M/S MAATRI MEDICITY AND ORTHOCARE HOSPITAL vs THE STATE OF HP AND OTHERS
- Court
- High Court of Himachal Pradesh
2026:HHC:29794
High Court of H.P.
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
CWP No. 2080 of 2026
alongwith connected matters.
Reserved on : July 07 , 2026
Announced on: July 21 , 2026
Uploaded on website: 21.07.2026
( )
1. CWP No. 2080 of 2026
M/S Maatri Medicity & Orthocare Hospital ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
2. CWP No. 8820 of 2025
Aastha Multispecialty Hospital Pvt. Ltd. ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
3. CWP No. 15097 of 2025
M/S Surya Hospital ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
4. CWP No. 15422 of 2025
Bhardwaj Multi Specialty Hospital ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
5. CWP No. 16831 of 2025
Dev Bhoomi Eye Hospital ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
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6. CWP No. 16930 of 2025
Apex Multispecialty Hospital &
Health Care Centre ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
7. CWP No. 16939 of 2025
M/S City Care Multispecialty Hospital ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
8. CWP No. 16965 of 2025
Advanced Cardiac Cath Lab ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
9. CWP No. 16966 of 2025
Saurabh Kalia Memorial KayDee Hospital ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
10. CWP No. 17160 of 2025
Krishna Children Hospital ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
11. CWP No. 17246 of 2025
Shivam Orthocare ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
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12. CWP No. 17248 of 2025
Navneet Urology & General Surgery Hospital ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
13. CWP No. 17249 of 2025
M/S Anandraj Malik Hospital ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
14. CWP No. 17381 of 2025
M/S Dev Bhoomi Advaita Heart Institute ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
15. CWP No. 17401 of 2025
City Heart Superspecialty Hospital ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
16. CWP No. 17431 of 2025
M/S Shri Harihar Hospital & Research Centre ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
17. CWP No. 19209 of 2025
Bhanoo Hospital Private Limited ...Petitioner
Versus
Union of India & Ors. ...Respondents
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18. CWP No. 19210 of 2025
Bhanoo Hospital Private Limited ...Petitioner
Versus
Union of India & Ors. ...Respondents
19. CWP No. 20980 of 2025
M/S Balmukand Apex Hospitals ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
20. CWP No. 2081 of 2026
M/S Dr. Neena Pahwa Maternity Home ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
21. CWP No. 2484 of 2026
Sai Sanjivni Hospital ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
22. CWP No. 2894 of 2026
M/S Life Line Care Hospital ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
23. CWP No. 2941 of 2026
M/S Bhambla Multispecialty Hospital ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
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24. CWP No. 3636 of 2026
M/S NR Multispecialty Hospital ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
25. CWP No. 3700 of 2026
M/S Kapoor Nursing Home ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
26. CWP No. 3701 of 2026
M/S BBN Hospital & Surgical Centre ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
27. CWP No. 4046 of 2026
M/S Jagriti Medical Centre ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
28. CWP No. 4588 of 2026
M/S Sparsh Multi Speciality Hospital ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
29. CWP No. 4896 of 2026
M/S Navkiran Eye Hospital ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
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30. CWP No. 4897 of 2026
M/S Surya Eye Hospital ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
31. CWP No. 4898 of 2026
M/S Nav Jeevan Hospital ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
32. CWP No. 4899 of 2026
M/S Surya Multispecialty Hospital ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
33. CWP No. 4954 of 2026
Shri Sai Cardial & Critical Care Centre ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
34. CWP No. 5100 of 2026
Shri Sai Multispecialty Hospital & Trauma Centre ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
Coram:
Ms. Justice Jyotsna Rewal Dua, Judge
1
Whether approved for reporting? Yes.
For the petitioner : Mr. Ajay Chandel, Advocate, for the
petitioner(s) in all petitions except CWP No.
19209/2025, 19210/25, 2484/26, 3636/26,
4588/26, 4954/26 & 5100/26.
Mr. Neeraj Sharma, Senior Advocate with Mr.
Vidhush Chauhan, Advocate, for petitioner in
CWP No. 2484 of 2026.
1
Whether reporters of Local Papers may be allowed to see the judgment? Yes.
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Mr. Parav Sharma & Mr. Rupesh Kumar,
Advocates, for petitioner(s) in CWP No. 19209
& 19210 of 2025.
Mr. Amit Singh Chandel, Advocate, for the
petitioner in CWP No. 3636 of 2026.
Mr. Jagan Nath, Advocate, for the petitioner(s)
in CWP Nos. 4954 and 5100 of 2026.
Mr. R.L. Verma, Advocate, for the petitioner in
CWP No. 4588 of 2026.
For the respondents : Mr. Anup Rattan, Advocate General with Mr.
Mr. L.N. Sharma, Addl. AG, Mr. Sikander
Bhushan, Dy. AG & Mr. Rajat Choudhry, Astt.
AG for the respondents/State.
Ms. Reeta Thakur & Mr. Bharat Bhushan,
Senior Panel Counsel and Mr. Shashi
Shirshoo, Mr. Virbahadur Verma, Mr. Janak Raj
& Mr. Anshul Attri, Central Government
Standing Counsel for respondents-UOI in the
respective matters.
Mr. Mansi Sharma, Advocate vice Ms. Vandana
Misra, Senior Panel Counsel for the
respondent–UOI in CWP No. 17401 of 2025.
Jyotsna Rewal Dua, Judge
Petitioners in all these writ petitions are private hospitals.
They were empanelled to provide treatment to the patients under the
Ayushman Bharat Pradhan Mantri Jan Arogya Yojna (in short ‘AB-
PMJAY’) of the Central Government and also the Mukhya Mantri
Himachal Health Care Scheme (in short ‘HIMCARE’) of the State
Government. These hospitals are with the grievance that they
provided and are still treating patients but are not being released
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payments due to them under these very Schemes. The respondents
though do not dispute that payments are due to be released to these
hospitals yet it is not being released. Pursuant to several orders
passed in these writ petitions from time to time, some payments in
piecemeal, have been released to the petitioners. Facts are not in
dispute but there appears to be a deadlock between the
respondents as to who is to bear the responsibility for releasing the
outstanding payments to the petitioners under the AB-PMJAY
Scheme. The respondents-State admits its responsibility for
releasing due payments to the petitioners under the HIMCARE
Scheme, however, claims of the petitioners under this Scheme are
also pending for release. The Schemes and operational guidelines
for working out the modalities in both the Schemes have not been
challenged by any of the parties. The matters have accordingly
been heard vis-à-vis the relief claimed by the petitioners seeking
directions to the respondents to make payments to them against
their claims on account of treatment of the patients/beneficiaries
under the AB-PMJAY and HIMCARE Schemes.
2. Ayushman Bharat – PMJAY Scheme
2(i) Ayushman Bharat-PMJAY Scheme was promulgated by
the respondent-Union of India. The Scheme is designed to meet
sustainable healthcare goals for “leaving no one behind”. It aims to
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holistically address the healthcare system at primary, secondary &
tertiary level. The beneficiary families have been selected/identified
by the Government of India on the basis of Socio – Economic Caste
Census, 2011 (in short ‘SECC-2011’). Treatment of the beneficiary
families is completely cashless with cover of Rs. 5 lac per family per
year on family floater basis for secondary and tertiary care
hospitalization across public & private empanelled hospitals in the
country. The monetary cover is called the sum insured. This is fixed
cover irrespective of size of beneficiary family. The sum insured is
available to any or all members of the beneficiary family unit for one
or more claims during each policy cover period. The sum insured is
available to the beneficiary family on cashless basis at any
Empanelled Health Care Provider (EHCP) – the hospitals. The
benefit of the Ayushman Bharat - National Health Protection Mission
(in short ‘AB-NHPM’) is portable across the country. The beneficiary
covered under the Scheme can get benefits under the Scheme
across the country at any EHCP. The benefits cover in terms of the
Scheme include hospitalization/treatment expenses coverage for
medical conditions and diseases requiring secondary and tertiary
level of medical and surgical care treatment. It also includes defined
day care procedures and follow-up care alongwith cost for pre and
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post hospitalization treatment as defined. Some relevant provisions
of the Scheme in this regard are as under:-
“Eligible Beneficiaries
A. All AB-NHPM Beneficiary Family Units, as defined under
the deprivation criteria of D1, D2, D3, D4, D5 and D7,
Automatically Included category (in rural areas) and
broadly defined occupational un-organised workers (in
Urban Sector) of the Socio-Economic Caste Census
(SECC), 2011 database of the State (as updated from time
to time).
