Narayana Health & Orsv.State of West Bengal & Ors

Legal Analysis: Narayana Health & Ors. vs. State of West Bengal & Ors

Citation: 2026 INSC 481
Court: Supreme Court of India
Bench: Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe (Division Bench)
Date of Decision: May 12, 2026
Nature of Judgment: Criminal Appeal under Article 136 of the Constitution of India against the judgment of the High Court of Calcutta in a criminal revision petition.

Synopsis of the Judgment

The complainant’s mother was treated at a hospital run by the appellants. After discharge, the complainant discovered that the hospital bill included a charge of ₹2,500 for an HRCT test that was not performed. The hospital admitted the error and offered a refund. The complainant, however, filed a criminal complaint alleging offences under Sections 406 (criminal breach of trust), 420 (cheating), and 120B (criminal conspiracy) of the Indian Penal Code, 1860, and Section 34 of the West Bengal Clinical Establishment (Registration, Regulation and Transparency) Act, 2017. The Magistrate issued summons. The High Court, in revision, set aside the summoning order but remanded the matter for reconsideration of the complicity of certain accused, while observing that an offence under Section 504 IPC (intentional insult) was made out. The Supreme Court quashed the entire criminal proceedings, holding that the allegations, even if taken at face value, did not disclose any criminal offence. The dispute was essentially a civil or regulatory matter concerning a billing error, which the hospital had already offered to rectify. The Court reiterated the principles from Bhajan Lal and held that the High Court should have quashed the complaint instead of remanding it.

1. Basic Information of the Judgment

• Case Title: Narayana Health & Ors. vs. The State of West Bengal & Ors.

• Criminal Appeal Nos.: Arising out of SLP (Crl.) Nos. 10379-10380 of 2023

• Bench: Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe (Division Bench)

• Date of Decision: May 12, 2026

• Citation: 2026 INSC 481

• Appeal From: Judgment and order dated 16.05.2023 of the High Court of Calcutta in CRR No. 967 of 2021 (and connected matters)

2. Legal Framework

Laws and Provisions Involved

• Indian Penal Code, 1860 (IPC): Sections 405 (criminal breach of trust – definition), 406 (punishment for criminal breach of trust), 415 (cheating – definition), 420 (punishment for cheating), 120B (criminal conspiracy), 503 (criminal intimidation), 504 (intentional insult)

• Code of Criminal Procedure, 1973 (CrPC): Sections 200 (examination of complainant), 482 (inherent powers of High Court to quash proceedings)

• West Bengal Clinical Establishment (Registration, Regulation and Transparency) Act, 2017: Sections 29 (penalties for deficiencies), 34 (criminal liability for contravention of provisions), 35 (Adjudicating Authority), 36 (Regulatory Commission)

Key Precedents Cited

• State of Haryana v. Bhajan Lal (1992) Supp (1) SCC 335 – Laid down categories of cases where the High Court can quash criminal proceedings under Section 482 CrPC, including where allegations do not prima facie constitute any offence, where the allegations are absurd or inherently improbable, or where the proceeding is manifestly attended with mala fide.

What the Judgment is About

The judgment addresses the question whether a billing dispute between a hospital and a patient, where the hospital erroneously charged for a diagnostic test that was not performed and subsequently offered a refund, can constitute criminal offences of cheating, criminal breach of trust, or conspiracy. The Court holds that such a dispute is essentially civil or regulatory in nature, and that criminal proceedings cannot be sustained merely because a patient is dissatisfied with the billing or the conduct of hospital staff, especially when the hospital has taken corrective action. The Court also clarifies that the High Court, in exercise of its inherent powers under Section 482 CrPC, should quash such complaints rather than remand the matter for further inquiry.

3. Relevant Facts

• Admission and treatment: Complainant’s mother (Bina Sen) was admitted to Narayana Multispecialty Hospital, Barasat, Kolkata on 13.02.2021 for treatment of a fractured right femur. She underwent successful surgery on 15.02.2021 and was discharged on 19.02.2021.

