1. Dispute among trustees of medical trust over board resolution restricting trustee's communication with hospital employees. (Para 4 )
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2007 Supreme(SC) 1799
SUPREME COURT OF INDIA
K.G. BALAKRISHNAN, CJI., R.V. RAVEENDRAN, J.
Charu Kishor Mehta - Appellant(s)
Versus
Lilavati Kirtilal Mehta M. Trust & Ors. - Respondent(s)
Civil Appeal No. 1575 of 2007. (@ Special Leave Petition (C)No. 4911 of 2007)
Decided On : 26.03.2007
In cases of severe internal trust disputes affecting essential services like healthcare, the court can appoint neutral administrators for day-to-day operations as an interim measure to ensure continuity and transparency until the primary dispute is resolved.
Headnote:(A) Trust Management - Internal disputes between trustees - Management of healthcare institution - Challenge to board resolution restricting a trustee's interaction with employees and consultants - Board's authority to pass resolutions excluding a trustee from direct management of the trust's primary objects. (Para 4)
(B) Interim Measures - Appointment of administrators - Where serious disputes between trustees may hinder the operational efficiency of a hospital, the court may appoint administrators for day-to-day running to ensure continuity of services, requiring all board directions to be issued via formal resolutions and reports to be shared with aggrieved parties. (Para 5)
Facts of the case:
A trustee of a medical trust challenged a board resolution that prohibited her from interacting or communicating with employees and consultants of the associated hospital and research centre, except through the board of trustees. It was contended that such a resolution effectively excluded the trustee from management. The board maintained that the resolution was a necessary response to situations created by the said trustee. A civil suit regarding the matter was pending before the trial court.
Findings of Court:
The court observed that serious disputes existed between the parties, which could cause significant difficulties in the running of the hospital managed by the trust. (Para 5)
Issues: Whether the resolution restricting a trustee's direct communication with employees was valid and what interim arrangements were necessary to ensure the uninterrupted functioning of the hospital.
Ratio Decidendi: To prevent the disruption of a healthcare facility during a trustee dispute, the court may appoint administrators to oversee day-to-day operations. To maintain transparency and accountability, these administrators should report to the board, and the board must communicate directions only through formal resolutions, allowing aggrieved trustees to seek relief from the trial court. (Para 5)
Result: Appeal allowed to the extent indicated above.
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Table of Contents
2. Appellant argued Board lacked authority to pass restrictive resolution; respondents contended it was necessary due to appellant's conduct. (Para 4 )
3. Serious disputes between parties may cause difficulties in hospital management; as temporary measure, two administrators appointed for day-to-day running. (Para 5 )
4. In trust disputes where serious disputes risk hospital management, court may appoint interim administrators pending suit. (Para 5 )
5. Appeal allowed; interim arrangement substituting High Court order; trial court directed to expedite suit within six months; no costs. (Para 6 , 7 , 8 )
6. Under what circumstances can a court appoint interim administrators for a trust hospital during pending litigation?
When serious disputes among trustees risk causing difficulties in hospital management, the court may appoint administrators as a temporary measure to ensure smooth running. (Para 5 )
ORDER :
K.G. Balakrishnan, CJI. - Leave granted.
2. Respondents 1 to 13 are represented through respective counsel.
3. Heard both sides.
4. The appellant herein is the plaintiff in Suit No. 1997 of 2006 pending before the City Civil Court, Mumbai. The appellant is one of the Trustees of Lilavati Kirtilal Mehta Medical Trust and according to the averments in the plaint, defendants 2 to 9 are the other Trustees of the said Trust. Four resolutions were passed by the Board on 29th April, 2006. Appellant herein claims that she is seriously prejudiced by resolution No. 3 which is to the following effect :-
"Resolved that Mrs. Charu Kishor Mehta shall not interact or communicate with employees and/or consultants of the Lilavati Hospital and Research Centre and/or the trust save and except through the Board of trustees of the Trust, and employees and/or consultants be and are hereby informed that they do not have to take into account any instructions directly given by Mrs. K.Mehta to them." Shri Fali S.Nariman, learned senior counsel for the appellant submitted that the Board of Trustees had no authority to pass such a resolution and by virtue of this resolution, the appellant is completely excluded from the management of the hospital and research institute, which is the primary object of the Trust. Learned counsel for Respondents 11 to 13 supported the said contention.
5. On the other hand, Shri Harish N.Salve, learned senior counsel and other counsel appearing for respondent nos.1 to 10 supported the resolution and contended that the Resolution had to be passed because of the situation created by the appellant. After hearing the arguments on both sides, we find that there are serious disputes between the parties which ultimately may cause serious difficulties in the running of the hospital, which is under the management of the Trust. In view of the present circumstances, as a temporary measure, we direct that Dr. Narendra Trivedi, Vice-President of the Leelavati Hospital and Dr. K. Ramamurthy, Senior Consultant in that hospital, shall be in-charge of the hospital of the day to day running of the Hospital and Research Institute. These two Administrators will take all decisions relating to the administration of the hospital. They shall give a report to the Board of Trustees every two weeks and any directions by the Board of Trustees are to be issued to these two Administrators only in the form of resolutions and not individual instructions by any Trustee. A copy of the report of resolution shall also be furnished to the appellant and if she is in any way aggrieved by the directions issued by the Board, she would be at liberty to seek appropriate direction from the City Civil Court, Mumbai where the suit is pending.
6. We direct the City Civil Court, Mumbai to take up the suit No. 1997 of 2006 at an early date and dispose of the matter as expeditiously as possible at least within a period of six months. It is clarified that this interim arrangement is in substitution of the order passed by the High Court.
7. The appeal is allowed to the extent indicated above.
8. No costs.
