of the  Constitution in the case of  Kesavananda

Bharti. In the case of Moolchand Khairati Ram Trust, in the Will, the

executor of the Will by which he created the Trust, never intended

that free treatment should be provided to the poor and needy.

Reliance has been placed on the definition of ‘charity’ in Charitable

Endowment Act, 1890 and Income Tax Act, 1961 and the land had

been allotted to the Trust as per the directions issued by the Ministry

of Rehabilitation as the trustees came to India as refugees from

Pakistan. The policy decision in 1949 did not envisage free treatment

to the patients neither the conditions in allotment letter nor in the

lease deed 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 profit motive was not applicable to hospitals. Even if it

was applicable to hospitals it only provided that the institutions

would be run for the public good without any profit  motive. Thus,

condition of free treatment could not have been imposed. The DDA

Rules of 1981 are not applicable. Clause 14 of the lease deed would

not cover imposition of such onerous condition. The decision in Social

Jurists  (supra) is not applicable. Thus, such a condition could have

been imposed in view of provision under Article 19(6) of the

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Constitution by enacting a statutory law as defined in Article 13. It

was not open to the Executive to impose such conditions. The order of

this Court dated 1.9.2011 is not applicable to respondent­hospitals

as they were not parties to the said decision and this Court could not

have issued such directions without hearing them. Contempt petition

filed in the  High Court  against the  Trust for  violating  decision  in

Social Jurists  (supra), was dismissed. As a matter of fact allotment

was made at the market rates prevailing in 1951. Free services are

being provided in the hospital since 1958 at its own level.  

26. In the  case  of  St.  Stephens  hospital similar  arguments  have

been raised, apart from that it was urged by learned senior counsel

that though charity is being performed by the missionaries as such

conditions could not have been imposed by the appellants. There was

no such stipulation in the allotment letters/sale deeds. The

interpretation of the lease deed made by L&DO was impermissible.

Unilaterally such conditions could not have been imposed. It could

have been done by enacting statutory law. The conditions were

impermissible, arbitrary and violative of Article 14. The lease deeds

are not governed by the provisions of the Government Grants Act. The

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Executive power referred to in Articles 73 and 298 of the Constitution

did not empower the State to unilaterally amend the terms of a

perpetual lease deed granted by it. The fundamental rights cannot be

abridged by an executive order. Decision in  Social Jurists  (supra) is

distinguishable. There was no similar stipulation in the lease deeds of

respondents.  Judgment of the High Court in  Social  Jurists  (supra)

was faulty to the extent that it imposed a condition of free 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 then

seek to enforce it. Charity would not mean free services to be

provided.  Medical  relief itself is  a charitable purpose. It  would not

mean that it cannot charge for services provided by it. Though while

seeking allotment by the missionaries as charitable society, do not get

actuated by a profit motive. Surplus income is also utilized for

charitable purpose for providing medical care. The fact that the land

was allotted on concessional rates would not confer any right on the

Government of India to unilaterally amend the lease deed. There was

no provision for free care in 1949 policy.

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27. On behalf of Sitaram Bhartiya Institute of Science & Research,

inter alia,  it was urged that it was not covered by the judgment of

Delhi High Court in Social Jurists (supra). The land was not given to

respondent No.1 at concessional rates. No condition for providing free

treatment was prescribed in the allotment letter or in the lease deed.

Since lease was in perpetuity there was no right to impose a further

condition on the lessee which may have financial implications. Clause

7 of the allotment letter does not authorize the lessee to change or

alter any terms of the lease. As no such condition was there in the

letter of allotment, as such new condition could not have been

imposed. Lease rental is liable to be increased after every 30 years.

The condition  of free treatment is  not legally tenable or justified.

Since the work of  the institute was not charitable  in nature, such

conditions could not have been imposed. Respondent No.1 Sitaram

Bhartiya Institute provides medical services as part of its agenda, as

the same generates valuable research data and funds for respondent

No.1's research  activities.  A show cause  notice  was issued to the

society on 9.2.2005 alleging that it was running a hospital on

commercial lines. It was required to show cause as to why the

allotment and lease deed should not be canceled, and it was informed

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to the Commissioner, Institutional Branch, DDA that it was pursuing

its mission of research in healthcare and medicine. The

clinical/hospital portion generates valuable research data and funds

which enable respondent No.1 to finance research activities. It was

further contended that there were three categories, government

organisations, charitable organisations and other institutions, for the

purposes of allotment of land. Other institutions were allotted land at

the zonal variant rates that were the rate paid by the respondent.

There  was no such condition. The condition  would have serious

financial consequences as entire feasibility and viability would have to

be worked out, whether it would be economically viable to undertake

the  project  at  all  or  not.  Such unconscionable,  unreasonable  and

arbitrary condition could 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 free medical treatment except possibly in

Government hospitals.   No profit no loss condition would not mean

that  it  was allotted on a concessional basis.  Respondent No.1  is a

self­supporting society, is doing medical research also. In case free

medical treatment is  provided it  would  diminish the respondent's

ability to invest in research. Populist and misplaced policies could not

26

have been framed or imposed. Similar arguments have been 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 Trust and

St. Stephens Hospital have obtained the land for charitable purposes

at a concessional rate, it was open to the Government to impose a

condition of 10% in IPD and 25% in OPD services to be provided free

of cost to patients of economically weaker sections?

2.  Whether in view of the condition No.7 of the allotment letter issued

in the case of Sitaram Bhartiya Institute and Foundation for Applied

Research in Cancer, the imposition of the aforesaid condition of free

treatment was permissible?

3. Whether the imposition of aforesaid conditions amounts to

restriction under Article 19(6) to carry on profession, trade or

business under Article 19(1)(g) of the Constitution of India?

4. What is the effect of the previous decision rendered in the case

of Social Jurists (supra)?  

In reference to question nos.1 & 2 :

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29. In order to decide the main question, it is necessary to ponder

on the question  with respect to the  meaning of charity.   In the

background of the fact that Government of  India in the year 1949

took a decision for allotment of land at the concessional rate to the

charitable institutions.  The  hospitals and  schools  inter  alia  were

treated as charitable institutions of secular and non­communal

character with a further rider that the same should be run for the

good of public without any profit motive. It was observed that as per

the policy decision dated 25.7.1943, the premium charged was too

high.  As per that formula, the premium was Rs.25,000 to Rs.35,000

per acre  per  annum plus ground rent at  5% on the premium per

annum.   It was decided to allot the land at the concessional rates

between Rs.2,000/­ to Rs.5,000/­ per acre.   A substantial area of 9

acres in Lajpat Nagar the heart of Delhi to Moolchand Khairati Ram

Trust and 2.66 acres & 2331 sq. yards to St. Stephens hospital was

allotted.

30. It was urged on behalf  of the Moolchand Kharaiti  Ram Trust

that creator of the Trust never intended that free treatment should be

provided to the poor and needy.   Reliance has been placed on the

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definition of charity in Charitable Endowment Act, 1890 and Income

Tax Act, 1961.   The policy decision taken in 1949, did not envisage

free treatment to the patients. In the allotment letter, there was no

such condition that free treatment shall have to be provided to the

patients belonging to economically weaker sections of the society at

the hospital.   The lease deed was executed for 99 years.   The only

condition was that the institution should be run for the good of the

public without any profit  motive.   The aforesaid condition was not

applicable to the hospitals, even if it was applicable, the only rider

was that it should run without any profit motive.  The free treatment

was not envisaged in the aforesaid expression.

31. It was urged that the hospital by itself is a charitable

institution. It carries out obligation and stipulations of free treatment

at its  own level.   In order to  appreciate the submission made,  we

deem it appropriate to consider the meaning of charitable, charitable

purpose, charitable corporation and charitable trust in common

parlance.

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32. The  Black’s  Law Dictionary,  Ninth  Edition  defines ‘charitable’,

‘charitable purpose’, ‘charitable corporation’ and ‘charitable trust’

thus:

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

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

Charitable corporation – A nonprofit corporation that is dedicated to benevolent purposes and thus entitled  to  special  tax  status  under  the  Internal Revenue  Code.  –  Also  termed  eleemosynary corporation.

Charitable  trust –  A  trust  created  to  benefit  a specific charity, specified charities, or the general public  rather  than  a  private  individual  or  entity. Charitable trusts are often eligible for favorable tax treatment.   If  the  trust’s  terms  do  not  specify  a charity or a particular charitable purpose, a court may  select  a  charity.  –  Also  termed  public  trust; charitable use.”

33. In  Webster’s New World Dictionary, the expressions of

‘charitable’ and ‘charity’ are defined thus:

“Charitable –  1.  Kind  and  generous  in  giving money or other help to those in need.  2.  of or for charity.  3.  kindly in judging others; lenient.

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

34. The Halsbury’s  Laws of  England,  Vol.5,  Fourth Edition while

dealing with the definition of ‘charity’ for the purpose of the Charities

Act, 1960, has discussed the matter thus:

“501. Definition of “charity”.  For the purposes of the  Charities  Act,  1960  “charity”  means  any institution,  corporate  or  not,  which  is  established for charitable purposes and is subject to the control of the High Court in the exercise of its jurisdiction with respect to charities.  “Institution” includes any trust  or  undertaking;  and  “charitable  purposes” means  purposes  which  are  exclusively  charitable according to the law of  England and Wales.   The question  of  whether  purposes  are  or  are  not charitable is therefore determined according to the same principles as before 1960.

The requirement that an institution is subject to the control  of  the  High  Court  in  the  exercise  of  the court's  jurisdiction  with  respect  to  charities  is satisfied  if  the  institution  is  subject  to  that jurisdiction in any significant respect.  It does not have to  be  subject  to  that  jurisdiction  which  the court  only  exercises  over  charities  and  not  over other  trusts  or  other  corporate  bodies,  and  it  is sufficient if the court could restrain the institution

31

from applying its property ultra vires or in breach of trust.

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

35. Again, the Halsbury’s Laws of England while dealing with the

meaning of charity, has discussed the matter thus:

“502.  Meaning of “charity”. Since the Charities Act, 1960  provides  no  statutory  definition  of  what purposes are and what are not charitable, all  the cases  previously  decided  on  the  subject  are  still relevant.   The  legal  meaning  of  “charitable purposes” is said to be precise and technical, and the  phrase  is  a  term  of  art,  but  it  is  probably incapable  of  definition.   The  popular  use  of  the expressions  “charity”,  “charitable”,  “charitable objects”  and  “charitable  purposes”  does  not coincide  with  their  technical  legal  meaning according  to  the  law  of  England.   The  word “charitable”, when used in its legal sense, covers many objects which a layman might not consider to be included under that word, but it excludes some benevolent  or  philanthropic  activities  which  a layman might consider charitable.

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Charitable  uses  or  trusts  form a  distinct  head of equity,  and  it  is  the  court's  duty  to  determine whether particular purposes are charitable.  To be charitable a purpose must satisfy certain tests; it must  either  fall  within  the  list  of  purposes enumerated in the preamble to the ancient statute of Elizabeth I (sometimes referred to as the Statute of Charitable Uses or the Charitable Uses Act, 1601) or within one of the four categories  of charitable purposes  laid  down  by  Lord  Macnaghten  and derived from the preamble and in the case of the fourth  of  those  categories  it  must  be  within  the spirit and intendment of the ancient statute, either directly or by analogy with decided cases on the same point, or it  must have been declared to be charitable  by some other  statute.   In  addition,  it must  be  for  the  public  benefit,  that  is  to  say,  it must be both beneficial and available to a sufficient section of the community.

References to "charity" in any legislative Act should be construed in their technical legal sense unless a contrary intention appears from the context.   For income tax purposes "charity" means any body of persons or trust established for charitable purposes only.  References in any enactment or document to a  charity  within  the  meaning,  purview,  and interpretation of the ancient statute of Elizabeth I, or  of  the preamble to  it,  are  to  be construed as references to a charity within the meaning which the word bears as a legal term according to the law of England and Wales.

An activity which is charitable in the legal sense is not  any  the  less  charitable  because  it  is  being carried  on  without  any  regular  organization  by  a person who may discontinue it at any time.  Such an  activity  would  come  within  the  statutory definition of charity as a trust or undertaking.”

33

36. The charitable trust can be enforced by the Court, which knows

about what charitable purposes are.   In the  Halsbury’s Laws of

England, the following discussion has been made in this regard :

“504.  Purposes must be exclusively charitable.  To be a charity in law, a trust or institution must be established  for  purposes  which  are  exclusively charitable;  a  charitable  trust  can be enforced by the court at the suit of the Attorney General, for the court knows what are charitable purposes and can apply the trust property accordingly, but a trust for benevolent purposes cannot be so enforced and is therefore void for uncertainty.”

37. Public welfare is one of the essential requirements of legal

charity, which has been discussed in Halsbury’s Laws of England in

paragraph 505, which is extracted hereunder:

“505.  Public benefit essential.   It  is  a clearly established principle of the law of charities that a purpose is not charitable unless it is directed to the public benefit so that the element of public benefit is the necessary condition of legal charity.  There are two distinct elements in this requirement: the purpose itself must be beneficial and not harmful to the public, and the benefit of the purpose must be available to a sufficient section of the public.  The line of distinction between purposes of a public and a private nature is fine and practically incapable of definition."

34

38. The benefit to the poor is one of the essential requirements of

charity.   The concept has been discussed in paragraph 509 of

Halsbury’s Laws of England, which reads thus:

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

39. In Incorporated Council of Law Reporting for England and Wales

vs. A­G (1971) 3 All ER I029, CA, it was observed that when a purpose

has been proved to be of general public welfare or beneficial to the

community, it  will be  held to  be charitable  unless there is some

reason for holding that it is not within the spirit and intendment of

the Preamble.

