THE HON'BLE SRI JUSTICE A. GOPAL REDDY W.P.No. 4401 of 1994 DATE: 7.12.2006 Between: Siddhartha Academy of General and Technical Education, Vijayawada, represented by its Secretary Sri Y.V. Rao. … Petitioner And 1. Government of Andhra Pradesh, represented by the Principal Secretary to Government Medical and Health, Secretariat, Hyderabad. 2. The University of Health Sciences, Gunadala, Vkijayawada-520005, Represented by its Registrar. … RespondentS. THE HO’BLE SRI JUSTICE A. GOPAL REDDY WRIT PETITION No.4401 of 1994 ORAL JUDGMENT: By means of filing this Writ Petition under Article 226 of the Constitution of India, the petitioner – Siddhartha Academy of General and Technical Education, Vijayawada, represented by its Secretary Sri Y.V. Rao seeks for issue of a mandamus directing the Respondent No.1-State of Andhra Pradesh to handover the Management and the properties of the Siddhartha Medical College, Vijayawada to the petitioner-Academy or pay suitable compensation for the acquired property of the Siddhartha Medical College and for an appropriate order. Before considering the prayer of the petitioner, the following chronological facts-in-brief giving rise to the filing of this petition may be noted: Siddhartha Academy of General and Technical Education, Vijayawada (hereinafter referred to as ‘the academy’) is an educational society registered in the year 1975 under Societies Registration Act, 1860 with an object to establish, aid and maintain educational and other institutions to impart education at all stages and for the promotion of Arts, Science, Engineering and Technology etc. With an object to provide medi-care facilities to the people of Vijayawada and to the surrounding rural folk in Krishna District, the Academy made an application to the State Government for establishment of a Medical College at Vijayawada in the name of Siddhartha Medical College. The State Government, vide Letter No.4223/E1/79-10 dated 18.11.1980 granted provisional permission to the academy for starting of a Medical College with an intake of 100 admissions annually from the academic year 1980-81 subject to certain conditions, important being providing of infrastructure facilities needed for the college, construction of an attached teaching hospital etc. within specified time as indicated in the provisional permission. College was also given the opportunity to utilize the existing facilities at the Government Hospital, Vijayawada. The Government indicated in the said letter that position would be reviewed after three years after the commencement of the college. Subsequently, vide G.O.Ms.No.276 M & H, Medical and health (E1) Department dated 29.4.1981 the Government made available about 57 Acres (which is inclusive of 15 Acres of land already handed over to the Academy of General and Technical Education) of vacant land situate at Gunadala Village, Vijayawada for the purpose of construction of a 400 bed strength teaching hospital by the Academy according to the standards specified and to handover the same to the Government. Pending completion of construction of building complex, the college was accommodated and started functioning from the academic year 1980-81 in the premises of Siddhartha Engineering College, Vijayawada. It continued to function so in the said premises till 1985 when permanent building was made ready. It appears that in the year 1983 there was an agitation by the students of the college alleging that the academy has not made ready the building complex and the teaching hospital as required under the provisional permission. There were also allegations against the academy that the funds collected by the College were not exclusively utilized for the College. As the hospital was not made ready, the Government in the year 1983 granted permission to the College to utilize the Government Hospital, Railway Hospital and E.S.I. hospital at Vijayawada for the requirements of the students. While things stood thus, in the year 1983, the Government enacted A.P. Educational Institutions (Regulation of Admissions and Prohibition of Capitation Fee) Act, 1983 (Act No.5 of 1983) (for short ‘the Act’) with effect from 30.1.1983, banning capitation fee in professional educational institutions in the State. The Government, vide G.O.Ms.No.46, Education (W) dated 1.2.1983 appointed Sri Priyadarshi Dass, Commissioner, Municipal Corporation, Vijayawada to enquire into the manner of collection of funds by Siddhartha Medical College who submitted report stating that the college collected Rs.401.00 lakhs and incurred an expenditure of Rs.184.00 lakhs leaving a balance of Rs.217.00 lakhs. Subsequently, Government appointed another committee on 10.5.1983 headed by Dr. C. Sita Devi, Principal, Andhra Medical College, Visakhapatnam to find out as to how the college would be run after the enactment of the Act and also to analyze what measures are required to improve the existing system and what finances would be required to run the College. The Committee submitted its report stating that if the College is to be taken over by the Government and the Hospital upgraded, an amount of Rs.18.57 crores would be