Supreme court quashes criminal proceedings against Kolkata's hospital over billing dispute
Supreme Court of India
New Delhi: Granting relief to a Kolkata-based hospital and its chairman, the Supreme Court recently quashed a criminal complaint against them, observing that billing discrepancies and service-related grievances are primarily civil in nature and do not constitute criminal offences.
Based on a complaint alleging discrepancies in billing and failure to provide medical records, a criminal case had been registered against Narayana Hospital, its Chairman and staff under Sections 406 (criminal breach of trust), 420 (cheating), and 120B (criminal conspiracy) of the IPC, along with provisions of the West Bengal Clinical Establishments Act, 2017.
However, while considering the matter, the Apex Court bench comprising Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe observed, "...the legislative scheme clearly establishes that disputes concerning billing practices, supply of medical records, or service-related grievances are primarily intended to be addressed as deficiencies for which compensation is payable, if found to be true."
The Apex Court's order set aside the order of the Calcutta High Court, which had suggested that a prima facie criminal case was made out against the Barasat-based hospital.
Case Details:
The proceedings stemmed from a complaint filed by the petitioner regarding the medical treatment of his mother, who had been admitted to the hospital back in 2021 for treatment of her fractured right femur bone. After undergoing a successful surgery, she remained admitted for four days. After discharge, the hospital issued a bill for the medical services rendered.
Later, the complainant approached the hospital authorities, raising concerns regarding certain discrepancies in the billing and seeking copies of the medical records and documents relating to the treatment.
The complainant was informed about the hospital's grievance redressal mechanism and was advised to follow the established procedure for obtaining records and addressing billing concerns. Subsequently, the complainant requested copies of medical documents and treatment records required for purposes of insurance reimbursement.
Following this, the hospital issued a revised bill with an adjustment in the charges, particularly relating to an HRCT test amounting to Rs. 2,500/-, which had earlier been included in the bill. According to the hospital, though the said diagnostic test was proposed, it was in fact not conducted because the subsequent condition of the patient did not warrant it. Consequently, the revised bill reflected that the amount of Rs. 2,500/- was liable to be refunded to the complainant. The hospital communicated the same to the complainant through email, requesting him to collect the refund amount from the hospital counter or to provide bank details to facilitate the transfer of the amount. A reminder communication was also sent.
Meanwhile, the complainant lodged a case before the Judicial Magistrate, 2nd Court, Barasat, alleging that the hospital had intentionally included charges for a diagnostic test which had not been performed, and that relevant medical documents were not supplied promptly. The complaint further alleged that certain hospital personnel behaved improperly and issued threats when the complainant questioned the billing and sought clarification regarding the treatment records.
Based on these allegations, offences under Sections 406, 420 and 120B of the Indian Penal Code, 1860 (“IPC”), along with Section 34 of the West Bengal Clinical Establishments (Registration, Regulation and Transparency) Act, 2017, were invoked against the company running the hospital, the hospital itself, the Chairman of the company, a hospital representative and a former employee of the hospital.
After examining the matter, the Magistrate, by an order dated 11.03.2021, issued process against the accused persons. Aggrieved by this, the hospital and other authorities approached the Calcutta High Court for quashing the complaint and the summoning order under Section 482, CrPC.
However, the High Court in its order dated 16.05.2023, instead of considering the submissions of the appellants that no offence was made out and that the allegations, even if true, related to a civil dispute, proceeded to remand the matter to the Magistrate to reconsider. While setting aside the order of summons, the High Court without a proper examination of the facts, particularly in the context of the offences alleged, made a passing comment that offence has been made out. Aggrieved by this, the hospital approached the Supreme Court seeking relief.
Observations by Supreme Court:
While considering the matter, the Apex Court noted that the complainant alleged commission of offences under Sections 405, 420 and 120B, IPC in his complaint. The bench observed that for criminal breach of trust under Section 405, IPC, it is necessary that there must be entrustment of property to the accused; such entrustment must create a fiduciary obligation regarding the handling or use of that property; and the accused must have dishonestly misappropriated or converted the entrusted property.
At this outset, the Court observed, "Applying these principles to the present case, the allegations in the complaint indicate that the amount of Rs. 2,500/- was paid by the complainant as part of the hospital bill towards charges for an HRCT test, at the time of discharge of the patient. The complaint does not contain any averment that the amount in question was entrusted to the hospital to be held or utilised for a fiduciary or trust-based purpose, nor does it refer to any legal or contractual stipulation governing the manner in which such amount was required to be dealt with or any other averment to show as to how Section 405, IPC is made out. Furthermore, upon mistake being pointed out, the hospital had offered to refund the amount wrongly charged. Thus, in the absence of entrustment, dishonest misappropriation, or violation of a fiduciary obligation, foundational ingredients of the offence of criminal breach of trust as enshrined in Section 405, IPC are not satisfied."