40. The Cy­pres doctrine  is  applied by the Courts  in England to

administer a charitable trust of which the particular mode of

application has not been defined.  Where a clear charitable intention

is  expressed, it  will  not  be  permitted to fail  because the  mode, if

specified, cannot  be  executed,  but the law will substitute  another

mode.  The Cy­pres doctrine has been discussed in paragraph 696 of

Halsbury’s Laws of England, which is extracted hereunder:

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“696.   The  cy-pres  doctrine.   Where  a  clear charitable  intention  is  expressed,  it  will  not  be permitted  to  fail  because  the  mode,  if  specified, cannot  be  executed,  but  the  law  will  substitute another mode cy-pres, that is, as near as possible to the mode specified by the donor.

An application cy-pres results from the exercise of the  court’s  ordinary  jurisdiction  to  administer  a charitable  trust  of  which  the  particular  mode  of application  has  not  been  defined  by  the  donor. Where he has in fact prescribed a particular mode of application and that mode is incapable of being performed, but he had a charitable intention which transcended  the  particular  mode  of  application prescribed,  the  court,  in  the  exercise  of  this jurisdiction, can carry out the charitable intention as  though  the  particular  direction  had  not  been expressed at all.

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

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

There can be no question under English law of a cy- pres application of property subject to trusts which are not charitable in law.”

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41. It has also been observed in the Halsbury’s Laws that not all

hospitals are charitable institutions, for there may be hospitals run

commercially, with a view to the profit of private individuals or

hospitals, the services of which are not available to a sufficient

section of the public.   The mere fact that a hospital is supported by

the payment of fees does 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 are charitable institutions, for there may be hospitals run commercially, with a view to the profit  of  private  individuals,  or  hospitals  the services of which are not available to a sufficient section of the public.  The mere fact that a hospital is  supported  by  the  payment  of  fees  does  not prevent it's being a charitable corporation, and the same is true of schools.  Furthermore, the Charity Commissioners  have  the  power  to  authorize  the committee of management of a voluntary hospital to  provide facilities  for  paying patients  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

certain decisions and dictionaries, with regard to charitable,

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charitable object, charitable purpose, charity and charitable trust of

public nature, relevant parts of which are reproduced hereunder:

“Charitable.  Having the character or purpose of a charity.   The  word  "charitable",  in  a  legal  sense, includes every gift for a general public use, to be applied consistent with existing laws, for benefit of an indefinite number of persons, and designed to benefit them from 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 "Charitable purpose" includes relief of the poor, education, medical relief, and advancement of any other object of general public utility, but does not include  a  purpose  which  related  exclusively  to religious  teaching  or  worship.   Act  VI  of  1890 (Charitable Endowments), S. 2.

Per  MUKERJI,  J.   The  expression  “charitable purposes” in Act XXI of 1860 should be understood in a wide sense.  If relief wants of occasioned by lack  of  pecuniary  means  is  charity,  adoption  of preventive 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 Court of justice, “has a meaning so extensive as  to  include  everything  which  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, but there is perhaps not one person in a thousand  who  knows  what  is  the  technical  and

38

legal  meaning  of  the  word  ‘charity’.   Per  Lord CAIRNS in Dolan v. Macdermott, (1868) 3 Ch App 678.

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 the Income Tax Act, 1842 (5 & 6 Vic. c. 35), sch. A, S. 61]

“Charitable purposes” in S. 4 of the Income-tax Act would        include relief of the poor, education, medical relief and the     advancement of any other object  of  general  public  utility.   Trusts  for  the benefit of the inhabitants of a particular locality are regarded as charitable, but trusts for the benefit of a          particular  political  party  or  for  the advancement  of  particular  political  purposes  or opinions are not regarded as charitable.  A gift for such  purposes  as  a  particular  individual  or individuals may consider to be charitable is not a good  charitable  purpose  although  a  gift  for  such charitable purposes as the managing committee of a trust may think fit would be good, because the committee  would  be  bound  to  keep  within  the ambit of charity, and if  they go beyond the legal boundary, 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 by itself would not be a charitable object unless it involved an      object of general public utility.  Relief for the poor relations of the settlor or 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  Council  is  to  ensure  quality  service  of competent lawyers to the litigating public, a spread

39

legal  literacy,  promote  law  reforms  and  provide legal  assistance to the poor,  such purpose is  the advancement of the 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 whatever      proceeds from a sense of moral duty or  from  humane  feelings  towards  others, uninfluenced  by  one's  own  advantage  or pleasure."   (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 well as to the rich."  It embraces all that is usually understood by the words "benevolence, "Philanthropy" and "good will".  A gift to a home for the friendless is a gift to charity.

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

The  term  “charity”  under  the  Hanafi  School  of Mahommedan Law has a more general import than under  the English Law.  A wakf  of  property by a Mahommedan to defray the expenses of the poor, the fakirs, the orphans, the needy and the indigent, and to defray the expenses of good deeds, creates a trust for public purposes of a charitable nature. (32 All 499 = 7 ALJ 420=6 IC 188.)

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In  common parlance,  the word  ‘charity'  means a giving  to  some one in  necessitous  circumstances and in law it  means a giving for public good.  A private gift to one's own self or Kith and Kin may be 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 is

the public purpose for the benefit of the needy people, who cannot

pay for benefits received.   The Internal Revenue Code may define it

separately for its purposes  what is charitable so  as to claim the

benefit under the Act.  The charitable trust is a trust which is for the

benefit of general public.  Charitable is a kind and generous in giving

money or other help to those in need as defined in Webster’s New

World Dictionary and Black’s Law Dictionary.  The Halsbury’s Laws of

England  discussed the  meaning  of charity,  which  provides that if

there is no statutory definition of charitable purposes, to be a

charitable purpose, it must satisfy certain tests.   It must be for the

public benefit and available to a sufficient section of the community.

The reference to charity should be construed in their technical legal

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sense.  For income tax purpose, the charity may be defined in the Act

and in that light, the interpretation of the Act has to be made.  Public

benefit is an essential ingredient of charitable activities.   There are

two distinct requirements, the purpose itself must be beneficial and

not harmful to the public.   In paragraph 509 of Halsbury's Laws of

England, it has been discussed that it  is difficult to believe that a

trust  would be held charitable if the poor are excluded from its

benefits.

44. The cy­pres doctrine has been discussed in paragraph 696 of

Halsbury's Laws of England.  The said doctrine can be clearly pressed

into service in the instant  matter  when the Government land has

been allotted to the hospitals even if the mode of giving charity was

not specified.   It can  be specified later on and the  Court is not

powerless to enforce that purpose of the charitable trust, of which the

particular mode of the application had not been defined by the donor

or otherwise.  In Ironmongers’ Co. vs. A­G  (1844) 10 CI & Fin 908 at

927,  HL, it  was observed that  where  a testator intends  to  benefit

several charitable objects, one of which fails, the fund must not be

distributed among other objects if the one that fails bears no

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resemblance to the other.   In reference  Lambeth Charities  (1853) 22

LJ Ch 959, it was observed that when trusts have been altered by a

scheme, and the trusts of the scheme become impossible so that a

new cy­pres scheme is required, the trusts of the new scheme must

be as close as possible to the original trusts of the gift.

45. The relief of the poor is one of the essential requirements of the

charity.  All hospitals are not charitable institutions as there may be

hospitals which run commercially.   The hospitals, which are

operating  under the guise of charity, are in fact being run on a

commercial basis and it has become impossible for the poor to afford

the life­saving drugs at an affordable price.   Their right to life is in

jeopardy.   Merely by the expression hospital, it could not be

successfully claimed by the respondent­hospitals that they are

charitable.   They can be directed to fulfill their obligation and fulfill

the purpose by undertaking charitable activities and give 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 own level

cannot be  used as a shield to the performance of charity in an

organized  way. The very spirit of the argument that as they do

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charity, it cannot be fastened  upon them, is self­destructive and

tends by its tenor to negate unjust obstruction created in the path of

real charity  

46. The definition of “charitable purpose” as defined in the

Charitable Endowments Act, 1890 is extracted hereunder:

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

It is apparent from the definition that charitable purpose

includes relief of the poor, education and medical needs.  As per the

provisions of the Charitable Endowments Act, 1890, relief of the poor

and medical  relief is included as such conditions which had been

imposed are clearly within the parameters of aforesaid definition.   

47. The charity in the broadest sense includes whatever proceeds

from a sense of moral duty or from humane feelings towards others

uninfluenced by one's  own advantage  or  pleasure.   In its  widest

sense, denotes all the good affections men ought to bear towards each

other; in its most restricted and common sense, relief of the poor.  In

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the Mahommedan Law, the charity has a more general import than

under the English Law.   A wakf of property by a Mahommedan to

defray the expenses of the poor, the fakirs, the orphans, the needy

and the indigent and to defray the expenses of good deeds, creates a

trust for public purposes of a charitable nature.   In common

parlance, the word charity means giving to someone in any

necessitous circumstances and in law, it means a giving for public

good.

48. In P.C. Raja Ratnam Institution vs. Municipal Corporation of Delhi

&  Ors.,  1990 (Supp) SCC  97,  wherein this  Court considered the

definition of ‘charitable purpose’ under Section 115 (4) (a) of the Delhi

Municipal Corporation Act, 1957, the school in question was run by a

Society.   It was claimed that it was a non­profit making registered

society and its object was to organize and run schools in Delhi and

elsewhere  with a view to promoting education and  welfare.   The

question arose whether it was necessary for the educational

institution to qualify for exemption from the tax liability to offer

medical relief.  In that context, it was observed by this Court that the

test of charitable purpose would be satisfied by the proof of any of the

45

three conditions, namely, relief of the poor, education or  medical

relief.  The fact that some fee was charged from the students was not

decisive.  The  explanation was  held inclusive  and  not  exhaustive.

This Court observed thus:

“3.  The  learned  Counsel  for  the  petitioner  has contended that in view of the language of Section 115(4)(a), quoted below, it is not correct to suggest that to qualify for exemption from the tax liability it is necessary for a society to offer medical relief:

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

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

Explanation-"Charitable purpose" includes relief of the poor, education and medical relief but does not include  a  purpose  which  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 that some fee is charged from the students is  also not decisive inasmuch  as  the  proviso  indicates  that  the expenditure incurred in running the society may be supported  either  wholly  or  in  part  by  voluntary contributions. Besides, the explanation is in terms inclusive  and  not  exhaustive.  The  impugned

46

judgment  must,  therefore,  be  held  to  be erroneous.”

The question in the aforesaid case was altogether different with

respect to the meaning of charitable purpose as defined under Section

115 (4) (a).

49. In Municipal Corporation of Delhi vs. Children Book Trust, (1992)

3 SCC 390, this Court considered the provisions of Section 115(4)(a)

of Delhi Municipal Corporation Act, 1957 and dealt with the question

of charitable purpose, context of property tax in respect of lands and

buildings and exemption to lands and buildings occupied and used

by a society for charitable purpose.   It was held that conditions for

applicability of the tax exemption were firstly on the society must be

charitable and not earn a profit.  This Court considered the meaning

of charitable  purpose for imparting  education  sans  an  element  of

public welfare not per se charitable.   Secondly, society  must be

supported  wholly or in  part  by voluntary contribution  and lastly,

society must utilize its income in promoting its object and must not

pay any dividend or bonus to its members.  This Court observed that

the tax liability of a registered society running recognized  private

unaided school should be considered in the light of the above

47

conditions.  Transfer of funds by the school to the society even in the

name of contribution would amount to transfer by the society itself

and, therefore, cannot be considered for the purposes of the

exemption.  It was also observed that where running of school by the

society generating positive income from the fees and donations

received from the students/parents, the activity of the school was not

for a charitable purpose but for commercial purpose.  The conditions

of charitable purposes having not been fulfilled, society was not

entitled to tax exemption.   This  Court  has further observed that

where the predominant object is to sub­serve charitable purpose and

not to earn a profit, it would be a charitable purpose.  This Court has

observed thus:

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

xxx xxx xxx 76. In view of the above rulings, it would be clear that where the predominant object is to subserve charitable purpose and not to earn profit it would be a charitable purpose. However, the argument of the  appellant  is  as  per  the  Delhi  School Education Act and the rules framed thereunder, if the society cannot utilise the fund and the school cannot be run for private gain in the absence of any profit, it would be a charitable       purpose.

48

77. We have already seen that merely because education is imparted in the school, that by itself, cannot be regarded as a charitable object. Today, education has acquired a wider                meaning. If  education  is  imparted  with  a  profit  motive,  to hold, in such a case, as charitable purpose, will not be correct. We are inclined to agree with Mr. B. Sen, learned counsel for the Delhi Municipal Corporation in  this  regard.  Therefore,  it  would necessarily involve public benefit.

78. The  rulings  arising  out  of  Income Tax  Act may not be of great help because in the Income Tax Act "charitable purpose" includes the relief of the poor,  education,  medical  relief  and  the advancement of any other object of general public utility.  The  advancement  of  any  other  object  of general public utility is not found under the Delhi Municipal  Corporation  Act.  In  other  words,  the definition is narrower in scope. This is our answer to question No. 1.

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

"One,  I  think,  that  enriches  the  corporation itself or           relieves it of a burden or furthers its objects or powers."

49

Thus, it is apparent from the aforesaid discussion that the

charitable object would be served if it is not to earn a profit.

50. The medical and legal professions stand on a different pedestal

in the matter of fulfilling the obligations towards the society. They are

not  meant to be for commercial activity  which by and large has

become a bitter reality of  the day.  ‘Free treatment' to economically

weaker sections is a normal obligation by very nature of charity, and

it  was  also contended on behalf  of the  hospitals that the  medical

treatment itself is regarded as  charitable  one.  The question arises

when medical profession is charitable, what meaning is to be given to

charity  and  whether  by  virtue  of commercial  gains  only  by  giving

treatment, it  would  still retain   charitable   character in its true

meaning.  Charity in  common parlance is  a relief to the  poor  and

needy.

