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Judgment
J.S. Khehar, C.J.—A large number of writ appeals emerge for collective consideration. Through these writ appeals, the Appellants and the Petitioners seek to assail an order dated 11.02.1999 (rendered by a learned Single Judge of this Court) disposing of WP Nos. 28186-187/1996 (and other connected matters), wherein, the main case disposed of was titled as, Medical Relief Society of South Canara v. Union of India and Ors. For the same common purpose some writ petitions are also posted for hearing with the writ appeals.
The controversy between the Appellants/Petitioners and the Respondents emerges, from a notification issued on 01.03.1988. The aforesaid notification dated 01.03.1988, was issued by the Central Government u/s 25 of the Customs Act, 1962. Under the aforesaid notification, four categories of hospitals were permitted to import medical equipment/machinery, without payment of customs duty, on the condition that they would provide free medical assistance, to persons whose monthly family income was less than Rs. 500/-. The aforesaid notification contemplated four categories of beneficiaries. The beneficiaries under the notification have been appropriately depicted in the following manner by the learned Single Judge; in the impugned order dated 11.02.1999:
The table below the notification classifies hospitals in four different categories. Category-1 deals with hospitals certified by the Ministry of Health and Family welfare as being run or substantially aided by such Charitable organisations as may be approved front time to time by the said Ministry. Category-2 comprises hospitals, which may be certified by the Ministry of Health and Family Welfare in each case to be run or providing medical, surgical or diagnostic treatment without any distinction of caste, creed, race, religion or language and free on an average to 40% of the outdoor patients and all indoor patients with a family income of less then Rs. 500/- per month. In Category-3 fall hospitals which the Ministry of Health and Family Welfare may having regard to the treatment available therein or the geographical situation thereof or the class of patients for whom such treatment is provided either generally or in each case certify that the hospital even though it makes a charge for the said treatment is nevertheless run on No. profit basis and is deserving of exemption from payment of duty on the import of hospital equipment, provided that the equipment so imported is received by way of a free gift from a donor abroad or purchased out of the donations received in foreign exchange. The 4th and the only other category comprises hospitals, which are in the process of being established and in respect of which the Ministry of Health and Family Welfare is of the opinion that there is an appropriate Programme for establishment of the hospital, that there are sufficient funds and other resources worked for such establishment and that such hospital would be in a position to start functioning within a period of one year and would be relatable to a hospital specified in Categories 1, 2 or 3 referred to above.
All the Appellants and writ Petitioners in the instant bunch of cases fall under category-2 depicted in the notification dated 01.03.1988.
The notification dated 01.03.1988 also provided, that the benefits availed by hospitals thereunder, could be annulled, and the imported equipment impounded, in case of violation of the terms and conditions imposed therein. On the ground, that the Appellants herein (as also the Petitioners in the connected writ petitions) had violated the aforesaid terms and conditions, the hospital equipment/machinery came to be impounded, and customs duty (on the imported hospital equipment/ machinery), sought to be recovered. The fall out thereof was extensive litigation, not only before the customs authorities, but in different courts all over the country. The impugned order passed by the learned Single Judge on 11.02.1999 was one such determination. We are informed, that in some cases this action commenced 18 years ago.
When the instant writ appeals were taken up for consideration, learned Counsel for the Appellants/Petitioners invited our attention to the order passed by the Supreme Court on 24.10.2007 in Civil Appeal No. 7284/2005 (Sir. Gangaram Trust Society and Anr. v. Union of India and Ors.). The aforesaid order is being extracted hereunder;
Prima facie, we were of the view that the Director General Health services (for short ''DGHS'') had withdrawn/canceled the exemption certificate given to the Appellants from payment of customs duty on import of medical instruments in terms of Notification No. 64/88-Cus. Dated 1st March, 1988 in violation of the principles of natural justice.