• Billing dispute: The hospital issued a bill of approximately ₹1,94,307.84. The complainant paid ₹1,71,130 after discounts. The bill included a charge of ₹2,500 for an HRCT test that was not performed (the test was proposed but later not required).

• Hospital’s response: On 23.02.2021, the hospital issued a revised bill reflecting the removal of the ₹2,500 charge and offered a refund. The hospital communicated this to the complainant via email and reminders, requesting him to collect the refund or provide bank details.

• Criminal complaint: The complainant filed a complaint before the Judicial Magistrate, 2nd Court, Barasat, alleging that the hospital intentionally inflated the bill, that medical records were not supplied promptly, and that hospital staff behaved improperly and issued threats. Offences under Sections 406, 420, 120B IPC and Section 34 of the 2017 Act were invoked.

• Magistrate’s order (11.03.2021): After examining the complainant and witnesses under Section 200 CrPC, the Magistrate issued process (summons) against all accused.

• High Court order (16.05.2023): The accused filed a quashing petition under Section 482 CrPC. The High Court set aside the summoning order but remanded the matter to the Magistrate to reconsider the complicity of certain accused (the corporate entity and the Chairman) living in a different territorial jurisdiction. The High Court observed that the act of the two hospital employees (pushing the complainant into an office and threatening him) prima facie made out an offence under Section 504 IPC and that “offence has been made out”.

• Supreme Court: The accused appealed. The Court stayed further proceedings and, after hearing, quashed the entire criminal complaint.

4. Issues

1. Whether the allegations in the complaint, even if taken at their face value, disclose the commission of offences under Sections 406, 420, and 120B of the IPC.

2. Whether the High Court was justified in remanding the matter to the Magistrate instead of quashing the complaint under Section 482 CrPC, given that the dispute was essentially civil in nature.

3. Whether the High Court’s observation that an offence under Section 504 IPC was made out was valid, especially when no such charge was initially invoked.

5. Ratio Decidendi

A. No offence of criminal breach of trust under Section 406 IPC (Paras 11):

The Court held that for an offence under Section 405/406 IPC, essential ingredients are: (i) entrustment of property to the accused; (ii) a fiduciary obligation regarding the handling of that property; and (iii) dishonest misappropriation or conversion of the entrusted property. In this case, the amount of ₹2,500 was paid as part of the hospital bill. There was no specific entrustment to the hospital to be held for a trust‑based purpose. Moreover, upon the mistake being pointed out, the hospital offered to refund the amount. Therefore, the foundational ingredients of criminal breach of trust were not satisfied.

B. No offence of cheating under Section 420 IPC (Para 12):

For cheating under Section 420 IPC, there must be deception at the time of inducement and a dishonest intention from the very beginning. The allegation was merely that the bill reflected a charge for a test that was not performed. The discrepancy appears to be an inadvertence, not a case of dishonest intention. The hospital promptly offered to refund the amount once the error was noticed. Hence, the allegation of cheating was completely misplaced.

C. No offence of criminal conspiracy under Section 120B IPC (Para 13):

Criminal conspiracy requires a prior agreement or meeting of minds to commit an illegal act. Since the foundational offences of criminal breach of trust and cheating were not made out, the charge of conspiracy premised on those offences could not stand independently. The complaint did not indicate any prior agreement among the accused.

D. Allegations of threat – insufficient to sustain criminal proceedings (Paras 14-15):

The High Court observed that the conduct of two hospital employees prima facie made out an offence under Section 504 IPC. The Supreme Court noted that the complaint did not invoke Section 504, and the allegation of “pushing into an office and threatening” was vague. Even assuming the truth of such allegations, they did not, in the overall context of a billing dispute, warrant the continuation of criminal proceedings, especially when the High Court itself had set aside the summoning order. The Court held that the allegations, even if assumed to be true, failed to disclose any criminal offence.

