Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO……………./2008
(arising out of SLP(Civil) No. 6536/2006)
M/s. Andromeda Foundation India P.Ltd. ...Appellant
Vs.
D.G.H.S. & Ors. ….Respondents
J U D G M E N T
HARJIT SINGH BEDI,J.
1. Leave granted.
2. This appeal is directed against the judgment of the
Andhra Pradesh High Court which, while exercising its
writ jurisdiction under Article 226 of the Constitution,
has dismissed the Writ Petition questioning the validity
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of the order dated 9 December 1997 issued by the
Director General Health Services, New Delhi. The facts
of the case are as under:
3.
The appellant herein, is a private limited company
established for the purpose of conducting diagnostic
tests and treating patients with specific Andrological
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problems. On 1 March 1988, a Notification was
issued by the Government of India whereby medical
equipment imported for specified purposes, was
exempted from the payment of customs duty. Taking
advantage of the aforesaid Notification, the appellant got
sanction to import four machines (though only three
were imported) and also furnished the necessary
documents to the authorities. Respondent No.2, the
Director, Medical Education submitted a report to
respondent No.3, Secretary to the Government, Health,
Medical & Family Welfare Department, Govt. of A.P.,
intimating that he had conducted an inspection of the
appellant’s hospital with respect to the use of the
imported equipment and the free services that were to be
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provided to the poor in accordance with the terms of the
exemption Notification. Taking note of the report
aforesaid, respondent No.3 forwarded the
recommendation to respondent No.1 for the issuance of
an installation certificate. It appears that respondent
No.1 thereafter asked for some additional information
which too was collected and conveyed to the said officer
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vide letter dated 29 March 1996. The appellant,
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however, received two letters dated 18 June 1997 and
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14 July 1997 requiring it to furnish yet more
information with respect to the use of the “Hand Held
Recording Doppler” for which an authorization for import
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had been issued. The appellant in its reply dated 28
July 1997 pointed out that this equipment had not been
imported, but gave the other details to the respondent.
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Respondent No.1, however, wrote another letter dated 6
October 1997 to the appellant giving 10 days time to
furnish the information that had been sought. Some
additional information was supplied but it appears that
respondent No.1 was not satisfied on which, vide
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annexure P5 dated 6 October 1997 the appellant was
refused the installation certificate for the imported
medical equipment. The appellant once again wrote to
respondent No.1 that the required information had been
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supplied on which a reply dated 9 December 1997 was
received from respondent No.1 that the information had,
in fact, not been furnished and in particular referred to
the details of the use of the “Hand Held Recording
Doppler” and the details of the free services which had to
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be given to the poorest individuals. Vide order dated 9
December 1997, respondent No.1 thereupon withdrew
the Customs Duty Exemption Certificate which had been
issued to the appellant. The appellant submitted a
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detailed Memorandum to respondent No.1 on 6
February 1998 but to no effect. Being aggrieved thereby,
the appellant filed the present Writ Petition challenging
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the order dated 9 December 1997 and praying for a
direction to respondent No.1 to issue the Installation
Certificate with respect to the imported equipment. A
counter affidavit was filed in response to the Writ
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Petition and on a consideration of the matter, the
Division Bench of the High Court dismissed the Writ
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Petition by the impugned judgment dated 8 November,
2005. It is in these circumstances that the present
matter is before us.
4.
Mr. Rana Mukherjee, the learned counsel for the
appellant, has raised several arguments in the course of
the hearing. He has first and foremost submitted that as
the representation filed by the appellant was still
pending decision, it would be appropriate that a
direction be issued for a decision in that matter. He has
also submitted that from the impugned judgment it
appeared that the exemption granted to the appellant
had been cancelled due to the following reasons: (1) that
the data with respect to the use of the “Hand Held
Recording Doppler” had not been supplied, (2) that the
data pertaining to the OPD/IPD cases had not been
supplied,(3) free OPD for one equipment had been found
to be less than 40% for one year and (4) that information
furnished by the institute did not clarify the OPD/IPD
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free facilities, that were required to be given to those
whose income was less than Rs.500/- per month and
the information required had not been furnished in the
prescribed format. He has pleaded that as per the
information given to the respondents, the Hand Held
Recording Doppler had not been imported and as far as
point Nos. 2 and 3 are concerned, there was only a
marginal deviation with respect to the facilities provided
to the poorer sections of the population and the required
information had, in fact, been supplied to the
respondents as per their direction. He has in this
connection referred us to extracts of the OPD register
which has been appended with the reply. It has
accordingly been pleaded that in the light of the
judgments of this Court in Commissioner of Customs
(Import), Mumbai vs. Jagdish Cancer & Research
Centre (2001) 6 SCC 483, a marginal deviation would
not involve penal consequence. It has also been
submitted that as per the provisions of section 124 of the
Customs Act, 1962, it was incumbent to have given the
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appellant a show cause notice before making the
impugned order and as this procedure too had not been
adopted, the High Court judgment was not maintainable.