Mr. Amrendra Sharan, learned Additional Solicitor General, after taking instructions, states that the impugned order of the High Court as well as DGHS be set aside and the case be remitted back to the DGHS to pass a fresh order in accordance with law after affording due opportunity to the Appellants to put forth their point of view. That the Appellants shall be supplied a copy of the inspection report carried out on 17th & 18th January. 2001.
In view of the statement made by the learned Additional Solicitor General, these appeals are allowed; impugned orders of the High court and DGHS are set aside and the case is remitted back to the DGHS to pass a fresh order in accordance with law after affording due opportunity to the Appellants to put forth their case. All contentions are left open.
It would have been convenient for us to dispose of the instant bunch of appeals (and connected writ petitions) in terms of the order passed by the Supreme Court, inasmuch as, the action to be taken against the Appellants (and the Petitioners) herein, was bound to be preceded by procedure, contemplated under the rules of natural justice. This was the common prayer of the learned Counsel for the rival parties.
The aforesaid procedure would result in recovery of customs duty, and initiation of such other action as was permissible under the notification dated 01.03.1988. This would however not provide any succour to the poor persons for whose benefit the notification dated 01.03.1988 was originally issued. It is, therefore, that a series of hearing were held, during the course of the adjudication of the present controversy, resulting in formulation of a proposed alternative scheme, subject to the approval of the Central. Government, so that the general public, which cannot afford expensive and sophisticated medical treatment, are able to get expert medical assistance free of cost, from the best medical facilities all over the country, just in the same manner as was originally contemplated by the notification dated 01.03.1988.
It also needs to be mentioned, that technology improves rapidly and machinery and equipment which is considered sophisticated today, may become obsolete in a few years. The beneficiaries of the notification dated 01.03.1988 purchased machinery till it was permissible under the aforesaid notification (till 02.04.1994). The said equipment/machinery is most certainly by now obsolete. No. purpose would be served for either of the parties, if the aforesaid machinery is confiscated, since the same must in any case have been replaced by now. The phrase used by the learned Counsel for the Appellants/Petitioners is, that the machinery purchased under the notification dated 01.03.1988 can now justifiably be described as scrap. We are of the view, that the Appellants may not be way off the mark in their remark.
Keeping in mind the aforesaid aspects, in conjunction with the suggestions made at the hands of the learned Counsel for the Appellants/Petitioners herein, and with the approval of the Additional Solicitor General of India, we have drawn a proposed alternative scheme, as a substitute for the proceedings initiated by the Respondents. This proposed alternative scheme would provide succour to the poor amongst the general public, just in the same manner as the original notification dated 01.03.1988. On the other hand, if adopted by the Appellants/Petitioners herein, it would entail No. further action against them under the original notification dated 01.03.1988. The terms of the proposed alternative policy, as also, the reasons for each of the terms, are being expressed hereunder:
Firstly, the Appellants would provide free inpatient treatment for atleast 20% of their inpatients, annually. Inpatient treatment is treatment requiring invasive surgery. Free inpatient treatment would include medical, surgical and diagnostic procedures, besides boarding and lodging, to the concerned patient. The original notification depicted such free treatment only for 10% of the inpatients. The instant enhancement to cover 20% of all annual inpatients, is on account of the fact, that it has been considered appropriate to do away with free outpatients'' treatment, since it is virtually impossible to verify records for such large number of patients, not only on the issue of their eligibility (under the original scheme), but also in respect of treatment rendered. In case of a shortfall in a particular year, the principle of carry-forward will be adopted, to provide free medical treatment to BPL card-holders, for the following years (including the years after the expiry of the period of 20 years), till the short fall is satisfied. In case, any of the hospitals have sister/peripheral hospital(s). it shall be open to such hospitals to satisfy the obligation of 20% free inpatient treatment, by providing medical treatment in any of their sister/peripheral hospital(s).