E. Statutory remedies under the 2017 Act – not criminal (Paras 16-19):

The West Bengal Clinical Establishment Act, 2017 provides a comprehensive mechanism for addressing grievances relating to billing, supply of medical records, and service deficiencies. Section 29 provides for penalties and Section 35 provides for an Adjudicating Authority. Section 34 creates criminal liability only for contravention of declared provisions, but the complainant did not indicate how the criminal offence was made out. The Court held that the dispute was essentially a service‑related grievance that could be addressed under Section 29 of the 2017 Act, not a criminal offence.

F. Quashing under Section 482 CrPC – fit case (Para 20):

Applying the principles from Bhajan Lal, the Court held that the allegations, even if taken at face value, did not constitute any offence. The dispute was civil in nature, and the criminal proceeding was an abuse of the process of law. The High Court should have quashed the complaint instead of remanding it. The Supreme Court, therefore, quashed the entire criminal complaint.

6. New Legal Principles Established / Reiterated

• A billing dispute between a hospital and a patient, where the hospital admits the error and offers a refund, does not give rise to criminal offences of cheating, criminal breach of trust, or conspiracy. The mere inclusion of an erroneous charge in a medical bill, without evidence of dishonest intention at the time of making the bill, is not sufficient to invoke Sections 420 or 406 of the IPC.

• The availability of a statutory regulatory mechanism under a State Clinical Establishments Act (with provisions for adjudication and penalties) indicates that such disputes are intended to be resolved civilly or administratively, not criminally. A complainant cannot bypass the statutory adjudicatory mechanism by simply invoking criminal provisions without proper foundational allegations.

• A High Court, when exercising its inherent powers under Section 482 CrPC, should quash a complaint that does not disclose any criminal offence, rather than remanding the matter for further inquiry. Remanding only prolongs the litigation and does not cure the fundamental defect in the complaint.

7. Court’s Analysis and Examination of Concepts

The Court examined each offence invoked by the complainant:

• Criminal breach of trust: The Court noted that the complainant paid the bill as consideration for medical services, not as entrustment of property to be held for a specific purpose. The hospital’s obligation was to render services and charge correctly. An erroneous charge, especially when corrected and refunded, does not amount to criminal misappropriation.

• Cheating: The Court distinguished between a genuine billing error and a fraudulent deception. Here, the test was proposed but not performed; the hospital removed the charge on its own after the discrepancy was pointed out. There was no evidence that the hospital intended to cheat from the outset. The hospital’s prompt offer to refund indicated good faith.

• Criminal conspiracy: The Court held that without the substantive offences, the conspiracy charge cannot stand. The complaint did not plead any agreement among the accused to commit an illegal act.

• Statutory scheme of the 2017 Act: The Court analysed Sections 29, 35 and 36 of the Act and noted that the legislature intended service grievances (including billing irregularities and non‑supply of records) to be redressed through the Adjudicating Authority and the Regulatory Commission, not through criminal prosecution. Section 34 provides for criminal liability only for serious contraventions, but the complainant did not specify how that section was attracted.

• High Court’s error: The High Court, despite setting aside the summoning order, remanded the matter for reconsideration of complicity of some accused. The Supreme Court held that this was an unnecessary exercise – the complaint was fundamentally defective, and no further inquiry could cure it. The High Court should have quashed the complaint entirely.

8. Critical Analysis

Strengths: The judgment correctly distinguishes between a civil/regulatory dispute and criminal liability. It prevents the misuse of criminal law to settle commercial or service‑related grievances. The analysis of the ingredients of cheating, criminal breach of trust, and conspiracy is precise. The recognition that the 2017 Act provides a dedicated mechanism for dealing with such grievances is important – it channels disputes to the proper forum. The judgment also reaffirms the principles of Bhajan Lal and emphasises that High Courts should not hesitate to quash frivolous criminal proceedings.

Potential concerns: The judgment may be perceived as giving hospitals a blanket immunity for billing errors, even if repeated or systemic. However, the Court clarified that the specific facts showed the hospital offered a refund promptly. If there were evidence of deliberate overcharging or a pattern of such conduct, the outcome might be different. Also, the Court quashed the proceedings in the absence of the complainant (who did not appear), after appointing an amicus. This is procedurally permissible but could be seen as depriving the complainant of an opportunity to argue.

