Sri Ramachandra Educational and Health Trust vs The State of Tamil Nadu

Bakthavatsalam, J.—The prayer in W.P. No. 5135 of 1991 is to issue a writ of mandamus directing the respondent to make immediate

payment of the entire value of the assets of Sri Ramachandra Medical College and Research Institute, which has been taken over by the

Government, with interest to the petitioner Trust. Similarly, the prayer in W.P. No. 5136 of 1991 is to issue a writ of certiorarified mandamus

calling for the records of the respondent made in G.O. Ms. 1052, Health dated 26-6-1989 and quash the same and consequently direct the

respondent to restore Sri Ramachandra Medical College and Research Institute to the petitioner Trust forthwith with all its assets, fittings, fixtures,

etc. Mr. K. Sridhar, Additional Government Pleader takes notice on behalf of the respondent.

In 1985, the State Government permitted certain private management trusts including the petitioner Trust to open a self financing medical college

subject to the conditions stipulated in the annexure to the Government Order issued then. When the college was started by the Trust, a new

Government came in 1989 and took over the reins of the State of Tamil Nadu. Consequent to the discussions held by the then Chief Minister of

Tamil Nadu with the Managing Trustee of the petitioner herein for the taking over of the institution by the Government, the Managing Trustee of the

Trust sent a letter to the Government on 25th June, 1991 enclosing a resolution of the Trustees of the Trust dated 24-6-1989. The Trust resolved

to agree to the proposal of the Government of Tamil Nadu taking over Ramachandra Medical College and Research Institute, one of the

institutions created by the Trust situate in an extent of 176 acres within the compound described as Sri Ramachandra Medical College and

Research Institute, Madras, on the Government agreeing to discharge all the secured liabilities with interest. The Trust further resolved that all the

unsecured loan with interest borrowed by the Trust for the improvement of the Trust which are reflected in the proforma balance-sheet drawn for

the year ending 31-3-1989 be discharged after due scrutiny by a Committee duly appointed by the Government of Tamil Nadu. In view of that,

Government passed G.O. Ms. 1082, Health. Indian Medicine and Homeopathy and Family Welfare Department, dated 26-6-1989 accepting the

proposal of the petitioner Trust as follows;

Sri Ramachandra Medical College and Research Institute, Madras, including the attached hospital, together with assets be taken over by the

Government. The Headquarters of the Dr. M.G.R. Medical University, Tamil Nadu be in the premises of Sri Ramachandra Medical College and

Research Institute, Madras.

The Government subject to verification of the correctness of the proforma balance-sheet for the year ending 31-3-1989 relating to Sri

Ramachandra Educational and Health Trust, Madras, assume the liability relating to secured liabilities subject to verification of the extent of such

liabilities and their exclusiveness to Sri Ramachandra Medical College and Research Institute and shall discharge the same as and when repayment

of such liability becomes due and payable in the same manner as the Trust would have discharged.

As regards the unsecured liabilities, the Government shall constitute separately a Committee as agreed to by the Trust to go into the correctness

of the performs balance-sheet for the year ending 31-3-1989 and to verify the extent and their exclusiveness of unsecured liabilities of the said

Trust in relation to Sri Ramachandra Medical College and Research Institute, Madras. The Committee shall also verify the correctness of the

assets and secured liabilities has reflected in the proforms balance-sheet of the Trust.

Subsequently, on 4-11-1989, the Government appointed an Assets and Liabilities Committee constituting various officials and referred certain

questions to the committee. The Government further directed that the Assets and Liabilities Committee shall send its report through the

Empowered Committee of TAMARAI. On 12-3-1990, the Managing Trustee wrote a letter to the Member Secretary of the Committee apprising

the principles of valuation to be adopted in cases of purchase of private buildings by the Government Department, which are generally very

uncommon. It is also stated by the Managing Trustee that the values of the several assets and liabilities have all been recorded in the final audited

balance sheet sent on 2-1-1990 and they have not received any communication either from the Government or from the Valuation Committee with

regard to the work done by the Valuation Committee to enable them to offer any comments or to send any letter of clarification. The Managing

Trustee further stated that the Trust will presume that the Committee will send the estimated values of all the items of assets and liabilities to them

before they could offer their comments on presentations of them. The valuation has not been finished yet. Obviously, the Government has not

arrived at the valuation. The Managing Trustee seems to have been reminding the Committee and sending letters. It seems, the Trust started

receiving letters from certain banks also enforcing their liability, i.e., Trust''s liability. Ultimately by 20th November, 1990, the Trust wrote a letter

to the then Chief Minister of Tamil Nadu bringing forth their difficulties and wanted all payments immediately towards all the liabilities mentioned in

their letter dated 20-11-1990 and also to direct substitution of the personal guarantees offered by the Managing Trustee and the other Trustee (R.

