The move came after a three-member inquiry panel of the government submitted its final report to Health Minister Satyendar Jain, who described the incident as "not acceptable".
According to the Directorate General of Health Services (DGHS) of the Delhi government's heath department, the licence has been cancelled till further order.
In the order issued by the DGHS, the keeper of the hospital has also been directed to "refrain from admitting any new indoor patient and stop all outdoor treatment service in the premises with immediate effect".
"Whereas we don't wish to interfere in day to day functioning of pvt hospitals, however, open loot or criminal negligence by any hospital won't be tolerated. We won't hesitate to take strongest action in such cases (sic)," he tweeted.
Also Read
"The Delhi government has cancelled the licence of Max Hospital, Shalimar Bagh with immediate effect," he said.
"Max Hospital is a habitual offender and three notices were served earlier to it. And, it has been found guilty in those cases too," he said.
He also said his ministry has written to all chief ministers asking them to adopt the central government's Clinical Establishment Act which has a provision of establishing regulatory authorities both at the state and district levels.
Kejriwal had recently said that his government did not want to interfere in the functioning of private hospitals, but would not tolerate "criminal negligence", he told reporters.
The Max Healthcare authorities, in a statement, issued hours after the cancellation of the licence, said the decision was "harsh" and "unfair" and it would severely limit patients from accessing treatment.
Asked about the doctors' negligence in the twin baby case, the health minister said the Delhi Medical Council and the Medical Council of India are competent authorities to take action against doctors.
Jain had recently said that on November 22, a notice was sent to the Max Hospital for allegedly violating norms related to services to be given to EWS patients and use of dengue fever beds.
"I have directed the hospital authorities that they can give offer to admitted patients to shift, otherwise they can continue to get treatment at the hospital.
"This is not the only mistake by the (Max) hospital. They have done three mistakes within a span of two-three months," he said.
Jain had on December 6 said that based on the final report of the probe "strictest action" would be taken.
The Max Hospital case pertains to one of the premature twins, wrongly declared dead last week at the hospital where he was born, and who died during treatment at a nursing home in Pitampura a week later.
Reacting to the decision, the family members of the twins today welcomed the decision of the Delhi government to cancel its licence.
"We are indebted to the Delhi government for taking swift action in the case. We have been protesting outside the hospital demanding action for last few days.
"And today we feel somehow redeemed that some justice has been delivered," said Sunil Kumar, uncle of the baby boy, who died on December 6 at a nursing home in Pitampura, after being on life support for a week.
Disclaimer: No Business Standard Journalist was involved in creation of this content