Sanjeev Gulati Petitioner v. Sir Ganga Ram Hospital

S. Ravindra Bhat, J.:— In these proceedings under Article 226 of the Constitution of India, similar issues are involved; with consent of parties, they were heard together.

2. Both the petitioners are employees of the respondent. Sir Gangaram Trust Society (hereafter called “the hospital”). The hospital is a private institution; established by a charitable trust, which manages it. One of the objectives of the trust is to provide free medical aid to a section of the public. In its range of activities, the hospital offers an entire gamut of health care facilities, in various disciplines. It extends out-patient, as well as bed facilities; and doctors, as well as para-medical and other supporting staff are working for it.

3. The petitioners have approached this court, complaining violation of principles of natural justice. The petitioner in WP13521/2005 was issued with a charge sheet, alleging misconduct. He replied, resisting the charges; the hospital management, dissatisfied with the explanation afforded, decided to hold a formal inquiry, and appointed a retired High Court judge as an independent inquiry officer; a chartered accountant was appointed as the presenting officer. The petitioner complains that the conduct of inquiry is in violation of principles of natural justice, and that he was denied the services of a legal practitioner. The second petitioner was terminated from services of the hospital; he impugns the action as arbitrary, and mala fides. He was in the employment of the hospital for eight years; his case is that the termination was motivated by malice, and not preceded by any enquiry or opportunity of hearing. The order of termination was attacked as unconscionable, arbitrary, and an act of victimization.

4. The hospital, after issuance of notice, has opposed the petitions. It has raised a preliminary objection as to maintainability, on the ground that it is neither an authority under Article 226 of the Constitution of India, nor are the actions complained of, falling within the realm of duties of a public character, or nature, as to attract judicial review under Article 226 of the Constitution of India.

5. Mr. Vinay Bhasin, learned counsel for the respondent hospital urged that the mere fact that the respondent is carrying on activity of health care, which might be impacting a section of the public, does not entitle this court, to exercise jurisdiction under Article 226. To attract such jurisdiction, the activity must involve a public law element, or be concerned with the public duty cast upon the body, corporation or entity, against which judicial review is sought. The hospital is private; it is not subject to control, in day to day administration, or even policy making, by the state or any state agency. The duty sought to be enforced, is neither statutory, nor public; it is purely a matter of contract of employment, where the employer has chosen to take action against its employee. In such a background, the court should refrain exercise of jurisdiction under Article 226 of the Constitution of India. The learned counsel heavily relied upon the decision of the Supreme Court, reported as Federal Bank Ltd. v. Sagar Thomas, (2003) 10 SCC 733

6. Mr. G. S. Sistani, and Mr. Bhanu Pratap Singh Dubey, learned counsel for the petitioners, on the other hand, urged that the High Court, under Article 226 of the Constitution can issue writs against persons, and institutions that are not “State” as per Article 12 of the Constitution of India. Apart from the test of public nature of duties, or public character of the institution, the remedies under Article 226 of the Constitution of India, are available for breach of principles of natural justice. It was also urged that the hospital is a public institution, enjoined under the trust deed to carry out charitable activities. Inherent under its charter is the obligation to serve all members of the public, and extend medical aid, and treatment. If the hospital does not act in accordance with its mandate, the court acts within jurisdiction to entertain writ petitions under Article 226 of the Constitution of India, and take corrective action.

7. Learned counsel for the petitioners relied upon the decision reported as Zee Telefilms Ltd. v. Union of India, (2005) 4 SCC 649, Andi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust v. V.R Rudani 1989 (2) SCC 691; and U.P State Co-operative Land Development Bank v. Chandra Bhan Dubey, AIR 1999 SC 753 in support of the submission that the nature of the functions of the institution would be the determinative test, for finding out whether it discharged public functions. In this case, the hospital was charitable; it gave medical aid to patients; it is licensed by municipal and local authorities, and has to conform to a variety of rules and regulations, while carrying on its normal activities. Taken together, the hospital fulfils the requirement of carrying on public functions, and is amenable to writ jurisdiction.

8. Mr. Sistani also urged that the conduct of departmental proceedings, whereby the inquiry officer declined permission to engage a legal practitioner, since he was himself a trained legal expert, being a retired High Court judge, and further where the presenting officer was well versed, being a chartered accountant, whereas the petitioner was not so educated, was contrary to principles of natural justice. He relied upon the decision reported as Board of Trustees of the Port of Bombay v. Dilipkumar Raghavendranath Nadkurni, (1983) 1 SCC 124.