Ethurajan) with that of the Government of Tamil Nadu. The petitioner has come up to this Court now stating that having regard to the facts stated

above, i.e., in spite of repeated representations and in view of the failure and inaction on the part of the respondent to take over and discharge the

liabilities, G.O. Ms. No. 1012, Health, dated 25-6-1989 has become void and as such the petitioner Trust is entitled to restoration of the said

Medical College.

It is alleged in the affidavit that the taking over of the Medical College itself is illegal and is vitiated with legal mala fides and a perusal of the facts

stated in the affidavit shows the obvious malice of the Government headed by the then Chief Minister. It is also stated that the Medical College was

the property belonging to the petitioner Trust and the Government had taken over the said institution which amounted to an acquisition of the

property for which the Government is obliged to pay compensation. Even assuming the compensation payable to the petitioner Trust was restricted

in terms of the resolution of the Trust, the Government was obliged to assume and discharge all the secured and unsecured liabilities of the Trust in

relation to the institution. The failure or refusal on the part of the Government to discharge their liabilities amounts to acquiring the property

belonging to the petitioner without paying any compensation and leaving the petitioner Trust to face the liabilities in relation to the property that had

been taken over, which would render the entire proceedings as arbitrary. It is also stated that the failure or refusal on the part of the Government to

assume the said liabilities and discharge the same even after the expiry of nearly 2 years from the date of take over would render the entire

proceedings as null and void, besides being arbitrary under Art. 14 of the Constitution. It is also stated that since the petitioner placed before the

Committee the details of the value of the construction and the purchase of the various machineries, equipments, etc., for the Medical College and

Hospital which far exceeds the secured and unsecured liabilities, it is not open to the respondent to deny or restrict any portion of the said liabilities

which are disclosed in the books of accounts. As such, it is stated that the refusal and failure on the part of the respondent to take over the

liabilities and discharge the same renders the take over as illegal and therefore, the respondent is liable for the restoration of Sri Ramachandra

Medical College and Research Institute forthwith to the petitioner-Trust.

After hearing Mr. R. Krishnamoorthy, learned senior counsel for the petitioner and after going through the affidavit filed in support of the writ

petition I do not think the stand taken by the petitioner is right. The Institution has been taken over by the Government only on the basis of the

resolution passed by the Trust. The Trust itself has handed over the institution to the Government and has accepted the proposals for arriving at the

valuation of the property. It is not open to the petitioner to go back on that and the petitions is estopped from taking such a contention before this

Court now and as such the petitioner cannot invoke the extraordinary jurisdiction of this Court at this point of time. Taking over of the college was

done by the then Government in June, 1989 and it has become part and parcel of the institution of the State. Once it is taken over, that too with the

consent of the petitioner Trust, I do not think the petitioner can now wriggle out of the situation. So much so, the Government also cannot do.

When once the State has taken over the institution on certain conditions, it is for them to abide by that and see that proper compensation is given to

the petitioner-Trust. It is true that the Trust has accepted for appointing a Committee and has produced all the records before the Committee for

arriving at the valuation and the complaint of the petitioner seems to be that still the Government has not arrived at a figure and has not paid the

compensation and that results in the financial institutions to take action against the Trustees in their private capacities because they have given

personal guarantees. To put the Trustees to such a position is very unfortunate. It need not be stated that if any citizen is divested of the property,

he must be paid due compensation especially when the State takes over and the State should see that the compensation is paid expeditiously to the

person or the institution concerned so that they cannot get into unnecessary complications, as the complaint before me is that action is taken against

certain trustees by certain banks insisting upon certain payments. When the State interferes with the right to property. Art. 300-A of the

Constitution protects the right and the State cannot grab the property without authority of law and keep it without paying compensation. When the

Government has taken over the institution, though on the basis of the resolution of the Trust and that too with the consent of the Trust it is but

proper that they should abide by the Government Order in G.O. Ms. No. 1082 Health and Family Welfare dated 26-6-1989 and G.O. Ms. No.

2042, Health, Indian Medicine and Homeopathy and Family Welfare Department, dated 4-11-1989. In view of the grievance made out by the

petitioner in the affidavit, instead of granting the prayer as asked for in the writ petition, this Court can mould the prayer to suit the occasion and as

such a direction shall issue to the respondent-State to arrive at the compensation and pay it over to the petitioner-Trust with interest within three

months from today. If the Government fails to pay the amount within three months and arrive at the figure and pay the amount to the petitioner, it is

open to the petitioner to take appropriate proceedings against the State and if the petitioner is aggrieved by the quantum fixed by the State it is

open to the petitioner to challenge the same before the proper forum if so advised. The writ petition is ordered accordingly. However, there shall

be no order as to costs.