Patna High Court
Case Details
IN THE HIGH COURT OF JUDICATURE AT PATNA Civil Writ Jurisdiction Case No.7334 of 2013 ====================================================== 1. M/S AGS Medical System, A Partnership Firm, Having Its Head Office At A-1, 1st Floor, Deva Residency, Nageshwar Colony, Boring Canal Road, Patna-800001 through one of its Partner, Namely, Dhiraj Kumar, S/O Shri Shrawan Kumar Kedia R/O A-1, 1st Floor, Deva Residency, Nageshwar Colony, Boring Canal Road, P.S.- Budha Colony, Patna-800001 .... .... Petitioner/s Versus 1. The State Of Bihar through the Principle Secretary Department Of Health and Family Welfare, Government Of Bihar, Vikash Bhawan, Bailey Road, Patna 2. The Secretary, Health Cum Executive Director State Health Society, Bihar, Having Its Office At Parivar Kalyan Bhavan, Sheikhpura, P.S. Shastri Nagar, District- Patna 3. The State Health Society, Parivar Kalyan Bhavan Sheikhpura, P.S.- Shastri Nagar, District-Patna 4. The Regional Deputy Director, Health Services, Patna Division, Patna 5. The Regional Deputy Director, Health Services, Magadh Division, Gaya 6. The Regional Deputy Director, Health Services, Koshi Division, Purnia 7. The Regional Deputy Director, Health Services, Saran Division, Chapra .... .... Respondent/s ====================================================== with Civil Writ Jurisdiction Case No.6984 of 2013 ====================================================== 1. M/S Dirghayu Mahavir Diagnostic Through Its Managing Director Dr. Abhishek Tiwary S/O Dr. B. Tiwary H.O.-Kalambagh Road, P.S.- Sadar, District- Muzaffarpur .... .... Petitioner/s Versus 1. The State Of Bihar through the Principal Secretary, Health, Bihar, Patna 2. The State Health Society through Its Executive Director, Sheikhpura, Patna 3. The Secretary, Health Cum Executive Director, State Health Society, Bihar, Pariwar Kalyan Bhawan, Sheikhpura, Patna 4. The Regional Deputy Director, Health Services, Tirhut Division, Muzaffarpur 5. The Civil Surgeon –Cum- Chief Medical Officer, Muzaffarpur .... .... Respondent/s ====================================================== with Civil Writ Jurisdiction Case No.7059 of 2013 ====================================================== 1. M/S Dirghayu Mahavir Diagnostic Through Its Managing Director Dr. Abhishek Tiwary S/O Dr. B. Tiwary, H.O. Kalambagh Road, P.S. Sadar District - Muzaffarpur Patna High Court CWJC No.7334 of 2013 (6) dt.23-07-2013 Page 2 /18 .... .... Petitioner/s Versus 1. The State Of Bihar Through The Principal Secretary, Health, Bihar, Patna 2. The State Health Society Through Its Executive Director, Sheikhpura, Patna 3. The Secretary, Health Cum Executive Director, State Health Society, Bihar, Pariwar Kalyan Bhawan, Sheikhpura, Patna 4. The Regional Deputy Director, Health Services, Tirhut Division, Muzaffarpur 5. The Civil Surgeon- Cum- Chief Medical Officer, East Champaran, Motihari .... .... Respondent/s ====================================================== with Civil Writ Jurisdiction Case No.8168 of 2013 ====================================================== 1. Nishant Jaiswal S/O Surendra Choudhary Proprietor Of Prashant Diagnostic Centre (Ultra Modern Diagnostic Centre), Baaudeopur, P.S. And District- Munger Versus .... .... Petitioner/s 1. The State Of Bihar 2. The Secretary, Health-Cum-Executive Director State Health Society, Bihar Pariwar Kalyan Bhawan, Sheikhpura, Patna-800014 3. The Regional Deputy Director Health Services, Munger Division, Munger 4. The Regional Programme Manager Regional Programme Management Unit, Munger 5. The Special Secretary Health Department, Govt. Of Bihar, State Health Society, Patna 6. The Civil Surgeon-Cum-Chief Medical Officer, Munger 7. The Incharge Medical Officer, Sadar Hospital, Munger .... .... Respondent/s ====================================================== with Civil Writ Jurisdiction Case No.8169 of 2013 ====================================================== 1. Jawahar Lal S/O Late Jageshwar Prasad Proprietor Of Central Diagnostic Centre, R/O U.N. Bagchi Road, East Of Mokshada Girls High School, Mashak Chak, Bhagalpur Versus .... .... Petitioner/s 1. The State Of Bihar 2. The Secretary, Health-Cum-Executive Director State Health Society, Bihar, Pariwar Kalyan Bhawan, Sheikhpura, Patna-800014 3. The Regional Deputy Director Health Services, Bhagalpur Division, Bhagalpur Patna High Court CWJC No.7334 of 2013 (6) dt.23-07-2013 Page 3 /18 4. The Regional Programmed Manager Regional Programme Management Unit, Bhagalpur 5. The Special Secretary, Health