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Judgment
K. Chandru, J.—The Petitioners in these batch of writ petitions have originally passed M.B.B.S. Examinations. Thereafter, they wrote the
All India Entrance Examination in the year 2008 for doing Post Graduation in Medicine in different disciplines. The Petitioners on being selected for
the P.G. Courses, have undergone the said course in different colleges under non service category. The prospectus for the year 2008 2009 for
admission to Post Graduate Diploma / Degree / M.D.S. / Five year M.Ch.(Neuro-Surgery) Courses was issued by the Selection committee of the
Directorate of Medical Education, Chennai. It had stipulated several conditions. Paragraph 64 of the prospectus had stipulated payment of stipend
and conditions relating to security amount.
Since the present writ petitions revolve around the conditions stipulated in the prospectus, it is necessary to extract the said condition, which is
as follows:
STIPEND and SECURITY AMOUNT:
64 (a)All Non Service candidates selected will be paid stipend and service candidates salary as per the Government Orders in force.
(b)The Government of Tamil Nadu is offering Medical Education including Post-Graduate and Higher Speciality Training through its 14 Medical
Colleges / Hospitals and Specialised institutes. The Government spends a large amount of money to impart Medical Education including Post-
Graduate / Higher Speciality Education. It levies nominal fees and at the same time provides a stipend to Private candidates and salary to Service
candidates. It is natural that the Government desires to ensure that seats are not wasted. Further, the Government looks forward to these Doctors
who have undergone Post-Graduate training to serve the poor and the needy of this country at large and this State in particular. The public have
the right to expect the Specialists to utilize the skills they acquired during their training for the benefit of the sick, the poor and the needy. To ensure
that the services of trained Post Graduate Doctors are made available, an Under-taking is obtained from them at the time of their admission. It is
sincerely, believed that this will discourage an attitude of not paying attention to those poor people at whose expense they have been educated.
(c)All Service Candidates of Tamil Nadu shall execute a bond for a sum of Rs. 5,00,000/-(Rupees five lakhs only) for Diploma courses and Rs.
10,00,000/-(Rupees ten lakhs only) for Degree courses and MDS / 5 year M.Ch. Neuro-Surgery courses as security amount with the undertaking
that they will serve the Government of Tamil Nadu till Superannuation. Two permanent Government servants in the same or higher rank than the
candidate shall execute sureties. The prescribed form will be available in the colleges at the time of admission. The bond will become infructuous if
the service candidates serve the Government of Tamil Nadu after the completion of the Course until superannuation.
(d)Non-Service candidates shall execute a bond for a sum of Rs. 3,00,000/-(Rupees Three lakhs only) on admission to Post Graduate Diploma
courses and 5,00,000/-(Rupees Five Lakhs only) for the Post Graduate Degree courses /MDS / M.Ch. (Neuro-Surgery) 5 years course of the
2008-2009 session undertaking that they shall serve the Government of Tamil Nadu for a period of not less than 2 years, if required. During the
above period, they will be paid a salary on par with the fresh recruits of the Government of Tamil Nadu Medical Services and the Government of
Tamilnadu will requisition their services, if required, within a period of 2 years from the date of completion of their Postgraduate
Degree/Diploma/MDS/M.Ch.,(Neuro Surgery) 5 years Course. Two permanent Government servants shall be sureties. The prescribed form of
bond will be available in the Colleges at the time of admission. The bond will become infructuous if he/she serves the State Government of Tamil
Nadu if required for minimum period of 2 years.
(e)For any reason, the candidate is unable to serve the Government for the above said period, the bond amount has to be credited to the relevant
Head of Account.
(f)The Bonds are governed by Clause (c) exemption under article of 57 schedule-I to the Indian Stamp Act / Central Act of 1879. Hence the
bond executed need not be stamped.