5.
The learned counsel for the respondent has, however,
pointed out that as per the guidelines issued by the
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Ministry on 10 August 1993 superceding the earlier
ones, a proforma for the more effective monitoring of the
use of the equipment had been devised and as these
guidelines had not been followed by the appellant,
despite being called upon to do so, and as the necessary
information had not been furnished by the appellant in
the prescribed format, there was no merit in the petition.
For this plea, the learned counsel has also relied upon
Jagdish Cancer & Research Centre’s case (supra) . It
has also been pleaded that in the light of the judgment
in Mediwell Hospital & Health Care Pvt. Ltd. vs.
Union of India & Ors. (1997) 1 SCC 759, the
submission of the necessary information in the
prescribed format was a continuing obligation and as
such it was incumbent on the appellant to have
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furnished the information as per the guidelines and on
its failure to do so, the action that had been taken was
fully justified.
6.
We have considered the arguments advanced by the
learned counsel for the parties. Undoubtedly, the
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representation dated 6 February 1998 had been filed by
the appellant before the concerned respondent and the
same has not yet been decided. It has accordingly been
submitted by Mr. Mukherjee that it would be proper to
set aside the order of the High Court and to issue a
direction that the representation be first decided. We
are unable to accept this plea at this belated stage as the
appellant had filed a writ petition seeking the courts`
intervention in the matter and having failed he cannot
now claim a decision on the representation. We also find
that section 124 of the Customs Act has absolutely no
applicability to the facts of the present case as this
provision deals with the confiscation of goods, which is
not the case before us.
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7. On the contrary, we are of the opinion that the
appellant’s general conduct has been most
unsatisfactory, as despite being called upon to furnish
specific details time and again, it had not done so. We
have seen the information furnished by the appellant on
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20 July 1997, a copy appended as annexure P4 to the
SLP Paper Book. We find that it does not even remotely
fulfill the requirement as per proforma that had been
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laid down in the Notification dated 10 August 1993.
We have no doubt that having imported medical
equipment on concessional terms, it was incumbent on
the appellant to have scrupulously observed the
conditions of the import and to follow the guidelines
designed to ensure that the equipment was being
properly utilized. In Mediwell Hospital & Health Care’s
case (supra) this is was what the Court had to say:
“The competent authority, therefore,
should continue to be vigilant and
check whether the undertakings given
by the applicants are being being duly
complied with after getting the benefit
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of the exemption notification and
importing the equipment without
payment of customs duty and if on
such enquiry the authorities are
satisfied that the continuing
obligations are not being carried out
then it would be fully open to to the
authority to ask the persons who have
availed of the benefit of exemption to
pay the duty payable in respect of the
equipments which have been
imported without payment of customs
duty. Needless to mention the
Government has granted exemption
from payment of customs duty with
the sole object that 40% of all outdoor
patients and entire indoor patients of
the low income group whose income is
less than Rs.500 per month would be
able to receive free treatment in the
Institute. That objective must be
achieved at any cost, and the very
authority who have granted such
certificate of exemption would ensure
that the obligation imposed on the
persons availing of the exemption
notification are being duly carried out
and on being satisfied that the said
obligations have not been discharged
they can enforce realization of the
customs duty from them.
