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2017 DIGILAW 375 (JK)

KRSNAA Diagnostics Pvt. Ltd. v. State of J&K

2017-07-19

TASHI RABSTAN

body2017
JUDGMENT : 1. Through the medium of this petition, the petitioner is seeking quashment of the Order No.GMC/PS/2163 dated 31.08.2016 passed by the Principal and Dean, Government Medical College Hospital, Bakshi Nagar, Jammu, whereby the Public Private Partnership Mode agreement has been declared as null and void and the diagnostic centre of petitioner has been sealed. The petitioner is also seeking a direction to the respondents to de-seal its Diagnostics Centre and allow it to work for the remaining period of public-private partnership. 2. The facts in brief, as projected in the writ petition, are that based on Cabinet decision No.80/5/10 dated 29.03.2010 and 238/22/2010 dated 27.10.2010, Government of J&K invited Expression of Interest (EOI) for establishment of Diagnostics Centre in Government Medical College, Jammu and Super Specialty Hospital, Jammu, under Public Private Partnership Mode; petitioner placed the bid and the Government of J&K approached the petitioner through Letter of Intent. Accordingly, agreement for partnership between petitioner and the Government for establishment of Diagnostic Centre at GMC, Jammu was executed on 02.02.2014 for a period of ten years. It is averred that thereafter the petitioner established the Diagnostic Centre by investing crores of rupees by securing loan from the banks and other financial institutions. It is further averred that thereafter all of a sudden respondent No.2 issued the Order No.GMC/PS/2163 dated 31.08.2016, impugned herein, whereby the Public Private Partnership Mode agreement has been declared as null and void and the diagnostic centre of petitioner has been sealed along with all the machinery installed by the petitioner. It is further averred that before issuing the impugned order neither any opportunity of being heard was made available nor any show cause notice was served upon the petitioner. Hence, the present petition. 3. Objections have been filed on behalf of respondents contending therein that the Government after following due procedure and examining the record and other material, found it necessary and in public interest to terminate the contract of petitioner, as the same had been illegally allotted by the then Principal, Government Medical College, Jammu. Hence, the present petition. 3. Objections have been filed on behalf of respondents contending therein that the Government after following due procedure and examining the record and other material, found it necessary and in public interest to terminate the contract of petitioner, as the same had been illegally allotted by the then Principal, Government Medical College, Jammu. It is asserted that the then Principal was not authorized to allot the contract as neither the same had been signed on behalf of Governor of the State nor approval was taken from Secretary to Government, Health & Medical Education Department in terms of Clause 2 of EOI, and vigilance inquiry is also going on to enquire into this aspect. Further, it is insisted that before filing the present petition, the petitioner-Company ought to have exhausted the remedy of seeking appointment of an arbitrator in terms of arbitration clause in Paragraph 7.2 of agreement dated 02.01.2014. It is also insisted that the petitioner had failed to provide free and subsidized services to the poor patient as agreed upon by him, as number of oral complaints were being received by the respondents regarding charging exorbitant rates by the petitioner. Lastly, it is asserted that allotment to the petitioner was neither fair nor transparent, hence was not in public interest. 4. Heard learned counsel appearing for the parties, considered their rival contentions and also perused the file. 5. Admittedly, the respondents have not denied approval of pilot project by the Cabinet in the year 2010 on the recommendation of cabinet sub-committee for Public-Private Partnership for J&K State. It has also not been denied by the respondents that in the year 2013 Expression of Interest was invited for installation, operation and maintenance of Radio Diagnostic Equipment in Associated Hospitals of Government Medical College in J&K, which was published in Excelsior, a daily newspaper, in its edition dated 20.11.2013. 6. However, the main reason projected by the respondents for terminating the contract agreement of petitioner was that neither the same had been signed on behalf of Governor of the State nor approval thereof was taken from Secretary to Government, Health & Medical Education Department in terms of Clause 2 of EOI, and vigilance inquiry is also going on to enquire into this aspect. 7. 7. A perusal of EOI Notice reveals that the same was got published by the Officiating Administrator, Associated Hospitals, Jammu after it was approved by the Committee consisting of Principal, Government Medical College, Jammu; HOD Radiology, GMC, Jammu; Officiating Administrator, Associated Hospitals, Jammu; Medical Superintendent, MCH; Medical Superintendent, SSH, Jammu and Incharge Medical Store, MCH, Jammu. Therefore, it cannot be said that it was the then Principal, Government Medical College, Jammu alone who had approved and published the EOI Notice, rather a Committee had been constituted for the purpose. 8. Further, it would also be appropriate to reproduce the relevant portion of Expression of Interest Notice hereunder : “In line with this initiative, the Administrator, Associated Hospitals of Govt. Medical College, Jammu on behalf of Government of Jammu & Kashmir invites sealed tenders from registered institutions, individuals & private firms to Install, Operate & Maintain Radio Diagnosis equipment/machinery in the Associated Hospitals of Govt. Medical College, Jammu.” 