9. The issue as to what bodies are amenable to writ jurisdiction has arisen before courts, on numerous occasions. The Supreme Court has held in the recent past, that the institution must perform a function which is public in character; such an action need not necessarily be spelt out in law; the obligation should be apparent from its very nature. In Zee Telefilms, cited on behalf of the petitioners, the primary question was whether the Board of Control for Cricket was “State” under Article 12 of the Constitution of India. The Court held that it was not “State” but, on the facts of the case, went on to hold that the Board was amenable to writ jurisdiction under Article 226 of the Constitution of India. The Court held that:

“31. Be that as it may, it cannot be denied that the Board does discharge some duties like the selection of an Indian cricket team, controlling the activities of the players and others involved in the game of cricket. These activities can be said to be akin to public duties or State functions and if there is any violation of any constitutional or statutory obligation or rights of other citizens, the aggrieved party may not have a relief by way of a petition under Article 32. But that does not mean that the violator of such right would go scot-free merely because it or he is not a State. Under the Indian jurisprudence there is always a just remedy for the violation of a right of a citizen. Though the remedy under Article 32 is not available, an aggrieved party can always seek a remedy under the ordinary course of law or by way of a writ petition under Article 226 of the Constitution, which is much wider than Article 32.

32. This Court in the case of Andi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust v. V.R Rudani 12 has held: (SCC pp. 692-93)

“Article 226 confers wide powers on the High Courts to issue writs in the nature of prerogative writs. This is a striking departure from the English law. Under Article 226, writs can be issued to ‘any person or authority’. The term ‘authority’ used in the context, must receive a liberal meaning unlike the term in Article 12 which is relevant only for the purpose of enforcement of fundamental rights under Article 32. Article 226 confers power on the High Courts to issue writs for enforcement of the fundamental rights as well as non-fundamental rights. The words ‘any person or authority’ used in Article 226 are, therefore, not to be confined only to statutory authorities and instrumentalities of the State. They may cover any other person or body performing public duty. The form of the body concerned is not very much relevant. What is relevant is the nature of the duty imposed on the body. The duty must be judged in the light of positive obligation owed by the person or authority to the affected party, no matter by what means the duty is imposed. If a positive obligation exists mandamus cannot be denied.”

33. Thus, it is clear that when a private body exercises its public functions even if it is not a State, the aggrieved person has a remedy not only under the ordinary law but also under the Constitution, by way of a writ petition under Article 226.”

The words ‘any person or authority’ used in Article 226 are not restricted to statutory authorities and instrumentalities of the State; they include any person/body performing public duty. The nomenclature of the institution is irrelevant; of relevance is the nature of the duty imposed on the body. The duty is vis-a-vis positive obligation owed by the concerned person or authority to the affected party, irrespective of the means by which such a duty is imposed.

10. In Federal Bank Ltd. v. Sagar Thomas, (2003) 10 SCC 733 the Supreme Court had occasion to examine the entire issue, in the context of an employment dispute, to decide whether a private bank was amenable to writ jurisdiction. The court concluded that it was not amenable to writ jurisdiction, in the following terms:

“27. Such private companies would normally not be amenable to the writ jurisdiction under Article 226 of the Constitution. But in certain circumstances a writ may issue to such private bodies or persons as there may be statutes which need to be complied with by all concerned including the private companies. For example, there are certain legislations like the Industrial Disputes Act, the Minimum Wages Act. the Factories Act or for maintaining proper environment, say the Air (Prevention and Control of Pollution) Act, 1981 or the Water (Prevention and Control of Pollution) Act, 1974 etc. or statutes of the like nature which fasten certain duties and responsibilities statutorily upon such private bodies which they are bound to comply with. If they violate such a statutory provision a writ would certainly be issued for compliance with those provisions. For instance, if a private employer dispenses with the service of its employee in violation of the provisionscontained under the Industrial Disputes Act, in innumerable cases the High Court interfered and has issued the writ to the private bodies and the companies in that regard. But the difficulty in issuing a writ may arise where there may not be any non-compliance with or violation of any statutory provision by the private body. In that event a writ may not be issued at all. Other remedies, as may be available, may have to be resorted to.

