Kerala High Court Upholds Law Mandating Display Of Rates Outside Hospitals; Rejects Challenge Of IMA, Pvt Hospital Bodies

One of the main objections raised was against Section 39 of the Act, which mandates that every clinical establishment shall display the fee rate and package rate of all the services provided there. The clinics are prohibited from charging more than the displayed rates. The petitioners argued that “fee rate” and package rate” have not been defined, and this might lead to a situation where authorities are empowered to proceed against any clinic arbitrarily.

Justice Harisankar V. Menon in his order observed that the High Court had already in an earlier case–Sabu P. Joseph (Adv). V State of Kerala and Others (2021) issued directions to private hospital in the State to display rates and fees of the service given to the public as per Section 39 of the Act. The Court held that the petitioner cannot raise a challenge against Section 39 since the matter has already been decided by the Division Bench in Sabu Joseph. It said,

“In the light of the afore, the petitioners are not entitled to raise any challenge with reference to Section 39, as noticed above. This is all the more so, since the petitioner in W.P(C)No.1365 of 2019 (Kerala Private Hospitals Association) and the petitioner in W.P(C) No.29353 of 2019 (Indian Medical Association) were the additional 5th and the 9th respondents respectively before the Division Bench of this Court and it is after hearing them also, that the Division Bench issued the directions as above“.

Authorities Have Power To Cancel Registration Of A Clinic

The petitioners had challenged the authorities’ power under Section 25 of the Act to cancel the registration of a clinical establishment. The Court however rejected the argument of the petitioners that the authorities are given unguided power under the provision to cancel the registration of an establishment. The Authority, as defined under the Act, is the District Registering Authority.

As per the provision, the authorities can issue a show cause notice to the establishments only once it is satisfied that the conditions of the registration are not complied with or that the clinical establishment has knowingly or negligently carried out an act that is harmful to the health of anyone who sought service of the clinic. The cancellation can be ordered only after giving the establishment an opportunity to be heard. The establishment has the option to file an appeal before the Appellate Body and file a revision before the High Court challenging the order of cancellation. The order of cancellation would come into effect only after lapse of the period prescribed to prefer the appeal or on the date of order of dismissal of the appeal. The authority is empowered to restrain the establishment from functioning soon after passing the order of cancellation if it is of the opinion that there is imminent danger to the health and safety of the patients. In such a case of immediate restraint, the authority should record its reasons in writing.

The Court on examining the Section opined that utmost care has been taken while conferring the power on the Authority to cancel the registration, and it cannot be said that unguided powers have been given to the authority.

“This Court further notices that under Chapter VII, an Appellate Authority under Section 34 and a revision to this Court under Section 35 have also been provided. Therefore, I am of the opinion that there is no uncanalised power bestowed on the Authority with respect to the cancellation of registration…This Court also notices that it is not the mere ipse dixit, without any supporting reason, that attracts the rigours of Section 25. The provision makes this clear by the usage of the expression “satisfied”. Therefore, “satisfaction” of the Authority is a condition precedent for cancellation under Section 25. It is not as if the Authority can cancel registration at its will,” the court added.

It thus observed that unless the cancellation is proved and supported with material facts and figures, the same is subject to judicial review; however that cannot be a reason to contend that excessive powers are bestowed on the statutory Authority.

Inclusion of ‘Dentistry’ In The Act Upheld

Some of the petitioners opposed the Act being made applicable to ‘dentistry’. The argument was that dentistry does not come under the head of ‘public health and sanitation’ or ‘hospitals and dispensaries’ in the State List, and the enactment was without legislative competence. The Court held that the State is competent to enact the said Act, and it can include dentistry within the definition of ‘recognised system of medicine’ as dentistry is only a specialised department of medical science.

Inclusion Of Representatives of Patients In Executive Committee and State Council Is Valid

The Court rejected the challenge against the inclusion of a representative from welfare organisation of the patients in the State. The Act mandates such inclusion under Section 3 and 8. It was challenged saying that such inclusion is illegal in an expert body. The Court said that when representatives of Indian Medical Association and Indian Dental Association are included in the Council, the service recipients should also be included.

Law Cannot Be Struck Down Merely On Account Of Alleged Unreasonableness/ Arbitrariness

The petitioners had challenged many provisions of the Act alleging vagueness and the possibility of arbitrariness on account of it. The Court relying on State of A. P, and Others v McDowell & Co. and Others (1996) held that a law can be struck down only on grounds of legislative competence, violation of fundamental rights or any of the constitutional provision. The Supreme Court in that case had observed that an allegation of arbitrariness or unreasonableness would not be enough to strike down a law. The Court said that apart from contention that the law gives State unrestricted power, the petitioner could not point to any actual unreasonable actions/ steps taken against them.

The Court referred to the Supreme Court decision in State of Punjab v Shiv Ram and Others (2005) which emphasized the need for external regulation in medical field. The Court also noted that various High Courts have dismissed challenge against similar enactments made in the respective States. Accordingly, the High Court rejected the challenge against validity of the Act.

The Court however added that it was open to the petitioner to point out the practical difficulties faced by them before the Government and the Government should consider those difficulties and adopt remedial measures.

Case No: WP(C) 1365 of 2019 & Connected Cases

Case Title: Kerala Private Hospital Association and Another v State of Kerala and Others & Connected Cases

Citation: 2025 LiveLaw (Ker) 357

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