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State Cannot Issue Directions on Rate of Charge of Non-COVID Patients in Private Hospitals: Bombay High Court

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On 23rd October 2020, the Nagpur Bench of Bombay High court at Nagpur, consisting of Justice R.K. Deshpande and Justice Pushpa V. Ganediwala gave a judgment with regards to the constitutionality of various provisions issued by the State government in respect of COVID.

Facts of the Case

Taking into consideration the rapid spread of Coronavirus in the State, the Maharashtra government passed many laws and directions in response to the increasing number of COVID patients. Two laws were in question: In one law, the State government ordered that all the private, nursing, daycare hospitals should reserve 80% of the beds for COVID patients and the rates of the beds of such beds were prescribed in the annexure provided with the notification.

The law also stated that the remaining 20% of the beds (non-COVID patients) of the hospitals shall not be under the power of the State government but the rates of the same shall be under the rates which were prescribed for the COVID beds.

Arguments on Behalf of the Petitioner

The Counsel appearing on behalf of the Petitioner submitted that the laws which were supporting their base in Epidemic Diseases Act, 1897, Disaster Management Act, 2005, the Maharashtra Essential Service Maintenance (Amendment) Act, 2011, the Maharashtra Nursing Home Registration (Amendment) Act, 2006 and the Bombay Public Trusts Act, 1950, there is no provision which can give power to the State to regulate the charge of the private hospital non-COVID bed. 

Entry 6 of the State List under Schedule VII regarding public health and sanitation; hospitals and dispensaries did not provide power to fix the rate of the hospital bed. There was the Medical Council of India Act, 1956 enacted by the Central government under List III and the Maharashtra Essential Service Maintenance (Amendment) Act, 2011 which was enacted by the State under List II. These laws already encompassed all the items of the health-related subject, hence the new law regarding the rate of the bed could not be enacted. There was a violation of Article 19(1)(g) of the Constitution as it hampered the fundamental right of the practising one’s profession and this right included fixing rate charges as well.

Arguments on Behalf of the Respondent

The Counsel for the Respondent submitted that Entry 6 in List-II (State List) of Schedule VII, as well as the provisions of Section 2 of the ED Act and Section 65 of the DM Act, empowered the State Government to regulate the rates. If the government could fix the charge for the COVID bed, then it was well within the inherent power to fix the rate for non-COVID beds as well. The rates were reasonable, hence there was no violation of Article 19(1)(g).

The reasonable restriction power of the State Government has been derived from Articles 162 and 166 of the Constitution. The same was supported by the Supreme Court in the case of Association of Medical Superspeciality Aspirants and Residents and others v. Union of India.

Observations by the Court

The Court observed that it could not adjudicate on the matter of whether the rates fixed were unreasonably low or not, as the Court did not have the power to adjudicate on “facts” in a writ petition.  In all the lists mentioned in Schedule VII, the power of Parliament and State in respect to tax, toll, charge has been specifically provided, and in the same way, the power to regulate any activity has also been specifically provided.

Under Articles 162 and 166, the need for executive action has been mandated, and a Law can be made under Entry 6 of List II only when a law that supports the same has been in existence. Neither the Maharashtra Essential Services Maintenance Act, 2017 nor any COVID regulations provided such power. The Respondent did not point out any specific provision in the DM Act which empowered the State, except for Section 65 which empowered the State to issue directions concerning non-COVID patients.

Decision of the Court

The Court held that the power of the State to regulate the rate of the private bed hospital was not legal. The State did not have power under Articles 162 and 166 in the present case to place reasonable restrictions on Article 19(1)(g). The State was not competent to issue any direction relating to Non-COVID patients under section 65 of the Disaster Management Act. The fixing of the rate of 20% bed of the hospitals for the non-COVID patients was held to be violative of Article 19(1)(g).

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