New Delhi: The Wire Hindi recently reported on irregularities in the purchase of surgical gloves by the All India Institute of Medical Sciences (AIIMS), New Delhi. The Union Ministry of Health had written to the AIIMS director twice in 15 months about the costly purchase, but the country’s premier medical institute did not even care to respond.
This report investigates how Jai Prakash Narayan Apex Trauma Centre at AIIMS caused a loss of nearly Rs 50 lakh to the government exchequers. A senior doctor was accused of seeking ‘illegal gratification’ and acting with ‘vengeance’, but AIIMS has once again, failed to respond to the health ministry’s notice.
This imbroglio began after AIIMS delayed payments to Sparkle Associate, a firm that provides laundry services to the premier institution. This led to a prolonged legal battle that ultimately reached the Supreme Court. AIIMS lost at every stage, and eventually in January 2024, it not only had to pay all outstanding bills but also an additional Rs 46,29,003 as interest and Rs 1,67,493 for litigation expenses incurred by Sparkle.
When the matter first went to arbitration, the arbitrator observed that AIIMS’ decision to withhold payments seemed to be motivated by ‘vengeance.’ Arbitrator Surendra M. Mittal underlined the role of Amit Lathwal, the additional medical superintendent of the Trauma Centre, in blocking the payment.
Notably, despite the long legal battle between Sparkle Associate and AIIMS, the firm continues to provide laundry services to the institution.
Did AIIMS act with vengeance?
On February 15, 2016, AIIMS signed a contract with Sparkle Associate for providing laundry services at the Trauma Centre from November 1, 2015 to October 31, 2017. The contract ran smoothly for the first 18 months. In June 2017, Lathwal was appointed the additional medical superintendent of the Trauma Centre. Soon after, from April 2017 to October 2017, AIIMS stopped payments alleging poor services and violations of contractual terms.
On August 4, 2017, the Trauma Centre issued a show cause notice to Sparkle Associate for breaching its contract.
Dissatisfied with the company’s response, AIIMS formed an internal committee which found irregularities in the services provided by Sparkle Associate. Subsequently, AIIMS served another show cause notice on October 9.
The company responded on October 17, but, dissatisfied with its response, the Trauma Centre blacklisted Sparkle Associate from participating in its tendering process for five years starting November 1, 2017. The institute also seized a Rs 4.5-lakh security deposit.
When the company challenged the decision in the high court, the court stayed the prohibitory order and, on February 25, 2019, directed both parties to approach the Delhi International Arbitration Centre (DIAC).
In his March 12, 2020 ruling, arbitrator Surendra M. Mittal raised serious questions over Lathwal’s actions. Mittal observed that “the genesis of the problem seems to be the vigilance complaint filed by the claimant (Sparkle Associate) against Dr. Amit Lathwal in 2016.”
He further noted that “in the name of alleged non-compliance of Key Parameters by the Claimant, it seems it all started with vengeance.”
AIIMS Delhi. Photo: Wikimedia Commons/ Vishnoi M (CC BY-SA 4.0)
Mittal also emphasised that “the Contract was for a period of 24 months. The record shows that for the first 21 months everything was mostly hunky dory but after Dr. Lathwal joined the Respondent Organization (AIIMS), he found the reason to issue Show Cause Notice to the Claimant levelling certain allegations.”
Observing that Sparkle Associate had not breached the contract, Mittal ordered AIIMS to pay Rs 42,52,505 to the firm for its services, along with 15% interest amounting to Rs 46,29,003, and Rs 1,67,493 for legal expenses. The arbitrator also directed AIIMS to return the seized Rs 4,50,000 security deposit with 12 percent interest.
Mittal further stated that AIIMS’ decision to blacklist Sparkle Associate was “grossly unjustified, delving into malafides”, and therefore “needs to be withdrawn.”
Following DIAC’s ruling, AIIMS approached the Saket district court. AIIMS argued that a six-member internal committee had found irregularities in Sparkle Associate’s services. The committee had imposed Rs 18,49,000 fine on the company for damaging AIIMS’ laundry machines and other irregularities.
Saket Court rejected the argument and on April 18, 2022, upheld the DIAC’s decision, and ordered AIIMS to make the payments. The court noted that since AIIMS had never informed Sparkle Associate about any damage to machines during the contract period, the company “cannot be penalised for that”.
AIIMS then approached the high court, which, in its August 1, 2023 order, refused to intervene with the arbitrator’s judgment. Subsequently, AIIMS moved to the Supreme Court, which refused to intervene in the HC’s order and dismissed its appeal on April 8, 2024.
AIIMS, thus, had to pay a total of Rs 93,31,507, including interest rate and litigation charges, to Sparkle Associate.
Notably, throughout the legal battle Sparkle Associate continued to provide laundry services to AIIMS.
The case of ‘illegal gratification’
At the centre of the legal dispute stands the doctor, Amit Lathwal.
Sparkle Associate told the Saket court that by withholding payments Lathwal had acted with ‘vengeance’ because the company had filed a ‘vigilance complaint’ against him in January 2016 for demanding ‘illegal gratification.’
Lathwal, the company stated, withheld its payment and initiated an investigation in retaliation for the 2016 complaint.
When The Wire Hindi contacted Lathwal, he claimed he was unaware of the allegations. “I only learned about this when Sparkle Associate mentioned it in court,” he said.
Lathwal denied any personal vendetta.
“I noticed irregularities in Sparkle Associate’s services, so I recommended an inquiry committee. All decisions were based on the committee’s findings. There is no evidence that I acted out of personal enmity. I was not even aware of the vigilance complaint filed against me in 2016 until the arbitrator’s ruling mentioned it,” he added.
On the delay in payments to Sparkle Associate, Lathwal said, “I was not responsible for the delay. The payment files were pending at the level of the officer in-charge of laundry services. When the firm wrote about the delay, I directed the officer to deduct penalties for service deficiencies but release the remaining payment to avoid legal issues.”
Regarding the fine for machine damage, Lathwal stated, “AIIMS had to spend around Rs 10 lakh on repairs. The contract clearly mentioned that any damage to machines would be the firm’s responsibility.”
Clearly, the case does not rest on a single doctor or official. Given that the AIIMS was held responsible at every stage of the long legal battle, it raises serious questions about the institution’s management.
The AIIMS’ director has not yet responded to the Ministry of Health’s queries about the case. No action has been taken either.
The director and his media department refused to respond to The Wire Hindi’s queries despite multiple attempts to seek their comments.
This article, part two of a series on AIIMS, appeared in its Hindi original on The Wire Hindi. It has been translated by the author.
Read the English translation of part one here and its Hindi original here.