The Petitioners were selected pursuant to their applications made. They did not challenge the conditions found in the prospectus. After they
being successful in the selection, they were admitted to different colleges for completing their P.G. Courses. They had also signed a bond as
provided under paragraph 64(d) set out above. After completing the courses as per the condition stipulated in the prospectus and agreed to by the
Petitioners in executing a bond, the second Respondent Director of Public Health and Preventive Medicine, Chennai sent a communication to the
Director of Medical Education, dated 27.5.2011 asking to inform the candidates to appear for counselling at Chennai for the purpose of issuing
appointment orders under Rule 10(a)(i) of the Tamil Nadu General Service for rendering compulsory service under the Tamil Nadu Medical
service. The list of 497 candidates who had agreed to render service as per prospectus and the bonds executed were also furnished to the
Director of Medical Education and that the counselling was fixed on 6.6.2011. The counseling was for the purpose of allotting them to appropriate
hospitals under the control of the second Respondent. The Petitioners after completion of their P.G. Courses had also applied for P.G. Super
Speciality courses for the year 2011 and they had also written the examination. They were admitted to the examination under the condition that
they should produce the original certificate pertaining to graduation and Post Graduation which is presently held by the college in which they are
studying. If certificates are not produced, they will not be able to undergo the Super Speciality course. They have right to proceed with the Super
Speciality course which is a guaranteed fundamental right. It is in that premises, the writ petitions came to be filed.
It was contended by the Petitioners that the condition imposed for rendering compulsory service in the Tamil Nadu Medical service is in
violation of provisions of the Fundamental Right enshrined under Articles 14, 19(1)(g) and 21 of the Constitution of India. The second contention
raised was that at the time of admission, the Respondents cannot impose such onerous condition and pursuant to the condition, they cannot be
asked to render compulsory service. The condition imposing two years compulsory service also deny the right to carry on further education by
pursuing Super Speciality course which is in violation of ratio laid down by the Supreme Court in Dr. Saurabh Choudhary and Others Vs. Union of
India (UOI) and Others, . In paragraph 28, the Supreme Court had observed as follows:
Right of a meritorious student to get admission in a postgraduate course is a fundamental and human right, which is required to be protected.
Such a valuable right cannot be permitted to be whittled down at the instance of less meritorious students.
The condition imposed in the prospectus followed by a bond that they should serve two years immediately after completion of the P.G. Course
even before pursuing the Super Speciality course is waste of scores of super speciality courses. The condition imposed is an extraneous condition.
It blocks the meritorious candidates from pursuing their education. Further, it was stated that the compulsory services should be insisted only when
relevant vacancy is there with reference to the super speciality course. If for the post graduation degree obtained by candidates, if there are No.
vacancies available, they should be allowed to continue their further studies without insisting the bond condition.
The premises under which compulsory service was enlisted was that there was expenditure of large amount of money to impart medical
education has been done by the Government is a falsely woven narrative. The stipend given to students is only quid pro quo to the services
rendered by them. The imposition of compulsory service on the premises that the P.G. education in medicine is subsidized in Government colleges
is a misnomer. The amount paid to P.G. Students for three years course as stipend, i.e. Rs. 15,000/-per month for the first year, Rs. 16,000/-per
month for the second year and Rs. 17,000/-per month for the third year is substantially low comparing to the stipends paid all over the Country in
similar institutions. The Petitioners are also willing to serve compulsory service after completing their speciality course. They must be allowed to
appear for the higher education examination without insisting the bond condition. The imposition of such bond condition at the time of joining
service was irrational. Seeking to withheld the educational certificate submitted by them at the time of joining the course is unjustified and
unsustainable in law.
Further asking non service candidates who are undergoing the course for P.G. Degree in the Government colleges will only make all the super
speciality courses occupied by candidates who had completed the course in private colleges, thereby unmeritorious candidates having a march
over the meritorious candidates. It was also stated that since the prospectus for All India Entrance Examination for P.G. Course for 2008 did not
prescribe for compulsory temporary service, the prescription of such condition is invalid.
Taking the last contention first, it must be noted that even in the prospectus for All India Entrance Examination, in paragraph 11(h), it was stated
as follows:
(h)Stipends/fee structure/course duration/bond amount/rendering of service in rural/tribal area/other conditionalities etc. may vary from State to
State and Institute to Institute. Some seats may be approved but not yet recognised by MCI or non-stipendiary. The allotment made through
counselling on personal appearance will be firm and final as per Hon''ble Supreme Court''s guidelines. Therefore, examine these points before
opting a seat at a medical college. The Directorate General of the candidates should well Health Services (DGHS) shall neither be responsible nor
shall entertain any case on above grounds including the law and order problems, if any.