9. Thus, the EOI Notice itself reveals that the same had been issued on behalf of Government of J&K for installation of Diagnostic Centre in the Associated Hospitals of Government Medical College, Jammu. 10. As regards the contention of learned counsel for respondents that requisite approval was not taken from Secretary to Government, Health & Medical Education Department, I would also like to quote the relevant portion of Communication, i.e., letter of intent, bearing No.GMC/M/Misc/ 3806 dated 18.12.2013 addressed to petitioner herein by the Principal & Dean, Government Medical College, Jammu regarding awarding of contract on PPP mode: “This is to inform you that the undersigned for and on behalf of Govt. Medical College, Jammu with respect to above EOI, after obtaining the requisite approval of the Administrative Department vide No.HME/Acctts/78/2012-13 dated 13.12.2013, your response are hereby accepted for Installation, Operation and Maintenance of 128 Slice CT, 1.5T advanced MRI, DR System and PET Scan at Govt. Medical College Hospitals & Super Specialty Hospital in Jammu in Public Private Partnership (PPP) Mode.” 11. The above communication clearly reveals that the contract-in-question was allotted to petitioner after obtaining requisite approval from the Health & Medical Education Department vide No.HME/Acctts/78/2012-13 dated 13.12.2013, i.e., the Administrative Department of Associated Hospitals, Government Medical College, Jammu. 12. Medical College Hospitals & Super Specialty Hospital in Jammu in Public Private Partnership (PPP) Mode.” 11. The above communication clearly reveals that the contract-in-question was allotted to petitioner after obtaining requisite approval from the Health & Medical Education Department vide No.HME/Acctts/78/2012-13 dated 13.12.2013, i.e., the Administrative Department of Associated Hospitals, Government Medical College, Jammu. 12. As regards the contention of learned counsel for respondents that the contract agreement had not been executed on behalf of Governor of the State, I would like to quote hereunder the relevant portion of order dated 25.04.2016 passed in WPPIL No.13/2014 by a Division Bench of this Court : “Learned Advocate General seeks time to ascertain as to whether the contract which was not signed on behalf of the Governor, is willing to be ratified by the Governor. For getting response to the said issue, four weeks time is granted.” 13. The said order was passed at the request of learned Advocate General, who was representing the State. However, before any response could come to fore on the said issue, Order No.GMC/PS/2163 dated 31.08.2016, impugned herein, came to be issued by respondent No.2, whereby the contract agreement has been declared as null and void. And, the Division Bench on the basis of said order closed the public interest litigation on 21.09.2016 on the ground that the cancellation order is already subject matter of challenge before this Court, as the petitioner had already filed the present writ petition on 07.09.2016 questioning the impugned order. 14. However, the fact remains that the then Advocate General despite seeking time in the Public Interest Litigation had failed to file response as to whether the Governor was willing to ratify the contract; meaning thereby even if the contract agreement had not been executed on behalf of Governor, there was scope even at a later stage to ratify the same by the Governor. Therefore, in my view, before cancelling the allotment order, the respondents ought to have come with a clear stance as to whether the contract agreement could have been ratified by the Governor or whether the Governor was willing to ratify the same, as per the stand taken by the then Advocate General at the time of passing order dated 25.04.2016 by a Division Bench of this Court in WPPIL No.13/2014. 15. 15. Further, the order impugned reveals that the Vigilance Commission and Vigilance Organization, Jammu were probing into the alleged wrong allotment made in favour of petitioner by the then Principal, Government Medical College, Jammu. However, the respondents without waiting for the outcome of such probe have issued the order impugned, thereby declaring the contract agreement as null and void and sealing the premises of petitioner, leaving the machinery installed by the petitioner then and there. 16. Further, if there was any violation or breach of terms and conditions of the contract agreement or that the petitioner was over charging the rates of the tests, as alleged in the impugned order, the petitioner was required to be given cure period of 120 days by a written notice to rectify such breaches/violation in terms of Clause 7.2 of the contract agreement, relevant portion whereof is reproduced hereunder: “7.2. In case of any violation/breach of any of the term and/or condition to be fulfilled/observed/ performed by and/or on the part of the Second Part, the Party of First Part shall have all the rights including its unfettered right to stop ingress to the premises by Party of Second Part and its personnel without being liable to the Party of First Part for any damages, whatsoever. However, notwithstanding anything in this Agreement, Party of Second Part will not be called upon to vacate the Premises or equipments or its personnel’s entry/ egress shall not be stopped prior to the termination of this Agreement by efflux of time, without cause and without giving a cure period of 120 days by a written notice to rectify any breaches that Party of Second Part is alleged to have committed.” 