Further, the bench observed that for the offence of cheating under Section 420, IPC, there must be deception on part of the accused from the very beginning; such deception must lead to fraudulent or dishonest inducement; and the accused must have had a dishonest intention at the time the inducement was made.
It noted that the complainant's allegation was merely that the bill issued by the hospital reflected a charge for a test that was not performed. Noting that once the issue was raised by the complainant, the hospital communicated its decision to refund the amount, the top court bench held, "the discrepancy in billing appears to be more of an inadvertence, than a case of dishonest intention on part of the hospital. We are of the opinion that the allegation of cheating is completely misplaced."
Similarly, the bench observed that for the offence of criminal conspiracy under Section 120B, IPC, there must be a prior agreement or meeting of minds for commission of an illegal act or a lawful act by illegal means. Moreover, where the foundational offences are not disclosed, a charge of conspiracy premised upon those offences ordinarily cannot stand independently.
However, the bench observed that "Since the allegations regarding offences of criminal breach of trust and cheating are virtually nonexistent, the incidental allegation of criminal conspiracy is unsustainable. Furthermore, the complaint named not just the hospital and its staff but also the corporate entity running it and its Chairman. There is nothing in the complaint indicating a prior agreement, concerted plan, or meeting of minds among the accused persons to commit an unlawful act."
The complainant had also alleged improper conduct by the hospital representatives and employees. In this regard, the court noted that the allegations in the complaint relate to the alleged statements made by them discouraging the complainant from pursuing the matter any further. There is nothing more to this averment and it is important to note that neither the complaint nor the summoning order refers to commission of an offence under Section 503, IPC, it held.
It was observed by the Supreme Coiurt that the High Court while remanding the matter, observed that "the aforesaid act of the two accused persons prima facie do make out an offence under Section 504 of the Indian Penal Code" and that "offence has been made out".
Addressing this, the Apex Court noted, "We are of the opinion that there was no occasion for the High Court to construe the general averments and elevate them to the commission of an offence under Section 504 and then observe that offence has been made out."
Accordingly, the bench held, "In view of the above discussion, we are of the opinion that the allegations made in the complaint, even if assumed to be true in their entirety and accepted at face value, fail to disclose the commission of any offence under the Sections invoked against the accused persons."
Regarding the allegations and grievance about the non-supply or delay in providing medical records, the Court held that this allegation falls short of a criminal offence and could at the most give rise to some kind of a claim in civil law or a statutory requirement under West Bengal Clinical Establishment (Registration, Regulation & Transparency) Act, 2017 or the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002. However, the complaint only refers to the commission of offence under Section 34 of the West Bengal Clinical Establishment (Registration, Regulation & Transparency) Act, 2017
The Court noted that the 2017 Act is intended to regulate the functioning of clinical establishments within the State, ensure transparency in medical services, standardise treatment protocols, and provide mechanisms for grievance redressal in matters relating to patient care, billing practices and service standards.
Referring to Section 7(3), Section 34, 35, 36, and 29 of the 2017 Act, the bench observed, "In other words, the legislative scheme clearly establishes that disputes concerning billing practices, supply of medical records, or service-related grievances are primarily intended to be addressed as deficiencies for which compensation is payable, if found to be true. Without even indicating as to how and in which manner the criminal offence has been committed, it is not permissible for the complainant to proceed with prosecution by just mentioning Section 34 in the complaint. We do not deny the fact that that complainant may have certain service-related grievances and these could be addressed under Section 29 of the 2017 Act. In view of the above, we are of the opinion that no criminal offence even under Section 34 of the 2017 Act is made out."
Accordingly, granting relief to the hospital, the Apex Court observed, "Having considered the matter in detail, we are of the opinion that this is a fit case for exercising jurisdiction under Section 482 of CrPC to quash the criminal complaint and we are equally of the opinion that the High Court has failed to exercise such a power. In this view of the matter, we allow these appeals and set aside the judgement and order passed by the High Court in C.R.R. No. 967 of 2021 with CRAN No. 1 of 2021, dated 16.05.2023 and quash the Complaint Case No. C-533 of 2021."
It clarified that "Quashing of the above referred criminal complaint will have no bearing on the civil or statutory remedies that the complainant may exercise in accordance with law."
To view the order, click on the link below:
https://medicaldialogues.in/pdf_upload/2026/05/14/supreme-court-billing-issue-347554.pdf