Department, Govt. Of Bihar State Health Society, Patna 6. The Civil Surgeon-Cum-Chief Medical Officer, Bhagalpur 7. The In Charge Medical Officer, Sadar Hospital, Bhagalpur .... .... Respondent/s ====================================================== CORAM: HONOURABLE MR. JUSTICE KISHORE KUMAR MANDAL ORAL ORDER 6 23-07-2013 These writ petitions raise common issue inasmuch as the impugned order is the same. They have, thus, been heard together with the consent of the parties and are being disposed of by the present order. Petitioners are either the partnership firm and/or the individuals engaged in the business of supply, commissioning and running Medical Diagnostic services. Relevant facts are drawn from CWJC No. 7334 of 2013 ( M/S AGS Medical System Vs. State of Bihar & Ors.) to appreciate the rival submissions of the parties. The said writ petition has been filed for quashing the order dated 25.3.13 (Annexure -12) issued by the Respondent -Secretary Health –cum- Executive Director, State Health Society ( for short „Society‟) whereby the service(s) being rendered by the petitioners at different Regional Diagnostic Centres ( for short „RDCs‟) was discontinued until alternate/ permanent arrangement to be made by
Legal Reasoning
the Society. The petitioner has also challenged the Patna High Court CWJC No.7334 of 2013 (6) dt.23-07-2013 Page 4 /18 consequential order issued by the Regional Deputy Director Health Services whereby the petitioner was informed about the discontinuance of the said service(s) rendered by him at the RDCs and was directed to vacate the Government premises/centre(s) earlier allotted to the petitioner for providing those services. A prayer has also been made for issuance of writ of mandamus commanding the respondents to continue the existing arrangement at RDCs till permanent/alternate arrangement is made by the respondent -Society. The Government under Health and Family Welfare Scheme has been providing different services at the Government Hospitals/ Primary Health Centres to the needy patients either free of cost or at subsidized /minimal cost. Government of India initiated a National Health Care Progamme called National Rural Health Mission ( NRHM). In the year 2007 it was resolved by the respondent-Society to provide general and ultra modern Diagnostic facilities to the needy patients under Public Private Partnership (PPP) mode. This was with a view to ensure that the selected parties/persons would make investment and install required modern equipments for providing those services at the Regional Diagnostic Centres as also Government Medical College and Hospitals of the State. A tender was floated in order Patna High Court CWJC No.7334 of 2013 (6) dt.23-07-2013 Page 5 /18 to select the firm/ party for providing the said service at the RDCs. One M/S Softline Media Limited, New Delhi (for short „SML‟) was selected as its partner under PPP mode for setting up, operate and maintain modern diagnostic facilities at RDCs. The said service was assigned to SML under an agreement. A dispute arose between the respondent -Society and SML with regard to setting up those facilities in terms of the agreement. The agreement made with SML was cancelled on 15.2.2011 (Annexure-1). The respondent Society vide a communication contained in letter dated 16.3.2011 (Annexure-2) issued instruction to all the concerned authorities including the Superintendents of the Hospitals and the Civil Surgeon-cum- Member Secretary of the District Health Society to ensure that ad hoc arrangement in the meanwhile is made on the same terms and conditions with a view to ensure that the patients do not suffer on account of the dispute between the respondent Society and the SML leading to discontinuance of the service by SML. The petitioner, who was providing such diagnostic services from before, submitted an application on 18.3.11 showing its interest in running RDCs and providing the services earlier rendered by SML. The respondent Civil Surgeon-cum- Secretary of the District Society responded to the said communication and informed that Patna High Court CWJC No.7334 of 2013 (6) dt.23-07-2013 Page 6 /18 steps have been taken for selecting such agencies/firms to provide these service(s) on ad hoc / interim basis. A notice was published in the newspaper whereby agency/firm agreeable to provide specific services of medical tests/ investigations on the terms settled by the respondent - Society were invited for walk- in-interview. The petitioner appeared at the said interview and produced