B. Existing RSBY Beneficiary Families enrolled in 2014-15 i.e.
BPL, MGNREGA workers, Street Vendors, Building &
Other Construction Workers, Sanitation Workers, Auto
Rickshaw & Taxi Drivers, Contract Employees and >70%
disabled. … …
… …
Benefits
The Benefits within the scheme, to be provided on a cashless
basis to the beneficiaries up to the limit of their annual coverage,
package charges on specific procedures and subject to other
terms and conditions outlined herein, are the following
a. Benefit Cover will include hospitalization / treatment
expenses coverage including treatment for medical
conditions and diseases requiring secondary and tertiary
level of medical and surgical care treatment and also
including defined day care procedures (as applicable) and
follow up care along with cost for pre and post-
hospitalisation treatment as defined.
b. As on the date of commencement of the Policy Cover
Period, the AB-NHPM Sum Insured in respect of the Risk
Cover for each AB-NHPM Beneficiary Family Unit shall be
Rs. 5,00,000 (Rupees Five Lakh Only) per family per
annum on family floater basis. This shall be called the Sum
Insured, which shall be fixed irrespective of the size of the
AB-NHPM Beneficiary Family Unit.
c. The Sum Insured shall be available to any or all members
of such Beneficiary Family Unit for one or more Claims
during each Policy Cover Period. New family members
may be added after due approval process as defined by
the Government.
d. The benefits under the AB-NHPM Cover shall, subject to
the available AB-NHPM Sum Insured, be available to the
AB-NHPM Beneficiary on a cashless basis at any EHCP.
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e. The benefits of AB-NHPM will be portable across the
country and a beneficiary covered under the scheme will
be able to get benefits under the scheme across the
country at any EHCP.
f. Package rates of the hospital where benefits are being
provided will be applicable while payment will be done to
the hospital by the State Health Agency (based on
recommendation of ISA working the the State) that is
covering the beneficiary under its policy.
g. The SHA shall notify the packages from time to time and
the same shall be notified on the website of the SHA i.e.
www.hpsbys.in.
h. The benefits within this Scheme under the Benefit Cover
are to be provided on a cashless basis to the AB-NHPM
Beneficiaries up to the limit of their annual coverage and
includes: … … …”
2(ii) The AB-PMJAY provides for empanelment of hospitals
and also for their de-empanelment. Duties, responsibilities, functions
of empanelled hospitals have also been delineated in the Scheme.
These petitions are concerning payment of claims under the
Scheme, therefore, focus hereinafter would be to the relevant
provisions in that regard.
The AB-PMJAY provides mechanism for processing
claims and release of payments to the empanelled hospitals. The
Implementation Support Agency (ISA) is responsible for processing
all claims of the empanelled hospitals with due diligence and to
provide its recommendations regarding acceptance or rejection of
such claims to the State Health Agency (SHA) – Himachal Pradesh
Swasthya Bima Yojna Society within ten days of receiving the
required information/documents. The SHA is to then make payment
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to EHCP within fifteen days after receiving the requisite information.
Thus ISA is responsible for ensuring settlement of all claims within
fifteen days. The Scheme provides for payment of claims within
fifteen days if not rejected. For failure of ISA to process the claim
and send it to the SHA within ten days of the receipt of the complete
claim, the Scheme admits grant of interest @ 1% of the claim to
EHCP per week after 15 days of delay. Relevant provisions of the
Scheme in this regard are as follows:-
“Payment of Claims
a The ISA shall be responsible for processing all claims and
provide their recommendations regarding acception or rejection
to SHA within 10 days of receiving all the required information/
documents so that SHA can make the payment to EHCP within
15 days after receiving all the required information/ documents.
The ISA undertakes that it will exercise due diligence to service
any claims under portability from any empanelled hospital
under the scheme within India and will settle claims within 30
days of receiving them.
b. The ISA shall decide on the acceptance or rejection of any
Claim received from an Empanelled Health Care Provider. Any
rejection notice issued by the ISA to the Empanelled Health
Care Provider shall state clearly that such rejection is subject to
the Empanelled Health Care Provider's right to file a complaint
with the relevant Grievance Redressal Committee against such
decision to reject such Claim.
c. If the ISA recommends for rejection of a Claim, the ISA will
issue a written letter of rejection to the Empanelled Health Care
Provider stating: details of the Claim summary; reasons for
rejection; and details of the District Grievance Nodal Officer.
The letter of rejection shall be issued to the State Health
Agency and the Empanelled Health Care Provider within 15
days of receipt of the electronic Claim. The SHA through ISA
should inform the Empanelled Health Care Provider of its right
to seek redressal for any Claim related grievance before the
District Grievance Redressal Committee in its letter of rejection.
d. If a Claim is rejected because the Empanelled Health Care
Provider making the Claim is not empanelled for providing the
health care services in respect of which the Claim is made,
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then the ISAwill while rejecting the Claim inform the Beneficiary
of an alternate Empanelled Health Care Provider where the
benefit can be availed in future.
e. The ISA shall be responsible for ensuring settlement of all
claims within 15 daysafter receiving all the required information/
documents. The Claim Payment shall be made (based on the
Package Rate or the Pre-Authorized Amount) within 15 days, if
not rejected, including any investigation into the Claim received
from the Empanelled Health Care Provider.
f. In case of all PHCS, CHCS, District Hospitals and other Public
Empanelled Health Care Provider full claim payment will be
made without deduction of tax. In case of private health care
providers, full claim shall be paid without deduction of tax, if the
Empanelled Health Care Provider fails to submit a tax
exemption certificate to the SHA, then the Claim Payment
recommendation by ISA will be made after deducting tax at the
applicable rate.
g. If the Beneficiary is admitted by an Empanelled Health Care
Provider during a Policy Cover Period, but is discharged after
the end of such Policy Cover Period and the Policy is not
renewed, then the arising Claim shall be paid in full subject to
the available Sum Insured.
h. If a Claim is made during a Policy Cover Period and the Policy
is not subsequently renewed, then the Claim Payment shall be
made in full subject to the available Sum Insured.
i. The process specified in paragraphs (e) to (g) above in relation
to Claim Payment or investigation of the Claim shall be
completed such that the Turn-around Time shall be no longer
than 15 days.
If the ISA fails to process the claim and send to SHA within 10
days of receipt of the complete claim so as to ensure Claim
Payment within a Turn-around Time of 15 days then the ISA
agrees to be liable to pay a penal interest to the Empanelled
Health Care Provider at the rate of 1% of the Claim amount per
week after 15 days of delay.
j. The counting of days for the purpose of this Clause shall start
from the date of receipt of the Claim.” … … …
EHCP has also been provided right to appeal against
rejection of its claim by the ISA.
