Holding

The Court held that the Government's policy to exclude hospital staff from the direct payment system is a valid policy decision not open to judicial interference, rendering the High Court's order unsustainable.

Summary

The State of Kerala entered into an agreement with Dr. Padiar Memorial Homoeopathic Medical College to introduce a 'direct payment system' for its teaching and non‑teaching staff, effective from 1 January 2000. Subsequent Government Orders expressly excluded the staff of the hospital attached to the college from this benefit. Hospital staff filed writ petitions before the Kerala High Court seeking inclusion in the direct payment system, and the Single Judge ordered that they be brought within its purview. The State appealed, arguing that the exclusion was a policy decision of the Government and not subject to judicial interference. The Supreme Court held that the exclusion was a valid policy decision, that the nature of duties of college and hospital staff differed, and that the High Court could not over‑step to include the hospital staff due to financial implications. Consequently, the appeals were allowed and the writ petitions dismissed.

Issues considered

Whether the Kerala High Court erred in extending the 'direct payment system' to hospital staff attached to a private medical college.
Whether the Government's policy to exclude hospital staff from the direct payment system is a valid administrative decision amenable to judicial review.

Subjects

administrative lawpolicy decisiongovernment orderdirect payment systemjudicial reviewdiscriminationfinancial implicationshospital staff

Judgment

[2009] 2 S.C.R. 958

A -~~
STATE OF KERALA & ANR. )>o .
...
v
NAVEENA PRABHU & ORS.
··c J Civil Appeal Nos. 1152-1153 oF 2009
FEBRUARY 23, 2009
B
[S;8; SINHA AND DR.MUKUNDAKAM SHARMA, JJ.]
Administrative law - Policy decision - Interference with
,_
- Government Order introducing 'direct payment system' in
Medical College in respect of teaching and non-teaching.staff
c of College - Order of High Court extending the said benefit to r
hospital staff attached to the College - Held: Not sustainable 1.•
)
- It was the policy decision of the Government to exclude
hospital staff attached to College from the purview of direct
payment system - Policy decision usually cannot be interfered
D with - More so hospital staff did f!Ot challenge the said decision ;.
at any stage ;.... Nature of duties and responsibilities discharged
by teaching and non-teaching staff of college vis-a-vis hospital
staff are distinctly different and separate.
The question which arose for consideration in these
E appeals was whether the High Court was justified in
holding that the respondent-hospital staff are entitled to
be brought within the purview of direct payment system
which was introduced by the Government Order in the
Medical College for the teaching and non-teaching staff
F of the College.
Allowing the appeals, the Court
HELD: 1.1 By the G.O. (MS) No. 100/2000/H&FWD
dated 25.4.2000 issued by Health and Family Welfare
G Department, the Government issued directions for
introducing 'direct payment system' in Padiar Medical ~
College with effect from 1.1.2000 subject to the conditions
set out in the agreement and also subject to further
condition that selection of candidates for admission to ,_
I

H 958
STATE OF KERALA & ANR. V. 959
NAVEENA PRABHU & ORS.

the institution against 85% of the sanctioned strength in A
each institution would be made by the Government or by
such authority as may be appointed by the Government
for the purpose. It was also stipulated that for the
remaining 15% of the seats, candidates would be selected
-( by the Educational Agency from a list of eligible B
candidates prepared by the Controller of Entrance
Examination on the basis of the entrance examination
conducted for the purpose. Subsequent thereto another
--1
order G.O. (Rt.) 517/2001/H&FWD was issued on 20.3.2001.
The said order made it crystal clear that while introducing
the direct payment system by the Government in respect c
of Padiar Medical College, such benefit was extended to
the members of the staff of the college whereas the staff
of the hospital attached to the college was specifically
excluded from the applicability of the aforesaid benefit.
I. This order was never challenged by any of the D
respondents since such benefit of direct payment system
was not extended to the staff of the hospital attached to
the college. They did not acquire any status and
consequently they acquired no right being specifically
excluded from the benefit thereof. [Paras 9, 10 and 11] E
(964-G-H· 965-A- 965-B· 965-E ]
' ' '
1.2 The decision of the Government to exclude the
,.( staff of the hospital attached to the college from the
purview of the aforesaid orders was made specifically
stating that direct payment system is not introduced by F
the Government so far as college hospital is concerned.
The same being a policy decision of the Government and
having not been challenged as either arbitrary or
discriminatory at any stage by the respondents, thus the
legality and validity of the aforesaid decision is not
G
scrutinized. Besides, the same being a policy decision of
the Government, the same stands as this Court generally
does not interfere with the policy decision of the
Government. [Para 11] [965-G·H]
1.3 As regard the submissions that the nature of H
...