It is needless to reiterate that all
the persons including the appellant
who had the benefit of importing the
hospital equipment with exemption of
customs duty under the notification
should notify in the local newspaper
every month the total number of
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patients they have treated and
whether 40% of them are the indigent
persons below stipulated income of
Rs.500 per month with full particulars
and address thereof which would
ensure that the condition to treat 40%
of the patients free of cost would
continuously be fulfilled. In the event
of default, there should be coercive
official action to perform their
obligation undertaking by all such
persons. This condition becomes a
part of the exemption order
application and strictly be enforced by
all concerned including the police
personnel when complaints of non-
compliance are made by the indigent
persons, on denial of such treatment
in the hospital concerned or
diagnostic centres, a the case may
be.”
6. It has been fairly pointed out by both the learned
counsel that this judgment has been overruled in a
subsequent matter on a different point, but the
observations hereinabove quoted still hold the field. In
Jagdish Cancer & Research Centre’s case (supra) , this
Court was again called upon to consider the implications
of the non-compliance with the conditions of import and
it was observed thus:
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“Learned counsel for the
respondent has next urged that looking to
the total picture of the free treatment
provided by the Centre, it is to be noticed
that shortfall in providing free treatment is
marginal. The percentage of persons
provided free treatment cannot be precise.
During a certain period, it may be a little
less or a little higher. He has also drawn
our attention to a chart prepared by the
respondent and filed with an affidavit
before CEGAT, showing that the treatment
provided to outdoor patients is 39.8 per
cent and instead of 10 cent indoor patients
it is 8.9. per cent. In connection with this
submission, it may be observed that this
aspect of the matter has been considered
by the Commissioner as well as CEGAT in
some details and ultimately it has been
found that there was a shortfall which is
also not disputed by the respondent. A
perusal of the condition in the notification
indicates that on an average, at least 40
per cent of all outdoor patients should be
provided free treatment. It is, thus, at least
40 per cent or maybe above. It is
submitted that the condition nowhere
indicates that within what period the
prescribed percentage is to be achieved. It
is submitted that it should be during the
life of the equipment imported. Thus,
shortfall of a particular year may be made
good in the following year. We are not
impressed by this argument. It would, not
at all, be necessary to prescribe any period
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to achieve the given percentage of patients
treated free. It should generally be all
through the period. It being at least 40 per
cent, there is hardly any occasion to say
that in case there is more than 40 per cent
in a given period, that may make good the
deficiency in the previous or the following
year. In any case, over and above all, it has
not been in dispute that the Centre did not
have inpatient facility. According to the
condition of notification, 10% of the total
beds in the hospital are to be kept reserved
for patients of families having an income of
less than Rs.500 per month. The case of
the Centre, in this connection, is that they
had an arrangement with another hospital
in the proximity which is a sister concern
of the Centre, with whom the Centre had
entered into an agreement for reserving 10
per cent beds. Payments in respect of these
inpatients is to be made by the Centre. We
feel that 10 per cent of the total number of
beds are supposed to be reserved for
patients of such families in the hospital
where the equipment is installed. The
purpose of the notification for grant of
exemption from payment of customs duty
would not be served by making payment of
expenditure incurred on some inpatients in
some other hospital as alleged. It has also
not been shown that the alleged
arrangements had the approval of the
authority concerned or that it was brought
to their notice at all.”
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8. It has been contended by Mr. Mukherjee that as per the
information provided by the appellant in his proforma,
there was only a marginal deviation in the provision of
free facilities to those having an income of less than
Rs.500 per month. We see from a perusal of the record
that this was not the only factor which had led to the
action against the appellant as several cumulative
factors had been taken into account, the primary one
being the non-submission of the information in the
prescribed format. We have also perused the extract of
the OPD register furnished by the appellant in its own
format with regard to the provision of free facilities to the
poor. We cannot but remark that it hides more than it
reveals.
9.
We are also conscious of the large scale misuse of the
medical equipment imported under the exemption
notification, and in the light of the observations in
Mediwell’s case supra , it is essential that the
authorities regulatory monitor the use of the equipment.
We accordingly find no merit in this appeal. Dismissed.
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……………………………J.
(TARUN CHATTERJEE )
……………………………J.
( HARJIT SINGH BEDI)
New Delhi,
Dated: May 16, 2008