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Union of India v. Mool Chand Khairati Ram Trust

Civil Appeal · 2018 INSC 593Decided 9 Jul 2018
Civil Appeal No. 3155 of 2017
Justice Arun Mishra · Justice Uday Umesh Lalit

Background

Several Delhi hospitals, including Moolchand Hospital, had been allotted government land decades earlier at heavily concessional rates specifically to run charitable institutions providing free treatment to the poor. When the Delhi government (acting on a Supreme Court-linked policy requiring free treatment of a percentage of patients) directed these hospitals to comply, the hospitals challenged the conditions, and the Delhi High Court quashed the government's order. The Union of India and the land authority appealed, backed by an internal committee's findings that Moolchand Hospital had, over time, drastically scaled back its charitable Ayurvedic wards and largely abandoned the free-treatment obligations its founder had intended.

Decision Breakdown

The Supreme Court held that land granted to a hospital for a charitable purpose at concessional rates carries a continuing obligation to actually provide free treatment to the poor, and that this obligation is not erased simply because the exact meaning of "poor" was undefined in the original lease. Examining the evidence afresh, the Court found the government's 2012 order imposing free-treatment conditions to be "absolutely proper," rejecting the hospital's objections including the claim that it was not heard before related proceedings. The Court set aside the High Court's judgment, restored the government's conditions, and directed that the Delhi government file compliance reports for one year, warning that any violation could lead to cancellation of the hospitals' land leases.

Lesson Learnt

Land or other government concessions granted for an explicitly charitable purpose come with ongoing strings attached: an institution cannot keep enjoying concessional land while quietly abandoning the free-treatment obligations that justified the concession in the first place.

Official source (sci.gov.in)View Judgment (PDF)

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