28. The six factors which have been enumerated in the case of Ajay Hasia 5 and approved in the later decisions in the case of Ramana 4 and the seven Judge Bench in the case of Pradeep Kumar Biswas 52 may be applied to the facts of the present case and see whether those tests apply to the appellant Bank or not. As indicated earlier, share capital of the appellant Bank is not held at all by the Government nor is any financial assistance provided by the State, nothing to say which may meet almost the entire expenditure of the company. The third factor is also not answered since the appellant Bank does not enjoy any monopoly status nor can it be said to be an institution having State protection. So far as control over the affairs of the appellant Bank is concerned, they are managed by the Board of Directors elected by its shareholders. No governmental agency or officer is connected with the affairs of the appellant Bank nor is any one of them a member of the Board of Directors. In the normal functioning of the private banking company there is no participation or interference of the State or its authorities. The statutes have been framed regulating the financial and commercial activities so that fiscal equilibrium may be kept maintained and not get disturbed by the malfunctioning of such companies or institutions involved in the business of banking. These are regulatory measures for the purpose of maintaining a healthy economic atmosphere in the country. Such regulatory measures are provided for other companies also as well as industries manufacturing goods of importance. Otherwise these are purely private commercial activities. It deserves to be noted that it hardly makes any difference that such supervisory vigilance is kept by Reserve Bank of India under a statute or the Central Government. Even if it was with the Central Government in place of Reserve Bank of India it would not have made any difference, therefore the argument based on the decision of All India Bank Employees' Assn. 7 does not advance the case of the respondent. It is only in case of malfunctioning of the company that occasion to exercise such powers arises to protect the interest of the depositors, shareholders or the company itself or to help the company to be out of the woods. In times of normal functioning such occasions do not arise except for routine inspections etc. with a view to see that things are moved smoothly in keeping with fiscal policies in general.

29. There are a number of such companies carrying on the profession of banking. There is nothing which can be said to be close to the governmental functions. It is an old profession in one from or the other carried on by individuals or by a group of them. Losses incurred in the business are theirs as well as the profits. Any business or commercial activity, maybe banking, manufacturing units or related to any, other kind of business generating resources, employment, production and resulting in circulation of money are no doubt, such which do have impact on the economy of the country in general. But such activities cannot be classified as one falling in the category of discharging duties or functions of a public nature. Thus the case does not fall in the fifth category of cases enumerated in the case of Ajay Hasia 5. Again we find that the activity which is carried on by the appellant is not one which may have been earlier carried on by the Government and transferred to the appellant company. For the sake of argument, even if it may be assumed that one or the other test as provided in the case of Ajay Hasia 5 may be attracted, that by itself would not be sufficient to hold that it is an agency of the State or a company carrying on the functions of public nature.”

11. In a recent decision, reported as Binny Ltd v. Sadasivan AIR 2005 SC 3202. the Supreme Court had again occasion to review the entire law, in the context of an employment or service dispute. The court held as follows:

“29. Thus, it can be seen that a writ of mandamus or the remedy under Article 226 is pre-eminently a public law remedy and is not generally available as a remedy against private wrongs. It is used for enforcement of various rights of the public or to compel the public/statutory authorities to discharge their duties and to act within their bounds. It may be used to do justice when there is wrongful exercise of power or a refusal to perform duties. This writ is admirably equipped to serve as a” judicial control over administrative actions. This writ could also be issued against any private body or person, specially in view of the words used in Article 226 of the Constitution. However, the scope of mandamus is limited to enforcement of public duty. The scope of mandamus is determined by the nature of the duty to be enforced, rather than the identity of the authority against whom it is sought. If the private body is discharging a public function and the denial of any right is in connection with the public duty imposed on such body, the public law remedy can be enforced. The duty cast on the public body may be either statutory or otherwise and the source of such power is immaterial, but, nevertheless, there must be the public law element in such action. Sometimes, it is difficult to distinguish between public law and private law remedies. According to Halsbury's Laws of England 3rd ed. Vol. 30, page-682, “a public authority is a body not necessarily a county council, municipal corporation or other local authority which has public statutory duties to perform and which perform the duties and carries out its transactions for the benefit of the public and not for private profit.” There cannot be any general definition of public authority or public action. The facts of each case decide the point.

30. A contract would not become statutory simply because it is for construction of a public utility and it has been awarded by a statutory body. But nevertheless it may be noticed that the Government or Government authorities at all levels is increasingly employing contractual techniques to achieve its regulatory aims. It cannot be said that the exercise of those powers are free from the zone of judicial review and that there would be no limits to the exercise of such powers, but in normal circumstances, judicial review principles cannot be used to enforce the contractual obligations. When that contractual power is being used for public purpose, it is certainly amenable to judicial review. The power must be used for lawful purposes and not unreasonably.