17. This Court vide order dated 20.09.2016 directed the learned AAG to show as to whether any show cause notice was ever served upon the petitioner in terms of the agreement clause before issuance of the impugned order. On 28.09.2016 when the matter was reserved for passing orders, learned AAG fairly admitted that no show cause notice was issued to the petitioner before issuance of the impugned order, which has been recorded by this Court while passing order on 04.10.2016. On 28.09.2016 when the matter was reserved for passing orders, learned AAG fairly admitted that no show cause notice was issued to the petitioner before issuance of the impugned order, which has been recorded by this Court while passing order on 04.10.2016. Thus, it is the admitted case that the petitioner was not given cure period of 120 days by a written notice to rectify any breaches/violation and, without issuing such notice, the impugned order has been passed, which is nothing but a clear violation and failure of principles of natural justice on the part of respondents. 18. Also, a perusal of Expression of Interest, which was published in Daily Excelsior in its issue dated 20.11.2013, reveals that the same was issued on behalf of Government of J&K, inviting sealed tenders to install, operate and maintain Radio Diagnosis equipment/machinery in the Associated Hospitals of Government Medical College, Jammu. Accordingly, the petitioner placed its sealed bid, thereafter Letter of Intent was issued in its favour for awarding the contract and, thereafter, contract agreement came to be executed. If the agreement had not been executed on behalf of Governor of the State or that the administrative approval had not been taken by respondent No.2, then how the petitioner could be held liable for the same, rather the lapse, if any, was on the part of respondents, for which the petitioner cannot be made to suffer and allow the machinery/equipments installed by the petitioner to get damaged, as the same has been sealed by the respondents since the date of issuance of order impugned. The petitioner being a bona fide bidder had only placed its bid in response to Expression of Interest. Further, it is not the case of respondents that the petitioner was allotted the contract through backdoor. 19. Further, in the impugned order as well as in objections, the respondents have only alleged that there were oral complaints against the petitioner, however, they have failed to produce on record any specific complaint or some concrete material which could made basis to authenticate the same. Respondents without bothering to enquire at their own level have closed the diagnostics centre. Further, in the impugned order as well as in objections, the respondents have only alleged that there were oral complaints against the petitioner, however, they have failed to produce on record any specific complaint or some concrete material which could made basis to authenticate the same. Respondents without bothering to enquire at their own level have closed the diagnostics centre. Rather, this diagnostics centre being a life saving facility was being used by public at large, especially the same was a blessing for poor patients, now in absence of which, the poor/hapless patients are bound to conduct their tests through private diagnostic centers/labs, referred to by the doctors for obvious reasons, and pay the exorbitant rates. Therefore, one can easily understand the actual reason behind closing such a facility. Need is to see how the inconvenience and sufferings being caused to the poor/hapless patients could be addressed in a better way. Therefore, running such a facility in the Government Medical College, Jammu and associated hospitals was thousand times more beneficial than closing such a facility for public. 20. As regards the contention of respondents that the petitioner ought to have opted for appointment of an arbitrator in terms of the arbitration clause in the contract agreement, the said issue has already been dealt with by this Court while issuing notice on 04.10.2016. Otherwise too, the question of referring the matter to the arbitrator could only arise when the respondents had not violated the provisions of contract agreement and given a cure notice of 120 days to the petitioner for rectifying the shortcomings. Needless to say, this was a facility to be used by the public and the same could not have been shut down all of a sudden by such an illegal order without giving opportunity of being heard to the petitioner and without following the principles of natural justice. 21. Therefore, in view of what has been discussed above, I deem it proper to allow the writ petition. Accordingly, the writ petition is allowed and the Order No.GMC/PS/2163 dated 31.08.2016 passed by respondent No.2 is hereby quashed. Respondents, particularly respondent No.2 is directed to de-seal the Diagnostics Centre forthwith and allow the petitioner to work in terms of the contract agreement. Accordingly, the writ petition is allowed and the Order No.GMC/PS/2163 dated 31.08.2016 passed by respondent No.2 is hereby quashed. Respondents, particularly respondent No.2 is directed to de-seal the Diagnostics Centre forthwith and allow the petitioner to work in terms of the contract agreement. Petitioner is also directed to display the standard approved rate lists of each and every test being conducted by it in bold letters - one at some conspicuous place in front of the Diagnostics Centre and, another, at the reception, specifically mentioning in bold letters free and subsidized services, if any, to the poor patients/BPL patients in terms of the contract agreement and also as notified by the State Government. However, respondents are at liberty to seek ratification of the agreement from the Governor in terms of order dated 25.04.2016 passed in WPPIL No.13/2014, which came to be closed on 21.09.2016.