Andhra Pradesh High Court Quashes Cancellation of Essentiality Certificate | State Cannot Succumb to NMC Dictation | “Discretion Vested in Government Must Be Exercised Independently”
Safiya Malik
The High Court of Andhra Pradesh Division Bench of Chief Justice Dhiraj Singh Thakur and Justice R. Raghunandan Rao held that the cancellation of the Essentiality Certificate issued in favour of a medical college was vitiated as the State Government acted at the behest of the Board of Governors (MCI) without exercising independent judgment. The Court found that the order of cancellation dated 27.03.2019 was primarily influenced by directives from the then Board of Governors of the Medical Council of India, thereby violating established principles of administrative law.
The Bench further stated that although the cancellation was invalidated due to its vitiated origin, the State Government retains the power to reconsider the issue afresh in an independent manner. The court held that this power is grounded in circumstances where fraud is established or where the substratum for the Essentiality Certificate no longer exists. The judgment quashed the impugned order and directed the State Government to reevaluate the matter independently, considering relevant policy factors and statutory requirements.
The petitioner, Srinivasa Educational Academy, sought to establish the RVS Institute of Medical Sciences in Chittoor District, Andhra Pradesh. An Essentiality Certificate was issued by the State Government on 30.09.2013, certifying the feasibility and desirability of establishing the medical college with an annual intake of 150 MBBS seats. The Certificate affirmed that the petitioner owned 20 acres of land, managed a 362-bedded hospital, and that the institution was in public interest.
Subsequently, the petitioner applied for permission to establish the college for the academic year 2016-17 under Section 10A of the Indian Medical Council Act, 1956. An assessment conducted by MCI in January 2016 revealed significant deficiencies in faculty, residents, hospital occupancy, and infrastructure. The Central Government disapproved the application but later granted conditional approval following a Supreme Court Mandated Oversight Committee directive.
Further assessments in 2017 and 2018 showed recurring deficiencies. The Central Government barred the institution from admitting students for two years and encashed the bank guarantee. Despite inspections and submissions, including interventions by the Supreme Court directing fair reconsideration, the deficiencies remained unrectified according to MCI reports. Consequently, the Government of Andhra Pradesh was requested to reallocate the students and withdraw the Essentiality Certificate.
Acting on MCI's request, the State issued a show-cause notice on 05.02.2019 and cancelled the Certificate on 27.03.2019, citing low patient turnout, deficient faculty, and inadequate infrastructure. The petitioner challenged this cancellation in W.P. No. 4484 of 2019.
The High Court stayed the operation of the cancellation order on 17.04.2019, referring to the Apex Court decision in Chintpurni Medical College v. State of Punjab, which held that once issued, an Essentiality Certificate cannot be withdrawn except in cases of fraud or loss of substratum.
Despite multiple attempts to seek renewed permission, the petitioner faced rejections from the NMC citing outdated or invalid Essentiality Certificates. The NMC's inspection in 2023 found negligible deficiencies, but a 2024 inspection again reported significant shortcomings, leading to another disapproval.
The petitioner also filed W.P. No. 22536 of 2024 challenging the orders of the appellate authorities under the NMC Act.
The Court observed, "It would be impermissible to allow any authority including a State Government which merely issues an Essentiality Certificate, to exercise any power which could have the effect of terminating the existence of a Medical College permitted to be established by the Central Government."
In reference to the Chintpurni Medical College case, the Court quoted, "The power to issue an Essentiality Certificate is a power that must be treated as exhausted once it is exercised, except of course in cases of fraud."
Addressing the action of the State Government, the Bench remarked, "Even in the present case, just as in the case of Chintpurni Medical College, the cancellation of Essentiality Certificate was done only on account of the pressure exerted at the behest of the Board of Governors."
On the issue of substratum, the Court stated, "If the policy envisages only one medical college in a district and if there is no hospital in that district, which satisfies the conditions of eligibility as per the NMC Act, then whether the Essentiality Certificate is at all to be cancelled..."
Further, the Bench noted, "The discretion vested in the DSP in this case by Section 20-A(1) was not exercised by the DSP at all." Quoting Anirudhsinhji Karansinhji Jadeja v. State of Gujarat, the Court stated, "This is a case of power conferred upon one authority being really exercised by another."
On the doctrine of promissory estoppel, the Court recorded, "Surely, a person who establishes a Medical College upon an assurance of a State Government... cannot be told at a later stage that there was no justification for allowing him to do so."
The Court concluded by directing, "The cancellation of the Essentiality Certificate on this ground would stand vitiated."
The judgment added, "We do not wish to lay down as a matter of proposition that the order of cancellation, having been set aside on that ground once, the Government is precluded from considering the issue yet again."
It further instructed, "The Government can consider the issue yet again. However, we wish to state that for taking a call on whether the substratum has been lost or not, a few additional factors may be gone into by the Government."
a) Whether the Government has a policy which determines as to how many medical colleges are envisaged to be opened in the entire State, region, district or local area.
b) Whether the Government had received any other application for opening a medical college by an applicant, who has a hospital, which otherwise satisfies the requirement of the NMC Act and fulfills the needs of the State qua that region, district or local area.
c) Whether during the interregnum between 2013 and 2025, any other medical college has been permitted to be set up according to the policy of the Government in that particular region, district or local area and whether according to the policy, there is no further need for another medical college.
d) If the policy envisages only one medical college in a district and if there is no hospital in that district, which satisfies the conditions of eligibility as per the NMC Act, then whether the Essentiality Certificate is at all to be cancelled and the applicant has to be given a chance to improve its infrastructure, faculty etc., to ensure that a full-fledged medical college becomes operational.
Be that as it may, W.P. No.4484 of 2019 is allowed. The order passed by the Government, dated 27.03.2019, cancelling the Essentiality Certificate, is quashed. In view of the fact that W.P. No.4484 of 2019 stands allowed, writ petitions bearing Nos.2212, 5949, 6748, 7619 of 2019 are rendered academic. W.P. No. 22536 of 2024 is rendered infructuous inasmuch as the timelines for making admission for the academic session 2024-25 is since over.
The writ petitions are, accordingly, disposed of. No costs.
Pending miscellaneous applications, if any, shall stand closed
Advocates Representing the Parties:
For the Petitioners: Mr. P. Sri Raghu Ram, Senior Counsel, appearing vice Mr. Patanjali Pamidighantam
For the Respondents: Mr. Vivek Chandra Sekhar S, for NMC; Mrs. S. Pranathi, Special Government Pleader
Case Title: Srinivasa Educational Academy and Others v. The State of Andhra Pradesh and Others
Neutral Citation: APHC010100092019
Case Number: W.P. No. 4484 of 2019 & batch with W.P. No. 22536 of 2024
Bench: Chief Justice Dhiraj Singh Thakur, Justice R. Raghunandan Rao
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