2(iii) Respondent No. 1 has formulated guidelines under AB-
PMJAY for release of grant-in-aid for the implementation of this
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Scheme. As per these guidelines a defined annual benefit cover of
Rs. 5 lac, per family, per annum, on family floater basis has been
provided for identified category of families as per SECC-2011. The
guidelines also stipulate the maximum annual ceiling limit as also
the sharing pattern ratio between the Central & State Governments
as under:-
“1. Maximum Annual Ceiling Limit and Sharing Pattern Ratio
A. Maximum Annual Ceiling Limit:
The actual premium and/or treatment cost of AB PM-JAY
Beneficiary Families or the maximum ceiling of the
estimated annual grant-in-aid/family as decided by
Government of India, whichever is less, would be shared
between Central Government and States/Union Territories
(UTs) in the ratio as per the directives issued by Ministry of
Finance from time to time. This amount shall be subject to
amendment as and when amended by the directives
issued by Ministry of Finance in this regard.
The maximum annual grant-in-aid as NHA’s Share will be
as under:
For North-Eastern Region,
two Himalayan States and
one Union Territory viz.
Jammu & Kashmir
90% of Annual Maximum Ceiling
as decided by government of
India from time to time.
viz.Rs.946.80(Rs.1052/- @90%)
For States other than North
Eastern Region, two
Himalayan States and for
two Union Territories viz.
Puducherry & New Delhi
60% of Annual Maximum Ceiling
as decided by Government of
India from time to time.
viz. Rs.631.20 (Rs.1052/@60%)
For other Union Territories 100% of Annual Maximum Ceiling
as decided by Government of
India from time to time.
viz.Rs.1052/- (Rs.1052/- @100%)
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The ceiling limit shall be applicable irrespective of the
implementation mode opted by the State Government/
Union Territory.
B. Sharing Pattern between Central and State Government:
The existing sharing pattern ratio is 60:40 between the
Central Government and the States Government/Union
Territories for all States and Union Territories other than
the seven North-Eastern & two Himalayan States and
Union Territories, which have their own Legislatures; and
For the seven North-Eastern States, the Union Territory of
Jammu and Kashmir and two Himalayan States (viz.
Himachal Pradesh and Uttarakahnd), the ratio of sharing
between the Central and State Governments will be 90:10;
and
For Union Territories which do not have their own
legislatures, the Central Government may provide up to
100% on a case-to-case basis.”
According to above extracted operational guidelines, the
actual premium and/or treatment cost of AB-PMJAY beneficiary
families or the maximum ceiling of the estimated annual grant-in-
aid/family as decided by Government of India, whichever is less,
would be shared between Central Government and States/Union
Territories in the ratio as per the directives issued by Ministry of
Finance from time to time. For State of Himachal Pradesh this ratio
has been fixed as 90:10 between Central Government and the
State Government. For the Central Government the sharing pattern
is 90% of annual maximum ceiling kept at Rs. 946.80 (Rs. 1052/-@
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90%). The procedure for release of grant-in-aid has been detailed in
the guidelines. The guidelines provide for implementation of AB-
PMJAY either in Insurance Mode or the Trust Mode or the Mixed
Mode. Stage of release of premium is also outlined in the guidelines
as under:-
“II – Stage of Release of Premium:
(i) For States implementing AB PM-JAY in Insurance Mode Or
States implementing AB PM-JAY in Mixed Mode with regard to
Insurance Component of Mixed Mode: Grant-in-Aid will be
released as per the timeline decided in the approved Model
Tender Document approved by NHA for the selection of Insurance
Company or as per existing contract signed between SHO &
Insurance Company, if any.
(ii) For States implementing AB PM-JAY in Trust Mode Or
States implementing AB PM-JAY in Mixed Mode with regard to
Trust Component of Mixed Mode: Grant-in-Aid will be released,
preferable in two tranches of 50% each (around the month of May
& October), subject to proportionate upfront release of State share
and utilization of earlier released grant-in-aid, if any.
The annual payable Grant-in-Aid in case of Mixed Mode,
will be funds will computed for the premium payment as per the
applicable insurance contract signed between SHA and insurance
company. Further, the computation of payable treatment cost of
NHA’s Share for claim payment under trust mode will be done
from the left-over funds with revised beneficiary base (excluding
null data records).”
2(iv) A Memorandum of Understanding (in short the ‘MoU’) was
also executed on 14.05.2018 between the National Health Agency,
Government of India and respondents-State Government for
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implementation of Pradhan Mantri Rashtriya Swathya Suraksha
Mission (in short PMRSSM) wherein the basic sum insured was Rs.
5 lac per beneficiary family unit per annum. The beneficiary family
unit is the family including all its members that figures in the SECC
data base under the deprivation criteria. Clause 5 of the MoU is with
the heading – ‘Role and Responsibilities of NHA’. Its relevant
provision reads as under:-
“5) Role and Responsibilities of NHA
Having agreed to provide assistance for the
implementation of PMRSSM in alliance with Mukhya Mantri State
Health Care Scheme and HP Universal Health Protection Scheme
in the State of Himachal Pradesh, the NHA shall do the following:
a) Premium/Cost Contribution:
[Insurance mode] The NHA shall release Central share of grant-
in-aid under PMRSSM as premium contribution determined
through tendering process subject to national ceiling determined
by Government of India;
[Trust mode] The NHA agrees to release Central share of grant-in-
aid as actual cost of claims or the ceiling determined by the
Government of India, whichever is lower.
b) Transfer of Premium/cost as grant-in-aid in escrow account: There
shall be an escrow account established between the NHA and
SHA and the NHA shall transfer the Central Government’s share
to the specified escrow account, within 15 days on receipt of
intimation from the State pertaining to the fulfillment of the
conditions set out in (a) above as may be prescribed by the NHA.
c) Transfer of administrative expense: The NHA shall provide Central
Government’s share of contribution with respect to administrative
expenses to the SHA based on fulfillment of such conditions as
maybe prescribed by NHA.
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d) Database of beneficiaries: The NHA shall provide the database of
eligible beneficiary families to the States and shall allot a unique
national ID for each PMRSSM beneficiary. The NHA will also
provide flexibility to States to use their own database of
beneficiaries as mentioned in clause 6(f) of this MoU on the
condition that all PMRSSM eligible Beneficiary Family Units are
included in this database.
e) Operational Guidelines: The NHA shall provide guidance to the
States through operational guidelines for implementation of
PMRSSM.” … … …
Clause 6 of the MoU assigns following role and
responsibilities of State of Himachal Pradesh (relevant part only):-
“6) Role and Responsibilities of State of Himachal Pradesh:
The State shall be responsible for the following with respect to
implementation of PMRSSM in alliance with the Mukhya Mantri
State Health Care Scheme and HP Universal Health Protection
Scheme under this MoU:-
a) Setting up of State Health Agency: The State shall set-up a
dedicated State Health Agency (SHA) or designate this function to
any existing agency/trust/society i.e. Himachal Pradesh Swasthya
Bima Yojna Society designated for this purpose which will be
responsible for the implementation of PMRSSM in alliance with
Mukhya Mantri State Health Care Scheme and HP Universal
Health Protection Scheme.
b) Coverage: The State shall provide a health protection coverage of
Rs. 5 lakh per family per year benefit cover for secondary and
tertiary care hospitalizations to all eligible PMRSSM families.
c) Premium/Cost contribution
i) [Insurance mode] The State shall release State share of
grant-in-aid as premium contribution determined through
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tendering process including any contributions to be made
over and above the national ceiling determined by
Government of India [and for any additional coverage/benefit
cover/beneficiary family category covered under the Mukhya
Mantri State Health Care Scheme and HP Universal Health
Protection Scheme in alliance with PMRSSM];
ii) [Trust mode] The State shall release State share of grant-in-
aid as actual cost of claims or any additional claims beyond
the ceiling determined by the Government of India, [and for
any additional coverage/benefit cover/beneficiary family
category covered under the Mukhya Mantri State Health
Care Scheme and HP Universal Health Protection Scheme
in alliance with PMRSSM].
