SETH NANDLAL DHOOT HOSPITALversusTHE STATE OF MAHARASHTRA AND ANOTHER

                                               (1)                                   WP-469-2021


              IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                         BENCH AT AURANGABAD

                           WRIT PETITION NO.469 OF 2021
Seth Nandlal Dhoot Hospital
Marathwada Medical Research &
Rural Development Institution
A-1, MIDC, Chikalthana, Jalan Road,
Aurangabad- 431210.                                                    ...PETITIONER
       VERSUS
1. The State of Maharashtra
Through Public Health Department,
G.T. Hospital Compound, 10th Floor,
New Mantralaya, Mumbai-400 001.

2. District Collector, Aurangabad
Collector Office Campus Aurangabad,
Maharashtra-431003.                                                     ...RESPONDENTS
--------------------------------------------------------------------------------------------------
Mr. Rameshwar Totala i/by Mr. R. R. Totala, Advocates for Petitioner.
Mr. P. K. Lakhotiya, AGP for Respondent-State.
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                           CORAM                         : KISHORE C. SANT &
                                                           AJIT B. KADETHANKAR, JJ.

                           RESERVED ON                   : 31st JULY 2026.
                           PRONOUNCED ON                 : 16th SEPTEMBER 2026.

ORDER :- [PER:- KISHORE C. SANT, J.]

1]              Heard Mr. Totala, the learned Advocate for the petitioner

and Mr. Lakhotiya, the learned AGP for Respondent/State.
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2]         A short question involved in this petition is about the power

of the District Magistrate to issue a Show Cause Notice dated

25/09/2020 to the petitioner/Hospital for overcharging patients for the

health services provided during the COVID period. Notice was issued for

charging excess fee than prescribed in Annexure-C to the Notifications

dated 21/05/2020 and 31/08/2020. Notification were issued framing

policy guidelines regarding the grievances of the people with regard to

the exorbitant amount charged and recovered by the Healthcare

Providers from COVID patients.


3]         The nation faced the COVID-19 pandemic situation from the

year 2019 to 2021 and some part of 2022. The sufferance was such that

every organ of the Government was put to test. The country witnessed

enormous efforts taken by all the organs of the Government to serve the

people of this country and help them come out of the COVID situation.

At the same time, it was found that the health services providers, in

some cases which may be exceptional, were found to have taken undue

advantage of the situation and exploited patients. On noticing such few

instances, the Government issued notifications from time to time. One
                                  (3)                        WP-469-2021


such notification was issued prescribing the rates for health services

provided to COVID patients. Certain measures were directed to be taken

to curb such practices. The schedule of rates was also prescribed to see

that the persons facing COVID-19 situation were not required to pay

exorbitant charges for the services they received. The State Government

therefore issued notifications dated 30/04/2020, 21/05/2020 and

31/08/2020. The notification dated 30/04/2020 was issued by

considering various provisions of the various Acts concerning various

health services, epidemic diseases etc. The provisions were invoked by

the State Government under the following Acts; (i) The Epidemic

Diseases Act, 1897 (for short “E.D. Act” (ii) The Disaster Management

Act, 2005 (for short “D.M. Act”, (iii) The Maharashtra Essential Service

Maintenance (Amendment) Act, 2011, (for Short “ M.E.S.M. Act” (iv)

The Mumbai Nursing Home Registration (Amendment) Act, 2006 (for

short “M.N.H.R. Act”, and (v) The Maharashtra Public Trusts Act, 1950

(for short “M.P.T. Act”).


4]          The Government by taking cognizance of the spread of
                                      (4)                      WP-469-2021


COVID-19 pandemic situation issued circular. In view of this situation, as

declared by the World Health Organization (WHO), the Government

invoked power even under the M.P.T. Act, since some of the public

hospitals were run by Public Charitable Trusts wherein there are legal

obligations to reserve and earmark 10% of the total number of

operational beds for indigent patients and provide medical treatment to

them free of costs. The Government invoked power of Section 2(a)(iii)

of the M.E.S.M. Act which defines the services connected with the

maintenance of Public Health and Sanitation, including hospitals and

dispensaries, as essential service.



5]          The notification provided various guidelines through a

Competent Authority at the State Level, and the Public Health

Department or an appropriate decision-makers at the District Level. The

District Disaster Management Authority, designated vide the Disaster

Management Act, 2005, was recognized as the Competent Authority to

take appropriate action as provided in the Epidemic Diseases Act, 1897.

It was recognized as Competent Authority even for the purposes of D.M.
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Act, M.E.S.M. Act, M.N.H.R. Act, and the M.P.T. Act. The authority was

vested with the power to take action for any violation of the directions in

the said notification.