its credential. Having found the petitioner suitable the respondent Regional Deputy Director Health Services by communication dated 25.4.2011 (Annexure-4) permitted the petitioner to run the said centre at Purnia on ad hoc basis on the same terms and conditions on which such services were allowed to render by SML. SML in the meantime filed a writ petition challenging the termination/cancellation of agreement/contract. The writ petition was disposed of relegating the SML to take recourse to arbitration for resolution of the dispute. The SML raised the dispute in Arbitration case no. 1 of 2011. The arbitrator vide award dated 24.5.2011 granted three months time to the SML to provide all the ultra modern facilities at RDCs and thereby make good the deficiencies. The respondent Executive Director of the Society by an order dated 31.5.2011 (Annexure-5) permitted three months time to SML to perform and produce results as per the terms of the agreement. The temporary Patna High Court CWJC No.7334 of 2013 (6) dt.23-07-2013 Page 7 /18 arrangement made under order dated 25.4.2011 (Annexure-4) for continuance of those services was withdrawn. The petitioner and other selected firm/agency/person were directed to immediately hand over the space/centres allotted to them for providing those services in the hospitals and RDCs. SML again took over those RDCs but failed to produce satisfactory result within three months time. The respondent-Society, again came out with an order dated 24.10.2011 (Annexure-6) whereby the agreement was cancelled as the SML had failed to perform and thereby comply with the terms and conditions of agreement. The Regional Deputy Directors were again instructed by order contained in memo no. 31614 dated 21.11.11 (Annexure-7) to take needful steps for making alternative arrangement at those RDCs to ensure that the specified services are rendered on ad hoc basis until further arrangement is made. This was apparently with a view to safeguard, as far as possible, the needs of the patients. The State Government, in the meanwhile, also resolved and reiterated the need to provide free radiological and pathological test at the RDCs and the Government Hospitals and accordingly the respondent Society directed all the Principals of the Medical Colleges and the Regional Deputy Directors to ensure implementation of the said scheme. The petitioner who was earlier selected for providing Patna High Court CWJC No.7334 of 2013 (6) dt.23-07-2013 Page 8 /18 those services on the terms and conditions they were outsourced to SML could not render those services at the assigned RDC owing to order passed by this Court and subsequently by the learned arbitrator. In other words, the selection of the petitioner on ad hoc basis was not given effect to. In the wake of final termination of the agreement between the respondent Society and SML the petitioner again approached the respondents for outsourcing the said service on the same terms and conditions to the petitioner on alternate/ad hoc basis. The petitioner was called in for negotiation by the respondent Regional Deputy Director. By a communication dated 29.11.2011 (Annexure-10 series) the respondent-RDD permitted the petitioner to provide those facilities and run the RDC at Purnia on ad hoc/temporary basis until permanent arrangement was made. Similar letters were also issued by the other RDDs to make the respective RDCs functional by providing ultra modern facilities at those Centres on ad hoc basis. The petitioner arranged the infrastructure to provide those facilities which were discontinued on account of cancellation of agreement with SML. The respondents had earlier made alternate arrangement for providing some of those facilities by other agency. The respondent Executive Director of the Society by a communication dated 6.11.12 (Annexure-11) impressed upon the Patna High Court CWJC No.7334 of 2013 (6) dt.23-07-2013 Page 9 /18 functionaries at the District Level to ensure that one such centre should function at one place. The petitioner continued to provide those services as per the agreement earlier reached by and between the respondent Society and SML. The respondent-Society in the meanwhile was required to take fresh steps for providing those services at the RDCs by selecting an agency on the agreed PPP mode. All of a sudden the respondent- Society directed all Regional Deputy Directors to close down the operation of the petitioner in Regional Diagnostic Centre. It was further directed to restore the earlier agency which were removed in the light of order contained in letter dated 6.11.12 (Annexure-11) as an alternate arrangement. The respondent -Chief Medical Officer, by another order dated 1.4.2013, issued direction for removal of the machineries/equipments installed by the petitioner at the RDC