[Note: The State is implementing Mukhya Mantri State
Health Care Scheme and HP Universal Health Protection
Scheme on Trust mode. The State will decide for
implementation of Mission on Insurance mode or Trust mode
in consultation with NHA].” … … …
It is an admitted position that State of Himachal Pradesh
has adopted Trust/assurance mode for release of payments to the
empanelled hospitals. On 01.09.2018 respondent-State notified
guidelines for implementation of the AB-NHPM as under:-
“The Governor, Himachal Pradesh is pleased to notify the
guidelines for implementation of Ayushman Bharat National
Health Protection Mission (AB-NHPM) in the State of Himachal
Pradesh. The following shall be the guidelines for the
implementation of Mission in the State of Himachal Pradesh.
(a) The families, selected on the basis of Socio Economic
Caste Census, 2011 (SECC, 2011) and enrolled under Rashtriya
Swasthya Bima Yojna in 2014-15 in the State shall be eligible for
cashless treatment under the Mission.
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(b) The eligible family shall get maximum health insurance
coverage of Rs. 5.00 lakh per year on family floater basis.
(c) The HP Swasthya Bima Yojna Society, which is
implementing Rashtriya Swasthya Bima Yojna, Mukhya Mantri
State Health Care Scheme and H.P. Universal Health Protection
Scheme shall implement the Mission in the State.
(d) Hospitals empanelled under Rashtriya Swasthya Bima
Yojna will stand empanelled for Ayushman Bharat however their
physical verification will be completed within three months. In
addition new hospitals will be empanelled under the mission.
(e) The empanelled hospitals will appoint Pradhan Mantri
Arogya Mitra (PMAM) who will be responsible for beneficiary
identification system (BIS), Transaction Management System
(TMA) and help the beneficiaries for availing cashless treatment.
These PMAMs will keep proper record of the claims and help the
hospitals in getting reimbursement. Hospitals will depute PMAM at
their own level and their remuneration etc. will be met by the
hospital from its own resources.
(f) The Mission will be implemented on assurance mode and
HP Swasthya Bima Yojna Society will select implementation
Support Agency through open bidding process for implementation
of the Mission in the State.
The guidelines issued by the Government of India for
implementation of Mission from time to time shall be followed.
This issues with the prior concurrence of the Finance
Department obtained vide the U.O. Fin (C) B (15)-1/2018 dated
19.07.2018.”
Working of Ayushman Bharat – Pradhan Mantri
2(v) The Issue:
Jan Arogya Yojna
2(v)(a) During hearing of the case, learned Advocate General
provided following data to show year-wise allocation, release of
funds vis-à-vis actual expenditure incurred on the Scheme:-
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Year State
Share
(Rs. in
crore)
Centre
share
(Rs. in
crore)
Patients
treated
Amount
of
claims
(Rs. in
crore)
Extra
expen-
diture
on State
10% State
Share as
per actual
expen-
diture (Rs.
in crore)
90% Centre
Share on
Actual
Expenditure
(Rs. in
crore)
Extra
%age
burden
on
State
Per family
Expen-
diture on
actual
(Rs.)
(Rs. in
crore)
2018-19 0.73 16.56 9326 8.51 0 0.85 7.66 0 160
2019-20 5.51 23.96 50319 44.62 0 4.46 40.16 0 838
2020-21 4.78 33.55 30826 37.28 0 3.73 33.55 0 700
2021-22 4.78 45.35 49650 73.71 23.58 7.37 66.34 31.99 1384
2022-23 27.3 45.35 65736 83.58 33.45 8.36 75.22 40.02 1570
2023-24 5.51 45.35 62301 84.18 33.32 8.42 75.76 39.58 1581
2024-25 5.53 49.71 73173 112.21 56.97 11.22 100.99 50.77 2108
2025-26 5.52 49.71 106953 154.75 99.52 15.48 139.28 64.31 2907
Total 59.66 309.54 448284 598.84 246.84 59.88 538.96 41.22
Learned Advocate General submitted that during initial
years of operation of the Scheme i.e. 2018-19, 2019-20 & 2020-21,
the Scheme functioned almost smoothly. The number of patients
treated under the Scheme was less. Claims were accordingly also
less in number. The quantification of the claims was within the
limits under the Scheme. For example, since the maximum ceiling
limit under the Scheme for Central Government is Rs. 952/- per
family per annum therefore for total eligible beneficiaries i.e. around
5 lac families the Central Government’s annual share in the Scheme
becomes Rs. 49.71 crores as against Rs. 5.52 crores of the State
Government or in other words in the ratio of 90:10. Actual annual
expenditure per family till 2020-21 remained around Rs. 838/- or
less i.e. within the ceiling limit of Rs. 1052/- per family. However, the
situation became different w.e.f. 2021-22 onwards. The number of
patients treated by private empanelled hospitals rose, leading to
corresponding increase in their claims. But because of maximum
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ceiling fixed and as interpreted by the Central Government of its
contribution in AB-PMJAY Scheme, the grant-in-aid released by the
Central Government did not exceed Rs. 49.71 crores per annum.
Consequently, the additional financial liability fell upon the State
Government. Illustratively in the year 2021-22, number of patients
treated was 49650. Claims for Rs. 73.71 crores were received from
empanelled hospitals. According to the State, 90% of Centre’s
liability though would have been equivalent to Rs. 66.34 crores but
the Centre released the maximum ceiling limit of amount as
interpreted by it i.e. Rs. 952/- per family totaling Rs. 45.35 crores.
The remaining liability was fastened upon State. Total annual actual
expenditure per family for 2021-22 was Rs. 1384/-. Centre only bore
45.35 crores against 90% liability whereas against supposedly 10%
of liability the State was asked to shell out Rs. 23.58 crores over &
above 10% liability. This has continued for subsequent years as
well. For example, for the year 2025-26 the actual amount claimed
under AB-PMJAY was Rs. 154.75 crores, 90% of which i.e. Rs.
139.28 crores should have been borne by the Centre and 10%
thereof i.e. Rs. 15.85 crores should have been the responsibility of
the State Government. But in reality, because of the ceiling limit
fixed and being interpreted in a particular manner by the Central
Government regarding its contribution, the grant-in-aid released by
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the Central Government remained static at Rs. 49.71 crores.
Resultantly, balance liability fell upon the State Government. The
State is now supposed to pay claims of empanelled hospitals to the
extent of 64.31% extra over its delineated share of 10%. This
according to learned Advocate General is unjust. Submission was
made that for the revenue deficit State of Himachal Pradesh,
interpretation of sharing pattern of 90:10 for release of treatment
claims of empanelled hospitals has to be based upon actual
expenditure caused or else the Scheme becomes unworkable.
Therefore, Central Government should be directed to pay 90% of
actual cost incurred/claims per annum. Citing Adani Power (Mundra)
2
Limited vs. Gujarat Electricity Regulatory Commission & Ors. ,
learned Advocate General argued that contract should be
interpreted according to its purpose. The purpose of a contract is
the interests, objections, values, policy that the contract is
designed to actualize. Export Credit Guarantee Corporation of
3
India Limited vs. Garg Sons International , was relied upon to
submit that contract must be read as a whole and every attempt
should be made to harmonise the terms thereof, keeping in mind
2
(2019) 19 SCC 9
3
(2014) 1 SCC 686
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that the rule of contra proferentem does not apply in case of
commercial contract.
Learned counsel appearing for respondent No. 2-UOI
submitted that under AB-PMJAY, it is the responsibility of the State
Government to bear the expenses for the additional claims that are
beyond the ceiling limit. The Central Government & the State
Government are bound by the clauses of not just the Schemes but
also of Memorandum of Understanding executed between them.
Liability of Central Government is only to release 90% of the
maximum prescribed ceiling limit.
