Supreme Court Upholds Revocation of Essentiality Certificate for Medical College: Sukh Sagar Medical College vs. State of Madhya Pradesh (2020)

Date of the Judgment: 31 July 2020

Citation: (2020) INSC 549

Judges: A.M. Khanwilkar, J., Dinesh Maheshwari, J., Sanjiv Khanna, J.

Can a State Government revoke an Essentiality Certificate granted to a medical college? The Supreme Court of India recently addressed this crucial question in a case involving Sukh Sagar Medical College & Hospital. This judgment clarifies the extent of a State’s power to withdraw such certificates, especially when a college fails to meet the required standards. The three-judge bench, consisting of Justices A.M. Khanwilkar, Dinesh Maheshwari, and Sanjiv Khanna, delivered the opinion, with Justice A.M. Khanwilkar authoring the judgment.

Case Background

The Gyanjeet Sewa Mission Trust applied to the Madhya Pradesh government to establish a medical college in Jabalpur. The State Government issued an Essentiality Certificate on 27 August 2014, as required by the Medical Council of India (MCI) regulations. This certificate acknowledged the need for a medical college in the region and the Trust’s capacity to establish one. The Trust then sought permission from the MCI to start the Sukh Sagar Medical College & Hospital with an intake of 150 MBBS students for the academic year 2016-17. However, the MCI inspection revealed significant deficiencies, including fake patient records and inadequate staff, leading to the rejection of the scheme by the Central Government on 10 June 2016.

Subsequently, the Supreme Court Mandated Oversight Committee (SCMOC) intervened, and the Central Government granted conditional permission on 20 August 2016. This permission was subject to annual renewal based on the college’s performance. However, the college failed to rectify the deficiencies, and no renewal was granted for the academic years 2017-18, 2018-19, and 2019-20. A subsequent MCI assessment in January 2019 highlighted severe shortcomings, including a lack of faculty, inadequate infrastructure, and very low patient occupancy. Consequently, the Board of Governors of MCI declined to renew permission for the 2019-20 academic year.

Timeline

Course of Proceedings

The Additional Secretary of the Medical Education Department of Madhya Pradesh issued a show-cause notice on 7 August 2019, asking why the Essentiality Certificate should not be cancelled. The college challenged this notice in the High Court of Madhya Pradesh. While the writ petition was pending, the college responded to the show-cause notice, arguing that the State lacked the authority to revoke the certificate, citing the Supreme Court’s decision in *Chintpurni Medical College (supra)*. The Additional Secretary, after considering the college’s response, ordered the cancellation of the Essentiality Certificate on 5 September 2019.

The State cited the college’s failure to rectify deficiencies, lack of permission renewal for multiple academic years, and failure to provide minimum clinical standards as reasons for the cancellation. The High Court rejected the college’s writ petition, stating that the *Chintpurni Medical College* ruling did not completely bar the State from revoking the certificate under exceptional circumstances. The High Court noted the fraud, the inability of the college to maintain minimum standards and the larger public interest as reasons for the revocation of the Essentiality Certificate. The High Court, however, allowed the college to reapply for the certificate after rectifying the deficiencies.

Legal Framework

The case revolves around the interpretation of the Medical Council of India Establishment of Medical College Regulations, 1999 (the “1999 Regulations”) and the Indian Medical Council Act, 1956 (the “IMC Act”). These regulations mandate that a State Government must issue an Essentiality Certificate before a medical college can be established. The certificate confirms that establishing the college is in the public interest and that the college has the necessary infrastructure and resources. The 1999 Regulations specify that the State Government must certify the availability of adequate clinical material, which, according to the Supreme Court, refers to data such as admissions, discharges, surgeries, and lab investigations, not just the number of doctors and patients.

The Supreme Court also referred to Section 10A of the IMC Act, which empowers the Central Government to grant permission for establishing new medical colleges. The court noted that the Essentiality Certificate is a prerequisite for obtaining this permission. The Court also discussed the General Clauses Act, 1897, particularly Section 21, which deals with the power to rescind notifications and orders. The Court, however, held that the Essentiality Certificate was not a notification or order as contemplated under Section 21, and therefore, the State could not use this provision to revoke the certificate.

Arguments

Appellant’s Submissions:

• The appellant-college argued that the State Government lacked the authority to revoke the Essentiality Certificate once it was issued, citing the Supreme Court’s judgment in *Chintpurni Medical College (supra)*.
• They contended that the Essentiality Certificate is a one-time certification and cannot be withdrawn unless there is a case of fraud.
• The college submitted that the State Government’s action was a violation of the principles of fairness and promissory estoppel.
• The appellant argued that the State cannot exercise any power which could terminate the existence of a medical college permitted to be established by the Central Government.