Decision
assigned to the petitioner. Aggrieved thereby the writ petition has been filed. I have heard Mr. Kezriwal, learned counsel for the petitioners as well as the counsels appearing for the petitioners in cognate matters and Mr. K.K. Sinha, counsel for the respondent- Society. Learned counsel for the petitioners submitted that on bare perusal of the orders contained in Annexure-10 series, it Patna High Court CWJC No.7334 of 2013 (6) dt.23-07-2013 Page 10 /18 would appear that petitioner‟s selection/appointment for providing those modern diagnostic facilities at the RDCs was made provisionally/ad hoc basis but the same was to continue until permanent arrangement was made in the light of the policy/decision of the Government to outsource those services on PPP mode. The impugned order dated 25.3.13 (Annexure-12) indicates that no permanent arrangement has till date been made by the respondents and the petitioners have been abruptly prevented from rendering those services at the RDCs. It is further submitted that before passing the impugned order no inquiry was ever conducted of the centres operated by the petitioner inasmuch as no such enquiry /inspection report has been brought on record by the respondent- Society. Had the respondents made an enquiry with regard to the services being rendered by the petitioners at the assigned RDCs and any shortcomings was noticed and brought to the notice of the petitioner, the same could have been rectified/improved. Without holding such enquiry, the impugned order has been passed. He would further argue that even if, the allegation of certain specialized ultra modern services being not provide at the assigned RDCs by the petitioner is accepted to be true, in all fairness, the respondents were obliged to give an opportunity to rectify those deficiencies/shortcomings as was Patna High Court CWJC No.7334 of 2013 (6) dt.23-07-2013 Page 11 /18 given to SML. The impugned order does not set out reason for the said action/decision of the respondents. Arguing further, it has been submitted that restoration of the agency earlier directed to be discontinued vide letter dated 6.11.12 without any process of selection is an example of favouritism on the part of the respondents. The respondents acting fairly ought to have allowed the petitioner to operate the assigned RDCs and continue to provide service(s) thereat since the petitioner had incurred huge expenses in setting up the equipment/machinery at the RDCs. It has, thus, been submitted that the impugned action is in gross violation of rules of equity, fairness and reasonableness. Mr. Sinha combating the arguments of the petitioner, submitted that the respondents had resolved as a policy decision to outsource the diverse specialized diagnostic facilities on PPP mode. In the light of the said decision an agreement between the Society and SML was signed for providing those ultra modern facilities at nine RDCs for a period of ten years. The selected agency (SML) was to provide amongst others ultra modern diagnostic tests of Pathological, Biochemical investigations i.e. X- ray, digital X- ray, ECG, CT Scan, MRI and Mamography etc. It was found that SML was operating in gross breach of contract inasmuch as all the services required to be provided at the RDCs Patna High Court CWJC No.7334 of 2013 (6) dt.23-07-2013 Page 12 /18 was/were not being provided by the selected agency. Resultantly, the contract with SML was terminated on 15.2.2011. A writ petition being CWJC No. 4838 of 2011 was filed by SML against termination of contract . This Court, by a proceeding dated 31.3.2011, declined to interfere in the matter and directed the petitioner to take recourse to arbitration. Learned arbitrator also declined to accept the explanation of SML regarding breach of contract. Three months time, however, was granted to improve the services as per the terms of the contract. SML failed to improve and deliver. Resultantly, the contract with SML was terminated. The respondent-Society by a communication dated 21.11.2011 (Annexure-7) directed all the Regional Deputy Directors to ensure that whatever services being provided by SML continue to be provided at the RDCs by making alternate/ad hoc arrangement. This was with the sole