The High Court has ruled against Indira Gandhi Memorial Hospital (IGMH) in a dispute over a laboratory equipment agreement, rejecting the state's claim that a private supplier cannot seek damages for the hospital's failure to purchase reagents as contracted.
The legal battle stems from a 2014 agreement between Mediquip Maldives and IGMH.
Under the terms of the contract, Mediquip installed a laboratory machine at IGMH free of charge. In exchange, the hospital agreed to fix the price of the necessary reagents for five years and committed to purchasing all such supplies exclusively through Mediquip.
However, in November 2017, IGMH issued a letter to Mediquip requesting the removal of the equipment, citing that the machines were no longer in use. It was further revealed that during the two years the hospital operated the machinery, it had procured the required reagents through the State Trading Organisation (STO) instead of Mediquip.
Mediquip filed a lawsuit in the Civil Court regarding the termination of the contract. While the court ruled that the termination itself was not unlawful, it reserved Mediquip’s right to file a separate lawsuit to seek damages for the hospital’s failure to purchase reagents through them while the machines were in operation.
The state appealed this decision to the High Court, arguing that since the machinery was provided free of charge, the contract lacked "consideration" (a mutual exchange of value). The state further contended that since the lower court found no unlawful breach in terminating the contract, it was an error to grant Mediquip the right to sue for damages.
In its judgment, the High Court clarified that the commitment to purchase reagents through Mediquip constituted the legal consideration of the agreement. The court noted that the state’s decision to procure these items from another party did not nullify the existence of that consideration.
The High Court further emphasised that the right to seek damages granted by the Civil Court was not related to the termination of the contract itself. Instead, the judges noted that this right pertains to the financial losses Mediquip incurred because the hospital bypassed them to buy reagents while the machines were still in use.
Concluding that there is no legal basis to prevent such a claim, a three-judge panel of the High Court unanimously upheld the Civil Court’s ruling, allowing Mediquip to pursue compensation.
