State must fulfill payment obligations to empanelled hospitals regardless of internal funding deficits or pending investigative inquiries.

The petitioners are several private hospitals empanelled under the Central Government’s Ayushman Bharat Pradhan Mantri Jan Arogya Yojna (AB-PMJAY) and the State Government’s Mukhya Mantri Himachal Health Care Scheme (HIMCARE)

Despite treating patients under these cashless schemes, the respondents failed to release outstanding payments for duly approved bills

Regarding AB-PMJAY, a deadlock exists between the State and Central governments; the Center maintains its liability is capped at a fixed annual ceiling per family, while the State argues the funding ratio (90:10) should apply to the actual expenditure

Regarding HIMCARE, the State attributed non-payment to lack of funds and a pending vigilance inquiry into the genuineness of claims

1. Whether the State Government or the Central Government is liable to bear the financial burden of claims exceeding the maximum annual ceiling limit under the AB-PMJAY Scheme.

2. Whether the State can withhold payments for duly verified and approved bills under the HIMCARE Scheme on the grounds of financial constraints or the pendency of a vigilance inquiry.

The Court applied the operational guidelines of the AB-PMJAY and the Memorandum of Understanding (MoU) dated 14.05.2018, which specify that the National Health Agency (NHA) releases the lesser of the actual cost or the determined ceiling, with the State liable for additional claims beyond said ceiling

It relied on Adani Power (Mundra) Ltd. v. GERC, emphasizing that contracts must be given their plain literal meaning

Kirloskar Ferrous Industries Ltd. v. Union of India, which restricts judicial review of policy decisions to legality rather than wisdom

The Court cited Municipal Council, Ratlam v. Shri Vardichan, establishing that lack of funds is no excuse for a public authority to omit its statutory or contractual duties

Bhika Ram v. State of Rajasthan, holding that the Government is bound by its own policy

The Court observed that under the AB-PMJAY Trust Mode, the Central Government’s liability is explicitly limited by the MoU to 90% of the maximum ceiling (Rs. 952/- per family), even if the actual treatment costs are higher

The State, having entered the MoU and notified the scheme, cannot escape its liability for the "additional claims" beyond this ceiling by citing revenue deficits

Regarding HIMCARE, the Court found that the State is the sole funding authority and has already utilized the petitioners’ services

The Court rejected the State's attempt to halt payments via a May 2026 executive order citing a vigilance inquiry, noting that bills already verified and approved through the scheme’s internal mechanism cannot be withheld indefinitely

It reasoned that delaying payments for services already rendered violates Article 300A of the Constitution and threatens the healthcare system's sustainability

The Court directed the State to: (1) Clear all pending approved bills under AB-PMJAY and HIMCARE within three weeks; (2) Pay penal interest @ 1% per week for delays exceeding 15 days as per scheme guidelines; and (3) Ensure future claims are processed within stipulated timelines.

It clarified that the State may recover funds later if the vigilance inquiry proves fraud, but it cannot withhold currently approved dues based on a general inquiry. All petitions were disposed of accordingly.