6]          By Annexure-A, a schedule of rates was prescribed for

hospitals which were not part of the General Insurance Public Sector

Association (GIPSA) Preferred Provider Network (PPN) situated in

Mumbai. By notification dated 21/05/2020, the Government again

under various Acts issued another circular making it applicable even to

the Healthcare Providers that were not part of GIPSA and PPN or did not

have agreements/understanding with Third Party Administrators (TPAs)

pertaining to package rates for different treatments.


7]          For the implementation of the guidelines in the said

notification, the Competent Authority at the State level was the Chief

Executive Officer, State Health Assurance Society, Public Health

Department. At the District level, excluding Municipal Corporations, the

Competent Authority was declared as the District Collector and in the

Municipal Corporation areas, it Municipal Commissioner. These
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Competent Authorities were authorized to take appropriate action as

provided under the various Acts. This notification was to remain in

operation till 31/08/2020.



8]         By annexure-A, the rates were fixed for services. By

Annexure-B, different rates were made applicable to different districts

for hospitals which were not part of GIPSA, PPN or did not have any

agreement with any TPAs. Thus, it was applicable to such hospitals and

healthcare providers. Annexure-C prescribed the maximum rates which

can be charged to COVID patients. This was applicable throughout

Maharashtra for all healthcare providers.


9]         By another notification dated 31/08/2020, the Government

again issued notification under the above-stated Acts. It was for patients

without insurance coverage or patients whose insurance coverage was

exhausted. For the implementation of this notification, again at the

District Level (excluding Municipal Corporations) the District Collector

was the Competent Authority. In Municipal Corporation areas, the

Municipal Commissioners were the Competent Authority to take
                                    (7)                         WP-469-2021


appropriate action under the Acts. Again, this was prescribed in

Annexures A, B and C.


10]         It is in this view of the matter, the Collectors were appointed

as Competent Authorities for their entire districts, and in the Municipal

Corporation areas it was the Municipal Commissioner.


11]         Now coming to the facts of the present case, the Nodal

Officer and Deputy Collector, Aurangabad noticed from the newspaper

reports that some of the hospitals were overcharging patients during the

COVID period. The Deputy Collector therefore issued notices to three

hospitals in Aurangabad including the present petitioner-hospital. A

show cause notice called for an explanation as to why no action should

be taken under the Epidemic Diseases Prohibition Act, 1897 and the

Disaster Management Act. The petitioner/hospital replied this notice on

08/07/2020, giving an explanation stating that the newspaper reports

were based on misinformation. The hospital, in fact was charging fees as

per the rates given in the chart with the notification.
                                  (8)                        WP-469-2021


12]         Another show cause notice was again issued to the

petitioner/hospital on 25/09/2020, giving particulars like names of the

patients and amount charged. A total 393 instances were quoted in the

said notice. The petitioner/hospital was called upon to submit an

explanation alongwith relevant documentary evidence in support of

contention of the petitioner. It was also asked as to why penal action

contemplated under the provisions of the Disaster Management Act and

the Bombay Nursing Homes Registration Act read with the Bombay

Nursing Home Registration (Amendment) Act, should not be initiated

against the administration. The explanation was called for within seven

days of receipt of the notice.



13]         On the same day, an order was issued against the petitioner.

Pursuant to show cause notice dated 06/07/2020, this was on the basis

report dated 23/07/2020, 10/08/2020 and 20/08/2020 given by the

Nodal Officer, Account and Audit Team. Petitioner was directed to pay

the overcharged amount of Rs. 29,695/-, 48,740/- and 10,150/-. The

total charges of Rs.88,585/- charged from specific patients mentioned in
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the notice. Thus, this is the notice which is under challenge before this

Court.



14]        Mr. Totala, the learned Advocate for the petitioner,

vehemently argued that the petitioner/hospital comes within the

Municipal Corporation area. In view of notification dated 30/04/2020

for the Municipal Corporation area, the Municipal Commissioner was

appointed as the Competent Authority. There was thus no question of

the Collector taking action against the petitioner. In the show cause

notice dated 25/09/2020, there is no reference to the notification dated

30/04/2020. Only 13 cases were shown where there were allegations of

overcharging. Notice dated 25/09/2020 is only on the basis of some

newspaper reports which were not confirmed. On one hand, the notice

was given on 25/09/2020 and on the other hand, the order was also

passed on the same day without giving sufficient opportunity. The names

of persons shown in the notice dated 25/09/2020 are the same in

respect of whom earlier notice was issued and the order dated

25/09/2020 was passed.
                                    ( 10 )                       WP-469-2021


15]         He submits that the Collector has no authority to issue show

cause notice as the Hospital is within Municipal Corporation area. In

view of notification dated 31/08/2020 only Municipal Commissioner

had the authority. There was no proper verification done before passing

the order. No sufficient opportunity is afforded to the petitioner, as

immediately after the notice, on the same day order is passed by the

Collector. The action, therefore is without authority and is illegal, and

the same deserves to be quashed and set aside. He thus prays for

quashing and setting aside of impugned notice and action.