purpose to ensure that the dispute arisen between the Society and the selected agency (SML) does not affect the real beneficiaries of the health care scheme/programme of the Government . In other words, the patients continue to receive the facilities available at the RDCs. The selection of the petitioners was purely on ad hoc /interim basis. However, such assignment was given to the petitioner for providing the services strictly in terms of the agreement earlier Patna High Court CWJC No.7334 of 2013 (6) dt.23-07-2013 Page 13 /18 reached by and between the respondent -Society and the SML. It was later found that the petitioner was not providing all the services/tests which were to be provided by the original assignee i.e. SML and the patients at large were suffering on that count. The petitioner had not set up the modern equipments for providing ultra modern diagnostic facilities such as CT Scan and MRI etc. The facilities being provided by the petitioner were already being provided in the Govt. Hospitals free of cost to the patients and as such continuance of the petitioner on ad hoc basis to provide those services at RDCs for which the respondent had to bear additional cost was not found desirable. The impugned action, therefore, cannot be flawed. Mr. Sinha also contented that the agreement between the petitioners and the respondents on the terms and conditions on which the RDC was earlier assigned to SML is not in dispute. If there is any breach of terms and conditions of the contract, the remedy available to the petitioner is in seeking arbitration in the matter. The purpose with which the policy decision was taken by the government was being frustrated and the continuance of ad hoc arrangement was not found desirable in the public interest. There is no dispute that the petitioner was opted by the respondent-Society to provide the facilities of Pathological Patna High Court CWJC No.7334 of 2013 (6) dt.23-07-2013 Page 14 /18 tests/ ultra modern diagnostic facilities by way of stop gap arrangement until a permanent arrangement is made. There is also no dispute that earlier SML was assigned to provide those ultra modern facilities at the RDCs. It was later found that the services being provided by SML was wholly deficient and the purpose with which the services were outsourced was not being accomplished. This was construed as breach of the terms of the contract. Resultantly, the contract/agreement with SML was terminated. In the light of instruction issued by the respondent- Society the Officers at the District/Regional level took steps for selecting agency to provide those services at the RDCs on stop gap and/or interim basis. However, even after such selection of the petitioner the said service could not be assigned to the petitioner on account of litigation pending before this Court and subsequently before the Arbitrator at the instance of SML. The Arbitrator, after adjudicating on the issues, found the services rendered by the SML deficient but granted a grace period of three months to SML to improve its infrastructure at the RDCs. Even the said grace period utilized by SML was not found satisfactory and finally the agreement with SML was terminated on 24.10.2011. In the wake of such termination, the respondent- Society had decided to engage the petitioner on purely ad hoc Patna High Court CWJC No.7334 of 2013 (6) dt.23-07-2013 Page 15 /18 basis. The respondents have asserted that the petitioner grossly defaulted in rendering the specialized services at the RDC(s). The petitioner has taken a stand that no such enquiry as such was made in which the petitioner was associated. There is, however, no dispute that the decision to maintain specialized diagnostic centres at the RDCs under the NRHM and thereafter outsourcing those services to the selected agency on PPP mode are the policy decisions of the Government. It is also not a dispute that these services at RDC(s) were outsourced to the petitioner on purely ad hoc basis on the same terms and conditions on which they were assigned to SML. It is seen that the State Government under different health care programme/scheme is required to maintain such centres in the Government hospitals also. The petitioner was allowed to operate by way of ad hoc arrangement at the assigned RDC for a short period of time. In a matter like this, where the purpose for which the RDCs was/were assigned to the petitioner was not being fulfilled to the satisfaction of the respondent Society, the termination of the ad hoc arrangement cannot