51. What  may be proper for others in the society,  may still be

improper for members of the legal profession. The same ethical

standard applies with equal force to the medical profession. Medical

profession deals with the  life  of  human beings.  There has to be a

balancing of human rights with the commercial gains.

50

52. In the wake of globalisation, we are in a regime of Intellectual

Property Rights.  Even these rights have to give way to the human

rights. It is  an obligation of the Government  to  provide  life­saving

drugs to have­nots at affordable prices so as to save their lives, which

is  part  of  Article  21  of the  Constitution  of India. It is equally  an

obligation of the State to devise such measures that have­nots are not

deprived of the very treatment itself. Administering medicines is also

a part of medical therapy. Thus, in our considered opinion 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 of

treatment by a particular medicine or by a particular expert merely

on the ground that he is not in a position to afford the fee payable for

such an opinion/treatment. The moment it is permitted, the medical

profession would become purely a commercial activity, it is not

supposed to be so due to its nobleness. Thus, in our opinion, when

the Government land had been obtained  for  charitable  purpose of

running the hospital,  the Government is within its right to impose

such an obligation.

51

53. The nobility and obligation of the medical profession have also

found statutory recognition in the form of regulations framed by the

Medical Council of India in the exercise of the power conferred under

section 20A read with section 33(m) of the Indian Medical Council

Act, 1956. The Medical Council of India with prior approval of the

Central Government has made the regulations relating to the

standards of professional conduct and etiquette and code of ethics for

registered medical practitioners. Chapter 1 whereof contains the code

of medical ethics. 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 and honour of the profession. Regulation 1.1.2 is

self­explanatory and the same is extracted hereunder:

“1.1.2 The prime object of the medical profession is to render service to humanity; reward or financial gain  is  a  subordinate  consideration.  Whosoever chooses his profession, assumes the obligation to conduct  himself  in  accordance  with  its  ideals.  A physician should be an upright man, instructed in the art of healings. He shall keep himself pure in character and be diligent in caring for the sick; he should  be  modest,  sober,  patient,  prompt  in discharging  his  duty  without  anxiety;  conducting himself  with propriety in his profession and in all the actions of his life.”

52

 It lays down in an unequivocal term that the medical profession

has to render service to humanity; reward or financial gain is a

subordinate consideration. The doctor is supposed to be noble in all

actions of his life.

54. Under  Regulation  1.2.1 it is the  duty of the  member of the

medical profession to make available to the patients the benefits of

their professional attainments. Regulation 1.2.1   is   extracted

hereunder:

"1.2.1    The  principal  objective  of  the  medical profession is to render service to humanity with full respect  for  the  dignity  of  profession  and  man. Physicians should merit the confidence of patients entrusted  to  their  care,  rendering  to  each  a  full measure of service and devotion. Physicians should try continuously to improve medical knowledge and skills  and should make available to their  patients and  colleagues  the  benefits  of  their  professional attainments.  The  physician  should  practice methods  of  healing  founded on a  scientific  basis and  should  not  associate  professionally  with anyone who violates this  principle.  The honoured ideals  of  the  medical  profession  imply  that  the responsibilities of the physician extend not only to individuals but also to society."

55. Under Regulation 1.8, the physician engaged in the practice of

medicine has to give priority to the medical interests of the patients

53

and not to the personal financial interests. Regulation 1.8 is extracted

hereunder:

“1.8 Payment  of  Professional  Services: The physician, engaged in the practice of medicine shall give  priority  to  the  interests  of  patients.  The personal  financial  interests  of  a  physician  should not conflict with the medical interests of patients. A physician  should  announce  his  fees  before rendering  service  and  not  after  the  operation  or treatment is underway. Remuneration received for such services should be in the form and amount specifically  announced to  the patient  at  the time the service is rendered. It is unethical to enter into a  contract  of  "no  cure  no  payment".  Physician rendering service on behalf of the state shall refrain from anticipating or accepting any consideration."

56. Under Regulation 2.1 it is provided that in the case of

emergency the physician must treat the patient. No physician shall

arbitrarily refuse treatment to a patient. At the time of registration,

the medical practitioner has to submit a declaration that "I solemnly

pledge myself to consecrate my life to service of humanity" and that "I

will  maintain the utmost respect  for  human life from the time of

conception." And he is duty­bound to maintain all means in his power

to honour the noble provisions of the medical profession and he has

to abide by the regulations framed by the Medical Council of India.

Considering the object of the statutory rules also, medical profession

54

owes a duty to serve the poor and have­nots, irrespective of financial

status, they have to  treat  everybody equally  with respect  to social

standing and economic disparity, 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

Government largesse at concessional rates and continue to enjoy it,

they owe a duty to act in public interest. In our opinion, not only

Moolchand Kharaiti Ram Trust and St. Stephens Hospital have

obtained  the  land at  a  concessional rate, the  other two hospitals,

namely, Sita Ram Bhartia Institute of Science & Research and

Foundation for Applied Research in Cancer have also obtained land at

a lower pre­determined rate, not at market rate. It was not by way of

a  public  auction  that they  have received the land.  Besides in the

cases of Sita Ram  Bhartiya Institute of Science  &  Research and

Foundation for Applied Research in Cancer, clause 7 was inserted in

the allotment letters to the effect that "The DDA reserves its right to

alter any terms and conditions on its discretion."

55

58. It  was  contended  on  behalf of  Sita  Ram Bhartia Institute  of

Science & Research and Foundation for Applied Research in Cancer

that their request for allotment of land at concessional rate had been

turned down. It was urged on behalf of the State that DDA (Disposal

of Developed Nazul Land) Rules, 1981, in particular Rules 3 to 6 and

20 indicate that the land was allotted to the charitable institutions at

pre­determined rates and not on market rates. The allotment of land

to aforesaid two institutes  was at pre­determined rates. The  pre­

determined rates 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 pre­determined rates are nowhere near  market rates

fetched in auction or tender thus they are also the concessional ones.

Apart from that, as already discussed, as hospitals are enjoying

Government land it is open to the Government to impose such riders

and stipulations for free treatment to be given to economically weaker

sections.         

          59. The realization of human rights vests responsibilities upon the

State. The State has to constantly make an endeavor for realization of

human rights agenda, particularly in relation to economic, social and

56

cultural rights. Right to health is provided in Article 25 of Universal

Declaration of Human Rights of 10.12.1948 (the UDHR). The Article

provides that:

“Everyone  has  the  right  to  a  standard  of  living adequate for the health 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  in  circumstances beyond his control.”

60. The State has to ensure the basic necessities like food,

nutrition,  medical assistance, hygiene etc. and contribute to the

improvement of health. Right to life includes right to health as

observed in State of Punjab & Ors. v. Mohinder Singh Chawla & Ors.

(1997) 2 SCC 83. Right to life and personal liberty under Article 21 of

the Constitution also includes  right  of  patients to  be  treated with

dignity as observed by this Court in Balram Prasad v. Kunal Saha &

Ors. (2014) 1 SCC 384. Right to health  i.e., right to live in a clean,

hygienic and safe environment is a right  under  Article 21  of the

Constitution as observed in  Occupational Health and Safety

Association v. Union of India & Ors., AIR 2014 SC 1469. The concept

57

of  emergency medical  aid has been discussed by this Court  in  Pt.

Parmanand Katara v.  Union of India & Ors. (1989) 4 SCC 286.  In

Paschim Banga Khet Mazdoor Samity & Ors. v. State of West Bengal &

Anr. (1996) 4 SCC 37, right to medical treatment has been extended

to prisoners also.  

61. In Parmanand Katara (supra) this Court has observed that every

doctor whether at a Government hospital or otherwise has the

professional obligation to extend his services with due expertise for

protecting life. The obligation being total, absolute and paramount,

laws  of procedure  whether in statutes or otherwise,  which  would

interfere with  the discharge of this  obligation cannot be sustained

and must, therefore, give way, and there is an obligation upon the

doctor to treat the injured victim on his appearance before him either

by himself or being carried by others. It has also been observed by

this Court that the effort to save the person should be the top priority

not  only of the medical  professional  but even of the Police or any

other person who happens to be connected with the matter or who

happens  to  notice  such an  incident  or  a  situation.  Apprehensions

that the doctor will have to face police interrogation and stand as a

58

witness in court and face all  the harassments, should not prevent

them from discharging their duty as medical professionals to save a

human life and to do all that is necessary.

62. In Paschim Banga Khet Mazdoor Samity (supra), this Court has

observed that the Constitution envisages the establishment of a

welfare State. In a welfare State, the primary duty of the Government

is to  secure the welfare  of the people.  Providing adequate  medical

facilities for the people is an essential part of the obligations

undertaken by the Government in a welfare State. The Government

discharges this obligation by running hospitals  and health centers

which provide medical care to the person seeking to avail of those

facilities. Preservation of human life is thus of paramount

importance. Government is duty­bound to provide timely care to

persons in serious conditions. Medical facilities cannot be denied by

the Government on the ground of non­availability of bed. Denial of

medical assistance on unjust ground was held to be in violation of

right to life under Article 21 and the State was directed to pay the

compensation of Rs.25,000 to the petitioner and requisite directions

were issued by this Court. The State cannot avoid its constitutional

59

obligation in that regard on account of financial constraints and was

directed to allocate funds for providing adequate medical

infrastructure.

63. In our opinion, the State can also impose such obligation when

the Government land is held by such hospitals and it is the

constitutional obligation imposed upon such hospitals. Under Article

47, State has to make constant endeavor to raise the level of 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 of inquiry and reform. It

would  be inhuman to  deny a  person who  is  not  having  sufficient

means or no means, the life­saving treatment, simply on the ground

that  he is  not  having enough money.  Due  to financial reasons, if

treatment is refused, it would be against the very basic tenets of the

medical profession and the concept of charity in whatever form we

envisage the same, besides being unconstitutional would be violative

of  basic human rights. In our opinion,  when the State  largesse  is

being enjoyed by these hospitals in the form of land beside it is their

obligation by the very nature of the medical services to extend the

60

reciprocal obligation to the  public by  providing free treatment as

envisaged in the impugned order. In case they want to wriggle out of

it and not to comply with it, they have to surrender the land and orge

out the  benefit  which they have received  by  virtue  of  holding the

Government land in an aforesaid manner.

64. It is regrettable that the land had been obtained by Moolchand

Kharaiti Ram Trust which claims to be charitable and St. Stephens

Hospital run by the Missionaries admittedly for charity, are

questioning the very conditions for which they have come into being

and it appears  with the  passage of time they  have lost the very

purpose of their establishment. In our opinion they should have

welcomed  the  conditions imposed  by the  Government,  considering

their objectives and for the purpose, they have obtained the land. Two

other  hospitals, namely, Sita  Ram Bhartia Institute of Science  &

Research and Foundation for Applied Research 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

cannot be said to be foreign to the purpose for which land is held.

61

Thus, the  action of the  State  cannot  be  said to  be  unauthorized,

illegal or arbitrary in any manner whatsoever and is in furtherance of

the very objectives for which the medical profession exists. It is very

unfortunate that by and large the hospitals have now become centers

of commercial exploitation and instances have come to notice when a

dead body is kept as security for clearance of bills of hospitals which

is per se  illegal and criminal act. In future, whenever such an act is

reported to the police, it is supposed to register a case against

management of Hospital and all concerned doctors involved in such

inhumane act, which destroys the basic principles of human dignity

and tantamount to  a criminal  breach  of the trust reposed in the

medical profession.  

66. It is unfortunate that most of the hospitals are being run on a

commercial  basis  and various  ills  have sunk  in the noble  medical

profession. Right from  wrong reporting, uncalled for investigation

inclusive of invasive one, even as to heart and other parts of the body,

which  are  wholly  unnecessary, are  performed, it is time for soul­

searching for such big hospitals in and around Delhi, Gurgaon etc.

and other places. They must ponder what they are doing. Is it not a

62

criminal act? Simply by the fact that action is not taken does not

absolve the responsibility.  Time has come to fix accountability and to

set right the evils which have rotten the system.   The  medical

profession had never been intended to be an exploitative device to

earn money at the cost of patients who require godly approach and

helping hand of doctors. Every prescription starts from Rx, not from

the amount of bill.   Being big commercial international hospitals in

and around Delhi,  they are not above the ethical standards which

they have to maintain at all costs even by extending financial help to

the have­nots.  

67. The poor cannot be deprived of the treatment by the best

physician due to his economic disability in case he requires it. It is

the obligation on the medical professionals, hospitals, the State and

all concerned to ensure that such person is given treatment and not

deprived of the same due to poverty. That is what is envisaged in the

Constitution also. On the making of a doctor, the State spends and

invests a huge amount of public money and it is the corresponding

obligation to serve the needy and the treatment cannot be refused on

the ground of financial inability of the patient to bear it. To such an

63

extent, the right and  moral obligation can be enforced and that

precisely has been done by issuance of the impugned directions to

provide free treatment in IPD and OPD to economically weaker

sections of society. They have suffered so long and benefit has not

percolated down to them of distributive justice and they are deprived

of equal justice and proper treatment due to lack of financial means.

It is apparent from the policy decision dated 10.6.1949 and also the

provisions contained in section 2 of the Charitable Endowments Act,

1890 that running of hospitals is regarded as a charitable activity.

The further rider in policy was that such institution claiming

allotment should be secular and of non­communal character.