Learned Counsel further submitted that in no case the
actual share of Central Government will go beyond Rs. 49.71 crores
per annum for around 5 lac beneficiary families at 90% of Rs. 1052/-
i.e. Rs. 946.80 per annum, per family. The additional liability over &
above Rs. 49.71 crores, if any in any given year is to be borne by
the State Government and this is specifically so provided in the AB-
PMJAY, the notification dated 01.09.2018 as also the MoU dated
14.05.2018. Respondent-State has agreed to implement the
Scheme as it stands fully aware of the financial obligations arising
therefrom. There is no ambiguity in the Scheme. Respondent-State
has not exercised opting out of Scheme as provided in terms of
following Clauses of the MoU:-
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“3) Duration of the MoU
a) This MoU shall come into force immediately upon signing
and shall be applicable till such date when either of the
Parties decide to withdraw from it or both Parties agree to
terminate it as per clause 8 of this MoU.”
… …. …
“8) Exit and Termination
a) Either party of the MoU can invoke the exit clause to
withdraw from the MoU, provided that the existing party
gives a notice of its intent to terminate in writing at least 90
days in advance, and citing the reasons for the
termination. The Parties shall conduct as many
coordination and conciliation meetings as possible during
this period to explore ways to continue the MoU, if needed.
b) This MoU can also be terminated for cause by providing 60
days prior notice in writing, and such cause for termination
shall be if either party commits a material breach of its
obligations under this MoU.”
It was submitted that Central Government having already
released its share of Rs. 49.71 crores, remaining liability towards
pending claim of petitioners is that of the State Government.
2(v)(b) There appears to be some justification in the submissions
of the learned Advocate General. To simplify the submissions of the
learned Advocate General, a hypothetical situation (which though
according to learned Counsel for the petitioners and respondent No.
2 can never arise, illustration however is given only towards better
comprehension of the issue) can be visualized that in a given year
all 5 lac eligible beneficiary families (rounded off), claim the
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maximum sum insured i.e. Rs. 5 lac towards treatment cost, the total
actual expenditure would then work out to be 5 lac x 5 lac = 2500
crores. In terms of the Scheme, liability of Central Government is
90:10. This sharing pattern appears to be only a paper depiction,
for the reason that Central Government has fixed its maximum
ceiling limit per family, per annum, which is Rs. 952/-. Thus in case
one family avails Rs. 5 lac limit per annum, the Central Government
will release only Rs. 952/- to that family per annum. The remaining
amount of Rs. 499048/- has to be borne by the State Government.
For the revenue deficit State of Himachal Pradesh (as has come out
from the documents placed on record during hearing) it may not be
an easy task to bear. Be that as it may. It is not for the Court to
venture into this area. ‘ As per settled proposition of law, the Court
should refrain from interfering with the policy decision, which have a
cascading effect and having financial implications’ ( State of
4
Maharashtra & Anr. vs. Bhawan & Ors. ).
2
Adani Power (Mundra) Ltd. , relied upon by the
respondent-State inter alia holds that agreement ought to be given
the plain, literal and grammatical meaning of the expression used in
the same. The principle of business efficacy could be invoked only if
by a plain literal interpretation of the term in the agreement or the
4
(2022) 4 SCC 193
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contract, it is not possible to achieve the result or the consequence
intended by the parties acting as prudent businessmen. It was held
as under:-
“24. It could thus be seen that it is more than well settled that
the clauses in the agreement ought to be given the plain, literal
and grammatical meaning of the expression used in the same. No
doubt, that the courts will also try to gather as to what intention the
parties wanted to give them. As has been held by Ranjan Gogoi,
J. (as His Lordship then was) the principle of business efficacy
could be invoked only if by a plain literal interpretation of the term
in the agreement or the contract, it is not possible to achieve the
result or the consequence intended by the parties acting as
prudent businessmen. This test requires that a term can only be
implied, if it is necessary to give business efficacy to the contract,
to avoid such a failure of consideration that the parties cannot as
reasonable businessmen have intended. If the contract makes
business sense without the term, the courts will not imply the
same. It is amply clear that courts can imply a clause only if it is
found that the plain and literal meaning given to the expression
used in the terms is not in a position to make out the intention of
the parties. Reading an unexpressed term in an agreement would
be justified on the basis that such a term was always and
obviously intended by and between the parties thereto. An
unexpressed term can be implied if and only if the court finds that
the parties must have intended that term to form part of their
contract. It is not enough for the court to find that such a term
would have been adopted by the parties as reasonable men if it
had been suggested to them. It must have been a term that went
without saying, a term necessary to give business efficacy to the
contract, a term which, although tacit, forms part of the contract.
5
As held in Nabha Power Ltd. vs. Punjab SPCL , for invoking the
5
(2018) 11 SCC 508
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business efficacy test and carving out an implied condition, not
expressly found in the language of the contract, the following five
conditions will have to be satisfied:
(1) Reasonable and equitable;
(2) Necessary to give business efficacy to the contract;
(3) It goes without saying i.e. the Officious Bystander Test;
(4) Capable of clear expression; and
(5) Must not contradict any express term of the contract.”
It will also be in place to quote Kirloskar Ferrous Industries
6
Limited & Anr. vs. Union of India & Ors. that inter alia holds that
judicial review does not entail comprehensive re-evaluation of
policy’s wisdom as under:-
“56. Policy decisions often require the expertise of professionals
and specialists in fields such as economics, public health, national
security, and environmental science. These domains involve
specialized knowledge that judges, as generalists in legal matters,
may lack. For instance, in economic policy, the executive may
decide on trade tariffs or subsidies based on extensive data and
projections that aim to balance domestic industry support with
global trade commitments. The courts, lacking the same level of
economic expertise and without the authority to make trade-offs
among competing policy objectives, is typically not equipped to
second-guess these kinds of decisions.
57. While courts have the power of judicial review to ensure that
executive actions and legislative enactments comply with the
Constitution, this power is not absolute. Judicial review is meant to
act as a safeguard against actions that overstep legal boundaries
or infringe on fundamental rights, but it does not entail a
comprehensive re-evaluation of the policy's wisdom. The judicial
6
(2025) 1 SCC 695
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review of policy decisions is limited to assessing the legality of the
decision-making process rather than the substantive merits of the
policy itself. For example, if a government policy infringes on
fundamental rights or discriminates against a particular group, the
courts have a duty to strike down such policies. However, in the
absence of constitutional or legal violations, the courts should
respect the policy choices made by the executive or legislature.
58. The duty of the court in policy-related cases is primarily to
determine whether the policy falls within the scope of the authority
granted to the relevant body. If the policy decision is within the
executive's legal authority and has been made following proper
procedures, the courts should defer to the expertise and discretion
of the policy-makers, even if the policy appears unwise or
imprudent. This restraint ensures that the courts do not impose its
own perspective on policy matters that are rightly the responsibility
of other branches.”
7
In Bhika Ram & Anr. vs. State of Rajasthan & Ors. the
Apex Court reiterated “ It is well settled in law that a policy decision
though executive in nature binds the Government, and the
Government cannot act contrary thereto, unless the policy is lawfully
amended or withdrawn. Any action taken in derogation of such a
policy, without amendment or valid justification, is arbitrary and
8
violative of Article 14 of the Constitution of India ”. It was further held
that “ The State Government cannot be permitted to act in
contravention of the policy framed by it, which binds it. ”
7
SLP(c) No. 27965 of 2025, decided on 19.12.2025
8
Mahabir Auto Stores & Ors. vs. Indian Oil Corporation & Ors., (1990) 3 SCC 752;
Home Secy., U.T. of Chandigarh & Anr. vs. Darshjit Singh Grewal & Ors., (1993) 4 SCC 25; &
State of Punjab & Ors vs. Ram Lubhaya Bagga & Ors. (1998) 4 SCC 117.
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The respondent-State was well aware of provisions of the
Scheme, its operational guidelines as also the payment modalities
prescribed thereunder. The Scheme very clearly mandates that:-
(a) i) actual premium
and/or
ii) the treatment cost of AB-PMJAY beneficiary
families
or
(b) the maximum ceiling of the estimated annual
grant-in-aid/family as decided by Government of
India,
whichever is less would be shared between the
Central Government and the States in the ratio
as decided by the Ministry of Finance from time
to time. The prescribed ratio is 90:10 for the State
of Himachal Pradesh.