(Emphasis added)
Therefore, it is not as if the Petitioners were not aware of such condition or they did not agree to write the examination only on the basis of the
said condition. The counsel for the Petitioner relied upon an order passed by this Court in a batch of writ petitions in W.P. No. 12885 of 2008 and
batch cases in Dr. S.P.Maharajan and others v. State of Tamil Nadu and Ors. dated 20.11.2008. In that case, in paragraph 10, the court had
observed as follows:
10....The Respondents are directed to return the certificates/documents sought for by the Petitioners individually by the respective Deans of the
various Medical Colleges, within a period of two weeks from the date of receipt of a copy of this order. If the Deans of the respective Medical
Collage come across any violation of the conditions of bond executed by each of the Petitioners, it is open to him to enforce the terms of the bond
in the manner known to law....
The learned Counsel also referred to an another order passed by this Court in a batch of writ petitions starting from W.P. No. 12923 of 2008
in Dr. S.Rajesh and Ors. v. The State of Tamil Nadu and Ors. dated 12.12.2008, wherein this Court gave the following directions in paragraph 30
of the order, which reads as follows:
In fine, all the writ petitions are disposed of on the following terms:
(1)The PG Degree/Diploma Holders, who applied for their Degree/Diploma course though All India Entrance Examination for selection to all India
quota seats and admitted to Tamil Nadu Government Medical Colleges are not bound by the terms and conditions issued by the Respondents
through their prospectus. Even if any candidate executed bond, it will have No. effect since they have not applied for admission under the
impugned prospectus.
(2)The candidates admitted in the state Quota under the Non-Service category are bound by the terms of the bond executed by them pursuant to
the prospectus Clause 68(d) and on completion of their course, they are bound to serve in Government Collages/Hospitals according to the
availability of posts for three years, failing which it is open to the Respondents to recover the sum of Rs. 2/Rs. 3 lakhs as the case may be, as per
the bond conditions.
(3)No PG Degree/Diploma Holder shall be denied of their certificates in original on their completion of their course as the Respondents have No.
jurisdiction to retain their certificates and the Respondents are directed to return all the certificates of the Petitioners within two weeks from the
date of the receipt of copy of this order.
(4)No PG Degree/Diploma Holder, who completed their course or joined in Government Service temporarily as per the bond, shall be denied of
opportunity of applying for super speciality course and if they are selected, they should be permitted to undergo the course subject to the condition
that remaining period of service shall be served in the Government Institutions by the concerned person after the completion of their respective
super speciality course. If not, it is open to the Respondents to recover the bond amount with proportionate interest.
But, this order fails to take note of the condition stipulated in the prospectus for All India Entrance Examination in paragraph 11(h) wherein all
candidates are bound to abide by the conditions imposed by the respective States and students were asked to go through it carefully before opting
for seat in a particular medical college. Therefore, there is No. escape for the Petitioners to comply with the conditions of bond. In the very same
judgment, the court had also held that those who were coming under the State quota were bound by the bond. If that is true, the same condition
would apply even to candidates who came through the All India quota as the prospectus of the All India quota contemplated bond conditions
imposed by respective State Governments. The Petitioners having fully understood the condition and have signed, it will not be open to them to
escape from such a condition. The reason prompted the Government to impose the condition cannot be said to be either unreasonable or arbitrary
having regard to the circumstances set out in paragraph 64 of the prospectus.
The Saurabh Chaudri''s case (cited supra) relied upon by the Petitioners has No. relevance to the facts on hand, since that was a case of
reservation of seats vis-a-vis right of parties under Articles 15(4) and 16(4) and reasonableness of the State policy. It is not as if the bond
condition makes compulsory service and there is No. way out for the Petitioners. The very same bond has quantified liquidated damages that is to
be provided by the candidates in case they do not want to oblige the bond. The assertion that they are willing to come back to the State service
after completion of super speciality course will amount to re writing the conditions of bond. Once the Petitioners are called upon to attend the
counselling for grant of necessary posting and if they do not want to get posting for rendering compulsory service, then they must necessarily pay
the amount specified for breach of bond. In the present case, there is not even a challenge to the insertion of such clause in the prospectus or
unreasonableness of the amount quantified for breach of bond. The Petitioners had executed the bond on their own volition and there was No.
compulsion or contravention of provisions of the Indian Contract Act, 1872.
In cases of breach of contracts, Section 73 provides for compensation of loss or damages caused by breach. Section 73 reads as follows:
Compensation for loss or damage caused by breach of contract.- When a contract has been broken, the party who suffers by such breach is
entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose
in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it.
Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach.