68. The Arts and Crafts Society and other non­profit making bodies

were also  included under the term  ‘charitable  institution'  with the

rider that the  institution should be run for the good of  the public

without any profit motive. It was contended on behalf of the hospitals

that the aforesaid condition is not applicable to hospitals and would

apply to Arts and Crafts Association, and there was no specific

stipulation with respect to providing free treatment  in the  letter of

allotments and lease deed. In our opinion, the rider that the Arts and

64

Crafts institution should be run for good of the public, without any

profit motive is primarily applicable to the charitable institutions like

hospitals etc. then it has been only specified as an obligation to Arts

and Crafts institution etc. too. As such there would be an obligation

upon hospitals being charitable by their very nature to provide free

treatment to economically weaker sections of society. The expression

‘no profit  motive'  would also exclude the hospitals being run for

commercial gains. That would be violative of  the very  foundational

basis and fulcrum on which the allotment order had been issued and

lease deeds have been executed. Once having claimed themselves to

be charitable institutions, it does not lie in the armory of defense to

raise such plea and having obtained the benefit of the public largesse.

It is not open to raising the aforesaid challenge within the framework

of legal parameters. As a matter of fact, as these hospitals are being

run for commercial 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 in any manner of the obligation of providing free medical

treatment to 10% IPD and 25% OPD patients belonging to

economically  weaker  sections of the society.  The  imposition of the

said condition is inherent in the policy and in the very grant on the

65

basis of which the land is held and even otherwise in the case of two

other institutes i.e. Sita Ram Bhartia Institute of Science & Research

and Foundation for Applied Research in Cancer, as they are holding

the Government land for the hospital  purpose and research functions

in the hospital, the allotment was also made at a pre­determined rate

and not by way of auction and considering the specific stipulation in

clause 7 of the lease deed and considering the aforesaid other

aspects, and it being charitable activity, it was open to the

Government to obligate them by providing free medical treatment.

69. It is apparent that decision in  Social Jurists (supra) has been

rendered on the basis of the terms and conditions contained in the

allotment letters  as  well as stipulations  made in the lease  deeds.

Some representations were made relating to free treatment.  The High

Court, hence in  Social Jurists  (supra), opined that it was not

necessary to incorporate each and every condition in the lease deed

and other corresponding documents would also be seen and it was

not only contractual but statutory, and public law obligation enjoined

upon the hospitals to fulfil condition of free treatment.  The order was

66

affirmed by this Court by a reasoned order, hence it becomes binding

as precedent.

70. It is apparent that in the case of Moolchand Kharaiti Ram Trust

and  St. Stephens  Hospital, the lands  were allotted for charitable

purposes under the Scheme of the year 1949, as further modified,

thus, the policy under which they had obtained lease deed would also

be a relevant document and of paramount importance for entitlement

to hold the land for purpose as specified in the policy, as that is the

basic document governing the rights of the parties, and the terms and

conditions of lease deed, would be supplemental to the main objective

of the policy.  The lease deed can supplement not supplant the main

policy or rules as the case may be under which the allotment has

been obtained and lease deed has been executed.

71. In our considered opinion, not only by the policy that prevailed

in 1949, the land at concessional rates for charitable purposes, had

been obtained and free  treatment being as  stipulated  in the order

dated 02.02.2012 issued by the Government of India, is within the

realm of the policy under which allotment had been made at highly

concessional rates in the heart of Delhi and the Delhi Development

67

Authority Rules  framed in 1981.   They cannot wriggle out of  their

obligation by contending that there was no such stipulation in the

allotment  letter or lease deed.   Allotment letter and lease deed are

subject to the riders in the main policy and rules under which grant

has been made.   It is the foundation of the allotment letter and the

lease deed.

72. In the case of Sitaram Bhartia Institute of Science & Research

and Foundation for Applied Research in Cancer, the allotment had

been  made by the DDA when the Delhi Development Authority

(Disposal of Developed 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

establishing a multi­disciplinary research complex in New Delhi.  The

allotment was made for 1.52 acres of land at Rs.6 lacs per acre on

22.10.1984,  followed by  lease deed dated 02.09.1985 in respect of

another plot of land of 1.46 acres for a consideration of Rs.8,76,000.

Thus, it was clearly subject to Rules 5 and 20 of aforesaid DDA Rules,

1981.  Rules 5 and 20 are extracted hereinbelow:

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

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

20. Allotment to certain public institutions. - [***] No  allotment  of  Nazul  land  to  public  institution referred to in Rule 5 shall be made unless -

(a) according to the aims and objects of that public institution -

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

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

(iii) it is apparent from the nature of work to be carried out by that public institution, that the same cannot, with equal efficiency be 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 the Government or any  Local  Authority,  or  is  constituted  or established under any law [for the time being in

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force  or  it  is  a  company,  firm  or  trust  for  the purpose  of  establishment  of  hospital  or dispensary];

(c) it is of non-profit making character;

(d) it is in possession of sufficient funds to meet the cost of land and the construction of buildings for its use; and

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

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

74. It is apparent from Rule 5 that allotment of lands to the

charitable institutions would be at pre­determined rates and not on

market rates.  According to Rule 20 above, the allotment is subject to

the further rider that public institution should sub­serve the interests

of the population of the Union Territory of Delhi and such institutions

should be of non­profit motive character.   There was a clear

stipulation by way of the condition in clause 7 of the allotment letter

to the effect that  DDA  reserves the right to alter any terms  and

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conditions  on its  discretion.   Thus, it appears that the land  was

obtained  for     research purposes.  Later  on, it  was  noticed that

hospitals were set up and were running on commercial lines, which

was objected to by the DDA as it was in clear violation of the terms

and conditions.  As the land was obtained at concessional rates, not

on market rates, the hospitals were bound to serve the public good

and the imposition of such condition in the lease deed could not be

said to be impermissible, arbitrary or irrational.  The allotments that

were made in favour of Sitaram Bhartiya Institute and Foundation for

Applied Research in Cancer were at pre­determined rates, which were

lesser than the market rates.

75. The contention raised on  behalf of  Moolchand  Kharaiti  Ram

Trust to the effect that this Court cannot proceed to make an order on

account of sympathy in contravention of settled law and it will

seriously damage the credibility of this institution.  In our view, it is

wholly impermissible submission.  The Trust cannot be permitted to

wriggle  out  of its obligation  unjustly  and  unfairly.  Originally the

Trust was set up for pure charity.   In raising such unworthy and

untenable submission, Trust has lost its main objective and assumed

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a commercial character and it is regrettable that it has to be

reminded of its responsibility by the Court for the purpose for which

it exists and having obtained the land on a particular basis, is

observed only in breach thereof.  The adverse remarks in the report of

Justice Qureshi Committee with respect to the institution cannot be

brushed aside on the sole ground that comments recorded in Justice

Qureshi's report were based on the statement made by disgruntled

employees of the hospitals, who were in dispute with the management

of the hospital.

76. Learned senior counsel appearing on  behalf of St. Stephens

Hospital 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  and then seek to enforce it.   The  statement in the

factual matrix has no legs to stand and we are conscious that we are

not trying to create any new obligation.   It was a self­created

obligation on missionaries to do charity  for which they exist while

obtaining the land and Court is duty bound to enforce it.  By the

stipulation in the question of free treatment, the policy rules of

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allotment have been given a shape that is enforceable and cannot be

termed to be a new imposition not contemplated initially.

77. On  behalf of  Moolchand  Kharaiti Ram Trust,  Will has been

relied upon to indicate the purpose of creation of Trust. It is apparent

that Moolchand Kharaiti Ram Trust was created by a Will executed by

Lala Kharaiti Ram resident of Lahore in 1927. The Will was produced

for perusal. The objects of the creation of Trust were imparting

education in and preaching Sanskrit according to Sanatan Dharam

methods; and, secondly, for devising means for imparting education

in and improving the “Ayurvedic system of medicine” and preaching

the same. In order to achieve the latter object, it was not prohibited to

take help from the English or Yunani or any other system of medicine

and according to need, one or more than one Ayurvedic Hospital may

be opened. It was contended that it was not in the deed of the Trust

to impart free medical aid. The ground raised and what is contained

in the  Will is against the very purpose for  which the  Moolchand

Kharaiti Ram Hospital is being run. When its object was of improving

the Ayurvedic system of  medicine only as is apparent from the

material on record that at present the said activities had been

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confined to one room and the changed main activity is an Allopathic

system of medicine which was not at all the intendment of the creator

of the Trust.  We leave the  matter at that in these proceedings.

However,  having obtained  the  land  for  charitable  purposes  for the

hospital, for no profit  and for the public good, whatever system of

medicine is being administered, it can be obligated with such

charitable rider of free treatment as envisaged in the impugned order

issued by the Government.

78. Similarly, St. Stephens Hospital is Missionaries’ hospital and its

very objective admittedly is to provide the charitable services free of

charge but it has also become more or less a commercial venture as

in the case of other hospitals inter alia involved in the instant matter,

how such provision for charity is opposed is beyond comprehension,

is it charity versus charity. They have to abide by the just and

reasonable legal conditions for free treatment which are

constitutionally envisaged also.

79. It was also urged on behalf of Moolchand Kharaiti Ram Hospital

that though nine acres of land was allotted at Lajpat Nagar, it was not

a prime locality at the relevant time and the land was given at the

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market rate.  The submissions are wholly baseless and against the

record 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 that

imposition of  such a stipulation for  free treatment tantamounts to

imposing restriction on the right enshrined in Article 19(1)(g) of the

Constitution which confers a Fundamental  Right on all  citizens of

India to practice any profession or to carry on any occupation, trade

or business in India. Since the Trustees are Indian citizens, they are

exercising their fundamental  right  in running the hospitals. If  any

restriction was to be placed on their right to run the institution by

providing the  manner in  which they  must run their hospitals by

providing free treatment to a particular percentage of patients, this

could  only  be  done  by  enacting  a ‘law’  under  Article  19(6)  of the

Constitution. It was further contended that ‘law’ is clearly defined in

Article 13 of the Constitution as ‘statutory law’ which has a

foundation in a legislation enacted either by the Parliament or State

Legislatures. Reliance has been placed on  Kharak Singh v. State of

U.P. (1964) 1 SCR 322 in which this Court observed that the

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provisions contained in Police Regulations had no statutory basis but

were  merely executive or  departmental instructions  and that they

could therefore not be “a law” which the State was entitled to make

under Article 19(2) to (6) to regulate or curtail Fundamental Rights

nor would it constitute a procedure established by law in furtherance

of Article 21 of the Constitution and if any action under those

executive instructions violated the Fundamental Rights of a person,

the person concerned 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 Government had

issued circulars requiring all students to join in the singing of the

National Anthem. It might have been a very laudable object of  the

Government and its policy but this Court held that the Circular being

only executive instructions of the  Government, could  not infringe

upon the Fundamental Rights of the students and stated that “The

law is now well settled that any law which be made under clauses (2)

to (6) of Article 19 to regulate the exercise of the right to the freedoms

guaranteed by Article 19(1)(a) to (e) and (g) must be  ‘a law’ having

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statutory force and not a mere executive or departmental instruction.”

This Court observed:

“15. If the two circulars are to be so interpreted as to  compel  each  and  every  pupil  to  join  in  the singing of the National Anthem despite his genuine, conscientious  religious  objection,  then  such compulsion  would  clearly  contravene  the  rights guaranteed by Article 19(1)(a) and Article 25(1).

16.   We  have  referred  to  Article  19(1)(a)  which guarantees to  all  citizens freedom of speech and expression and to Article 19(2) which provides that nothing  in  Article  19(1)(a)  shall  prevent  a  State from making any law, in so far as such law imposes reasonable restrictions on the exercise of the right conferred by Article 19(1)(a) in the interests of the sovereignty and integrity of  India,  the security of the  State,  friendly  relations  with  foreign  States, public order, decency or morality, or in relation to contempt of Court, defamation or incitement to an offence. The law is now well settled that any law which may be made, under Clauses (2)  to  (6)  of Article 19 to regulate the exercise of the right to the freedoms guaranteed by Article 19(1)(a) to (e) and (g) must be 'a law' having statutory force and not a mere executive or departmental instruction. In Kharak Singh v. State of U.P. AIR 1963 SC 1295, 1299,  the  question  arose  whether  a  police regulation  which  was  a  mere  departmental instruction, having no statutory basis could be said to be a law for the purpose of Article 19(2) to (6). The Constitution Bench answered the question in the negative and said:

    Though learned counsel for the respondent started  by  attempting  such  a  justification  by invoking Section 12 of  the Indian Police Act  he gave this up and conceded that the regulations

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contained in Chapter XX had no such statutory basis but were merely executive or departmental instructions framed for the guidance of the police officers.  They  would  not,  therefore,  be  "a  law" which  the  State  is  entitled  to  make  under  the relevant Clauses (2) to (6) of Article 19 in order to regulate or curtail fundamental rights guaranteed by the several  sub-clauses of  Article 19(1),  nor would the same be "a procedure established by law" within Article 21. The position, therefore, is that if the action of the police which is the arm of the executive of the State is found to infringe any of the freedoms guaranteed to the petitioner the petitioner  would  be  entitled  to  the  relief  of mandamus which he seeks, to restrain the State from taking action under the regulations.