16]         Mr.    Lakhotiya,    the     learned    AGP     appearing     for

Respondent/State vehemently argued that though by notification, the

Municipal Commissioner was appointed as the Competent Authority so

far as Municipal Corporation area is concerned, however that would not

take away the power of the Collector. The Collector is the authority

under the D.M. Act and E.D. Act. He thus submits that on 30/04/2020,

the Government had published the notification under the Acts wherein it

was made specifically clear that, at the district level the District Disaster
                                   ( 11 )                       WP-469-2021


Management Authority designated vide the Disaster Management Act

2005, shall be the Competent Authority to take appropriate action as

provided in the Epidemic Diseases Act and other Acts for the Municipal

Corporation area. It also provided that the Municipal Commissioner also

could act as the Competent Authority. The power of the Collector was

thus not taken away by the notifications, as the Collector is already

designated as Competent Authority under the Disaster Management Act.


17]         Learned AGP further invites attention to circular dated

21/09/2020 where again it was stated that the Competent Authority at

the District level shall be the District Collector and in Municipal

Corporation areas, the concerned Municipal Commissioner. Though the

wording appears that “for areas excluding Municipal Corporations, the

District Collector shall be the authority”, it will not divest the power of

the Collector. The power given to the Municipal Commissioner will have

to be taken as in addition to the powers vested in the Collector.


18]         Learned AGP points out Section 2(f) and Section 30 of the

Disaster Management Act 2005 to show that the Collector is the
                                   ( 12 )                     WP-469-2021


authority in the District under the said Act. This being the position, it

cannot be said that the Collector does not have the power in Municipal

Corporation area. He also relied upon notification dated 14/03/2020

issued by Public Health Department, Maharashtra State. The said

notification states that “Empowered Officers” under Section 2(1) of the

Maharashtra COVID-19 Regulations, 2020, shall be the Commissioner,

Health Services; Director of Health Services; Director, Medical Education

and Research, All Divisional Commissioners of Revenue Divisions; and

all Collectors and Municipal Commissioners who are empowered to take

such measures as are necessary to prevent the outbreak of COVID-19 or

the spread thereof within their respective jurisdictions. By the said

notification, various powers are given to the authorities. The Disaster

Management Authority had also passed an order on 20/08/2020

appointing auditors for the purpose of auditing and checking the bills

issued by the hospitals to the patients. By the said order, one Hemant

Jarange, Assistant Audit Officer, Municipal Corporation and Mr. Raju

Chitte, Assistant Audit Officer, Senior Treasury Office Aurangabad, were

appointed for the petitioner/hospital.
                                   ( 13 )                      WP-469-2021


19]           By relying upon notification dated 25/09/2020, learned

AGP submits that the order was issued by the Collector not in his

capacity as Collector, but as an Authority under the District Disaster

Management Act. For this purpose, again he relied upon the definitions

under Section 2(f) and 25(2) and Section 78(2)(e) and (g) of the

Disaster Management Act. He submits that, in fact, in addition to the

Collector’s powers, the powers were also given to the Municipal

Commissioners in the Municipal Corporation area. The powers vested in

Municipal Commissioner would not take away the powers of the

Collector, but were merely in addition to them. He thus submits that the

Collector was well within his powers to issue show cause notice and to

pass the order. He relied upon Section 15 (4) of the Disaster

Management Act as well.



20]          Considering all these submissions, this Court has only to see

as to whether the show cause notice and the order passed by the

Collector can be said to be without jurisdiction and without lawful

authority.
                                  ( 14 )                     WP-469-2021


21]         It is not disputed that the petitioner/hospital is covered

under the notification. The challenge is only to the authority of the

Collector to issue notice and to take action against the petitioner. The

said challenge is raised only on the ground that the petitioner/hospital

happens to be within the Municipal Corporation area, and therefore the

it is only Municipal Commissioner of Aurangabad who has the authority

to take action. The submission is made based on the wording used in the

notifications: “excluding Municipal Corporation areas”. But wording

further used is as “and in Municipal Corporation areas, the Municipal

Commissioner”. Whether such wording would take away the power of

the Collector is the key point.