Out of the above two postulations, in case in a given year
the maximum ceiling of estimated grant-in-aid per family decided by
the Government of India i.e. Rs. 1052/- per family, comes out as the
minimum expenditure for the Central Government, then it will only
be this expenditure that shall be borne by the Central Government
as per sharing pattern. Remaining responsibility will be that of the
State Government. This is also the clear language of the MoU
executed between the Central & State Government agencies. As per
Clause 5 of the MoU, in the Trust mode the National Health Agency
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shall release Central share of grant-in-aid as actual cost of claims or
the ceiling determined by the Government of India, whichever is
lower. Further as per Clause 6 of the MoU, the State shall release
State share of grant-in-aid as actual cost of claims or any additional
claims beyond the ceiling determined by Government of India. Thus
liability to bear expenditure beyond the maximum ceiling limit fixed
for Central Government has to be discharged by the State
Government. It is not the case where after working out the Scheme
from 2018-19 onwards, the State has been taken by surprise in the
year 2022-23 by the dimensions of the Scheme. Clauses of the
Scheme & the MoU are self speaking. The Clauses are the same as
they existed in the year 2018-19. Liability over & above the ceiling
limit of Rs. 952/- per family or in other words over maximum
financial limit of Rs. 49.71 crores per annum is to be borne by the
State. It was for the State to deliberate upon the Scheme, its long
term consequences and implications upon the State before notifying
the same for implementation in the State. Having undertaken to
implement the Scheme with all its terms & covenants, having
created financial obligations for itself under the Scheme, having
entered into contracts with third parties-the petitioners & others for
their providing treatment to patients as empanelled hospitals under
the Scheme, which they are admittedly still continuing to do, the
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State cannot deny or escape from its financial liabilities towards the
petitioners by putting forth the ground of unworkability of the
Scheme for the revenue deficit State. The respondent-State in its
reply filed to the writ petition has not even pleaded the unworkability
of the Scheme or wrong interpretation of the Scheme by the Central
Government as projected during hearing of the case. The stand
taken in the reply acknowledges ceiling based payments to be made
by the Centre under the Scheme as also on 90:10 sharing pattern
subject to maximum annual ceiling of Rs. 1052/- per eligible family
per annum. Reply also acknowledges that maximum share of the
Central Government under the Scheme is Rs. 49.71 crores per
annum for the identified beneficiary families. The only defence taken
by the State in the reply for not releasing the due payments to the
petitioners is lack of availability of funds with the State. Relevant
portion of reply is as under:-
“3. That at the outset, the replying respondents humbly submit that
the HP Swasthya Bima Yojna Society is implementing Ayushman
Bharat-Pradhan Mantri Jan Arogya Yojna and HIMCARE
Schemes in the State strictly as per the policy guidelines issued
by the appropriate Governments. It is worthwhile to submit here
that under Ayushman Bharat-Pradhan Mantri Jan Arogya Yonja
which is a centrally sponsored scheme, the allocation of funds is
made to the Society in the manner prescribed by the National
Health Authority (NHA), Ministry of Health and Family Welfare,
GOI and copy of the same is placed on record as Annexure R-4/1.
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Under the said policy, payments are strictly policy-driven, ceiling-
based and for Himachal Pradesh, being a Himalayan State, the
applicable 90:10 sharing ratio is subject to a maximum annual
ceiling of 1052/- per eligible family. In this way under Ayushman
Bharat –PMJAY Scheme, the Himachal Pradesh Swasthya Bima
Yojna Society i.e. Executive Agency receives total allocation
around Rs. 55.00 Crores in a year i.e (Rs. 49.71 Crore as Central
Share + Rs. 5.52 Crore as State Share). However, the HP
Swasthya Bima Yojna Society receives claims above Rs. 55.00
Crore and the Society has not been receiving any grant in respect
of the claims received more than Rs. 55.00 Crore in a year. It is
also put on record that during last two financial years claims more
than Rs. 100.00 Crores have been received and due to excess
claims, the backlog pendency under Ayushman Bharat- PMJAY
has accumulated more than Rs. 201.16 Crores. Also, it is
pertinent to submit here that under PM-JAY Ayushman Bharat
Scheme the claims are processed exclusively through the
Transaction Management System (TMS) Portal of NHA, which
does not permit manual or selective processing for a particular
hospital and all payouts are system-driven on a FIFO (First-In-
First-Out) basis, thereby leaving no scope for arbitrariness or
discrimination on the part of the replying respondent.
4. That the respondents are continuously making efforts to clear
pending claims, strictly in accordance with the NHA policy, and
there is no wilful default, arbitrariness or dereliction of statutory
duty.
5. That at the outset, it is respectfully submitted that payment of
certain claims could not be released due to non- availability of
funds at the relevant time. However, the replying respondent is
continuously taking up the matter for additional budget from the
Government and copies thereof are enclosed herewith as
Annexure-R-4-2. It is submitted that as and when the funds shall
be received from the appropriate Governments the pendency of
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eligible claims shall be cleared in accordance with the applicable
rules and scheme guidelines.”
It is admitted case of the respondent-State that MoU was
executed by it with the Central Government for implementing the
Scheme and in that memorandum also it has also been clearly
provided that any additional liability over and above the maximum
ceiling limit of grant-in-aid to be released by the Central
Government per family, per annum, has to be borne by the State
Government. In case the State Government is not in a position to
continue with the Scheme in its present format, it is for the State
Government to see its available options in accordance with law. It is
not the case of the respondent-State that it has discontinued the
Scheme or has opted out of the MoU. The reply filed by respondent-
State is clear indicator that respondent is aware about its liability
under the Scheme and that any additional expenditure over and
above the maximum ceiling limit of the Central Government is to be
borne by the respondent-State.
It is not in dispute that duly approved monetary claims of
petitioners for providing treatment to the beneficiary patients under
AB-PMJAY have not been cleared by the State.
For the foregoing it is held that liability to bear additional
expenses beyond the prescribed ceiling limit of the Central
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Government is that of respondent-State. The Central Government
having already cleared its financial liability towards the petitioners
under the Scheme, remaining part of duly approved bills of the
petitioners is to be released by the respondent-State.
3. HIMCARE Scheme
Vide notification dated 29.12.2018, Government of
Himachal Pradesh also started providing cashless treatment
coverage on the analogy of AB-PMJAY to the left out families under
HIMCARE Scheme. Under this notification, the hospitals empanelled
under AB-PMJAY Scheme stand automatically empanelled under
HIMCARE Scheme. Package rates of AB-PMJAY have been
adopted for HIMCARE. Under the HIMCARE Scheme, cashless
treatment coverage up to Rs.5 lac per year per family is being
provided in the empanelled hospitals by following the guidelines
issued for AB-PMJAY Scheme.
Petitioners have claimed that their bills under the
HIMCARE Scheme have also not been released by the respondent-
State and this is despite the fact that their bills are duly approved.
3(i) Respondents No. 1, 3 & 4 in their reply have not disputed
that HIMCARE is State funded Scheme and discharge of financial
obligations by releasing the claims of the petitioners-empanelled
hospitals under HIMCARE Scheme is their sole responsibility.
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Factual assertions made for the petitioners in the writ petitions have
not been disputed by the respondents-State. Non-release of claims
of the petitioners under this Scheme has been attributed to alleged
temporary non-availability of funds. The Hon’ble Supreme Court in
9
Municipal Council, Ratlam vs. Shri Vardichan & Ors , held that
financial constraints or lack of funds cannot be accepted as a valid
excuse for the non-performance of duties by public authorities.
Portion relevant to context is as under:-
“24. … … Why drive common people to public interest action?