17. The two circulars on which the department has placed  reliance  in  the  present  case  have  no statutory  basis  and  are  mere  departmental instructions.  They  cannot,  therefore,  form  the foundation  of  any  action  aimed  at  denying  a citizen's Fundamental Right under Article 19(1)(a). Further  it  is  not  possible  to  hold  that  the  two circulars  were  issued  'in  the  interest  of  the sovereignty and integrity of  India,  the security of the  State,  friendly  relation  with  foreign  States, public order, decency or morality, or in relation to contempt of Court, defamation or incitement to an offence’ and if not so issued, they cannot again be invoked  to  deny  a  citizen's  Fundamental  Right under  Article  19(1)(a).  In  Kameshwar  Prasad  v. State  of  Bihar  (1962)  Supp  3  SCR  369,  a Constitution Bench of the court had to consider the validity  of  Rule  4A  of  the  Bihar  Government Servants Conduct Rules which prohibited any form of demonstration even if such demonstration was innocent  and  incapable  of  causing  a  breach  of public tranquillity. The Court said:

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    No doubt, if the rule were so framed as to single  out  those  types  of  demonstration  which were  likely  to  lead  to  a  disturbance  of  public tranquillity  or  which would fall  under the other limiting  criteria  specified  in  Article  19(2)  the validity  of  the rule  could  have been sustained. The vice of the rule, in our opinion, consists in this  that  it  lays  a  ban  on  every  type  of demonstration-be  the  same  however  innocent and  however  incapable  of  causing  a  breach of public tranquillity and does not confine itself to those forms of demonstrations which might lead to that result.

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

82. Reliance has also been placed on State of M.P. & Anr. v. Thakur

Bharat Singh, AIR 1967 SC 1170 wherein it was pointed out that the

executive power of the State under Article 162 being only an executive

power and not a legislative power anything done in exercise of

executive power under Article 162 does not become law under the

Constitution. This Court in the factual matrix of the case that

executive order was issued during an emergency was pending under

Article 19. It was contended that Article 358 protects action of both

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legislative and executive. The decision in the aforesaid case was not

supported by Article 358 of the Constitution. It was observed:

"(4).  Counsel  for  the State  did  not  challenge the view that  the restrictions which may be imposed under cl. (b) of S. 3(1) requiring a person to leave his hearth,  home, and place of  business and live and remain in  another place wholly  unfamiliar  to him  may  operate  seriously  to  his  prejudice,  and may on that account be unreasonable. xx xxx.

(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  not revived  by  the  proclamation,  submitted  that  Art. 358 protects action both legislative and executive taken  after  proclamation  of  emergency  and, therefore any executive action taken by an officer of the State or by the State will not be liable to be challenged  on  the  ground  that  it  infringes  the fundamental  freedoms  under  Art.  19.  In  our judgment,  this  argument involves a grave fallacy. All executive action which operates to the prejudice of  any person must  have the authority  of  law to support it, and the terms of Art. 358 do not detract from that rule. Article 358 expressly authorises the State  to  take  legislative  or  executive  action provided such action was competent for the State to make or take, but for the provisions contained in Part  III  of  the  Constitution.  Article  358  does  not purport to invest the State with arbitrary authority to  take  action  to  the  prejudice  of  citizens  and others  :  it  merely  provides  that  so  long  as  the proclamation of  emergency subsists laws may be enacted,  and  executive  action  may  be  taken  in pursuance  of  lawful  authority,  which  if  the

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provisions  of  Art.  19  were  operative  would  have been invalid.  Our  federal  structure  is  founded on certain fundamental principles : (1) the sovereignty of  the  people  with  limited Government  authority, i.e.  the  Government  must  be  conducted  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  Government  possess  only  such powers as have been conferred upon them by the people; (2) There is distribution of powers between the three organs of the State - legislative, executive and judicial - each organ having some check direct or  indirect  on  the  other;  and  (3)  the  rule  of  law which includes judicial review of arbitrary executive actions. As pointed out by Dicey in his "Introduction to the study of the Law of the Constitution", 10th Edn.,  at  p.  202  the  expression  "rule  of  law"  has three  meanings,  or  may  be  regarded  from three different points of view.

"It  means,  in  the  first  place,  the  absolute supremacy  or  predominance  of  regular  law  as opposed to  the  influence  of  arbitrary  power,  and excludes  the  existence  of  arbitrariness,  of prerogative, or even of wide discretionary authority on the part of the Government."  

At p. 188 Dicey points out : "In almost every continental community the

executive  exercises  far  wider  discretionary authority  in  the  matter  of  arrest,  of  temporary imprisonment, of expulsion from its territory, and the like, than is either legally claimed or in fact exerted by the government in England :  and a study of European politics now and again reminds English readers that wherever there is discretion there  is  room  for  arbitrariness  and  that  in  a republic  no  less  than  under  monarchy discretionary  authority  on  the  part  of  the government  must  mean  insecurity  for  legal freedom on the part of its subjects."

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We  have  adopted  under  our  Constitution  not  the continental system but the British system under which the  rule  of  law  prevails.  Every  Act  done  by  the Government or by its officers must if it is to operate to the  prejudice  of  any person,  be supported by  some legislative authority.

xxx xxx xxx 7.  We are therefore of the view that the order made by the State in exercise of the authority conferred by S. 3(1)(b) of the Madhya               Pradesh Public Security Act 25 of 1959 was invalid and for the acts done  to  the  prejudice  of  the  respondent  after  the declaration of emergency under Art. 352 no immunity from the process of the Court could be claimed under Art. 358 of the Constitution, since the order was not supported by any valid legislation.”

83. For deciding  the aforesaid submission pivotal  question arises

whether imposition of condition tantamounts to a restriction imposed

within the purview of Article 19(6) of the Constitution. In our

considered opinion the High Court has erred in law in holding that

such stipulation could have been imposed only by a statutory law. In

our considered opinion, it is not a restriction on the right to carry on

medical profession, the  medical profession  has obligated itself by

such conditions by very nature of its professional activity and when

the State land is being held which is for the public good with no profit

motive, such land is held for the charitable purpose of public good.

The charitable purpose  would include, as already discussed, the

aforesaid obligation of free treatment to the persons of economically

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weaker strata of the society. It is not a restriction but the very

purpose of existence of medical profession and very purpose of

policy/Rules to grant land to institutions without public actions that

would have fetched market rate and does not amount to putting any

fetter to practice the medical profession or to carry on occupation. On

due consideration of the very object of the medical activity its

professional  and  other  obligations for the  proper treatment  of the

persons of economically weaker sections of the society deprived of the

fruits of development. The benefits of various welfare schemes hardly

reach to them in spite of efforts made, economic disparity is writ large

and persists. They cannot afford such treatment and thus in lieu of

holding land of Government at concessional rate and enjoying huge

occupancy benefits inter alia for aforesaid reasons, the hospitals can

be asked to impart free treatment as envisaged in the Government

order.

84. The  hospitals now­a­days have five­star facilities. The entire

concept  has  been changed to  make commercial gains.   They are

becoming unaffordable.   The charges are phenomenally high, and at

times  unrealistic to the service  provided.   The  dark side of such

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hospitals can be illuminated only by sharing obligation towards

economically  weaker sections of the society.   It  would be almost

inhuman to  deny proper treatment to  the poor owing to economic

condition and when hospitals  claim that  they are doing charity at

their own level, we find impugned order dated 2.2.2012 is simply an

expression to the aforesaid activity which has been given a

channelized form.

85. We are of the considered opinion that there was no necessity of

enacting a law, as the policy/rules under which the land has been

obtained, the hospitals were obligated to render free treatment as the

land was allotted to them for earning no profit and held in trust for

public good.  Similar is the provision in the rules of 1981 and apart

from that the regulations framed by the Medical Council of India also

enjoins upon the medical profession to extend such help and in view

of the object of the hospitals, trust, and missionaries it is apparent

that there was no necessity of any legislation and the Government

was competent to enforce in the circumstances, the contractual and

statutory liability and on common law basis.

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86. The right to carry on the  medical profession has not been

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  power

under  Article  162 of the  Constitution.   It  was  urged on behalf  of

hospitals that they were doing a charitable work at their own, thus, it

could not be said to be a restriction within the meaning contemplated

under Article 19(6) for which a law was required.  No new restriction

has been imposed for the first time 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 be issued under the

executive powers.

87. In Rai Sahib Ram Jawaya Kapur & Ors. v. The State of Punjab

(1955) 2 SCR 225= AIR 1955 SC 549, this Court observed that it is

open to the State to issue executive orders even if there is no

legislation in support thereof provided the State could legislate on the

subject in respect of which action is taken. There can be executive

orders in the absence of legislation in the field. This Court has

observed:

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“7.   Article 73 of  the Constitution relates to the executive  powers  of  the  Union,  while  the corresponding provision in regard to the executive powers of a State is contained in article 162. The provisions of these articles are analogous to those of section 8 and 49 respectively of the Government of  India  Act,  1935  and  lay  down  the  rule  of distribution of executive powers between the Union and the States,  following the same analogy as is provided 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 executive power of  a State shall  extend to the matters with respect to which the Legislature of the State has the power to make laws:

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

Thus,  under  this  article,  the  executive authority  of  the  State  is  executive  in  respect  to matters enumerated in List II of Seventh Schedule. The authority also extends to the Concurrent List except as provided in the Constitution itself  or in any law passed by the Parliament. Similarly, article 73 provides that the executive powers of the Union shall extend to matters with respect to which the Parliament  has  power  to  made  laws  and  to  the exercise of such rights, authority and jurisdiction as are  exercisable  by  the  Government  of  India  by virtue of any treaty or any agreement. The proviso engrafted  on  clause  (1)  further  lays  down  that although  with  regard  to  the  matters  in  the Concurrent  List  the  executive  authority  shall  be ordinarily left to be State it would be open to the Parliament to provide that in exceptional cases the

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executive power of the Union shall extend to these matters also.

Neither of these articles contain any definition as  to  what  the  executive  function  is  and  what activities would legitimately come within its scope. They are concerned primarily with the distribution of the executive power between the Union on the one hand and the States on the other.  They do not mean,  as Mr.  Pathak seems to suggest,  that  it  is only when the Parliament or the State Legislature has legislated on certain items appertaining to their respective  lists,  that  the  Union  or  the  State executive,  as  the  case  may  be,  can  proceed  to function in respect to them.

On  the  other  hand,  the  language  of  article 162 clearly indicates that the powers of the State executive  do  extend  to  matters  upon  which  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. These provisions of the Constitution, therefore, do not lend any support to Mr. Pathak's contention.

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

The  Indian  Constitution  has  not  indeed recognised the doctrine of separation of powers in its  absolute  rigidity  but  the  functions  of  the different parts or branches of the Government have been sufficiently differentiated and consequently it can very well be said that our Constitution does not

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contemplate assumption, by one organ or part of the  State,  of  functions  that  essentially  belong  to another.   The  executive  indeed  can  exercise  the powers of departmental or subordinate legislation when  such  powers  are  delegated  to  it  by  the legislature.

It  can  also  when  so  empowered,  exercise judicial  functions  in  a  limited way.  The  executive Government,  however,  can  never  go  against  the provisions of the Constitution or of any law.  This is clear  from  the  provisions  of  article  154  of  the Constitution but, as we have already stated, it does not  follow  from  this  that  in  order  to  enable  the executive to function there must be a law already in existence  and  that  the  powers  of  executive  are limited merely to the carrying out of these laws.

13.  The  limits  within  which  the  executive Government  can  function  under  the  Indian Constitution  can  be  ascertained  without  much difficulty by reference to the form of the executive which  our  Constitution  has  set  up.   Our Constitution,  though  federal  in  its  structure,  is modelled  on  the  British  Parliamentary  system where the executive is deemed to have the primary responsibility for the formulation of  governmental policy  and  its  transmission  into  law  though  the condition  precedent  to  the  exercise  of  this responsibility is it's retaining the confidence of the legislative branch of the State.

The  executive  function  comprises  both  the determination of  the policy as well  as  carrying it into  execution.   This  evidently  includes  the initiation of legislation, the maintenance of order, the promotion of social and economic welfare, the direction of foreign policy, in fact, the carrying on or supervision  of  the  general  administration  of  the State.

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

18. In the present case it is not disputed that the entire  expenses  necessary  for  carrying  on  the business of  printing and publishing the textbooks for  recognised  schools  in  Punjab  were  estimated and shown in the annual  financial  statement and that  the  demands  for  grants,  which  were  made under  different  heads,  were  sanctioned  by  the State Legislature and due Appropriation Acts were passed.

For the purpose of  carrying on the business the  Government  do  not  require  any  additional powers  and  whatever  is  necessary  for  their purpose, they can have by entering into contracts with  authors  and  other  people.  This  power  of contract  is  expressly  vested  in  the  Government under  article  298  of  the  Constitution.  In  these circumstances,  we  are  unable  to  agree  with  Mr. Pathak  that  the  carrying  on  of  the  business  of printing and publishing textbooks was beyond the competence of the executive Government without a specific legislation sanctioning such course."

88. In  U. Unichoyi & Ors.  v. State of Kerala,  AIR 1962 SC 12,  in

which notification issued by the Government of Kerala was

questioned that wages prescribed were something above the

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minimum wages, the fixation was questioned on the ground that it

affected the rights of the industries to carry on their activities under

Article 19(1)(g)  of the Constitution.   The submissions were rejected

following the earlier decisions of this Court in Bijay Cotton Mills Ltd.

v. State of Ajmer, AIR 1955 SC 33.  This Court observed that when a

Committee consisting of representatives of the industry and the

employees considered the problem and made its recommendation and

when they were accepted by the Government, it would ordinarily not

be possible to examine the  merits of the recommendation.   The

submission  made upon infringement of Article 19(1)(g) read  with

Article 19(6) was rejected.  This Court observed thus:

“10.  In  the  case  of  The  Edward  Mills  Co.  Ltd., Beawar v. State of Ajmer, 1955-I SCR 735: ( (S) AIR 1955 SC 25) the validity of S. 27 of the Act was challenged on the ground of excessive delegation. It was urged that the Act prescribed no principles and laid down no standard which could furnish an intelligent guidance to the administrative authority in making selection while acting under S. 27 and so the matter was left entirely to the discretion of the appropriate Government which can amend the schedule in any way it liked and such delegation virtually  amounted  to  a  surrender  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  the Legislature  undoubtedly intended to apply the Act to those industries only where by reason of unorganised labour or want of

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proper  arrangements  for  effective  regulation  of wages or for other causes the wages of labourers in  a  particular  industry  were  very  low.  He  also pointed out  that  conditions of  labour vary under different  circumstances  and  from  State  to  State and the expediency of including a particular trade or  industry  within  the schedule  depends upon a variety  of  facts  which  are  by no  means uniform and which can best  be ascertained by a  person who is placed in charge of the administration of a particular State. That is why the Court concluded that in enacting S. 27 it could not be said that the Legislature  had  in  any  way  stripped  itself  of  its essential powers or assigned to the administrative authority anything but an accessory or subordinate power which was deemed necessary to carry out the purpose and the policy of the Act.