Respondent’s Submissions:

• The State of Madhya Pradesh argued that it had the inherent power to withdraw the Essentiality Certificate, especially when the college failed to meet the minimum standards and conditions specified in the certificate.
• The State contended that the college had misrepresented facts and failed to fulfill its commitments, which amounted to fraud.
• The State argued that the substratum for issuing the certificate had disappeared due to the college’s inability to secure renewal of permission from the MCI and the Central Government.
• The State also argued that it had a duty to protect the interests of the students and the public, and that the college’s deficiencies jeopardized the academic careers of the students.
• The State submitted that the college had failed to provide minimum infrastructure and fulfill the norms of MCI, despite repeated opportunities.

The innovativeness of the arguments was that the State argued that the college had misrepresented facts and failed to fulfill its commitments, which amounted to a constructive fraud. The State also argued that the substratum for issuing the certificate had disappeared due to the college’s inability to secure renewal of permission from the MCI and the Central Government.

Issues Framed by the Supreme Court

The Supreme Court framed the following key issue:

1. Whether the State Government had unjustly revoked the Essentiality Certificate granted to Gyanjeet Sewa Mission Trust for establishing a medical college at Jabalpur, being contrary to the decision of a two-Judge Bench of this Court in *Chintpurni Medical College and Hospital & Anr. Vs. State of Punjab & Ors.*?

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The Supreme Court considered the following authorities:

On the power to revoke the Essentiality Certificate:

• *Chintpurni Medical College and Hospital & Anr. Vs. State of Punjab & Ors.* (2018) 15 SCC 1 – Supreme Court of India. The court discussed the limitations on the State Government’s power to revoke an Essentiality Certificate, stating that it can only be done in cases of fraud or when the substratum of the certificate disappears.
• *Indian National Congress (I) vs. Institute of Social Welfare & Ors.* (2002) 5 SCC 685 – Supreme Court of India. The Court discussed the exceptions to the principle that a quasi-judicial authority cannot review its own order, including cases of fraud.
• *Industrial Infrastructure Development Corporation (Gwalior) Madhya Pradesh Limited vs. Commissioner of Income Tax, Gwalior, Madhya Pradesh* (2018) 4 SCC 494 – Supreme Court of India. The Court discussed the power to recall an order obtained by fraud or misrepresentation.
• *Ghaurul Hasan & Ors. vs. State of Rajasthan & Anr.* AIR 1967 SC 107 – Supreme Court of India. The Court discussed the power to recall an order obtained by fraud or misrepresentation.
• *Hari Shankar Jain vs. Sonia Gandhi* (2001) 8 SCC 233 – Supreme Court of India. The Court discussed the power to recall an order obtained by fraud or misrepresentation.
• *Government of Andhra Pradesh & Anr. vs. Y.S. Vivekananda Reddy & Ors.* AIR 1995 AP 121 – High Court of Andhra Pradesh. The Court discussed the power to recall an order obtained by fraud or misrepresentation.

On the meaning of fraud:

• Black’s Law Dictionary 11th Edition. The Court used this to define “actual fraud,” “constructive fraud,” and “actionable fraud.”

On the State’s duty to provide healthcare:

• Article 47 of the Constitution of India. The Court cited this Article to emphasize the State’s duty to provide good public health.
• *Paschim Banga Khet Mazdoor Samity & Ors. vs. State of West Bengal & Anr.* (1996) 4 SCC 37 – Supreme Court of India. The Court cited this case to highlight the State’s obligation to provide adequate medical services.

Legal Provisions:

• Section 10A of the Indian Medical Council Act, 1956 (the “IMC Act”): This section empowers the Central Government to grant permission for establishing new medical colleges.
• Section 21 of the General Clauses Act, 1897 (the “1897 Act”): The Court discussed the applicability of this section to the Essentiality Certificate.
• Medical Council of India Establishment of Medical College Regulations, 1999 (the “1999 Regulations”): These regulations mandate the issuance of an Essentiality Certificate by the State Government.

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

The Court analyzed the authorities as follows:

• The Court distinguished *Chintpurni Medical College (supra)*, stating that while it generally limits the State’s power to revoke an Essentiality Certificate, it also acknowledges exceptions for fraud or disappearance of the substratum. The Court respectfully departed from the view taken in this case.
• The Court followed *Indian National Congress (I) vs. Institute of Social Welfare & Ors. (supra)* to establish that fraud vitiates any act or order, even if no power of review is conferred upon a quasi-judicial authority.
• The Court followed *Industrial Infrastructure Development Corporation (Gwalior) Madhya Pradesh Limited vs. Commissioner of Income Tax, Gwalior, Madhya Pradesh (supra)*, *Ghaurul Hasan & Ors. vs. State of Rajasthan & Anr. (supra)*, *Hari Shankar Jain vs. Sonia Gandhi (supra)* and *Government of Andhra Pradesh & Anr. vs. Y.S. Vivekananda Reddy & Ors. (supra)* to establish that a power to cancel/recall an order which has been obtained by forgery or fraud applies not only to courts of law, but also to statutory tribunals which do not have power of review.
• The Court used Black’s Law Dictionary to define “actual fraud,” “constructive fraud,” and “actionable fraud.”
• The Court cited Article 47 of the Constitution of India to emphasize the State’s duty to provide good public health.
• The Court cited *Paschim Banga Khet Mazdoor Samity & Ors. vs. State of West Bengal & Anr. (supra)* to highlight the State’s obligation to provide adequate medical services.
• The Court explained the role of Section 10A of the IMC Act in granting permission for establishing new medical colleges.
• The Court discussed the inapplicability of Section 21 of the General Clauses Act, 1897 to the Essentiality Certificate.
• The Court explained the role of the Medical Council of India Establishment of Medical College Regulations, 1999 in mandating the issuance of an Essentiality Certificate.