Where directive Principles have found statutory expression in Do’s
and Dont’s the court will not sit idly by and allow municipal
government to become a statutory mockery. The law will
relentlessly be enforced and the plea of poor finance will be poor
alibi when people in misery cry for justice. The dynamics of the
judicial process has a new ‘enforcement’ dimension not merely
through some of the provisions of the Criminal Procedure Code
(as here), but also through activated tort consciousness. The
officers in charge and even the elected representatives will have
to face the penalty of the law if what the Constitution and follow-
up legislation direct them to do are defied or denied wrongfully.
The wages of violation is punishment, corporate and personal.”
3(ii) During one of hearings of the case, learned Advocate
General projected for the respondents-State that bills/claims of the
petitioners were under scanner; They were being investigated into
as according to the respondents, a necessity was felt to verify
9
(1980) 4 SCC 162
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whether claims/bills submitted by the petitioners-empanelled
hospitals were genuine or fake/fraudulent; For this purpose a
vigilance inquiry was ordered, which is still investigating into the
matter; Therefore, till the investigation is completed the payments
cannot be released.
This stand has been opposed by learned Counsel for the
petitioners. The point put forth was that detailed mechanism has
been provided in the Scheme for verifying the claims/bills of the
petitioners – empanelled hospitals; Petitioners’ bills have been duly
verified and approved by the competent authorities. Yet these are
not being released & unlawfully have been kept pending for years.
3(iii) After hearing the case at length on 25.03.2026,
respondent State was directed to release all pending approved bills
of petitioners by making up to date full & final payments. Relevant
portion of order is as under:-
“Above huge pending claims of the petitioners are in
respect of services already rendered by them in terms of the
schemes. Furthermore the claims have been duly examined and
approved yet these have not been released in entirety. The
services being rendered by the petitioners are continuous in
nature. The claims shall keep on increasing with every passing
day with further patient care. The respondent-State being a
welfare entity committed to constitutional principles has
fundamental obligation to honour its commitment and cannot deny
legitimate claims compelling the petitioners to seek judicial
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intervention for what is rightfully due to them. In the backdrop of
the policy where the State entered into contracts and the work is
completed about which there is no dispute on facts and the bills
are approved, State cannot withhold the payments of approved
bills of the petitioners. The release of petitioners’ rightful dues is
akin to right to property protected under Article 300 (A) of the
Constitution. As a model employer as a model welfare entity
respondent-State is duty bound to uphold its bargain and fulfill its
payment obligations to ensure fairness, accountability and trust in
pubic dealings. More so, when the aforesaid schemes are aimed
in furtherance of right to life for sustainable health goals of general
public for covering the targeted areas under the health schemes.
In case the petitioners are not paid their duly approved bills, they
would be adversely affected by cash flow, which in turn would
affect the running of the scheme, ultimately creating negative
impact upon the health care system i.e. goal under the scheme.
For the foregoing reasons, respondent-State is directed to
release all pending approved bills of the petitioners by making
upto date full and final payments to them within two weeks from
today, failing which, the respondents shall remain present in the
Court on the next date when appropriate order in accordance with
law shall be passed.”
On the next date of listing – 10.04.2026, learned Advocate General
informed that a vigilance inquiry into the bills/claims submitted by the
private empanelled hospitals under HIMCARE Scheme had been
contemplated by the State. The operative part of the order passed
on the date is as under:-
“4. Under the HIMCARE Scheme, the only submission made
by the learned Advocate General is that a vigilance inquiry of
empanelled private hospitals under the HIMCARE Scheme has
been contemplated by the State Government.
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Before proceedings further in the matter, respondents–
State are directed to place on record complete data with details
including tabulations pertaining to the petitioners-the
hospitals/institutions empanelled under the Scheme including
facts & figures regarding the bills furnished by the petitioners,
dates when furnished; dates of their consideration; dates of
approval/disapproval of bills; reasons for disapproval; quantum of
approved bills; dates of release of amount under approved bills;
amount still due for release under approved bills; reasons as to
why the bills, if any, have not been considered/approved within the
period stipulated under the Scheme; complaints, if any, received
by the State pertaining to the bills of the empanelled hospitals,
date of receipt of complaints and nature thereof, on the next date.
List on 28.04.2026, when respondent No.1 & 3 shall also
remain present in the Court for assistance.”
On 28.04.2026, a consensus was reached between the
parties that the State will verify the pending bills of the petitioners
under the HIMCARE Scheme, within next two weeks. The order was
accordingly passed in the matter as under:-
… … … “Pursuant to the hearing held today, a consensus has
been reached between the parties, in terms of which, respondents
No.1 and 4 are now directed to carry out verification of the
pending bills of the petitioners-Empanelled Hospitals under the
Himcare Scheme. This exercise be undertaken within next two
weeks, after giving due opportunity of hearing to all the petitioners
through their authorized representatives.
Any information required, any document needed from the
petitioners in order to verify the bills, may be duly conveyed to
them to enable them to supply the same to the respondents. The
aim of this exercise would be to release the pending bills of the
petitioners, which are in order. This exercise would be
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independent of the investigation being carried out by the SIT
constituted by the State Vigilance & Anti Corruption Bureau. All
rights and contentions of the parties are left open. The bills, which
are ultimately approved, be released in favour of the petitioners.
It has been apprised during hearing that even though
Himcare Scheme is not being operated through Private
Empanelled Hospitals w.e.f. September, 2024, however, Dialysis
is still permissible under the Himcare Scheme in the private
empanelled hospitals. Therefore, there shall be a direction to the
respondents that all pending bills of the petitioners-Private
Empanelled Hospitals, if any, pertaining to Dialysis till date, be
also verified and if approved, payments be released in their
favour.
Report on the above two points be furnished by the next
date of hearing.” … …
During next hearing held on 21.05.2026, it was informed
by the respondent-State that some pending claims of the petitioner
under HIMCARE Scheme had been settled but a large number was
still pending. It will be appropriate to mention here that respondents
have stopped empanelment of all private hospitals including the
petitioners under the HIMCARE Scheme save & except for ‘dialysis’
st
w.e.f. 31 August, 2024. It was submitted by the learned Advocate
General that respondent-State had been verifying the bills furnished
by the petitioners but progress was slow due to less staff deployed
for the purpose. Considering this, following order was passed in the
matter (relevant portion only):-
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“2. The office instructions dated 20.05.2026 convey that prior
to 18.05.2026, only one Doctor had been assigned the task of
verifying the claims of the petitioners for settling their bills, but
after the hearing conducted on 18.05.2026, four additional Doctors
named in the office order dated 18.05.2026 appended alongwith
the instructions, have been deployed in the State Health Agency;
That they have been given the training and they have also
assumed the work.
Looking to the claims, which are as yet pending for
completion of codal formalities, it is obvious that the respondents
do require services of more Doctors for settling the claims of the
petitioners in respect of Dialysis cases and the cases other than
Dialysis. Learned Advocate General has apprised that submission
of claims by the petitioners under Dialysis heading is a continuous
process. Learned Advocate General has extended assurance that
the respondents are exploring the possibility and in all
probabilities, five more Doctors would be deployed for
verifying/settling the pending claims of the petitioners.
Sh. Ashwani K. Sharma, Chief Executive Officer, H.P.
Swasthya Bima Yojna Society has attended the hearing in person
and has assured expeditious verification of the pending claims of
the petitioners both under Dialysis and other than Dialysis
headings.
Keeping in view the fact that claims under ‘other than
Dialysis cases’ are much more in number than the claims in
respect of Dialysis cases, let respondent No.4 to explore the
possibility and if feasible, deploy three Doctors for
verifying/settling the claims of petitioners for Dialysis cases and
seven Doctors for other than Dialysis cases within next three
days.