11. In the same year another attempt was made to challenge the  validity  of  the  Act  in  Bijay  Cotton Mills Ltd. v. State of Ajmer (1955)-1 SCR 752; ((S) AIR 1955 SC 33). This time the crucial sections of the Act, namely, Ss. 3, 4 and 5 were attacked, and the challenge was based on the ground that the restrictions imposed by them upon the freedom of contract  violated  the  fundamental  right guaranteed under Art. 19(1)(g) of the Constitution. This challenge was repelled by Mukherjea, J., as he then  was,  who  again  spoke  for  the  Court.  The learned  Judge  held  that  the  restrictions  were imposed in the interest of the general public and with  a  view  to  carry  out  one  of  the  directive principles of State policy as embodied in Art.  43 and so the impugned sections were protected by the  terms  of  Cl.  (6)  of  Art.  19.  In  repelling  the argument of the employers' inability to meet the burden  of  the  minimum  wage  rates  it  was observed that "the employers cannot be heard to complain if  they are  compelled to  pay minimum wages  to  their  labourers  even  though  the labourers  on  account  of  their  poverty  and

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helplessness are willing to work on lesser wages, and  that  if  individual  employers  might  find  it difficult  to  carry  on  business  on  the  basis  of minimum wages fixed under the Act that cannot be the reason for striking down the law itself  as unreasonable. The inability of the employers may in  many cases  be  due  entirely  to  the  economic conditions of  those employers."  It  would thus be seen  that  these  two  decisions  have  firmly established the validity of the Act, and there can no longer be any doubt that in fixing the minimum wage  rates  as  contemplated  by  the  Act  the hardship  caused to  individual  employers  or  their inability  to  meet  the  burden  has  no  relevance. Incidentally, it may be pointed out that in dealing with  the  minimum  wage  rates  intended  to  be prescribed  by  the  Act  Mukherjea,  J.,  has  in  one place  observed  that  the  labourers  should  be secured adequate living wages. In the context it is clear that the learned Judge was not referring to living  wages  properly  so-called  but  to  the minimum  wages  with  which  alone  the  Act  is concerned. In view of these two decisions we have not allowed Mr. Nambiar to raise any contentions against the validity of the Act. It is true that Mr. Nambiar attempted to argue that certain aspects of the matter on which he wished to rely had not been duly considered by the Court in Bijay Cotton Mills Ltd.'s case (1955)-1 SCR 752; ((S) AIR 1955 SC  33).  In  our  opinion  it  is  futile  to  attempt  to reopen an issue which is clearly concluded by the decisions of this Court. Therefore, we will proceed to deal with the present petition, as we must, on the basis that the Act under which the Committee was appointed and the notification was ultimately issued is valid.”

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89. In  Minerva Talkies, Bangalore & Ors. v. State of Karnataka &

Ors.  1988  Suppl.  SCC 176 in  which  Rule  41­A  of the  Karnataka

Cinemas (Regulation) Rules, 1971 came to be questioned as violative

of Article 19(1)(g) of the Constitution of India.  The argument that the

income would be reduced as such the rule was prohibitive not

restrictive, this Court rejected the submission of violation of Article

19(1)(g) and observed thus :

“12.  The  appellants’/petitioners'  contention  that restriction  under  Rule  41-A  is  unreasonable  is founded  on  the  premise  that  Rule  41-A  is  not regulatory  in  nature  instead  it  totally  prohibits exhibition  of  cinematograph  films  for  one  show and  its  impact  is  excessive  as  it  reduces appellants’/petitioners'  income  to  the  extent  of one-fifth.  The  appellants/petitioners  have  no unrestricted  fundamental  right  to  carry  on business of exhibiting cinematograph films. Their right  to  carry  on  business  is  regulated  by  the provisions  of  the  Act  and  the  Rules  framed thereunder.  These  provisions  are  necessary  to ensure public safety, public health and other allied matters.  As  already  discussed  Rule  41-A  has placed  limit  on  the  number  of  shows  which  a licensee  can  hold  in  a  day.  The  rule  does  not prohibit exhibition of cinematograph films instead it  regulates  it  by  providing  that  instead  of  five shows  only  four  shows should  be exhibited  in  a day. In Narender Kumar v. Union of India, (1960) 2 SCR 375, this Court held that a law made in the public  interest  prohibiting  a  business  would  be valid  as  the  'prohibition'  is  only  a  kind  of 'restriction'.  The  expression  "restriction"  includes "prohibition"  also.  Rule  41-A,  however,  does  not

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take away the licensees' right to carry on business of  exhibiting  cinematograph  films.  It  merely regulates it. No rule or law can be declared to be unreasonable merely because there is reduction in the  income  of  a  citizen  on  account  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 Article 19(1)(g) of the Constitution.”

90. In T.V. Balakrishnan v. State of T.N. & Ors., 1995 Suppl. 4 SCC

236, wherein Rules 1­A (3)(b), 2, 3(ii) and 7(4) of Tamil Nadu Timber

Transit Rules, 1968 had been questioned on the ground of violation of

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:

4. The High Court further found that the impugned Rules  were  only  regulatory  and  did  not  in  any manner  infract  the  right  of  the  petitioners guaranteed  under  Article  19(1)(g)  of  the Constitution of India. The High Court rejected the argument on the following reasoning:

“When  the  rules  as  framed  are  intended  to subserve the aims of the Act which was meant to  consolidate  the  law relating  to  the  forest produce,  the  transit  thereof  and  the  duty leviable thereon; and hence those rules were meant  to  effectuate  same  of  all  of  these objects.  Having noticed the uphill  task faced by the Government in preventing illicit felling of trees, over large extents with limited man power, and checking at check-posts at forest frontiers having been found to be insufficient, ineffective  and  being  no  match  to  the  swift manner  in  which  they  are  carried  away  by

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lorries; and on raids conducted in places like Mettupalayam, Tambaram and elsewhere large stocks  of  illicit  timber  having  been found  in saw-mills  and  with  dealers,  the  impugned rules,  which  insist  on  a  Form  II  pass  to accompany during every movement of timber, and  hammer  mark  being  affixed  on  the transported timber,  are absolutely  necessary for the protection and management of forest wealth in the State of Tamil Nadu. Hence, the impugned  rules  are  not  violative  of  Article 19(1)(g).”

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

91. In  State of Orrisa and Anr vs. Radheyshyam Meher & Ors. AIR

1995  SC  855  =  1995 (1) SCC  652 the question  which arose for

consideration was about the power of the State Government in the

absence of rule or regulations to permit the opening of medical store

in campus of hospital remaining open day and night.  Objection was

raised by store­keepers across road close to hospital that opening of

store in campus will jeopardise their interest and they will not be able

to  sustain themselves.  This  Court  observed that the intention  in

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starting day and night store within the campus has direct nexus with

the  public interest  particularly  with that  of  patients  and that the

policy decision of the Government in absence of rules and regulations

was not liable to be interfered with.  This Court has observed thus:

“5. Learned Counsel appearing for the appellants vehemently  urged  before  us  that  the  said advertisement inviting applications for settling the shop to have a medical store inside the hospital premises  was  issued  in  pursuance  of  the Government  policy  and  with  the  sole  object  to make the medicines available to the patients even at odd hours and, therefore, the High Court should not  have  interfered  with  the  administrative decision  of  the  Government  taken  in  the  public interest.  We  find  considerable  force  and  much substance in these submissions.

6. In the aforesaid background the question arises whether, in the absence of any rule or regulation to  the  contrary,  can  the  power  of  the  State  be abridged on the basis of an individual interest of certain trader, even to the extent of restricting the State's capacity to advance larger public goods. It can hardly be disputed that the consideration of availability of the medicines to the patients should be  the  uppermost  consideration  as  compared  to the right of a person to derive income and make profits  for  his  sustenance  by  running  a  medical store  for  the reason that  the medical  stores  are primarily  meant  for  the  patients  and  not  the patients for the medical stores or those who run the same. The submission of the respondents that if a medical store is opened within the campus of the hospital, the same will jeopardise their interest adversely  affecting  their  business  and  that  they will not be able to sustain themselves could not be

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a valid ground to disallow the appellants to open a shop within the hospital campus. Undoubtedly, the opening  of  a  medical  store  within  the  hospital campus will provide a great facility to the patients who may not be having any attendant of their own in the hospital for their assistance at odd hours in the event of an emergency to go out to purchase the medicines.  There may be patients having an attendant who may not find it convenient or safe to go out of the campus to purchase the medicines in  the  night  hours.  In  these  facts  and circumstances,  the  paramount  consideration should  be  the  convenience  of  the  patients  and protection  of  their  interest  and not  the  hardship that may be caused to the medical store keepers who  may  be  having  their  shops  outside  the hospital  campus.  Thus  the  intention  of  the appellants  to  open  a  medical  store  within  the hospital campus is to salvage the difficulties of the patients admitted in the hospital and this object of the  appellants  has  direct  nexus  with  the  Public Interest  particularly  that  of  the  patients  and, therefore,  the  High  Court  should  not  have interfered  with  the  decision  of  the  State Government  to  settle  the  holding  of  a  medical store  in  the  Hospital  premises.  However,  if  the respondents  so  choose,  they  may  keep  their medical  stores  also  open  day  and  night. Consequently,  the  impugned  order  could  not  be sustained."

92. In Dalmia Cement (Bharat) Ltd. v. Union of India 1996 (10) SCC

104, compulsory packing of specified commodities with jute

packaging  material (gunny bags) was held not to be violative of

Articles 14, 19(1)(g) and 301 of the Constitution.  This Court held that

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the Act primarily intended to provide socio­economic justice to

agriculturist.   This  Court observed that the role of Article 14 in

ushering in healthy social order by providing equal opportunities to

all  citizens to  make  fundamental rights  meaningful  and  life  worth

living  should  also consider the role of  Article  38 in securing  and

protecting social,  economic and political justice and in the case of

economic legislation presumption of constitutionality arises in favour

of legislation.   It is  empowered  to  make experiments  on economic

legislation having regard to various socio­economic aspects.   Court

should not  adjudge crudities and  inequities arising  from economic

legislation.  With respect to human rights and fundamental freedom,

in the Universal Declaration of Human Rights, democracy,

development, and respect for human rights, this Court has observed

thus:

“15. In Valsamma Paul v. Cochin University, (1996) 3 SCC 545,  a Bench of  this  Court  has held  that human  rights  are  derived  from  the  dignity  and worth inherent in the human person. Human rights and fundamental freedoms have been reiterated in the  Universal  Declaration  of  Human  Rights. Democracy, development, and respect for human rights  and  the  fundamental  freedoms  are interdependent  and  have  mutual  reinforcement. Article 29(2) of the Declaration of Human Rights provides that:

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"…in the exercise of this right and freedoms, everyone  shall  be  subject  only  to  such limitations as are determined by law solely for the purpose of securing due recognition and respect for the rights and freedoms of others and  of  leading  the  just  requirements  of morality, public order and general welfare in a democratic society."  

The concept of equality and equal protection of law guaranteed by Article 14 of the Constitution in its  proper  spectrum  encompasses  social  and economic  justice  in  a  political  democracy  as  its species to eliminate inequalities in status and to provide  facilities  and  opportunities  among  the individual  and  groups  of  people  to  secure adequate  means  of  livelihood  which  is  the foundation for stability of political democracy.”

xxx xxx xxx

18. Article 14 of the Constitution is a shining star among the fundamental  rights  which guarantees equality  to every citizen and equal protection of laws  to  all  persons.  Equality  before  law  is  a correlative  to  the  concept  of  rule  of  law for  all- around evaluation healthy social order. Directives set forth social principles to eliminate inequalities in income, in status and opportunity and to provide facilities and opportunities to every citizen to make the fundamental rights meaningful and the life of every citizen worth living and at its best, with the dignity of person and fraternity, lest they remain empty  vessels  and  teasing  illusions  to  majority population.

xxx xxx xxx

21.  Article  38  of  the  Constitution  enjoins  the State  to  strive  to  promote  the  welfare  of  the people by securing and protecting, as effectively as it may, the social order in which justice - social, economic  and  political  -  shall,  inform  all  the

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institutions of the national life striving to minimise inequalities in income and endeavour to eliminate inequalities  in  status,  facilities,  opportunities amongst individuals and groups of people residing in  different  areas  or  engaged  in  different avocations.  As  stated  earlier,  agriculture  is  the mainstay of rural economic and empowerment of the  agriculturists.  Agriculture,  therefore,  is  an industry. To the tiller of the soil, livelihood depends on  the  production  and  return  of  the  agricultural produce and sustained agro-economic growth. The climatic  conditions  throughout  Bharat  are  not uniform.  They  vary  from  tropical  to  moderate conditions. Tillers of the soil being in unorganised sector, their voice is scarcely heard and was not even  remotely  voiced  in  these  cases.  Their fundamental right to cultivation is as a part of right to livelihood. It is a bastion of economic and social justice envisaged in the Preamble and Article 38 of the  constitution.  As  stated  earlier,  the  rights, liberties,  and  privileges  assured  to  every  citizen are  linked  with  corresponding  concepts  of  duty, public  order,  and  morality.  Therefore,  the  jural postulates form the foundation for the functioning of a just society. The fundamental rights ensured in Part III are, therefore, made subject to restrictions i.e.,  public  purpose  in  Part  IV  Directives,  public interest or public order in the interest of general public.  In  enlivening  the  fundamental  rights  and the public purpose in the Directives, Parliament is the  best  Judge  to  decide  what  is  good  for  the community,  by  whose  suffrage  it  comes  into existence and the majority political party assumes governance of the country. The Directive Principles are  the  fundamentals  in  their  manifestos.  Any digression  is  unconstitutional.  The  Constitution enjoins  upon the Executive,  Legislature,  and  the Judiciary to balance the competing and conflicting claims involved in a dispute so as to harmonise the competing claims to establish an egalitarian social order.  It  is  a  settled  law  that  the  Fundamental

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Rights and the Directive Principles are two wheels of the chariot; none of the two is less important than the other.  Snap one,  the other will  lose its efficacy. Together, they constitute the conscience of the Constitution 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 to provide flesh and blood to the dry bones of law. The Directives would  serve  the  Court  as  a  beacon  light  to interpretation.  Fundamental  Rights  are  rightful means to the end, viz., social and economic justice provided in the Directives and the Preamble. The Fundamental  Rights  and  the  Directives  establish the trinity of equality, liberty, and fraternity in an egalitarian social order and prevent exploitation.