Practical impact: This judgment will be cited by healthcare providers to quash criminal complaints arising from billing disputes, especially where the error was inadvertent and corrected. It will also guide courts to carefully examine whether the allegations disclose the necessary mens rea for cheating or criminal breach of trust. Additionally, it reinforces that regulatory statutes with their own adjudicatory mechanisms should be invoked before resorting to criminal prosecution.

9. Final Outcome

• Criminal Appeals allowed.

• The impugned judgment and order of the High Court of Calcutta dated 16.05.2023 in CRR No. 967 of 2021 and connected matters is set aside.

• Complaint Case No. C-533 of 2021 pending before the Judicial Magistrate, 2nd Court, Barasat, is quashed.

• The complainant (respondent No. 2) is at liberty to pursue any civil or statutory remedies available under the West Bengal Clinical Establishment Act, 2017 or any other applicable law.

• No order as to costs.

10. Practical Application (Use in Court)

• For healthcare providers (hospitals, doctors): If you are facing a criminal complaint for billing disputes (e.g., overcharging, wrong billing) and you have corrected the error and offered a refund, file a quashing petition under Section 482 CrPC. Cite this judgment to argue that the complaint does not disclose the ingredients of cheating or criminal breach of trust. Also, point out if the State has a clinical establishments act with a dedicated regulatory mechanism – argue that the dispute must be adjudicated there.

• For patients/complainants: Before filing a criminal complaint for a billing error, ensure that the hospital acted with dishonest intention from the beginning. If the hospital rectifies the error and offers a refund, a criminal complaint is likely to be quashed. Instead, approach the regulatory authority under the State Clinical Establishments Act (if applicable) or file a consumer complaint before the District Consumer Disputes Redressal Forum.

• For courts (High Courts and Magistrates): When a criminal complaint is filed against a hospital for a billing dispute, first examine whether the allegations disclose the essential ingredients of the offence, particularly the mens rea for cheating. If the hospital has corrected the error and offered a refund, the complaint should be quashed at the threshold under Bhajan Lal category 1 or 3. Do not remand for further inquiry when the complaint is fundamentally defective.

11. Court Lines

“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. … 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.” (Para 11)

“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 dishonest intention at the time the inducement was made. … The discrepancy in billing appears to be more of an inadvertence, than a case of dishonest intention on part of the hospital.” (Para 12)

“Where the foundational offences are not disclosed, a charge of conspiracy premised upon those offences ordinarily cannot stand independently.” (Para 13)

“The 2017 Act provides remedies against violations and excesses by clinical establishments by establishing an adjudicatory mechanism. … 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.” (Para 19)

12. Legal Strategy Insight

• For hospital/defence: In any criminal complaint arising from a billing dispute, immediately file a quashing petition under Section 482 CrPC. Attach evidence showing that the error was inadvertent (e.g., the test was proposed but not performed; the hospital corrected the bill on its own or promptly upon complaint). Also, cite the relevant State Clinical Establishments Act (if any) to show that the dispute falls within the regulatory mechanism, not criminal law. Use this judgment to argue that the absence of dishonest intention from the beginning is fatal to charges of cheating.

• For complainants/patients: Before filing a criminal complaint, obtain an expert opinion or evidence that the hospital’s overcharging was intentional and part of a systematic practice. If the hospital voluntarily refunds the amount, a criminal case will be difficult to sustain. Instead, approach the consumer forum or the regulatory authority under the Clinical Establishments Act. If you still wish to file a criminal complaint, ensure that the complaint clearly pleads facts that demonstrate the hospital’s dishonest intention at the time of issuing the bill, not just a subsequent error.

• For courts: When a criminal complaint against a hospital is based on a billing error, first ask: “Does the complaint allege that the hospital had a dishonest intention from the very beginning, or does it merely allege that a wrong charge was included and later corrected?” If the answer is the latter, quash the complaint. Also, check if the State has a regulatory mechanism for clinical establishments – if yes, suggest that the complainant approach that forum.