A) ABSTRACT / HEADNOTE

The judgment examines the scope and limits of the State Government’s power to withdraw an Essentiality Certificate granted for the establishment of a medical college under the Indian Medical Council Act, 1956 and the Medical Council of India Establishment of Medical College Regulations, 1999. The appellant Trust was granted an Essentiality Certificate in 2014 to establish a medical college at Jabalpur. Despite issuance of a conditional Letter of Permission for the academic year 2016–17, the college consistently failed to meet mandatory infrastructural, faculty, and clinical requirements prescribed by the Medical Council of India. Renewal permissions were denied for three consecutive academic years due to gross deficiencies, resulting in academic dislocation of the first batch of students.

The State Government, invoking public interest and student welfare, cancelled the Essentiality Certificate, which action was challenged by the appellant relying on Chintpurni Medical College and Hospital v. State of Punjab. The Supreme Court distinguished the precedent and upheld the cancellation, holding that while issuance of an Essentiality Certificate is a quasi-judicial act, its withdrawal is permissible in exceptional circumstances, particularly where the certificate was obtained by constructive fraud or where the substratum for its issuance has completely disappeared. The Court emphasized the State’s constitutional duty under Article 47 of the Constitution of India to safeguard public health and protect students from substandard institutions.

Keywords: Essentiality Certificate, Constructive Fraud, Medical Education Regulation, Substratum Doctrine, Article 47 Constitution of India

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The case arises from prolonged regulatory non-compliance by a private medical college despite repeated opportunities granted by statutory authorities. The State of Madhya Pradesh issued an Essentiality Certificate in 2014 certifying the desirability and feasibility of establishing a medical college with 150 MBBS seats. This certificate was issued on explicit representations by the Trust regarding availability of infrastructure, hospital facilities, and faculty in compliance with MCI norms.

Following submission of the scheme under Section 10-A of the Indian Medical Council Act, 1956, inspections revealed serious deficiencies. Although a conditional Letter of Permission was granted for 2016–17 pursuant to directions of the Supreme Court-mandated Oversight Committee, subsequent inspections demonstrated persistent failures. Renewal permissions were denied for academic years 2017–18, 2018–19, and 2019–20.

The deficiencies were structural and systemic. Faculty shortages exceeded 88 percent. Bed occupancy was negligible. Clinical material was absent. No meaningful teaching activity was demonstrated. The college effectively remained non-functional, jeopardizing the academic careers of admitted students.

In response, the State issued a show-cause notice and ultimately withdrew the Essentiality Certificate. The appellant contended that such withdrawal was barred by law once the certificate was issued, relying heavily on Chintpurni Medical College. The Supreme Court was thus required to determine whether the State’s action fell within legally recognized exceptions permitting withdrawal.

D) FACTS OF THE CASE

The appellant Trust applied for an Essentiality Certificate in 2014, representing possession of 27.27 acres of land, a 300-bedded hospital, and a time-bound plan for compliance with MCI norms. Based on these assurances, the State issued the certificate.

In 2016, the MCI reported gross deficiencies, including fake patient records, non-existent resident doctors, and inadequate facilities. Despite initial rejection, the Central Government granted conditional permission under judicial supervision. This permission was explicitly limited and subject to annual renewal upon compliance.

Subsequent inspections revealed alarming shortcomings. Bed occupancy was recorded at 3.65%. There were no surgeries, no deliveries, and no functioning ICUs. Faculty deficiency stood at 88.03%, and resident deficiency at 90.9%. Diagnostic and emergency services were practically absent.

Due to non-renewal of permissions, students admitted in 2016–17 were unable to continue their course. The State eventually relocated them to other recognized colleges. These developments prompted the State to cancel the Essentiality Certificate, citing violation of its foundational conditions.

The High Court upheld the State’s decision, leading to the present appeal.

E) LEGAL ISSUES RAISED

i. Whether the State Government possesses the power to withdraw an Essentiality Certificate once granted?
ii. Whether such withdrawal violates the principle laid down in Chintpurni Medical College?
iii. Whether persistent regulatory non-compliance constitutes constructive fraud?
iv. Whether loss of substratum justifies cancellation in public interest?

F) PETITIONER / APPELLANT’S ARGUMENTS

The counsel for the appellant submitted that issuance of an Essentiality Certificate is a quasi-judicial act that becomes functus officio once exercised. Reliance was placed on Chintpurni Medical College and Hospital v. State of Punjab, where it was held that the State cannot indirectly terminate the existence of a medical college by withdrawing such certificate.

It was argued that deficiencies fall exclusively within the domain of the MCI and Central Government, and that the State lacks inspection or revocation powers post-issuance. The appellant further contended that investments were made in reliance on State assurances, invoking principles of promissory estoppel and legitimate expectation.

G) RESPONDENT’S ARGUMENTS

The State contended that the appellant obtained the certificate by misrepresentation and failed to fulfill minimum commitments. Persistent deficiencies, repeated denial of renewal, and academic displacement of students demonstrated complete collapse of the substratum.

Reliance was placed on Indian National Congress (I) v. Institute of Social Welfare, asserting that fraud vitiates all actions. The State emphasized its constitutional obligation under Article 47 to protect public health and student welfare.

H) JUDGEMENT

The Supreme Court dismissed the appeal. It held that although issuance of an Essentiality Certificate is quasi-judicial and ordinarily irrevocable, exceptional circumstances permit withdrawal. The Court found that the appellant engaged in constructive fraud by making assurances it consistently failed to honor.

The Court distinguished Chintpurni Medical College, noting that it expressly allows withdrawal where fraud is involved or where the substratum disappears. The appellant’s institution was not an “established” college, as it never achieved functional compliance or recognition.

The Court underscored the State’s role as parens patriae and its duty under Article 47 to ensure quality medical education. Allowing such an institution to continue would compromise public health and student futures.

a) RATIO DECIDENDI

The ratio rests on the principle that fraud and loss of substratum constitute valid grounds for withdrawal of an Essentiality Certificate, notwithstanding its quasi-judicial character. Persistent inability to meet statutory standards amounts to constructive fraud, justifying State intervention.

b) OBITER DICTA

The Court observed that issuance of an Essentiality Certificate does not exhaust the State’s constitutional responsibility. Supervision must continue to ensure realization of its underlying purpose.

c) GUIDELINES

i. Essentiality Certificates may be withdrawn in cases of fraud or loss of substratum.
ii. Medical colleges must achieve compliance within a reasonable timeframe.
iii. Student welfare remains paramount.
iv. Article 47 duties extend beyond formal certification.

I) CONCLUSION & COMMENTS

The judgment reinforces regulatory accountability in medical education. It harmonizes Chintpurni Medical College with constitutional duties and prevents misuse of Essentiality Certificates as perpetual shields. The decision prioritizes public interest, student protection, and quality healthcare over private investment expectations.

J) REFERENCES

a) Important Cases Referred

i. Chintpurni Medical College and Hospital v. State of Punjab, [1976] 3 SCR 202
ii. Indian National Congress (I) v. Institute of Social Welfare, [2002] 3 SCR 1040
iii. Paschim Banga Khet Mazdoor Samity v. State of West Bengal, [1996] 2 Suppl. SCR 331

b) Important Statutes Referred

i. Indian Medical Council Act, 1956
ii. Medical Council of India Regulations, 1999
iii. General Clauses Act, 1897
iv. Constitution of India