Let the matter in this regard be now listed on 05.06.2026,
when fresh status report with respect to verification & settlement
of petitioners’ claims under Dialysis cases and other than Dialysis
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cases be furnished. Efforts be made for speedy settling of
petitioners’ claims.”
When the matter was next taken up on 05.06.2026,
learned Advocate General informed that Government of Himachal
Pradesh, vide its decision conveyed in office letter dated 30.05.2026
on the subject regarding release of payments under HIMCARE and
Ayushman Bharat Schemes had ordered not to release any payment
to private hospitals under HIMCARE Scheme till the completion of
vigilance enquiry or any other orders in this regard from the
Government. Since the aforesaid order passed by the State of
Himachal Pradesh was in breach of the orders passed in these writ
petitions from time to time whereunder directions had been issued to
the State to make payments of the duly verified bills under the
HIMCARE Scheme, the decision of the Government as conveyed in
office letter dated 30.05.2026 was stayed. The respondents were
directed to adhere to the orders already passed in the writ petitions
by releasing payments towards duly verified and settled bills in
favour of the petitioners. The relevant portion from order dated
05.06.2026 is as under:-
“2. Learned Advocate General, at this stage, also placed on
record copy of office letter dated 30.05.2026 from the Secretary
(Health) to the Government of Himachal Pradesh on the subject
‘Regarding release of payment under HIMCARE and Ayushman
Bharat Scheme’. The said letter conveys decision taken by the
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Government ‘not to release any payment to the private hospitals
under HIMCARE Scheme till the completion of vigilance enquiry or
any other orders in this regard from the Government’. The
contents of the office letter, relevant to the context, are as under:-
“I am directed to refer to the subject cited above
and to say that in the issue of pending payments to Private
and Government hospitals/Institutions under HIMCARE
and Ayushman Bharat Scheme, the Government has
decided not to release any payment to the private hospitals
under HIMCARE Scheme till the completion of vigilance
enquiry or any other orders in this regard from the
Government. However, only payments under Ayushman
Bharat are to be released to private and Government
hospitals to the extent of amount released by Government
of India and the 10% share of the State Government as of
now. Further, it is also decided to release payments under
HIMCARE to Government hospitals only.”
The above is, prima facie, in breach of the orders passed in
these writ petitions from time to time, whereunder, directions have
been issued to the respondent-State to make payments of the
duly verified bills under the HIMCARE scheme. Let the
respondents file reply as to why action be not taken against them
in this regard.
The decision of the Government as conveyed in office
letter dated 30.05.2026 is ordered to be stayed. The respondents
are directed to strictly adhere to the orders passed in these writ
petitions. Payments towards all duly verified and settled bills be
released in favour of the petitioners by the next date of hearing.
For this purpose, list these matters on 25.06.2026.”
4. At this stage, it will also be pertinent to take note of CMP
No. 14780 of 2026 filed by respondent No. 4 seeking modification of
the orders dated 21.05.2026 and 05.06.2026. The application is with
the pleadings that vigilance inquiry is being conducted into the bills
submitted by the private empanelled hospitals – petitioners; Inquiry
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is in progress and expected to be completed within few weeks. The
claims under the HIMCARE Scheme being inquired into by State
Vigilance & Anti-Corruption Bureau, the simultaneous holding of two
inquires qua verification of the genuineness of the petitioners’ claims
was creating hurdles in completion of inquiry being conducted by
the Vigilance Department. Prayer, inter alia, was made for three
weeks further time to verify the claims after completion of vigilance
inquiry subject to findings of the said inquiry. This application was
filed on 15.06.2026. More than five weeks have already gone by.
Neither vigilance inquiry has been concluded nor the pending
approved bills of the petitioners have been released. Some of the
petitioners have even enclosed complete data of their bills both
under AB-PMJAY as also HIMCARE Schemes, which are duly
verified & approved by the respondents yet are pending for release
for years together. Petitioners having incurred expenditure on
treatment of the patients, promised to be reimbursed to them under
express provisions of the contract & the applicable Schemes, are
liable to be paid this amount. Their grievance of facing financial
hardships for respondent-State’s inaction cannot be brushed aside.
According to the data supplied by the State, as on 06.07.2026, duly
approved bills of the petitioners amounting to Rs. 11,03,10,597
(rupees eleven crore three lac ten thousand five hundred & ninety
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seven only) under the HIMCARE Scheme and Rs. 25,22,50,100/-
(rupees twenty five crore twenty two lac fifty thousand & one
hundred only) under the AB-PMJAY Scheme were pending for
release. State cannot keep on evading its financial obligations under
pretext of it having contemplated or initiated a vigilance inquiry into
bills submitted by the private empanelled hospitals. These hospitals
also have to run, to conduct their day to day business. They are still
liable to provide cashless treatment to the patients under AB-PMJAY
st
& HIMCARE Scheme (dialysis only w.e.f. 31 August, 2024). In case
the heavy financial liabilities towards the petitioners that have
staggered over the years are not cleared, they will suffer immensely
and their working will also be affected. Apparently no sound
justiciable reason has come forth from the State to deny the
payment to the petitioners for their duly approved bills. Non release
of duly approved bills of the petitioners is flagrant breach of both the
Schemes as also the operational guidelines and MoU/notifications.
Duly verified & approved bills of the petitioners are pending for
release for years together. Vigilance inquiry has been initiated by the
State in April, 2026. It is for the State to go on with the vigilance
inquiry, but mere pendency of such inquiry cannot be taken as a tool
to withhold payment of duly verified & approved bills of the
petitioners. The recourse taken by the State to delay the payment
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citing ongoing vigilance inquiry is wholly unjustified, arbitrary & only
adds to its financial liabilities by attracting penal clauses of the
Schemes and in turn harm the petitioners. Once liability is admitted,
it cannot be postponed on pretext of an ongoing vigilance inquiry
that even otherwise appears to be proceeding on merrily &
indefinitely. Petitioners are providing treatment to patients under the
Schemes designed to holistically address the healthcare system.
Delay in making due payments to them will cause them financial
hardships – in time affecting their working and consequently the
goals intended to be achieved under the Schemes.
5. For the foregoing discussion these writ petitions are
disposed of with the following directions:-
1. Respondent-State shall clear its share of financial
liability in accordance with observations made hereto
before towards the petitioners’ – empanelled hospitals
under the Ayushman Bharat – Pradhan Mantri Jan
Arogya Yojna (AB-PMJAY) by releasing all duly
approved pending bills of the petitioners under the
Scheme within three weeks from today. The bills shall
be released alongwith interest @ 1% of the claim
amount per week after 15 days of delay (as provided in
the Scheme).
2. Respondent-State shall release duly approved
pending bills/claims of the petitioners – empanelled
hospitals under the Mukhya Mantri Himachal Health
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Care Scheme (HIMCARE) within three weeks from
today alongwith interest @ 1% of the claim amount per
week after 15 days of delay (as provided in the
Scheme).
3. Respondent-State shall ensure that future claims
of petitioners - empanelled hospitals under AB-PMJAY
& HIMCARE Schemes are duly processed, verified
within the timelines presently prescribed under the
Schemes and if approved are cleared strictly within the
period stipulated under the Schemes. Delayed
payments, if any, will fetch interest @ 1% of the claim
amount per week after 15 days of delay (as provided in
the Scheme). The Central Government shall also
ensure prompt release of its contribution under AB-
PMJAY Scheme as per agreed covenants.
4. In case on conclusion of vigilance inquiry, statedly
being conducted by the State into past claims of
empanelled hospitals, if any amount is found
recoverable from petitioners-hospitals, the respondents
shall be at liberty to proceed in the matter for recovery
of the amount, in accordance with law. All rights and
contentions of the parties including the empanelled
hospitals, in that regard are left open.
All pending miscellaneous application(s), to also stand
disposed off.
Jyotsna Rewal Dua,
Judge
(PK)
July 21 , 2026
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