22. Social Justice, therefore, forms the basis of progressive  stability  in  the  society  and  human progress. Economic justice means abolishing such economic conditions which remove the inequality of  economic  value  between  man  and  man, concentration of wealth and means of production in the hands of a few and are detrimental to the vast.  Law,  therefore,  must  seek  to  serve  as  a flexible instrument of  socio-economic adjustment to bring about peaceful socio-economic revolution under  rule  of  law.  The  Constitution,  the fundamental supreme lex distributes the sovereign power between the Executive, the Legislature, and the  Judiciary.  The  three  instrumentalities,  within their play endeavour to elongate the constitutional basic structure built in the Preamble, Fundamental Rights and Directives, namely, establishment of an egalitarian  social  order  in  which  every  citizen receives  equality  of  opportunity  and  of  status, social and economic justice. The Court, therefore, must  strive  to  give  harmonious  interpretation  to propel  forward  march  and  progress  towards establishing an egalitarian social order.”

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93. This  Court  has  observed that  above  economic justice  means

abolition of such economic conditions which remove inequality

between man and  man.   In  our  opinion, there  has to  be  positive

action for that equality.

94. In Indian Drugs & Pharmaceuticals Ltd. & Ors. v. Punjab Drugs

Manufacturers  Association  & Ors.  (1999)  6  SCC 247 constitutional

validity of the policy of the Government of the State of Punjab was

challenged whereby directions  issued to the purchasing authorities

that certain medicines used in the government hospitals and

dispensaries were to be purchased from public sector manufacturers

only  was  quashed  by the  High  Court  while  allowing  writ  petition.

Whereas Rajasthan High Court has dismissed a similar writ petition.

Both the matters were decided by this Court.  This Court relied upon

the decision in Rai Sahib Ram Jawaya Kapur v. State of Punjab, AIR

1955 SC 549 (quoted above) and observed that such restriction could

be imposed by framing policy by exercising powers of the State under

Article 162 of the  Constitution.   Therefore, the contention of the

appellants in regard to creation  of  monopoly and violation  of the

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fundamental rights under Articles 19(1)(g) and 19(6) was turned

down. This Court has observed thus:

“16.  It  is  clear  from  the  various  judgments referred  to  above  that  a  decision  which  would partially affect the sale prospects of a company, cannot be equated with creation of monopoly. In Ram  Jawaya  Kapur  AIR  1955  SC  549  and Naraindas's  [1974]  4  SCC  788  cases,  the Constitution  Bench  also  held  that  the  policy restrictions, as discussed above, can be imposed by exercise of executive power of the State under Article  162  of  the  Constitution.  Therefore,  the contention of the appellants in regard to creation of monopoly and violation of the fundamental right under Articles 19(1)(g) and 19(6) should fail. The judgment cited above also show that  preference shown to cooperative institutions or public sector undertakings being in public interest,  will  not be construed  as  arbitrary  so  as  to  give  rise  to  a contention  of  violation  of  Article  14  of  the Constitution. We have noted above that this Court in the cases of Oil  & Natural Gas Commission v. Association of Natural Gas Consuming Industries of Gujarat (1990) Supp SCC 397 ; Krishna Kakkanth (1997) 9 SCC 495 and Hindustan Paper Corpn. Ltd. v. Govt. of Kerala (1986) 3 SCC 398, has held that the preference shown to cooperative institutions or public sector undertakings being in public interest, will not be construed as arbitrary so as to give rise to  a  contention  of  violation  of  Article  14  of  the Constitution.

xxx xxx xxx 19. For the above reasons, we are of the opinion

that  the  High  Court  was  right  in  coming  to  the conclusion that by the impugned policy, there was no  creation  of  any  monopoly  nor  is  there  any violation Of  Articles  14,  19(1)(g)  or  19(6)  of  the Constitution. In view of the above, we are of the

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opinion  that  these  appeals  should  fail  and  the same are dismissed accordingly. No costs.

CA Nos. 3723 and 3744 of 1988: 20.  These  appeals  are  preferred  against  the

judgment and order of  the High Court  of  Punjab and Haryana dated 3-6-1988 made in Civil WP No. 6144 of 1987 wherein the High Court was pleased to allow the writ petition filed by the respondents in these civil appeals, quashing the policy decision of  the  State  of  Punjab  whereby  the  State  had directed  its  authorities  concerned  to  purchase certain  medicines  from  the  public  sector undertakings only. We have today in CA Nos. 4550- 51  of  1989  held  that  a  similar  policy  decision issued by the State of Rajasthan does not amount to creation of monopoly nor is there any violation of Article 14 or 19(1)(g) of the Constitution. The facts  giving  rise  to  the  writ  petitions  before  the Punjab  and  Haryana  High  Court  from which  the above civil  appeals have arisen being the same, we  allow  these  civil  appeals  and  set  aside  the judgment  and  order  of  the  Punjab  and  Haryana High Court dated 3-6-1988 made in Civil  WP No. 6144 of 1987. Consequently, the said writ petition stands dismissed. No costs."

(emphasis supplied)

95. In our considered opinion such stipulation for  free treatment

does not amount to restriction under Article 19(6) on the right

enshrined under Article 19(1)(g) and even otherwise it was not

necessary to enact a statutory provision by the Government in view of

existing liability as per policy/rules/statutory provisions as to ethical

standards and other statutory provisions in force.

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 In Reference to question No.4 – decision in Social Jurists v. 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 were 20

hospitals  as respondents.  Out of  these 20 hospitals,  18 hospitals

were allotted land by Delhi Development Authority (DDA) and in the

case of Veerawali and Vimhans hospitals, the land was allotted by

Land and Development Office (L&DO).  The Head of L&DO allotted the

lands to the aforesaid two hospitals on concessional rates.   Out of

remaining 18  hospitals, 16  hospitals  were provided lands on the

condition of free patient treatment specifically mentioned in the lease

deed.  However, according to remaining two  hospitals  i.e.,  Escort

Heart Institute and Research Centre and Dharam Shila Cancer

Foundation  and  Research  Centre,  who  were  also  allotted land  by

DDA, there was no condition requiring them to provide free patient

care and treatment to the poor sections of the society.  Though in the

letter of allotment, the said condition was specifically  incorporated.

The terms and conditions of the lease deed certainly did not contain

the stipulation of free treatment, however, in view of the conditions of

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letter of allotment, the High Court of Delhi in paragraphs 47 and 48

observed thus:

“47. The first letter of allotment issued to both these  hospitals  contained  the  term  of  free treatment to poorer sections. The relevant terms of the letter has been referred by us supra. Without execution  of  any  document,  the  hospitals  had  in furtherance to the letter of allotment accepted the terms  and  conditions  of  the  letter  including  this condition  and  (a)  paid  the  money  demanded  in terms  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 in accordance with the terms of letter of allotment  and,  therefore,  a  complete  contract existed  between  the  parties.  The  terms  and conditions of the letter of allotment empowered the authorities to add or impose such other conditions which  the  allottee  was  obliged  to  agree  having taken benefit thereof. The terms and conditions of the  Lease  Deed  certainly  does  not  contain  the condition of free treatment to poorer sections of the Society  but  the  same  was  part  of  the  letter  of allotment itself and they would be applicable to the allotments  mutatis  mutandis  particularly  when there is no conflict between them and they duly are supplement to each other."

97. The High Court of Delhi also referred to Rules 5 and 21 of the

Delhi Development Authority (Disposal of Developed Nazul Land)

Rules, 1981.   Rule 5 deals with rules of  premium for allotment of

Nazul land to certain public institutions, whereas Rule 20 deals with

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allotment to  certain  public institutions.  Rule  5  provides that the

Authority  may allot Nazul land to schools, colleges, universities,

hospitals, other social charitable institutions, religious, political,

semi­political organizations and local bodies for remunerative, semi­

remunerative or unremunerative purposes at the premia and ground

rent in force immediately before the coming into force of these rules,

or at such rates as the Central Government may determine from time

to time.   Rule 20 (a) (i) provides that no allotment of Nazul land to

public institution, referred to in Rule 5 shall be made unless,

according to the aims and objects of public institution, it directly sub­

serves the interests of the population of the Union Territory of Delhi.

Rule 20  (c)  provides that public institution should be a non­profit

making character.   There is no such stipulation running contrary to

the aforesaid provisions.   The condition of free patient treatment to

the poor with reference to Delhi Development Authority (Disposal of

Developed Nazul Land) Rules, 1981, was examined by the High Court

of Delhi, the relevant portion is extracted hereunder:

“56. The condition of 25% free patient treatment to  the  poor  thus  is  a  condition  which  has  been imposed  in  furtherance  to  the  policy  of  the Government which in turn is in strict consonance to the spirit contained in Rules 5 and 20 of the Rules

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and  the  Constitutional  mandate.  The  DDA  had specifically incorporated this condition at/after the time  when  on  the  tall  representations  and negotiations  made  by  the  hospitals  and  their undertaking  to  abide  by  such  conditions,  was repeatedly  accepted  that  it  issued  the  letter  of allotment containing these terms. On facts of the case and in law, they cannot abrogate themselves from  completely  satisfying  the  condition  of  'free patient treatment'.

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

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

".....The  allotment  of  land  belonging  to  the people  at  practically  no  price  is  meant  for serving  the  public  interest  i.e.,  spread  of education or other charitable purposes; it is not meant to enable the allottees to make money or profiteer with the aid of public property."

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98. The High Court held that it was not open to hospitals to wriggle

out of their contractual, statutory and public law obligation.   There

was no scope for reading and confining the rights and obligations of

the parties in isolation.

99. The recommendation  made in the report of Justice  Qureshi

Committee was also considered by the  High Court of Delhi, the

relevant part is extracted hereunder:

“66. The  Lieutenant  Governor  of  Delhi  had constituted  a  special  committee  being  Justice Qureshi  Committee  for  this  purpose.  This committee after  taking into  consideration  various aspects including workability of this condition had recommended that 10% IPD and 25% OPD patients should be treated free in all respects in every such hospital. Such patients belonging to the poor strata of the society should not be required to pay any charges.  The  relevant  part  of  the  report  of  the committee reads as under:

“1. Most of the representative of the hospital submitted that 25% beds earmarked for poor patients  were  excessive  since  the  cost  of medicines was too high. It was agreed that it should not be more than 15% in any case, but 10%  would  be  ideal.  Therefore,  committee recommended 10% indoor beds free for poor patients  for  all-purpose  including  medicines and consumables. The free treatment services should  be  available  to  25%  of  total  OPD patients. This condition should be applicable to all  the hospitals that have been allotted land by the govt.

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xxx xxx  xxx

3. The free treatment should be totally free and not  partly  free and should be uniform for  all hospitals that have been allotted land by the Government. 4. It is also suggested that all those institutions should provide the free services to the extent of  10%  also  who  have  not  been  allotted Government land. Even Nursing Homes should provide 5% of their  beds for poor and needy patients. 5.  In  consideration  of  persistent  violation  of expressed  and  implied  terms  by  the institutions,  the  allotment  of  land  should  be cancelled  and should  be reallotted  by a new lease  deed  on  new  and  uniform  terms  and conditions for thirty years, on commercial rates of ground rent, to a new management in which Government should have at least 3 nominees nominated  by  Lt.  Governor  having  wide experience  of  rendering  free  services.  The renewed lease must  clearly  mention that the lease is not transferable and any contravention would result in automatic cancellation."

100. The Government of NCT of Delhi accepted the recommendation

of the Justice Qureshi Committee as reasonable and took the decision

that it should be enforced.   However, Union of India stated that the

matter was under its consideration and they had not taken a final

view in the  matter.   At the relevant time, the similar view  was

expressed by Maninder Acharya Committee that the condition of free

treatment of poor strata of society should  be reasonable, but its

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implementation 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 vital assets thus:

"95. No right exists without any obligation and no obligation can be dissected from the duty tagged with it. Right should correlate to a duty. The wider interpretations given to Article 21 read with Article 47 of the Constitution of India are not only meant for the State but they are equally true for all who are placed at an advantageous situation because of the help or allotment of vital  assets.  Such assets would be impossible to be gathered in a city like Delhi where the land is not available in feet, much less in acres, which the State at the cost of its own projects had provided land at concessional rates to these hospitals. The principle of equality, fairness, and  equity  would  command  these  hospitals  to discharge their obligations of free patient treatment to poor strata of Delhi."