required. The Government considering the said report, decided to permit the academy to run the Medical College for a period of two more years from August 1983, vide Lr.No.1313/E1/83-4 dated 30.8.1983 with certain conditions. It appears that before the extended permission was granted in the letter dated 30.8.1983, discussions were held between the representatives of the academy and the Government in the Committee Room of the then Chief Minister on various issues including on the aspect of taking over of the Medical College. Thereupon, Dr. T. Srinivasan, Superintendent, Government General Hospital, Vijayawada was appointed as Special Officer to work out the details of taking over of the College. Thereafter, the petitioner-academy vide its letter dated 5.9.1983 addressed to the then Chief Minister in principle agreed to handover the building and other facilities with equipment etc. after completion of construction of the building complex of the college without claiming any compensation. The Government in its letter dated 30.8.1983 referred to above clearly indicated that the management at the end of two years shall handover the facilities created including the amounts standing in the Medical College Educational Fund to the Government with them as free of cost without claiming any compensation. The academy in their letter-dated 5.9.1983 while accepting the proposal, however, requested the Government to make suitable amendments in regard to providing of certain infrastructure facilities such as increasing the bed strength in Government Hospital and E.S.I. hospital to 770 to satisfy the standards of Medical Council of India (MCI) in order to enable the MCI to accord recognition to the College. On 28.11.1983, the academy has submitted representation with new proposals. After examining the said proposals, the Government have communicated their views vide letter No.1313/E1/83-7 dated 24.12.1983 and the academy has also been requested to convey their acceptance of the conditions. Accordingly, the academy has accepted the conditions stipulated by the government vide their letter dated 17.1.1984. In the meanwhile, Dr. T. srinivasan submitted his report on 8.11.1985. Thereafter, in order to consider the question of takeover of the college, another committee consisting of the Director of Medical Education or his representative, Special Secretary to Government, Finance & Planning (FW) Department, A chartered Accountant, the Executive Engineer (R & B), Vijayawada and Joint Secretary to Government, H.M. & F.W. Department was constituted on 21.3.1986 to study the reports submitted by Sri Priyadarshi Dass and Dr. T. Srinivasan and the Director of Medical Education and to give its opinion regarding the assets and liability and the estimated cost of the buildings of the Medical College and hostel constructed by the academy and the financial implications of such takeover. The committee after taking into account all the factors and reports, recommended for taking over of the Medical College with movable and immovable assets by the Government and that no payment on any account is due from the Government to the petitioners academy. It appears that subsequently on 2.4.1986 and 3.4.86 the academy held discussions with the Health Minister, Health Adviser and Health Secretary. Thereafter, the Government decided to establish University of Health Sciences at Vijayawada in the premises of Siddhartha Medical College and also a teaching hospital in the land leased out to the medical college and in pursuance thereof the Government enacted University of Health Sciences Act and to commence the University with effect from 1.11.1986. The academy by letter dated 16.4.1986, while welcoming the decision of the Government to establish the University of Health Sciences in the college premises, requested to pay accommodation charges for accommodating the students and the staffing in Siddhartha Engineering College from 1980-81 as there was delay in getting the plans prepared and approved for the Medical College buildings and amounts spent towards construction of the complex in excess of the receipts of the medical college. The Government in fulfillment of their commitment, vide G.O.Ms.No.399 dated 17.6.1986 granted administrative sanction for construction and establishment of 400 bedded teaching hospital at Vijayawada at an estimated cost of Rs.750.00 lakhs and this construction is to be taken up on the government land which is alienated in favour of the academy extending over 30.62 acres for which the academy has agreed and given its consent. In effect, the Government have generously and gracefully reciprocated to the offer made by the medical college by providing full-fledged super specialty hospital and setting up University of Health Sciences a unique and a pioneer institution in the entire country to cater the needs of the growing city of Vijayawada and surrounding villages. As already stated, the petitioner- academy in turn expressed their gratitude in letter dated 16.4.1986 and obliged to honour their commitments for handing over of college by 30.8.1986. But, instead of honouring their commitment for handing