Compensation for failure to discharge obligation resembling those created by contract.-When an obligation resembling those created by contract
has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from
the party in default, as if such person had contracted to discharge it and had broken his contract.
If a party enters into a contract and the damages are quantified, the question of assessing actual damages will not arise as held by the Supreme
Court in Chunilal v. Mehta and Sons Ltd. v. Century Spg. & Mfg. Company Ltd., reported in 1962 Supp (3) SCR 549 = AIR 1962 SC 1312. In
paragraph 11 of the order, the Supreme Court observed as follows:
11....Again the right to claim liquidated damages is enforceable u/s 74 of the Contract Act and where such a right is found to exist No. question of
ascertaining damages really arises. Where the parties have deliberately specified the amount of liquidated damages there can be No. presumption
that they, at the same time, intended to allow the party who has suffered by the breach to give a go-by to the sum specified and claim instead a sum
of money which was not ascertained or ascertainable at the date of the breach....
The Supreme Court further held that if the terms of contract provides for certain rates after entering into contract, it is not open to consumer or
any contracting party to state that the terms are not fair as held by the Supreme Court in S. Narayan Iyer Vs. The Union of India (UOI) and
Another, . In paragraph 6, the Supreme Court held as follows:
There are three principal reasons why the writ petition is incompetent and not maintainable and the appeal should fail. First, when any subscriber
to a telephone enters into a contract with the State, the subscriber has the option to enter into a contract or not. If he does so, he has to pay the
rates which are charged by the State for installation. A subscriber cannot say that the rates are not fair. No. one is compelling one to subscribe.......
The Supreme Court after analysing the English decisions which have bearing on the question of ""inequality of bargaining power"" vide its
judgment in Central Inland Water Transport Corporation Limited and Another Vs. Brojo Nath Ganguly and Another, dealt with the concept under
Indian Law with Constitutional backdrop. It is necessary to extract the following passages found in paragraph 83, 90 and 91, which is as follows:
83....It was in Lloyds Bank Ltd. v. Bundy 232 that Lord Denning first clearly enunciated his theory of ""inequality of bargaining power"". He began
his discussion on this part of the case by stating: (at p. 763)
There are cases in our books in which the courts will set aside a contract, or a transfer of property, when the parties have not met on equal terms,
when the one is so strong in bargaining power and the other so weak that, as a matter of common fairness, it is not right that the strong should be
allowed to push the weak to the wall. Hitherto those exceptional cases have been treated each as a separate category in itself. But I think the time
has come when we should seek to find a principle to unite them. I put on one side contracts or transactions which are voidable for fraud or
misrepresentation or mistake. All those are governed by settled principles. I go only to those where there has been inequality of bargaining power,
such as to merit the intervention of the court.
(emphasis supplied)
He then referred to various categories of cases and ultimately deduced therefrom a general principle in these words: (at p. 765)
Gathering all together, I would suggest that through all these instances there runs a single thread. They rest on ''inequality of bargaining power''. By
virtue of it, the English law gives relief to one who, without independent advice, enters into a contract on terms which are very unfair or transfers
property for a consideration which is grossly inadequate, when his bargaining power is grievously impaired by reason of his own needs or desires,
or by his own ignorance or infirmity, coupled with undue influences or pressures brought to bear on him by or for the benefit of the other. When I
use the word ''undue'' I do not mean to suggest that the principle depends on proof of any wrongdoing. The one who stipulates for an unfair
advantage may be moved solely by his own self-interest, unconscious of the distress he is bringing to the other. I have also avoided any reference
to the will of the one being ''dominated'' or ''overcome'' by the other. One who is in extreme need may knowingly consent to a most improvident
bargain, solely to relieve the straits in which he finds himself. Again, I do not mean to suggest that every transaction is saved by independent advice.
But the absence of it may be fatal. With these explanations, I hope this principle will be found to reconcile the cases.
(emphasis supplied)
..........
It is not as if our civil courts have No. power under the existing law. u/s 31(1) of the Specific Relief Act, 1963 (Act 47 of 1963), any person
against whom an instrument is void or voidable, and who has reasonable apprehension that such instrument, if left outstanding, may cause him
serious injury, may sue to have it adjudged void or voidable, and the court may, in its discretion, so adjudge it and order it to be delivered up and
cancelled.
......
