[COVID-19] Kerala High Court sets aside Kerala Govt order capping price of RT-PCR test at ₹500

The Kerala High Court on Monday set aside a Government Order (GO) that had capped the price chargeable by private laboratories for RT-PCR tests at ₹500 and directed the State government to issue fresh orders after affording the labs an opportunity to present their views (Devi Scans Pvt. Ltd. and Ors. v. State of Kerala and Ors.)..Single judge Justice TR Ravi issued the order quashing the GO noting that the petitioners had not been afforded a chance to be heard as directed by the Indian Council of Medical Research (ICMR) which in turn came after the orders issued by the Supreme Court permitting the private laboratories to charge at the rates fixed by the ICMR."The State was obliged to discuss the matter with private laboratories. The GO issued without conducting a discussion with the private laboratories and that too in a matter in which they are seriously affected cannot be legally sustained," the order stated.The Court opined that none of the statutory provisions relied on by the State authorises it to issue the order and stated that the GO can only be treated as an executive order and not a part of the legislative process. Therefore, "it is open to judicial review on the grounds available for judicial review against executive/administrative orders," the Court held.However, quashing the GO and allowing the petitioners to charge ₹1,700 for each test as they had done earlier would also not be appropriate and therefore, the Court directed the government to hear the private labs and issue fresh orders."The interest of justice requires that the State government decides the matter after hearing the petitioners or their representatives at the earliest, at any rate, within three weeks from the date of receipt of a copy of this judgment," the Court ordered..The Court issued the order on two petitions preferred by several diagnostic laboratories and research centres in Kerala, who were conducting various kinds of Covid-19 tests, including RT-PCR tests. At the beginning of the pandemic, the cost of these tests had been capped at ₹4,500 and later at ₹1,700 based on market research conducted by the Kerala State Medical Services Corporation Ltd. (KSMC)However, in April 2021, the State issued a GO capping the price at ₹500..Senior Advocate P Ravindran appearing for the petitioners, contended that the State never heard the petitioners and it amounted to a violation of the orders issued by the Supreme Court and the direction of the ICMR.Moreover, he submitted that providing the tests at ₹500 has been pushing the petitioners to the brink of closure as the cost incurred in providing good quality tests is around ₹1,500. While cheaper alternatives may be available, the results of the same are not reliable, he added.He also assailed the justification offered by the State that the price was set based on market research by KSMC and considering similar price caps in other States as the KSMC is able to buy test kits in bulk and therefore avail discounts and the cost of raw materials, transportation etc. in other States is not known. .Advocate General K Gopalakrishna Kurup, appearing for the State contended that the State is empowered to issue the GO by exercising the powers under the relevant provisions of the Disaster Management Act, Epidemic Diseases Act, Travancore-Cochin Public Health Act, Madras Public Health Act and the Kerala Epidemic Diseases Ordinance.The State is also empowered by the the executive powers vested in the government under Article 162 of the Constitution of India in relation to Entry 6 of List II of 7th Schedule of the Constitution of India dealing with public health and sanitation, hospitals and dispensaries, he added..The Court had earlier issued an order in the matter allowing an alternate dispute resolution (ADR) whereby KSMC was directed to procure the test kits and provide it to the labs at the rates they are able to avail. However, KSMC itself admitted that even if they were to procure the materials for supply to the private labs as a temporary measure, they will not be able to procure all the materials that they would require..When the matter came up again after the failed ADR, the Court considered the rival contentions and concurred with the petitioners.This GO, the Court opined, is an executive action which is open to judicial review.It held that the State should have afforded the petitioners an opportunity to be heard and therefore set aside the GO and ordered the State to hear the petitioner labs and issue fresh orders expeditiously..[Read Order]