22]         So far as authority with the Collector is concerned, we need

to look to the relevant provision of the Act. Under section 2(f) of the

Disaster Management Act and the Epidemic Diseases Act, the District

Magistrate/Collector is the Authority and there is no dispute. Once the

Collector is conferred with the power, there is question of Collector

loosing power in view of the notification, does not arise. The
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Commissioner is given power in addition to the Collector. In no case it

be said that as power is given to the Commissioner would cease to have

power. Because of the notification, the authority under the Act would

not lose its power.


23]         One more thing that needs to be considered is the

Government decision dated 01/06/2006 issued by Revenue and Forest

Department     (Relief,   Rehabilitation     and   Disaster   Management),

Mantralaya Mumbai. Order was passed under Section 25 of the Disaster

Management Act of the Central Government, establishing the Disaster

Management Authority wherein the Collector is the ex-officio Chairman.

Thus, the Government has already appointed the Collector as the ex-

officio Chairman of the Disaster Management Authority at the district

level, so he is already an authority under the Act.



24]         This Court had taken cognizance and registered Suo Moto

PIL No. 01/2020 during the COVID period, looking to the COVID

situation and the urgent need to take relief by the people. This Court

issued various directions/guidelines by which a task force was
                                      ( 16 )                        WP-469-2021


appointed. By clause (A), it was directed to all the District Collectors to

establish task force, if not already established. The task force was given

various tasks to perform. In view of order passed in PIL, the Collector

was designated as the Head of the task force. Thus, in that view also, the

Collector has every power. Nodal Officers were also appointed at the

rural level and district level. Thus, considering all this, it is clear that the

Collector has every power.



25]           Coming to the proposition as to whether, by delegating

authority to some other authority, the authority thereby loses its own

power, the Hon’ble Apex Court in the cases of Purtabpore Co. Ltd. Vs.

Cane Commissioner of Bihar and Ors. 1, and Joint Action Committee of

Air Line Pilots' Association of India v. Director General of Civil Aviation 2

and in the case of Sidhartha Sarawgi Vs. Board Of Trustees for the Port

of Kolkata and Ors.3 has laid down the law.


26]           In the judgment in the case of Purtabpore Co. Ltd. (supra),

paragraph No.12 reads as under:
1 (1969) 1 SCC 308
2 2011 (5) SCC 935
3 (2014) 16 SCC 248
                                       ( 17 )                           WP-469-2021


       “12. The executive officers entrusted with statutory discretions may in
       some cases be obliged to take into account considerations of public
       policy and in some context the policy of a Minister or the Government
       as a whole when it is a relevant factor in weighing the policy but this
       will not absolve them from their duty to exercise their personal
       judgment in individual cases unless explicit statutory provision has
       been made for them to be given binding instructions by a superior.



27]         It is thus clear that when an officer is entrusted with

statutory discretion, they are not absolved from their duty to exercise

their personal judgment in individual cases. In the present case, it is seen

that under various Acts, the Collector is the authority, being chairperson

of the Disaster Management Authority under Section 2(f) of the said Act.

Thus, even if the Municipal Commissioner is appointed in addition as a

Competent Authority under the Act, that will not take away the power of

the Collector to perform his duties and exercise his powers.


28]         In the case of Joint Action Committee (supra), it is observed

that it is settled legal position that the authority which has been

conferred with the competence under a statute alone can pass an order.

No other person even the superior authority, can interfere with the

functions of the statutory authority.
                                    ( 18 )                        WP-469-2021


29]         In the present case, assuming that the power was delegated

to the Municipal Commissioner in the Municipal Corporation area, that

cannot be taken as that the Collector lost his power to take action. As

already considered, the Collector possessed the power under the Act

itself.

30]         Considering all above, this Court finds that the Collector was

certainly within his powers to issue show cause notice and to take action

pursuant to notifications and under the provisions of the Acts.


31]         Thus, considering overall case and the facts, this Court finds

that there is no illegality committed by the Collector in issuing show

cause notice and taking action.


32]         It is open to the petitioner/hospital to defend itself before

the Collector and put-forth its case. The Collector shall act appropriately.

33]         With these, Writ Petition stands disposed off.

34]         Pending civil applications, if any, also stand disposed off.



[AJIT B. KADETHANKAR, J.]                       [KISHORE C. SANT, J.]
                                   ( 19 )                     WP-469-2021




35]        At this stage, it is mentioned by learned AGP that pursuant to

show cause notice, the petitioner has already deposited the amount, as

directed by this Court, in the office of this Court. The said amount be

remitted back to the Collector for disbursement to the concerned

patients from whom it was collected.



36]        Learned Advocate for the petitioner seeks to continue interim

arrangement that was made by this Court pending the petition.



37 ]       Considering the same, the amount shall not be remitted to

the Collector for a period of three weeks from today.



[AJIT B. KADETHANKAR, J.]                      [KISHORE C. SANT, J.]

DAEthape