960 SUPREME COURT REPORTS [2009] 2 S.C.R.

A duties and responsibilities of the teaching staff of the )-

college and the staff of the hospital being the same there
can be no discrimination so far the staff of the hospital,
the teaching staff of the college as also non-teaching staff
are being given the benefit of direct payment system but
B that itself would not entitle or make the staff of the hospital
eligible to claim the said benefits. There is no assessment
by any authority with regard to the nature of duties and
responsibilities discharged by the teaching and non- 1'--
teaching staff of the college vis-a•vis the staff of the
hospital. Without going into the technicalities, it could also
c be said that nature of duties and responsibilities in the
I
college would be distinctly different and separate from '
that of the duties and responsibilities of the staff in the
hospital attached to the college. This Court also cannot
issue any direction for over inclusion of the staff as it
D involves financial implications. [Para 12 and 13] [966-8;
966-D]
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
1152-1153 of. 2009
E From the Judgement and Order dated 03.06.2005 of the
High Court of Kerala at Ernakulam in WA. No. 189, 259, 323,
334 and 229 of 2005.
C.S. Ranjan, G. Prakash, Beena Prakash, Ramesh Babu
M. R. for the Appellant.
F
R. Rajendran Nair, ShakilAhmed Syed, K. Radhakrishnan,
S. Udaya Kumar Sagar, Bina Madhavan Gaichangpoo
Gangmei, T.L.V. Iyer, Subraonium Prasad, Jay Kishore Singh,
Wills Mathews Arun Basil, M.K. Michael, H.L.K. Puri, Romy
Chacko, C.K. Sasi, for the Respondent.
G
DR. MUKUNDAKAM SHARMA, J.
1. Leave granted.

H
2. These appeals filed by the State of Kerala are directed
against the judgment and order dated 17.6.2005 passed by ..
{

STATE OF KERALA & ANR. V. 961
NAVEENA PRABHU & ORS. [DR. MUKUNDAKAM SHARMA, J.]

the Division Bench of the High Court of Kerala at Ernakulam A
whereby not only order dated 3.3.2004 of the learned Single
Judge of the same High Court was upheld and the writ petition
was held to have been rightly allowed by the learned Single
Judge.
B
3. Relevant facts for disposal of the appeals are as under:
Dr. Padiar Memorial Homoeopathic Medical College,
...,; Chottanikkara (hereinafter referred to as 'Padiar Medical
College') is a private college established in the year 1920 and
governed by its Board of Trustees. On 30.12.1998, a decision, c
in consultation with the Government of Kerala, was taken by the
management of the college to introduce the 'direct payment
system'. At that time there were only 31 teaching staff and 20
non-teaching staff. Consequent thereupon the management
~
appointed 45 non-teaching staff and 21 teaching staff by letter D
dated 2.1.1999. On 24.1.2000, an agreement was executed
between the Government of Kerala and the Governing Body of
the College for bringing the said college under the 'direct
payment system' w.e.f. 1.1.2000.
4. G.O. (Ms) 511/95/H&FWD dated 10.11.1995 issued by E
the Department of Health and Family Welfare, Government of
Kerala, provided that the system of direct payment will be
introduced in the following three private Homoeopathic Colleges
in the State, subject to the conditions stipulated hereunder :
"1. Athurasramam Nair Service Society Homeopathic F
Medical College, Kurichy, Kottayam
2. Dr. Padiyar Memorial Homoeopathic Medical
College, Chottanikara.
3. Sir Vidadhiraja Homeopathic Medical College, G
• Nemom, Thiruvananthapuram
Cqnditions :

.
,,-
(a) Direct payment of salary will take effect from
01.11.1995 H
'l
962 SUPREME COURT REPORTS [2009) 2 S.C.R.