Secondly, the original notification dated 01.03.1988 envisaged free treatment only for persons whose family income was less than Rs. 500/- per month. It may be difficult for hospitals to find even a few patients annually, who satisfy the aforesaid criteria. For the proposed alternative scheme, we consider it just and appropriate to extend the benefit of free medical treatment to all BPL (below poverty line) cardholders. The instant change would be realistic, and would enable the concerned hospitals to carry out their annual obligations effectively, under the proposed alternative scheme.
Thirdly, the benefits under this scheme would be operational for a period of 20 years commencing from 01.01.2012, wherein, each hospital would provide free medical facilities to inpatients as already noticed above. In determining the number of inpatients entitled to free medical treatment, reference shall be made to the total inpatients treated at the hospital during the preceding year; 20% thereof shall constitute the number of patients who would be entitled to free treatment in the year in question. The same principle will be adopted annually, in each succeeding year. Wherever, there is an expected shortfall in a particular year, it shall be open to the hospital(s) in question to require government hospitals to refer BPL card-holders, for free inpatient treatment.
Fourthly, hospitals seeking the benefit of the proposed modified scheme, would announce through notices affixed at prominent places at the hospital, the facility of such free medical inpatient benefits, to persons who possess BPL cards. Due publicity shall also be provided on ''Prasar Bharathi'' by Respondent No. 1. Simultaneously, press releases shall be issued by the State of Karnataka, periodically informing the general public of the free medical inpatient facility, available at the hospitals in question.
Fifthly, all hospitals concerned shall maintain complete records and details, to identify the beneficiaries under the modified scheme, as also, the details of the treatment rendered to them. The Director General. Health Services, Government of India, or an agency nominated by him, will have the liberty, to carry out quarterly inspections, so as to ascertain the veracity of the records maintained by the concerned hospitals. Records shall be maintained, so as to be available for inspection for a period of one year. During an inspection it shall be open to the concerned authority, to scrutinize records, pertaining to a period of one year preceding the inspection in question.
We are of the view, that the proposed alternative scheme should be placed for consideration before the Central Government by the Additional Solicitor General of India, who represented the Central Government in this bunch of cases. The Central Government shall take a decision thereon, in terms of the spirit of the original notification dated 01.03.1988, and the instant order, in consultation with the Additional Solicitor General of India. The Central Government shall take its decision, one way or the other, by 31.10.2011.
Such of the Appellants/Petitioners who desire to be governed by the proposed alternative scheme, shall file affidavits within four weeks from today, with the Director General, Health Services, Government of India, consenting to be governed by the proposed alternative scheme. Those of the Appellants/Petitioners who have filed an affidavit in the terms referred to herein-above, would not be proceeded against in furtherance of the earlier notification dated 01.03.1988. They would be entitled to the return of their machinery unconditionally; they would also be entitled to refund of customs duty, if any, deposited by them; all bonds and bank guarantees (or the like) shall be returned to the concerned parties on or before 31.12.2011, which will be deemed to have been cancelled on the exercise of option and the acceptance of the proposed alternative scheme. In sum and substance, the proceedings initiated against hospitals agreeing to be regulated by the proposed alternative scheme, shall come to an end.
Such of the hospitals who do hot file their affidavit(s) in the manner expressed herein-above, shall be proceeded against by the concerned competent authority in consonance with the order passed by the Supreme Court on 24.10.2007 in Sir Gangaram Trust Society and Anr. v. Union of India and Ors. (Civil Appeal No. 7284/2005). Likewise, if the proposed alternative scheme is not approved by the Central Government by 31.10.2011, those who have opted for the proposed alternative scheme, shall also be proceeded against by the concerned competent authority in consonance with the order passed by Supreme Court on 24.10.2007 in Sir Gangaram Trust Society''s case (supra). In such of the matters which have to be proceeded with, in terms of the order passed by the Supreme Court, we hope and expect, that the final orders shall be passed within six months from today. This is imperative, as we are informed, that in many cases proceedings under the notification dated 01.03.1988 came to be initiated 18 years ago.
The appeals and writ petitions collectively listed for disposal stand disposed of, in the aforesaid terms.