A bench of Justices S Ravindra Bhat and R V Eswar allowed separate pleas of Moolchand Khairati Ram Trust, St Stephen's Hospital, Sitaram Bhartia Institute of Science & Research and Foundation For Applied Research in Cancer challenging the order.
The state government and its agencies had on February 2, 2011, amended the lease deed of four hospitals which received land at concessional rates and directed they will have to provide 10% indoor and 25% outdoor treatment free of cost to poor patients in return.
"This court only seeks to emphasize that while any endeavour to bring the directive principle (to provide free treatment to poor) to fruition is laudable, such effort must be by way of a legislation, especially when the rights guaranteed under part III of the Constitution are likely to be infringed through such actions," HC noted.
The court said the fundamental right of the hospitals to do business cannot be taken away by an executive order; it can be done only by enacting a law. "While the state's effort to maximize area of public health system... is undeniably in public interest, such objective has to be achieved through the route of legislation and in the present case the route taken by the respondent is not accurate."
It also said "allotment letters and lease deeds being conclusive on the rights and obligations of parties, further directions through the impugned orders would be justified only if the governing statute or even the conditions of the lease deed allow such changes". It added the government's decision was "untenable" and against the terms of the "concluded contracts".
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