TaxTMI 
TaxTMI 
2016 (3) TMI 1326
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....spitals. Also other hospitals, which are not NABH accredited, are being paid lower amount @ 15%. Ex-servicemen Contributory Health Scheme have adopted the DGHS' above mentioned letter and they are making payments as per the said letter". 3. This information was considered by the Commission and an order dated 23.06.2014 was passed for closing the proceedings of the case under Section 26(2) of the Competition Act, 2002. The Commission dwelt into the information provided by the informant and the alleged Office Memorandum quoted above. The principal allegation by the appellant - informant is that under Central Government Health Scheme, the DGHS discriminates between hospitals on the basis of their accreditation to the National Accreditation Board for Hospitals and healthcare providers (NABH). The same practice is followed under Ex-servicemen Contributory Health Scheme (ECHS). The appellant - informant has alleged that there is no scientific basis to this discrimination. Through the issue of this Office Memorandum, DGHS, who is in a dominant position, is abusing its dominance and thereby thwarting competition among hospitals. It is not providing a level playing field and thereby ....
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....ell as curative healthcare to Central Government employees, retired Central Government personnel and their dependent family members. Respondent No. 2 is providing preventive and curative healthcare to retired Defence personnel. The healthcare as provided by R1 and R2 constitutes all out-patient and in-patient services. For the above purposes, Respondent Nos. 1 and 2 have empanelled several hospitals across the country. b) QCI and NABH (subsidiary body of QCI) are acting certification bodies to empanel hospital for the purpose of providing indoor and outdoor healthcare facilities to the eligible person and to their dependent family members of CGHS and ECHS. c) Respondent No. 4 (through QCI) are identified and empanelled hospitals to provide indoor and outdoor patient healthcare facilities to the eligible personnel of CGHS and ECHS. d) Appellant has submitted information with Competition Commission of India (CCI) regarding formation of cartel consisting of Respondent Nos. 1, 2, 3 and 4 leading to unfair trade practice and against the principal of competitive neutrality. e) ....
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....; j) As regard to physical infrastructure and its standards, there is a Government organization created by an Act of Parliament, namely Bureau of Indian Standards (BIS). National standardization activity started in India in 1947 with the establishment of the Indian Standards Institution (ISI) as a society under the Societies Registration Act, 1860 to prepare and promote the adoption of national standards. In 1952, the institution was also given the responsibility of operating a certification making scheme under an Act of Parliament. In 1986, the national authorities made a review of the structure and status of ISI and assessed the impact made by it on the national economic development and the technological growth of various sectors of Indian industry. The Government of India felt that a new thrust had to be given to standardization and quality control activities, and that a national strategy had to be evolved for giving appropriate recognition and importance to standards and for integrating them with the growth and development of production and exports in different sectors. The Government of India therefore decided to create a statutory organization as the national standards ....
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....ption and defective accreditation process to accredit hospitals for NABH certification, Ministry of Commerce and Industry, Department of Industry and Promotion by their letter No. 3/11/2014/2014/NPC-QCI dated 25th June 2014 has ordered an enquiry to look into the various complaints regarding corruption and irregularities in QCI. (Annexure 5) o) Respondent No. 1 vide their above quoted letter has set an arbitrator, illogical and anti-competitive price fixation of the various services rendered by the hospitals. The said letter favours NABH accredited hospitals and puts the non-NABH accredited hospitals in a disadvantageous position. For example, rate for OPD consultation for NABH accredited hospitals has been fixed as Rs. 58/- whereas the rates for the non-NABH accredited hospitals is Rs. 50/-. Similarly, a consultation charge for the inpatient is Rs. 72/- for NABH accredited hospitals and Rs. 63/- for non-NABH accredited hospitals. Similarly, rates for compressed air/piped oxygen is Rs. 58/- for NABH accredited hospitals and Rs. 50/- for non-NABH accredited hospitals and Rs. 1300/- for Super Speciality hospitals." 7. In their replies, Respondent Nos. 3....