over the college, the academy in their letter dated 30.7.1986 requested for payment of a sum of Rs.35,12,851/- alleged to be the amount spent by them in excess of the receipts of the college for construction of buildings; to pay the accommodation charges for the occupation of the building in the premises of engineering College for the period from 3/81 to 10/85 (according to the estimate of R & B Rs.17,62,127/-) and additional amounts spent after 31.3.19986 till the actual date of take over of complex. The Government after examining the aforesaid requests of the academy, vide letter dated 7.10.1986 felt that there is little justification in the academy claiming any compensation and called upon the academy to honour their commitment to handover the possession of the buildings and other facilities with equipment to the Medical college as they agreed to handover the possession after completion of construction without claiming any compensation. The academy in their letter dated 17.10.1986 again requested to consider payment of overspent amounts etc., stating that they are not expecting any compensation from the government for handing over of the college. Under those circumstances, on 27.10.1986, the Government addressed a letter to the Officer on Special Duty, to take appropriate action for the take over of the medical college so as to synchronize with the establishment of University of Health Sciences. On 29.10.86, the Officer on Special Duty addressed a letter to the Secretary of the Academy to hand over possession of land, building and other equipments on 1.11.1986 to the University of Health Sciences. The academy vide letter No.1337/86 dated 15.12.1986 addressed to the then Chief Minister of Andhra Pradesh intimating the decision of the 10th Annual General Body Meeting of the Academy held on 13.12.1986 and the resolution passed in the meeting to hand over the Siddahartha Medical College to the Government or its nominee University of Health Sciences and requested to consider certain terms and conditions regarding the staff working in the medical college and their absorption in the University and also requested for reimbursement of overspent expenditure etc. The Academy also unanimously resolved to request the Chief Minister to be present on the occasion of handing over of the college on any day preferably on 21.12.1986. Subsequently, the academy handed over the College on 21.12.1996 at Vijayawada in the presence of the Chief Minister. Nearly six years thereafter, the academy vide letter dated 24.4.1992 addressed to the Chief Minister seeking re-handing over of the medical college to run it as a private institution. The academy again addressed a letter to the Secretary to Government, Medical and Health, Government of A.P on 29.3.1993 praying for re-handing over the institution or to pay them compensation as contemplated under sections 67 and 68 of the A.P. Education Act, 1982, which was followed by another letter dated 24.4.1993 to the Chief Minister. To the above, the Principal Secretary to Government, Health, Medical and Family Welfare Department, in letter No. 364//E1/93-3 dated 15.11.1993 replied to the Secretary of the Academy stating that in the letters dated 5.9.1983, 16.4.1986 and 30.7.1986 the academy had agreed to hand over to the Government the buildings and other facilities of medical college after completion of the construction of the building complex without claiming any compensation which was reiterated in letter dated 7.10.19986 and accordingly the college was handed over to the University of Health Sciences on 21.12.1986 and as such the request of the academy is not acceptable. The said communication reads as under: “ Government of Andhra Pradesh Health Medical and Family Welfare Department Letter No.364/E1/93-3 From: The Principal Secretary to Government Health medical and Family Welfare Department, Hyderabad. To The Secretary, The Siddardha Academy of General & Technical Education, Siddartha Nagar, Vijayawada-520010. Hyderabad Dated:15.11.1993. Sir, Sub: Siddartha Academy of General & Technical Education, Vijayawada—Request for handing over back the S.M.C. Vijayawada to the academy or payment of compensation—Request—Reg. Ref: 1. Your Lr.No.O.C.498/93 dated 29.9.93. 2. Your Lr.No.O.c.681/93 dated 24.4.93. 3. From the U.H.S. Vijayawada Lr.No.UHS/4/Mg/86 Dated 21.6.93. *** With reference to your letters first and second cited, I am directed to invite attention to your letter dated 5.9.83, 16.4.1986 and 30.7.1986 in which the Academy have agreed to hand over to the Government the buildings and other facilities such as equipment etc., for medical college after completion of the construction of the college without claiming any compensation. Further, the Government in their Letter No.1786/E1/84-26 dated 7.10.1986 have also reiterated the above position and requested to handover the possession of buildings and other facilities such as equipment etc., direct to the University of Health Sciences without claiming any compensation and as when the said University commences functioning. Accordingly, the College was handed over to University of health Sciences on 