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TMI Blog2016 (3) TMI 1326X X X X Extracts X X X X X X X X Extracts X X X X ..... BH 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 discriminating against non-accredited hospitals. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tired 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) It is submitted that the Respondent No. 1 vide their letter No. S.110011/23/2009-CGHS D.II ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly 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 body which was named as the Bureau of Indian Standards (BIS), with adequate autonomy as well as flexibility in its operations to achieve ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 and 4 have contested the allegations made by the appellant. According to the reply, NABH is a constituent board of Quality Council of India which is a Government-industry join ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 covered under Sections 3 and 4 of the Act. This case has broadly raised two major issues. 1) Whether DGHS and ECHS can be termed as 'enterprise' under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice; (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 but also covers activities relating to provision of services of 'any kind' which gives a very broad connotation to the gamut of activities that can be covered in the definition of services. As far as exclusion is concerned, there are two possib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res 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 regulating and controlling the activities of people in almost every sphere, education, commercial, social, economic, political and even marital. The demarcating line between sovereign and non-sovereign powers for which no rational basis survives has largely disappeared. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous 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 be outside the ambit of 'industry' as also in State of Bombay & Ors. case". 21. In a more recent case, State of U.P. v. Deep Chandra (MANU/UP/0733/2003), the SC in Para 31 held that: "Applying the principles laid down by the Apex Court......regarding dominant natu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 enterprise. CGHS is clearly an enterprise which provides healthcare services to the target group and in order to do so, in view of the constraints on its capacity, it laterally complements its resources by empanelling hospitals which include private hospitals as well. Therefore, the process of empanelment is essentially an expansion of CGHS' activitie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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