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....lf and the counsels for the respondents. The appellant has argued that the Office Memorandum No. S.11011/23/2009-CGHS D.II/Hospital Cell/Part(1) dated 17th August 2010 issued by the Department of Health and Family Welfare discriminates between accredited and unaccredited hospitals while fixing rates for various services provided by these hospitals. In response, the principal argument from the side of Respondent Nos. 1 and 2 is that the Central Government Health Scheme (CGHS) instrumentality through which healthcare is provided to past and present Government employees and the Ex-servicemen Contributory Health Scheme (ECHS) are only facilitation mechanisms which have the objective of facilitating access to healthcare institutions for the target group. The second point of their argument was that in order to proceed against them, the appellant should first prove that they should be considered as 'enterprise' under Section 2(h) of the Act. Since Respondent Nos. 1 and 2 neither themselves provide healthcare services nor they provide healthcare services in return for profits or in the nature of commercial activities, they cannot be termed as enterprise and, therefore, they are not....
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....use,-- (a) "activity" includes profession or occupation; (b) "article" includes a new article and "service" includes a new service; (c) "unit" or "division", in relation to an enterprise, includes-- (i) a plant or factory established for the production, storage, supply, distribution, acquisition or control of any article or goods; (ii) any branch or office established for the provision of any service;" 13. It is clear that in an institutional sense the definition covers all departments of the Government. The only exclusion is provided in the last part of the definition which is underlined above. A bare reading of this provision clearly shows that Government departments which are engaged in the stated activities are covered by the definition of enterprise. It is further seen that the definition does not cover only those institutions connected with activities relating to goods b....
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.... its statutory functions or, on the other, by State itself in the exercise of its inalienable functions." 15. The Court further held that the sovereign functions, strictly understood, alone qualify for exemption, not the welfare activities or economic adventures undertaken by the government or statutory bodies. In other words only primary, inescapable, inalienable and non-delegable functions of a government should qualify for exemption within the meaning of sovereign functions of the government and welfare, commercial and economic activities are not covered within the meaning of sovereign function. 16. In P.W.D. Employees Union and Ors. v. State of Gujarat and Ors (1987)2 GLR 1070 it was observed that the welfare activities or economic adventure undertaken by the Government or statutory bodies do not qualify for being treated as sovereign functions. Further, in N. Nagendra Rao & Co. v. State of A.P. (1994) 6 SCC 205, the Supreme Court also approached the issue in similar manner and observed: "In Welfare State, functions of the State are not only defence of the country or administration of justice or maintaining law and order but it extends to regul....
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....l the welfare activities, which would be undertaken by any private player..." "So, sovereign function in the new sense may have very wide ramifications but essentially sovereign functions are primary inalienable functions which only State could exercise. Thus, various functions of the State, may be ramifications of "Sovereignty but they all cannot be construed as primary inalienable functions. Broadly it is taxation, eminent domain and police power which covers its field. It may cover its legislative functions, administration and law, eminent domain, maintenance of law and order, internal and external security, grant of pardon. So, the dichotomy between sovereign and non-sovereign function could be found by finding which of the functions of the State could be undertaken by any private person or body. The one which could be undertaken cannot be sovereign function. In a given case even in subject on which the State has the monopoly may also be non-sovereign in nature. Mere dealing in subject of monopoly of the State would not make any such enterprise sovereign in nature. Absence of profit making or mere quid pro quo would also not make such enterprise to b....
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.... by its own admission that Respondent No. 1 is not just a facilitator for its target group to seek healthcare in empanelled hospitals but itself provides healthcare in its 273 allopathic dispensaries, 19 polyclinics, 73 labs and 85 Ayush hospitals. This network is further supplemented by private hospitals (648) and diagnostic centres (148). The last two are empanelled following a procedure given out in the Office Memorandum which has fixed differential rates for NABH accredited and non-accredited hospitals. 25. At Serial No. 14 of the list of business allocated to the Department of Health and Family Welfare, it provides as under- "Concession of medical attendance and treatment for Central Government servants other than...." 26. "Central Government Health Scheme (CGHS) is a health scheme for serving/retired Central Government employees and their families." Further the DGHS is clearly in the nature of a service provider that does not perform a function which can be termed as inalienable, as explained in several cases referred above. It cannot be said to be performing a sovereign function and, therefore, warranting exclusion from the definition of ent....