What weighed in the mind of the Court?

The Supreme Court’s decision was heavily influenced by the following factors:

• Failure to Meet Minimum Standards: The college’s repeated failure to meet the minimum standards prescribed by the MCI was a significant factor. The Court emphasized that the college had not only failed to establish the necessary infrastructure but also failed to maintain the required academic standards.
• Constructive Fraud: The Court concluded that the college had committed a constructive fraud by misrepresenting its ability to establish and run a medical college. This misrepresentation was evident in the college’s failure to fulfill the commitments made at the time of obtaining the Essentiality Certificate.
• Disappearance of Substratum: The Court found that the very basis on which the Essentiality Certificate was granted had disappeared. The college’s inability to secure renewal of permissions from the MCI and the Central Government, coupled with its failure to provide minimum standards, led to this conclusion.
• Public Interest: The Court highlighted the State’s duty to protect the interests of the students and the public. The college’s deficiencies jeopardized the academic careers of the students and compromised the quality of medical professionals being produced.
• State’s Duty under Article 47: The Court underscored the State’s constitutional obligation to provide good public health and ensure access to proper healthcare. This duty extends to ensuring that medical colleges meet the required standards.

The Court was also influenced by the fact that the college had failed to produce any medical professionals and that the hospital attached to the college was grossly deficient. The Court emphasized that the State could not remain a mute spectator and had to intervene in the larger public interest.

Fact:Law Ratio

Logical Reasoning:

The Supreme Court considered the arguments of the college, but rejected them based on the fact that the college had failed to meet the minimum standards and had misrepresented its ability to establish a medical college. The Court also considered the State’s duty to protect public health under Article 47 of the Constitution of India.

The Court considered the argument that the State could not withdraw the certificate once granted, but rejected it based on the exceptions of fraud and disappearance of the substratum. The Court also rejected the argument that the State’s action violated fairness and promissory estoppel, stating that the college’s misrepresentations and failure to meet standards justified the revocation. The Court also rejected the argument that the State cannot exercise any power which could terminate the existence of a medical college permitted to be established by the Central Government, stating that the college was not an established medical college.

The Court’s decision was based on the principle that the State has a duty to ensure that medical colleges meet the required standards and that the Essentiality Certificate is not just a formality but a commitment to providing quality medical education and healthcare. The Court also emphasized that the State could not remain a mute spectator when a college fails to fulfill its commitments and jeopardizes the interests of the students and the public.

The Court also noted that the term “established” in the context of medical colleges means more than just having a certificate and that the college must be operational and meeting the required standards. The Court found that the appellant college had failed to do so.

The Court’s decision has significant implications for future cases involving the establishment of medical colleges. It clarifies that the State has the authority to revoke an Essentiality Certificate if the college fails to meet the required standards, commits fraud, or if the substratum of the certificate disappears. The decision also emphasizes the State’s duty to protect the interests of the students and the public and to ensure that medical colleges are established and operated in a manner that provides quality education and healthcare.

Key Takeaways

• State’s Power to Revoke: The State Government can revoke an Essentiality Certificate if the medical college fails to meet the required standards, commits fraud, or if the substratum of the certificate disappears.
• Constructive Fraud: Failure to fulfill commitments made at the time of obtaining the certificate can be considered constructive fraud.
• Substratum of Certificate: The Essentiality Certificate is not just a formality; it is a commitment to establish a functional medical college. The substratum of the certificate disappears if the college fails to meet minimum standards and secure necessary permissions.
• Public Interest: The State has a duty to protect the interests of the students and the public and to ensure that medical colleges provide quality education and healthcare.
• Standards are Imperative: Medical colleges must adhere to the standards specified by the MCI and the State Government. Failure to do so can result in the revocation of the Essentiality Certificate.
• Time-Bound Compliance: Medical colleges must fulfill the basic norms specified by the MCI in a time-bound manner.

Potential Future Impact:

• This judgment sets a precedent for State Governments to proactively monitor and ensure that medical colleges meet the required standards.
• It empowers the State to take action against colleges that fail to fulfill their commitments and jeopardize the public interest.
• It clarifies the scope of the State’s power to revoke the Essentiality Certificate, providing guidance for future cases.
• It emphasizes the importance of transparency and accountability in the establishment and operation of medical colleges.
• It will lead to stricter enforcement of the norms prescribed by the MCI.
• It will lead to more vigilance by the State Governments while granting Essentiality Certificates.