A (b) All these private Homeopathic Colleges will enter ...
into agre·ements with the Government to the effect
that in respect of appointments of Staff and enrollment
of students, they will abide by terms and conditions
similar to those adopted in respect of private
B Engineering Colleges in the State.
(c) Dr. Padiyar Memorial Homeopathic College will not
claim any Special rights of a Minority Institutions or
of a self-financing institution. ....

c (d) Shree Vidyadhiraja Homeopathic College shall
•.!
obtain recognition from University of Kerala as a
Precondition for implementation of the direct payment
·system"
5. The.Government Order G.O.(MS) No. 100/2000/H&FWD
D dated 25.4.2000 was issued regarding the introduction of 'direct r

payment system' with effect from· 1.1.2000 which, inter alia,
provided thaf direct payment system can be introduced in the
Padiar Memorial Homeo College, allowing the management to
fill up 15% seat for BHMS as is being enjoyed by the NSS
E Homeo College, Kurichy if they executed an agreement to this
effect as provided in the conditions stipulated in the aforesaid
Government order dated 10.11.1995. This Government order
authorised the Senior Principal & Controlling -Officer for
Homoeopathic Education to take necessary action for making
.
F the staff fixation. Consequently, on 16.11.2001 he sent a list of
40 teaching and 50 non-teaching staff having qualification
according to the government rules as on 1.1.2000 and
considering the department seniority for staff fixation. The
Government accepted arid approved the said list as per
G Government Order G.O. (MS) No. 99/02/ H&FWD dated
25.4.2002 relevant portion of which is reproduced hereinbelow: ..
"In the G.O. read above, Direct Payment System was
introduced in the Dr. Padiar Memorial Homoeopathic
Medical College, Chottanikkara, with effect from
...
H 01.01.2000, subject to the conditions set out in the "'
STATE OF KERALA & ANR. V. 963
NAVEENA PRABHU & ORS. [DR. MUKUNDAKAM SHARMA, J.]

agreement entered into between Government and the A
~
Management of the College. It was stipulated therein that
until fixation of staff strength and approval of salary are
done, members of the staff in the college will be paid pay
and allowances at the approval rate at which they were
drawing their pay for the month of December, 1999. B
As per the agreement entered into between Government
and the amendment of the College on 24.01.2000,
..... Government are liable to disburse the pay and allowances
due to the staff of the college which accrue from 01.01.2000
directly through the Principal of the Institution based on c
the existing staff pattern of the Government Homoeopathic
Medical College and the hospitals attached therewith. As
per the direction of the High Court in the judgment dated
19.07.2001 in WA No. 2255/00 in OP No. 19111/00 filed
by Dr. Renjini N. Menon, final orders in the matter have to D
be issued within the period of 3 months from the date o_f
receipt of a copy of the judgment. Accordingly as directed
by the Government, the Principal and Controlling Officer,
Government Homoeo Medical College, Thiruvanantha-
puram, furnished the list of 40 senior most and qualified E
teaching staff based on departmental seniority and 50
non-teaching staff of the Dr. Padiar Memorial Homoeo
Medical College as on 01.01.2000 to be considered for
-'.. staff fixation."

6. By the aforesaid Government order dated 25.4.2002 F
the Government provided that direct payment system would be
introduced in Padiar Medical College with effect from 1.1.2000:
However, the entire staff belonging to the college did not become
entitled to the benefit of direct payment, since the staff pattern
consisting of 40 senior most and qualified teaching staff and G
50 non-teaching staff alone was to be recognized as eligible
for the said benefit.
7. The private respondents herein are the hospital staff
and they sought a direction from the High Court in the writ
H
'"
964 SUPREME GOURT REPORTS [2009) 2 S.C.R.