be faulted. This Court would have considered the case if any of the constitutional or statutory right of the petitioner was breached. This Court does not find it necessary to delve into the claim and counter claim of the parties with regard to the Patna High Court CWJC No.7334 of 2013 (6) dt.23-07-2013 Page 16 /18 adequacy/sufficiency of the services said to have been provided by the petitioner. The respondents have relied on an order passed by this Court in CWJC No. 22673 of 2012 ( Ran Vijay Kumar vs. The State of Bihar & Ors.) wherein service to provide ambulance outsourced to the petitioner was found deficient and the contract was terminated and the concerned authority was directed to stop taking the service. Considering the entire conspectus of the matter this Court held as under:- the submissions of “I have considered learned counsels for the parties. In a contractual matter, this Court acting under its jurisdiction under Article 226 of the Constitution of India, would not normally go into any issue of breach of any provision of the contract for which the statutory remedies are available to the concerned parties in the regular courts of law. However, where there has been exercise of power in relation to a contract by any authority which is State under Article 12 of the Constitution, as in the present matter, all that this Court would look into is whether the action of the respondents is fair and reasonable or wholly explained in terms of the generally accepted principles of law under the Public Law and is not arbitrary and discriminatory and therefore violative of Article 14 of the Constitution. In view of the stand taken in the counter affidavit as also the submissions of learned counsel for the respondents, it is evident that the action of the respondents in the present matter was actuated by a policy decision taken at the level of the Central Government Patna High Court CWJC No.7334 of 2013 (6) dt.23-07-2013 Page 17 /18 to the the any issue level. Thus to provide funds for the purchase and running of upgraded Ambulances under 102 Scheme. It is not simply a case where the agreement entered into with private parties to provide Ambulance Service has been discontinued by any decision taken by any functionary at a the local question of applying terms of the such respect contract with discontinuance cannot arise so far as the consideration of the writ in the said is concerned. For jurisdiction reasons the termination of the agreements before the completion of the period under the contract or on a ground which is not related to unsatisfactory performance, can be of no avail to the petitioners in the present matter. The decision having been based on a policy decision of the Central Government for the purchase of prescribed ambulances having life support system as also the operational cost of said ambulances, it cannot be said that the action the of agreements with the private parties who were running ambulances of a lower grade and quality, is arbitrary or unreasonable.” respondents terminating running the the in In a matter like this where the specialized services rendered by the assigned agency on stop gap basis are not found up to the mark and /or in terms of the conditions of contract this Court would refrain from exercising its jurisdiction under Article 226 of the Constitution of India. On a conspectus of the matter it appears to this Court that the decision taken by the respondent State tread into the realm of policy decision of the State. A play Patna High Court CWJC No.7334 of 2013 (6) dt.23-07-2013 Page 18 /18 in the joint, therefore, merits to be conceded. Further more, there is no dispute that such assignment of the job/services was purely ad hoc. The petitioner knew that the same was liable to be terminated/discontinued at any time. The matter can be viewed from a different angle also. It is admitted in course of argument by the parties that the specialized services were allowed to be rendered on ad hoc basis to the petitioner on the terms and conditions on which they were assigned to SML. The agreement between the parties is, therefore, not in dispute. If there is any dispute leading to termination of contract then the parties can raise a dispute before the Arbitrator. This Court in the case of SML had taken the similar view and declined to interfere in the matter. In view of the discussions made hereinabove, this Court does not find merit in this application. It is, accordingly, dismissed. No order as to cost(s). (Kishore Kumar Mandal, J) Shyam/-