91.......Contracts in prescribed or standard forms or which embody a set of rules as part of the contract are entered into by the party with superior
bargaining power with a large number of persons who have far less bargaining power or No. bargaining power at all. Such contracts which affect a
large number of persons or a group or groups of persons, if they are unconscionable, unfair and unreasonable, are injurious to the public interest.
To say that such a contract is only voidable would be to compel each person with whom the party with superior bargaining power had contracted
to go to court to have the contract adjudged voidable. This would only result in multiplicity of litigation which No. court should encourage and
would also not be in the public interest. Such a contract or such a clause in a contract ought, therefore, to be adjudged void. While the law of
contracts in England is mostly judge-made, the law of contracts in India is enacted in a statute, namely, the Indian Contract Act, 1872. In order
that such a contract should be void, it must fall under one of the relevant sections of the Indian Contract Act. The only relevant provision in the
Indian Contract Act which can apply is Section 23 when it states that ""The consideration or object of an agreement is lawful, unless... the court
regards it as... opposed to public policy.
(Emphasis added)
As to whether such agreement could be enforced came to be considered by the Supreme Court in M. Sham Singh Vs. State of Mysore, . In
paragraph 8 of the order, the Supreme Court held as follows:
8..... The High Court is quite right in saying that when the Appellant came to Bangalore in July 1950 he did not do so for the purpose of staying at
Bangalore and accepting any employment which might be offered to him. He had to come as he admitted in his own letters, on account of domestic
reasons. He wanted to go back and finish that period of training with the General Electric Company. He sought permission in that behalf and was
allowed to return to the United States for that purpose. We are unable to see how in these circumstances the Government was bound to offer him
any employment within a period of six months from July 18, 1950. By writing the letter, dated November 27, 1950 the Appellant had
unequivocally indicated his desire to finish the training with the General Electric Company. He had made No. suggestion and given No. hint that he
was waiting for the offer of any employment. The period of six months was to expire on January 18, 1951 whereas the letter, dated November 27,
1950 was written well before that date. The mere fact that he left after the expiry of the period of six months would not show that he had returned
to Bangalore and was waiting for any employment being offered to him within six months of his arrival in terms of the bond. It is significant that in
the letter, dated November 27, 1950 he had reiterated his assurance that he would place his services at the disposal of the Government on his
return provided a suitable position was available. This shows that he was fully conscious of what the true legal position was. Instead of returning to
India the Appellant chose to take up a job at San FrancisCompany Surely the Mysore Government had not expended all the amount in question
on the studies of the Appellant to enable him to seek employment on his own without first placing his services at the disposal of the Mysore
Government which he was legally bound to do under the terms of the bond and the subsequent mutual agreement between the parties.
(Emphasis added)
The Supreme Court has also held that in case of specific performance of an obligation is impermissible in respect of contract to render personal
services, damages is the only remedy vide its decision in Nandganj Sihori Sugar Co. Ltd., Rae Bareli and another Vs. Badri Nath Dixit and others,
. The Supreme Court in paragraph 11 of its judgment observed as follows:
11...... Even if there was a contract in terms of which the Plaintiff was entitled to seek relief, the only relief which was available in law was damages
and not specific performance. Breach of contract must ordinarily sound in damages, and particularly so in the case of personal contracts.....
It must be held that the conditions of the bond executed by them neither suffers from any arbitrariness nor it was done due to any unequal
bargaining power. On the contrary, the Petitioners are qualified and trained medical doctors and have undergone P.G. Medical courses. Therefore,
it cannot be said that they have signed it with an unequal bargaining power. This is especially so when there are thousands of candidates standing in
queue for direct selection to PG courses and the Petitioners had the advantage of being selected. If they had to resile from the terms of the bond
relating to compulsory service, there is No. other option except to pay the quantified damages as agreed to by them in the bond.
This Court is not inclined to go into the quantum of quantified damages and the term stipulated do not indicate that it was either arbitrary or
fixed on any fancy basis. Even at the time of admission to the PG course, the Petitioners were aware of such condition in the prospectus stipulated
in respect of the Government hospitals. The present term is more or less similar to the condition stipulated by the State Government in respect of its
employees.
In view of the above, the contentions raised by the Petitioners must necessarily fail. However, if the Petitioners are willing to pay the amount
undertaken by them in the bond, the respective colleges in which their certificates are retained are bound to return those certificates. With this
observation all writ petitions are disposed of. No. costs. Consequently, connected miscellaneous petitions stand closed.