Madras HC quashes Rs 1.61 crore bond penalty demand, orders doctor to pay Rs 40 lakh

Chennai: Granting partial relief to a doctor on a Rs 1.61 crore penalty demand, the Madras High Court told her to pay Rs 40 lakh as a penalty for not honouring her bond service terms of serving the state till superannuation.

Earlier, the doctor was asked by the authorities to pay Rs. 1,61,55,261/-, computing the bond amount with penal interest till her superannuation. However, the HC bench comprising Justice G.K. Ilanthiraiyan observed, "The said demand is contrary to the bond condition. The interest cannot be calculated till the petitioner's superannuation. The bond amount shall be paid by the petitioner with interest till the date of demand."

After completing her MBBS degree, the petitioner qualified the NEET PG entrance examination, becoming eligible to get a post-graduation seat. After completing her undergraduate degree, she was appointed as Casualty Medical Officer at Government Mohan Kumaramangalam Medical College and Hospital, Salem by direct recruitment. Later, she was transferred as Medical Officer at the Government-upgraded Primary Health Centre, Elampillai, Salem district.

Since the petitioner was a service candidate, as per the prospectus for the post-graduation degree in Tamil Nadu Government Medical Colleges for the batch 2019-2020, she could apply only as service candidate, and there was no provision for service candidate to opt for applying asa non-service candidate (general category), foregoing the pay scale.

Therefore, she applied as a service candidate and she was awarded 5% incentive mark considering her service of 1 year and 7 months in a rural area. She was selected for MS (Obstetrics and Gynaecology) in the Government Medical College, Thanjavur. She had executed a bond as per the prospectus during her post-graduation course. During her post-graduation course, she had worked as a PG doctor in the Department of Obstetrics and Gynaecology, and she was also put on COVID-19 duty from March 2020 to 20.06.2022.

She completed her postgraduation and was then posted as an Assistant Professor in the Department of Obstetrics and Gynaecology at Government Mohan Kumaramangalam Medical College and Hospital, Salem. However, she could not continue her service due to her illness and other family circumstances.

Therefore, the Dean of the medical college issued a show-cause notice to the petitioner on 19.12.2023 and demanded a sum of Rs. 1,61,55,261/- computing the bond amount with penal interest till her superannuation. On receipt of the same, the petitioner submitted her explanation. Thereafter, the District Collector, Salem, authorised the Tahsildar of Edappadi Taluk to recover the bond amount from the petitioner by an order dated 01.07.2024.

Challenging the order, the petitioner's counsel argued that the demand is exorbitant and there was no basis for claiming such a huge amount. The counsel contended that although the petitioner had secured high scores to get a PG seat under the open quota, she was not allowed to apply as a non-service candidate under the open quota since non-service candidates have to serve only for one year or pay a Rs 20 lakh bond penalty. On the other hand, the service candidates have to render their service till superannuation or pay Rs 40 lakh as a penalty. This, according to the petitioner's counsel, was illegal, irrational, discriminatory, disproportionate, and without any founding principle.

It was argued that the condition of service till superannuation is nothing but bonded labour. It was submitted that the bond conditions were approved by the Government Order dated 08.03.2019. Therefore, the petitioner's counsel argued that the bond condition mandating the petitioner to render service till her superannuation is blatantly illegal and arbitrary, and the Government Health Department order dated 08.03.2019 is illegal, onerous, and manifestly arbitrary, and it violates Article 14 of the Constitution of India. It was argued that no one can be compelled to render service to the State till superannuation against their will.

The petitioner's counsel relied on the Supreme Court judgment in the case of Association of Medical Super Speciality Aspirants & Residents and others Vs. Union of India, and the Apex Court order in the case of Mohini Jain Vs. State of Karnataka.

On the other hand, the authorities submitted that despite submitting a bond with an undertaking to serve till superannuation, the petitioner attended duty only for 1 year and 22 days after completion of her post-graduation degree. She failed to attend duty for the remainder of her service of 26 years, 1 month and 10 days. Therefore, as per the bond executed by the petitioner dated 07.08.2019, she had agreed to serve the Government of Tamil Nadu till her superannuation, and on failure of not complete the bond period fully, the petitioner shall have to pay Rs. 40,00,000/-, and in default of the same, the petitioner shall have to pay the bond amount along with interest.

"But the petitioner was served with demand notice for a sum of Rs.1,61,55,261/-. The said demand is contrary to the bond condition. The interest cannot be calculated till the petitioner's superannuation. The bond amount shall be paid by the petitioner with interest till the date of demand. Further after completion of her post graduation, the petitioner had served from 21.06.2022 to 13.07.2023," the HC bench observed

Further, the Court noted that as per the clarification letter issued by the Health Department dated 26.04.2024 to the Director of Public Health and Preventive Medicine, in the cases of non compliance of bond conditions by the medical officers, the recovery of the interest for the contractual bond amount should be calculated from the date of demand till the date of payment as per the prospectus of the course they underwent and it must not be calculated till the date of superannuation of the medical officer.

Accordingly, the Court held,

"Therefore, the order of demand and consequential recovery proceedings cannot be sustained and the same are liable to be quashed insofar as the interest portion alone."

"Therefore, this Court is inclined to direct the petitioner to pay only a sum of Rs.40,00,000/- as bond amount within a period of four weeks from the date of receipt of copy of this order, failing which the fifth and sixth respondents are directed to recover the said bond amount with interest at the rate of 6% from the date on which the aforesaid four weeks is completed till payment, in accordance with law," it ordered.

Thereafter, the Court observed that after having been executed the bond as per the prospectus and joined in her post-graduation degree and after completion of her PG degree, she had served for 1 year and 22 days. After her unauthorised absence, she challenged the very Government Order and prospectus. After going through the terms and conditions of admission, the petitioner had voluntarily executed the bond to pursue her post-graduation degree. Further, the bond executed by the petitioner was found to be valid, noted the Court.

In this regard, the Court referred to the order in the case of State of Tamil Nadu Vs. P.S.Sairam and others, and noted, "The above judgment is squarely applicable to the case on hand and as such, insofar as challenges made against the prospectus for admission to Post Graduate Degree/Diploma Courses in Tamil Nadu Government Medical Colleges and Government Seats in Self-Financing Medical Colleges Affiliated to the Tamil Nadu Dr.M.G.R.Medical University & Rajah Muthiah Medical College Affiliated to Annamalai University 2019-2020 Session dated 10.03.2019 insofar as compelling the petitioner to serve till superannuation failing which to pay Rs.40,00,000/- (Rupees Forty Lakhs only) as security and the bond dated 07.08.2019 executed by the petitioner pursuant to the same and the Government order in G.O.(D) No.443 Health and Family Welfare (MCA1) Department dated 08.03.2019 cannot be countenanced and the same are dismissed."

"However, in respect of the bond amount alone, the impugned orders of the fourth and fifth respondents are modified to the effect that the petitioner shall pay only a sum of Rs.40,00,000/- as bond amount within a period of four weeks from the date of receipt of this order, failing which the fifth and sixth respondents shall recover the said bond amount with interest at the rate of 6% from the date on which the aforesaid four weeks is completed till payment, in accordance with law," the Court ordered.

To view the order, click on the link below:

https://medicaldialogues.in/pdf_upload/madras-hc-service-candidate-bond-303946.pdf

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