21.12.1986 in the presence of the then Chief Minister. Therefore, their request for payment of compensation or handing over of institution back to the Academy is considered unacceptable. Government regret their inability to comply with it. Yours faithfully, for Principal Secretary to Government. “ On receiving the above communication, the petitioner has filed the present writ petition for the relief referred to above. The factual aspects as indicated above are not disputed by the petitioner. The petitioner mainly relied on Section 67 of the A.P. Education Act contending that Section 67 lays down certain procedure to be followed for acquisition of the property and Section 68 lays down the principles and methods of determining amount for property requisitioned or acquired. It is averred that the Government cannot deprive the petitioner academy of their right to receive the compensation. It is stated that they have only agreed not to claim any compensation for handing over of the management, but in so far as the amount spent on the moveable and immovable properties are concerned, the petitioner never made assurance at the time of handing over the management and possession of the assets to the University of Health Sciences. The Assistant Secretary to Government filed a detailed counter dealing with all the factual aspects as noted hereinabove contending that the Government in their letter dated 30.8.1983 specifically informed the academy about the conditions for taking over the college. The academy in their letter dated 5.9.1983 requested for certain modifications and conditions imposed by the government followed by a representation dated 28.11.1983, explaining the various difficulties in running the college and making new proposals to the Government. The Government after examining the said proposals in its letter dated 24.12.1983 communicated the views of the Government and in their letter dated 13.1.1984 called upon the academy to convey their acceptance of the conditions mentioned and the academy through its letter dated 17.1.1984 accepted the conditions laid down in the Government letter dated 24.12.1983. In view of the same, the academy is not entitled to compensation as claimed or handing over the college back to the academy. Sri Kodandaram learned counsel for the petitioner would submit that Government in G.O.Ms.No.276 dated 29.4.1981 earmarked certain land on lease for construction of the hospital and college buildings and the building complex belongs to the society. He further submitted that the academy never waived their right to receive compensation in accordance with sections 67 and 68 of the Education Act on the moveable and immoveable properties. Before taking over the college, the academy was not given any notice as to why the property should not be taken over. He would submit that the Government have not chosen to follow the procedure contemplated in the Education Act before directing the academy to handover the college and the building complex to the University of Health Sciences and not determined the compensation payable. Section 68 of the Education Act lays down the procedure to determine compensation for the property requisitioned or acquired and, therefore, the government is bound to decide the compensation payable as per sub-section (3) of Section 68. The learned Government Pleader, on the other hand, contended that since the academy has agreed to handover the college accepting the conditions laid down by the Government in its letter dated 24.12.1983 and since Ac.30.62 cents of government land was alienated to the academy for construction of 400 bed teaching hospital at an estimated cost of Rs.750.00 lakhs which was approved by the Government and it will be handed over to the Government free of cost, it is not open for them to claim compensation. Since the academy has agreed to handover the hospital and building complex with all facilities and equipment without claiming any compensation or to claim any excess amount spent, the Government is not bound to pay any compensation. The claim for reimbursement of amount spent over and above the receipts was considered unreasonable and was not conceded and as such the writ petition is liable to be dismissed. The Academy was initially granted provisional permission by the Government for establishment of the Medical college vide their communication dated 18.11.1980 and it was specifically mentioned therein that the same would be reviewed after three years after the commencement of the medical college. For proper appreciation, the conditions subject to which the Government granted provisional permission may be noticed: (i) That the responsibility to secure timely permission from the Medical Council of India and also affiliation of the concerned University will solely rest with the society; (ii) (a) that a minimum of 20% of the admissions in the above Institution should be kept with the government who would allot these seats for the applicants from the S.C., S.T. and B.C. communities; (b) that no capitation fee should be collected by the Management from the candidates admitted against the above Government-allotted