A petitions filed by them that they should also be brought under
the direct payment system with effect from 1.1.2000. The r
contention raised by them was that they are similarly situated
being a part of the medical college and, therefore, they are
entitled to be brought within the puNiew of direct payment
B system. This contention found favour with the learned Single
Judge who heard the writ petition and the learned Single Judge
by his judgment and order dated 3.3.2004 allowed the writ
petition with a direction that the said hospital staff who are
...,...
respondents herein should also be brought under the 'direct
c payment system' with effect from 1.1.2000.
8. State of Kerala being aggrieved by the aforesaid
judgment and order filed an appeal before the Division Bench
of the Kerala High Court which was dismissed and consequently
the present appeals are filed in this Court.
D
9. We have heard the learned counsel appearing for the
parties in respect of all the contentions raised before us. There.
l
is no dispute with regard to the fact that Padiar Medical College
is a private medical college. The Health and Family Welfare
Department, Government of Kerala issued an order G.O. (MS)
E
No. 100/2000/H&FWD dated 25.4.2000 pursuan.t to an
agreement entered into between the Government and the
President of the Padiar Medical College. In the said order, the
~
Government has, inter alia, stated that they have examined the ;... ...,
matter in detail with regard to the introduction of 'direct payment I
F system' in Padiyar Medical College and that they have advised I
...
that 'direct payment system' could be introduced in Padiar ,,
Memorial Homeo College allowing the management to fill up
15% seat for BHMS as is being enjoyed by NSS Homeo
College, Kurichy if they executed an agreement to that effect.
G By the said order the Government issued directions for
introducing 'direct payment system' in Padiar Medical College
with effect from 1.1.2000 subject to the conditions set out in the
agreement and also subject to further condition that selection
of candidates for admission to the institution against 85% of
H the sanctioned strength in each institution would be made by
"'>
STATE OF KERALA & ANR. V. 965
NAVEENA PRABHU & ORS. [DR. MUKUNDAKAM SHARMA, J.]

the Government or by such authority as may be appointed by A
the Government for the purpose. It was also stipulated that for
the remaining 15% of the seats, candidates would be selected
by the Educational Agency from a list of eligible candidates
prepared by the Controller of Entrance Examination on the basis
of the entrance examination conducted for the purpose. B
10. Subsequent thereto another order G.O.(Rt) 517/2001/
H&FWD came to be issued on 20.3.2001 by the Health & Family
Welfare Department, Government of Kerala reiterating its earlier
~-
order that until fixation of staff strength etc. the members of the
staff in Padiar Medical College would be paid salary and c
allowance at the approved rate at which they were drawing their
pay for the month of December, 1999. However, in the said order
it was made clear that the order would not be applicable to the
staff of the hospital attached to the college as the 'direct payment
system' has not been introduced in the college hospital. D
'\
11. The aforesaid order, therefore, makes it crystal clear
that while introducing the direct payment system by the
Government in respect of Padiar Medical College, such benefit
was extended to the members of the staff of the college whereas
E
the staff of the hospital attached to the college was specifically
excluded from the applicability of the aforesaid benefit. This
order was never challenged by any of the respondents herein
since such benefit of direct payment system was not extended
,. .J.
to the staff of the hospital attached to the college. They did not
acquire any status and consequently they acquired no right being F
specifically excluded from the benefit thereof. The decision of
the Government to exclude the staff of the hospital attached to
the college from the purview of the aforesaid orders was made
specifically stating that direct payment system is not introduced
by the Government so far as college hospital is concerned. The G
same being a policy decision of the Government and having
.,..
not been challenged as either arbitrary or discriminatory at any
stage by the respondents, thus we are not called upon to
scrutinize the legality and validity of the aforesaid decision.
Besides, the same being a policy decision of the Government, H
966 SUPREME COURT REPORTS [2009] 2 S.C.R.

:r
A the same stands as this Court generally does not interfere with '•
the policy decision of the Government. .
12. It was one of the contentions of the respondents that
the nature of duties and responsibilities of the teaching staff of
the college and the staff of t'le hospital being the same there
B
can be no discrimination so far as the staff of the hospital is
concerned. It is true that the teaching staff of the college as also
non-teaching staff are being given the benefit of direct payment
system but that itself would not entitle or make the staff of the ..,
hospital eligible to claim the said benefit.
c
·13. Our attention could not be drawn to the fact that there
'
is any assessment by any authority with regard to the nature of I
duties a·nd-responsibilities discharged by the teaching and non-
teaching staff of the college vis-a-vis the staff of the hospital.
D Without go,ng into th~ technicalities, it could also be said that
nature of ·duties and responsibilities in the college would be ;
distinctly different and separate from that of the duties and ._
responsibilities of the staff in the hospital attached to the college;
This Court also cannot issue any direction for over inclusion of
the staff as it involves financial implications.
E
14. Considering the entire facts and circumstances of the
case we find merit in these appeals and the same are
accordingly allowed. The Writ petitions_ stand dismissed.
:- ... I

N.J. Appeals allowed.

'