31. The decision of the employer in these two cases to terminate the services of their employees cannot be said to have any element of public policy. Their cases were purely governed by the contract of employment entered into between the employees and the employer. It is not appropriate to construe those contracts as opposed to the principles of public policy and thus void and illegal under Section 23 of the Contract Act. In contractual matters even in respect of public bodies, the principles of judicial review have got limited application. This was expressly stated by this Court in State of U.P v. Bridge & Roof Co. and also in Kerala State Electricity Board v. Kurien E. Kalathil (2000) 6 SCC 295. In the latter case, this Court reiterated that the interpretation and implementation of a clause in a contract cannot be the subject matter of a writ petition. Whether the contract envisages actual payment or not is a question of construction of contract. If a term of a contract is violated, ordinarily, the remedy is not a writ petition under Article 226.

32. Applying these principles, it can very well be said that a writ of mandamus can be issued against a private body which is not a State within the meaning of Article 12 of the Constitution and such body is amenable to the jurisdiction under Article 226 of the Constitution and the High Court under Article 226 of the Constitution can exercise judicial review of the action challenged by a party. But there must be a public law element and it cannot be exercised to enforce purely private contracts entered into between the parties.

33. We are unable to perceive any public element in the termination of the employees by the appellant in Civil Appeal No. 1976 of 1998 and the remedy available to the respondents is to seek redressal of their grievance in civil law or under the labour law enactments especially in view of the disputed questions involved as regards the status of employees and other matters. So also, in the civil appeal arising out of SLP(Civil) No. 6016 of 2002. the writ petition has been rightly dismissed by the High Court. We see no merit in the contention advanced by the appellant therein.”

The court also referred to its previous decisions, in VST Industries Limited v. VST Industries Workers' Union and Anr. (2001) 1 SCC 298: General Manager, Kisan Sahkar Chini Mills Limited, Sultanpur, UP v. Satrughan Nishad and Ors., AIR 2003 SC 4531.

12. Further debate on the issue would not be necessary, in view of the judgment of the Division Bench of this court, reported as Sanjay Gupta. v. Dr. Shroff'S Charity Eye Hospital. 2002 (62) DRJ 368. An order of termination of an employee, working in a private charitable hospital was challenged in writ proceedings. The court held that in such cases, the terms and conditions of the contract are private in character, and do not involve public law functions. The court rejected the contention that writ proceedings were maintainable, on account of functions of the hospital being of public importance. Here too, whatever be the other obligations cast on the hospital, which may partake of a public nature, contracts of employment, disciplinary action, and termination orders do not answer the description of activities that are of an intrinsically public nature. Therefore, in the light of the judgments cited above, particularly Binny Ltd's case; Federal Bank Ltd. v. Sagar Thomas,(2003) 10 SCC 733 and Sanjay Gupta. v. Dr. Shroff'S Charity Eye Hospital. 2002 (62) DRJ 368, it has to be held that the petitions are not maintainable, since the dispute does not fall within the domain of public law.

13. In Dilipkumar Nadkarni's case, in regard to an enquiry where the delinquent officer was denied services of a legal practitioner, it was held that:

“In our view we have reached a stage in our onward march to fair play in action that where in an enquiry before a domestic tribunal the delinquent officer is pitted against a legally trained mind, if he seeks permission to appeal- through a legal practitioner the refusal to grant this request would amount to denial of a reasonable request to defend himself and the essential principles of natural justice would be violated. This view has been taken by a learned Single Judge and while dismissing the appeal in limine approved by the Division Bench of the High Court commends to us. Therefore, this appeal is liable to be dismissed.”

Reliance was also placed on the decisions in Institute of Technology v. Union of India 1991 Supp (2) SCC 12: CL Subramaniam v. Collector of Customs, AIR 1972 SC 2178, by the petitioners, to say that failure to provide a legal practitioner vitiated the conduct of the proceedings, and rendered it arbitrary, and thus, amenable to writ jurisdiction. I am of the opinion that such alleged wrongful action can be questioned in civil proceedings; or remedies available under the Industrial Disputes Act, as the case may be; a petition under Article 226 of the Constitution of India would neither appropriate nor maintainable.

14. For the foregoing the petitions and applications are dismissed with no order as to costs. All interim orders stand discharged. The petitioners are entitled to initiate such legal proceedings as they may choose, and as is available in law. All rights and contentions of parties are kept open.