seats; (c) that the position would be reviewed after 3 (three) years after the commencement of the Medical college by the society, after which the rules of reservation, as applicable to admissions in Government Institutions should be adopted by the Society; (iii) that in case any Government land is needed for the proposed Medical College, the Society will formally submit due requests for alienation/lease to the appropriate Department along with detailed plans including lay out, draft agreement, with all terms and conditions. (iv) that the infrastructure facilities needed for the College will be provided in a satisfactory manner by the Society well within the specified time – interim facilities within the first year itself and the permanent arrangement by the third year; (v) that the building for the attached teaching hospital shall be constructed by the Society according to the standard specified and duly handed over Government within the given time; (vi) Detailed plans along with time schedule and the binding stipulations including those prescribed by the medical Council of India, University and government in regard to infrastructure referred to in (iv) and (v) above, shall be drawn up and submitted for approval of the Director of Medical Education within three months; (vii) that in case the existing facilities at the Government Hospital at Vijayawada or the services of the staff thereat are required by the Society a formal request spelling out the terms and conditions may be submitted through proper channel for due approval; (viii) that after the Society has taken appropriate measures to complete the above steps, the Government’s final permission will be communicated.” 2. (a) All admissions made at this college shall be based on merit. (b) the Director of medical Education or his nominee shall be included in the Selection Committee for the admission of the candidates; (c) all finances received in connection with and for this Medical College shall be kept apart for this purpose along and shall nut under any circumstances be diverted for any other purpose; (d) the Government will have no liability whatsoever to take over this institution for any lapses committed by the management. But in case such a step becomes necessary neither the institution nor its staff or students shall have any claim on the government. The management must given an indemnity to this effect now itself. (e) the management should be willing to adhere to any further conditions that might be prescribed in the matter of admissions, donations, reservations, fees etc., if any, and should furnish due undertaking in this regard to the Government. From the above, it is clear that the academy has to provide infrastructure facilities needed for the college in a satisfactory manner well within the specified time i.e. interim facilities within the first year itself and the permanent arrangement by the third year. It was further obligatory on the part of the academy to construct an attached teaching hospital according to the standard specified and the same shall be duly handed over to Government within the given time. The academy was also given the liberty to make a formal request to utilize the facilities at the Government Hospital at Viajyawada or the services of the staff thereat. Subject to fulfillment of the above requisite conditions only final permission will be granted. Therefore, the Government was prepared to extend any requirement, which the academy needed in establishing the college. Under Clause 2(d) of the provisional permission, the government will have no liability whatsoever to take over the institution for any lapses committed by the management. But, in case such a step becomes necessary, it was made clear that neither the institution nor its staff or students shall have any claim on the government, and the management was required to give an indemnity to the said effect. Thereafter, vide G.O.Ms.No.276 M & H dated 29.4.1981, the Government made available about 57 acres of land at Gunadala Village, Vijayawda on lease to the academy for the purpose of construction of a 400 bed strength attached teaching hospital and to handover the same to the Government after construction. The relevant portion of the order reads as under: “Out of the 57 acres, some area of approximately 30 acres is meant for the hospital with 400 bed-strength which the Academy would be constructing and handing over to Government. Therefore, this piece of land need not be leased to the Academy but handed over for construction of building and transferring the same to the Government as per the agreement. The balance land of approximately about 27 acres meant for the Medical College/Campus with Hostels shall be leased to the Academy on nominal rent. The Collector, Krishna is requested to handover the land immediately to the Academy of General and Technical Education, Vijayawada, and sent proposals for the rent to be levied” Therefore, as per the conditions of provisional permission, the academy was under an obligation to construct the teaching hospital of 400 bed strength in an extent of 30 acres and to handover the same to the