Principles Governing Criminal Summoning in Patient Billing Disputes: No Prima Facie Offense Absent Dishonest Intent

Introduction

In SHASHANK GARG v. STATE & ORS., CRL.M.C. 3583/2018, decided on 17 April 2025 by the Delhi High Court (Neena Bansal Krishna, J.), the Court examined whether routine patient‐billing practices and insurance‐related delays could give rise to criminal liability under Sections 342 (wrongful restraint), 406 (criminal breach of trust), 420 (cheating), and 120B (criminal conspiracy) of the Indian Penal Code. The petitioner, Advocate Shashank Garg, alleged that Max Super Speciality Hospital and its staff coerced him into advancing large sums despite a valid cashless insurance policy, wrongfully withheld refunds, and confined him until full payment was made. The hospital and its officers were previously discharged by the Sessions Judge against a Metropolitan Magistrate’s order of summons. Garg invoked the High Court’s inherent powers under Section 482 CrPC to set aside that discharge.

Summary of the Judgment

The High Court dismissed the petition, upholding the Sessions Judge’s finding that no prima facie case of cheating, misappropriation, wrongful restraint or conspiracy was made out on the pleadings and the pre‐summoning testimony. The Court held that:

The hospital’s insistence on advance deposit arose from the insurer’s partial pre‐authorization (₹75,000) against estimated charges (₹2.2 lakhs) and complied with IRDA norms;
The difference in room category charge (₹57,332) and the agreed discount (₹12,495) were duly adjusted, with any surplus refunded;
Delay in discharge until the insurer’s final approval did not amount to “wrongful restraint” under Section 342 IPC;
No entrustment or misappropriation (Section 406 IPC) occurred because the advance deposit was contractually adjustable;
No dishonest or fraudulent intent—essential for Section 420 IPC—was established;
Allegations of a wider conspiracy (Section 120B IPC) were unsupported by any common‐intent nexus;
The Magistrate’s summoning order was not perverse; at the process stage only prima facie satisfaction is required, not proof of guilt.

Analysis

Precedents Cited

Bhushan Kumar & Anr. v. State & Anr. (2012 5 SCC 424): The Magistrate need not record elaborate reasons when issuing summons.
Kanti Bhadra Shah v. State of W.B. (2000 1 SCC 722): Avoids prolixity at early stages; only prima facie satisfaction is needed.
Nupur Talwar v. CBI (2012 2 SCC 188): Interference with a cognizance or summoning order is warranted only if it is perverse or without material.
U.P. Pollution Control Board v. Bhupendra Kumar Modi (2009 2 SCC 147) and similar judgments: Summoning under CrPC requires only prima facie proof on the complaint and evidence led, not final adjudication.

Legal Reasoning

1. Advance Deposit and IRDA Norms: The hospital’s demand for an advance deposit beyond the insurer’s initial approval was contractual and aligned with Insurance Regulatory and Development Authority guidelines. There was no concealment or false representation.

2. No Cheating or Dishonest Intent (Section 420 IPC): Cheating requires fraud or dishonest inducement. Here, the petitioner was informed of costs and deposit requirements in advance, and the surgery proceeded only after compliance. The subsequent billing adjustments (room‐category differential, agreed discount) were transparently credited.

3. No Criminal Breach of Trust (Section 406 IPC): The advance deposit remained the hospital’s contractual receipt to be adjusted in the final bill. All funds were accounted for and any surplus refunded. No misappropriation or diversion took place.

4. No Wrongful Restraint (Section 342 IPC): Delayed discharge arose from awaiting insurer’s final authorization; there was no physical or legal impediment to leave. Procedural delay, even if stressful, does not constitute a criminal restraint.

5. No Conspiracy (Section 120B IPC): Allegations of a “higher‐level management” plan lacked any pleaded or demonstrable meeting of minds to commit an offence. Parallel conduct by hospital staff, without common criminal intent, cannot ground conspiracy.

6. Standard for Summoning: At the stage of issuing process under Section 203 CrPC, the Magistrate must be satisfied prima facie, on the complaint and pre‐summoning evidence, that cognizable offences are disclosed. Detailed reasons or mini‐trial are neither required nor appropriate.

Impact

This decision clarifies that routine disputes over medical billing and insurance procedures—however onerous to patients—do not automatically attract criminal charges. It reinforces:

A high threshold of dishonest or fraudulent intent for Sections 420 and 406 IPC;
The distinction between civil remedies/consumer claims and criminal liability in healthcare billing;
The limited scope for judicial interference with summoning orders, thereby discouraging frivolous or vexatious criminal complaints against medical institutions;
A call for regulatory reforms—such as a Patients’ Rights Charter and streamlined insurer‐hospital coordination—to reduce patient harassment without resorting to criminal sanctions.

Complex Concepts Simplified

Section 342 IPC (Wrongful Restraint): Requires unlawful obstruction of a person’s freedom of movement. Mere procedural delay is not enough.
Section 406 IPC (Criminal Breach of Trust): Arises when entrusted property is misappropriated. Here, the deposit was contractually held and adjusted, not stolen.
Section 420 IPC (Cheating): Involves fraudulently inducing someone to deliver property. Transparent billing and prior disclosure negate fraud.
Section 120B IPC (Criminal Conspiracy): Demands an agreement to commit an offence. Parallel administrative actions, without a criminal agreement, do not suffice.
Section 482 CrPC (Inherent Powers): Allows High Courts to quash proceedings to prevent abuse of process or miscarriage of justice, especially where no prima facie case exists.

Conclusion

The Delhi High Court in SHASHANK GARG v. STATE & ORS. reaffirms that the criminal law’s scope in healthcare billing is narrow. Absent clear evidence of fraud, misappropriation or physical restraint, disputes over payment procedures and insurer delays are civil or regulatory matters, not criminal offences. The judgment underscores the limited role of the criminal process at the summons stage, demands genuine prima facie material for cognizance, and encourages policy-level solutions to patient grievances without resorting to criminal sanction.