101. The aforesaid decision in  Social Jurists  (supra) was questioned

before this Court by way of  several  special leave petitions  filed by

Dharamshila Hospital & Research Centre etc. and Sundar Lal Jain

Charitable Hospital also challenged the abovesaid decision by

preferring SLP (C) No.5630 of 2008.  The said special leave petitions

were dismissed by reasoned order dated 01.09.2011.   The order in

entirety is extracted hereunder:

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   “The special leave petitions are dismissed.

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

102. Thereafter, the  Government  of India  on  2.2.2012, issued the

impugned order with respect to the policy of free patient treatment to

indigent/poor persons of Delhi to be followed by the private hospitals

allotted land by Land & Development Office on concessional rates.

The said order is reproduced hereinbelow:

“Government of India Ministry of Urban Development

Land & Development Office Nirman 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  of  Delhi  to  be followed by the private hospitals  allotted land by Land & Development Office on concessional rates –               regarding.

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Land  &  Development  Office,  Ministry  of  Urban Development, Govt. of India had allotted land to the registered societies  and trusts  on concessional  rates for establishment of hospitals.  As per the Government policy  for  allotment  of  land  in  force  in  1943,  a charitable institution was required to pay a premium at the rate of about Rs.25,000/- to Rs.35,000/- per acre. In 1949, the policy was reviewed and it was felt that these prevailing land rates were on the higher side.  It was  then  decided  that  land  should  be  allotted  to Charitable Trusts and Institutions for opening schools and  hospitals  at  a  nominal  premium  ranging  from Rs.2,000  to  Rs.5,000/-  per  acre  depending  on  the locality  in  which  the  land  is  situated  subject  to  an annual ground rent of 5% of the premium.  In order to avail the    concessional rate, the institution should be non-profit making 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/-  per acre to 5 hospitals,  namely (1)  Sir Ganga  Ram  Hospital,  (2)  Mool  Chand  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  (initial allotment of land was made by DDA and after that an additional strip of land 773 sq. yds. was   allotted by L&DO), during the period 1951 to 1976 in accordance with the said policy and at the rate of Rs.10,000/- per acre  to  one  hospital  namely  VIMHANS  as  per  the prevailing concessional rate in 1981 keeping in mind that  these  hospitals  were  genuinely  charitable  in nature and would provide free treatment for the poor patients and function for the welfare of the public.  Out of these 6 hospitals, the lease deed of two hospitals namely,  Veeranwali  International  Hospital  (Delhi Hospital  Society)/PRIMUS  ORTHO  and  VIMHANS  had the free treatment condition to the extent of 70% of total  beds  whereas,  in  respect  of  remaining  four

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hospitals, conditions for free treatment have not been provided.

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

i. The conditions of free patient treatment shall be 25% of      patients for OPD and 10% of beds in the  IPD  for  free              treatment.   The percentage of patients will  not be liable to pay any expenses in the hospital for admission, bed, medication,  treatment,  surgery  facility,  nursing facility,             consumables,  and  non- consumables etc.  The hospital           charging any money shall  be liable for action under the law and it would be treated as a violation of the orders of the court.  The Director/M.S./member of the trust or the society running the hospital shall be  personally  liable  in  the  event  of breach/violation/default.

ii. The  hospital  shall  maintain  the  records  which would  reflect  the  name  of  the  patient, father's/husband's name, residence, name of the disease  suffering  from,  details  of  expenses incurred  on  treatment,  the  facilities  provided, identification  of  the  patient  as  poor  and  its verification done by the           hospital.

iii. The  hospital  shall  also  maintain  details  of reference  from  Government  hospital  and  the reports submitted by the      private hospital to Government hospital in the form of    feedback of treatment provided to the patient.  The records so maintained shall have to be produced to the Inspection  team,  constituted by the  Delhi  High Court,  as  and  when         required  for  its verification and quarterly details should have to

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be sent to Directorate of Health Services (DHS), Govt. of NCT of Delhi (GNCTD) under intimation to the office of Land and Development Office.

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

v. Every private hospital  shall  have to establish a referral        centre/desk functional  round the clock,  where  the  patients  referred  from  Govt. hospital would be able to report.  The   referral desk shall  be managed by a nodal  responsible person whose name, telephone,  e-mail  address and  fax  number  is  to  be  sent  to  the  Govt. Hospitals,  DHS  and  should  be prominently  displayed.   The  hospital  shall  also display the    facilities available at the hospital and the daily position of availability of free beds quota so that the patients coming   directly to the hospital would know the position in advance.

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

vii. The establishment of the referral desk should be ensured within two weeks from the issue of this letter and the            Director/In charge of the hospital shall be personally liable in the event of default.

viii. The  hospital  shall  send  daily  information  of availability of free 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 and also to the concerned nearby  Govt.  hospital  to  which  the  private hospital is proposed to be linked for general and for             specialized purposes.  The details of geographical linkage, the telephone numbers/fax numbers  and the  name of  the  nodal  officer  of Govt. hospitals shall be intimated shortly.  In case no information is received within the stipulated time from the private hospitals then it shall be presumed that the beds are available in private

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hospitals  and  the  patient  referred  shall  be accommodated.

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

x. After  the  discharge  of  such  patients  provided with the    treatment, the hospital shall submit a report to the referring hospital with a copy to the DHS,  GNCTD  indicating  therein  the  complete details  of  treatment  provided  and  the expenditure incurred thereon.

xi. The criteria of providing free treatment would be such       persons who have no income or have income below Rs.4,000/- per month for the time being which can be revised from time to time.

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

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

xiv. As per directions of  the court,  all  the hospitals stated in the judgment and/or all other hospitals identically situated shall strictly comply with the term of free patient treatment to  indigent/poor persons.

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

xvi. The above revised conditions i.e. 25% free OPD patient's and 10% free IPD beds and treatment

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on these beds shall be  prospective from the date of pronouncement of judgment.

xvii. Such hospitals which have not complied with the conditions at all and persist with the default, for them the conditions shall operate from the date their hospitals have become functional.

xviii. An Inspection Committee constituted by the High Court  would  also  inspect  any  of  the  private hospitals.  The             Inspection Committee shall,  have  to  be  entertained  and  would  be facilitated to carry out physical inspection of the hospital  where  the  free  treatment  has  been provided and would also be shown the records of having  provided  free  treatment.   The  said committee has been given the liberty to revive the petition or for issuance of any directions from the  court  and  wherever  necessary  for  action against                   violators/defaulters under the provisions  of  Contempt  of  Court  Act  read  with Article 215 of the Constitution of India.

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

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

5.  The  Hon'ble  Supreme  Court  has  affirmed  the aforesaid directions passed by the Hon'ble High Court of Delhi.   The  Government  of  India  has  taken  a  policy decision on the basis of  the judgment passed by the Hon'ble Supreme Court that all the six hospitals which

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have been provided land by Land & Development Office must  strictly  follow the  policy  of  providing  treatment free of cost to 25% OPD and 10% IPD patients.   The Government of India further incorporates the aforesaid conditions mentioned in the para 3 (i) to (xviii) above as a part of the terms and conditions of lease/allotment.

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

(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

thoroughly and we find that condition of free treatment had been the

primary objective, which would be applicable to hospitals in question

and to all other similarly situated hospitals, whether they were party

to the  aforesaid  decision or  not.  The  decision  rendered in  Social

Jurists  (supra) would be applicable to similarly situated institutions

having been rendered in the public interest institution and affirmed

by this Court by a reasoned order.

104. It is not the case of unilateral imposition of the condition of free

treatment on the hospitals.  The  inquiry was conducted,  hospitals

were heard and evidence was recorded by Justice Qureshi Committee

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and thereafter recommendation made in the report had been

accepted.  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 lease

deeds, a High Level 10­Member Committee for hospitals in Delhi was

constituted, headed by Mr. Justice A.S. Qureshi regarding the

working of the hospitals and nursing homes in Delhi, to review the

existing free treatment facilities extended by the charitable and other

hospitals  who had been allotted land on concessional terms/rates

pre­determined by  the Government,  and to  suggest  suitable  policy

guidelines for free treatment facilities for needy and 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 partially free; to suggest a

proper referral system for the optimum utilization of free treatment by

deserving and needy patients; and to suggest a suitable enforcement

and monitoring mechanism for the above, including a legal

framework. The Committee held various meetings, conducted

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enquiries, various hospitals were heard including Moolchand Kharaiti

Ram Hospital. The Government observed that there were resistance

and persistent refusal of the management of Moolchand Kharaiti Ram

Hospital to send a reply to the questionnaire and to submit the

documents  which  they  were required to  submit  at the  end of the

enquiry. The first visit made to Moolchand Kharaiti Ram Hospital was

on 16.1.2001 and the second on 21.3.2001. Various other hospitals

were also visited. The Committee observed that there was no legal,

social or moral justification for allowing such money­making

commercial concerns. The land was allotted for a charitable purpose

and to do charitable service which has now been totally replaced by

exploitative commercial hospitals.

106. With respect to Moolchand Kharaiti Ram Hospital, Justice

Qureshi Committee has discussed the matter in extensive details. It

has been observed that initially the Trust was truly charitable. It was

granted 9 acres of prime land situated on the Ring Road in Lajpat

Nagar in South Delhi. Initially the hospital continued to serve as a

free Ayurvedic hospital for patients in OPD and IPD sections. It also

carried on the research for Ayurvedic medicines. Later on the trustees

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decided to introduce Allopathic treatment also. The Allopathic Section

has been upgraded  with air­conditioned deluxe and super­deluxe

rooms which are called Wards. Presently the Allopathic section covers

about 90% of the  hospital activities and the  Ayurvedic section is

reduced to about 10%. There is only nominal Ayurvedic treatment of

patients in OPD and IPD,   which had originally 4 wards. Now it is

reduced to only one ward in which there are very few patients. There

were only 4 or 5 Ayurvedic patients in the ward on 21.3.2001. The

manufacturing of Ayurvedic medicines is also considerably reduced.

After noting in detail the statements of various witnesses working in

the hospital, and after analysing them, the Committee has found that

the Moolchand Kharaiti Ram Hospital has acted not only contrary to

the wishes of its founder but also violated the terms and conditions

regarding free treatment to the poor, openly both in letter and spirit.

The management of hospital does not consider it to be a charitable

hospital at all. The land would not have been allotted to Trust if it

was not charitable. Be that as it may, nonetheless the land has been

allotted for charitable purpose to the hospital. Their stand was that

the word ‘poor’ was not defined in the lease deed or anywhere else,

was adversely commented upon. Some adverse comments were also

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made with respect to the interpolation in the  Will. We are not

considering the aforesaid question of interpolation in the instant

matter as nothing turns on it.  The Committee observed that if  the

hospital  was  not  saved  immediately it  may be too late  because it

appears to be in the process of being sold out. The facts are writ large

along with the statements of witnesses recorded in the course of the

inquiry. In addition, the High Court  of  Delhi  during the course of

hearing of  Social  Jurists  (supra)  has also constituted a  Committee

headed by Shri  N.N. Khanna and also considered the same and

thereafter the decision had been rendered in Social Jurists  case

(supra).

107. Reliance has been placed on behalf of Moolchand Kharaiti Ram

Trust  to the decision rendered in  Asit  Kumar Kar v.  State of  West

Bengal & Ors.,  (2009) 2 SCC 703, wherein it was observed that no

adverse orders to be passed against a party without hearing him.  On

this account, it was contended that the Court could not have passed

the adverse order against the hospitals, who were not heard in the

matter of  Social Jurists  (supra).   It was also contended that a

contempt petition was filed by Union of India, which was dismissed

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on the ground that the hospitals in question were not impleaded as a

party to the writ petition, that does not help the hospitals in question.

We have examined the matter on merits in the present case afresh

unfettered by previous decision and have found Government's order

dated 2.2.2012, to be absolutely proper.

108. Reliance has also been placed on Delhi Development Authority &

Anr. v. Joint Action Committee Allottee of SFS Flats & Ors.,  (2008) 2

SCC 672, wherein  it  was held that novation of contract cannot be

done unilaterally, and the new terms must be brought to the

knowledge of the offeree and his acceptance thereto must be

obtained.   It  was  further observed that  when a contract has been

worked  out,  a fresh liability cannot  be thrust  upon a  contracting

party and it was beyond the scope of the original terms contained in

the offer letter and the allotment letter,  in which the imposition of

extra charges was not contemplated.  In factual matrix being different

decision has no application to the instant case as it was stipulated

right from the beginning in the policy/rules that land to such

institution has been given for charitable purposes of hospitality,

research etc. at concessional rates and/or with non­profit motive.  It

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is not the case of new obligation being fastened at the time of renewal

of the contract.

109. However, we make it clear that the hospitals in question and

other similarly situated hospitals, shall scrupulously observe the

conditions framed 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.   We are constrained to pass this order as there

had been resistance to wholesome policy violation of the afore­

conditions contained in order dated 2.2.2012.  Such violation cannot

be       permitted to prevail.  We hereby direct the Government of NCT

of Delhi to file a periodical report to this Court within a period of one

year from today  with respect to compliance of conditions by the

respondents­hospitals and other similar hospitals in Delhi, 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 order

passed by the High Court are not sustainable and the same is liable

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to be set aside and is hereby quashed.   The appeals are accordingly

allowed.  Parties to bear their own costs.

…………………………..J.    (Arun Mishra)

……..…………………..J.     (Uday Umesh Lalit)

July 9, 2018    New Delhi.