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2025 Supreme(Online)(NCLT) 6490
NATIONAL COMPANY LAW TRIBUNAL
Khetrabasi Biswal, Judicial Member, Shishir Agarwal, Technical Member
Nephrocare Health Services Private Limited – Appellant
Versus
Nayati Healthcare and Research Private Limited – Respondent
IA (I.B.C)/1255(CH)2024 in CP(IB) No. 147/Chd/Hry/2018
For the Appellants/Petitioners: Mr. Amar Pratap Singh, Mr. Niren Sharma
For the Respondents: Mr. Abhishek Anand, Mr. Karan Kohli, Mr. Akshit Awasthi
The Resolution Professional acts in an administrative capacity to collate claims, not an adjudicatory one; therefore, unliquidated damages, contingent liabilities, and disputed contractual claims for termination penalties do not constitute 'operational debt' and are not subject to admission by the RP.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 14, 18(1)(f), 60(5) - CIRP Regulations, 2016 - Regulations 6, 9A, 14 - Resolution Professional - Duties and Powers - Non-adjudicatory role - Disputed/Contingent claims - Admission on notional value.
(B) Operational Debt - Definition of - Must arise from provision of goods or services - Unliquidated damages/Termination penalty for breach of contract - Not operational debt - Adjudication of such claims remains subject to other competent forums.
(C) Moratorium - Section 14 - Restrains proceedings resulting in enforcement against assets - Arbitration proceedings - Cannot proceed for determination of liability during moratorium.
Facts of the case:
The applicant, a service provider to the corporate debtor under a Master Medical Services Agreement, sought the admission of claims including termination penalties and damages after the corporate debtor entered the CIRP. The resolution professional rejected the bulk of these claims, categorizing them as unliquidated damages and contingent liabilities, and refused to participate in ongoing arbitration proceedings.
Findings of Court:
The Adjudicating Authority held that the Resolution Professional acted within his statutory mandate by not admitting unadjudicated and uncrystallized claims. It was determined that the tribunal cannot adjudicate contractual disputes over ownership or damages under Section 60(5) of the Code, and arbitration proceedings cannot proceed during the moratorium.
Issues: Whether the resolution professional erred in rejecting claims; whether termination penalties constitute operational debt; whether arbitration may continue during a moratorium.
Ratio Decidendi: The resolution professional serves an administrative, not adjudicatory, function and is only required to verify and collate claims. Disputed/contingent claims should be admitted at a notional value. Arbitration for quantification of unliquidated damages/rights cannot continue to proceed against the corporate debtor during the moratorium as it pertains to the creation/determination of additional liabilities.
Result: Application dismissed.
Present:
For the Applicant : Mr. Amar Pratap Singh, Advocate
Mr. Niren Sharma, Advocate
For the Respondent No. 1 : Mr. Abhishek Anand, Advocate
Mr. Karan Kohli, Advocate
Mr. Akshit Awasthi, Advocate
Per: SH. KHETRABASI BISWAL, MEMBER (JUDICIAL)
SH. SHISHIR AGARWAL, MEMBER (TECHNICAL)
ORDER
The present Interlocutory Application has been filed by M/s Nephrocare Health Services Private Limited (hereinafter referred to as the “Applicant”) under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, seeking directions against Mr. Arvind Mittal, the Interim Resolution Professional of M/s Nayati Healthcare and Research Private Limited (“Corporate Debtor”), for rejection of the illegal and arbitrary refusal of the Resolution Professional to admit the legitimate claims of the Applicant arising out of the Master Medical Services Agreement dated 24.08.2018. The Applicant has further sought directions for release of its medical assets and equipment wrongfully retained by the Corporate Debtor and for continuation of the arbitration proceedings before the learned Sole Arbitrator, Hon’ble Mr. Justice Kailash Gambhir (Retd.), for quantification of its dues, contending that the outstanding amounts and termination penalty claimed by it squarely fall within the ambit of “operational debt” under Section 5(21) of the Code.
SUBMISSIONS OF THE APPLICANT
The Applicant has submitted as under:
i. The Applicant and the Corporate Debtor had entered into a Master Medical Services Agreement dated 24.08.2018, whereby the Applicant was engaged to operate, manage, and run kidney care centers in the hospital premises of the Corporate Debtor at Agra, Mathura, and Delhi, and to provide dialysis and related medical services on a revenue-sharing basis.
ii. Pursuant to the said Agreement, the Applicant had commenced operations and rendered dialysis services continuously and regularly. The Corporate Debtor collected payments from the patients and was obligated to share the revenue after reconciliation of accounts in accordance with the agreed terms. The Applicant issued monthly invoices/payout sheets which were never disputed by the Corporate Debtor at any stage prior to the termination of the Agreement.
iii. It is further submitted that, to the Applicant’s shock and dismay, the Corporate Debtor through its legal representatives issued a Termination Notice dated 08.08.2019, alleging negligence in the death of a patient. The Applicant immediately responded vide email dated 09.08.2019, denying all allegations and requesting an in-person meeting to resolve the issue amicably. However, on 17.08.2019, the Corporate Debtor again issued a second termination notice reiterating its decision to terminate the Agreement and directing the Applicant’s staff not to enter the hospital premises.
iv. The Applicant, through its counsel, replied to the second termination notice on 20.08.2019, contending that the termination was illegal and contrary to the terms of the Agreement, as the entire twelve-year term constituted a lock-in period during which neither party could terminate except in accordance with the conditions specified. The Applicant asserted that such unlawful termination would render the Corporate Debtor liable to pay termination penalty under Clause 12.5 of the Agreement.
v. Despite repeated requests, the Corporate Debtor not only failed to pay the outstanding amounts towards revenue share but also unlawfully retained possession of dialysis machines, RO plants, cardiac monitors, and other medical assets belonging to the Applicant. The Corporate Debtor allegedly continued using these assets for its own commercial benefit, in violation of Clause 12.3 of the Agreement, which entitled the Applicant to retain ownership and remove such movable assets upon termination.
vi. The Applicant was constrained to issue a Demand Notice dated 20.08.2019 under Section 8 of the IBC for recovery of an operational debt of ₹1,11,70,167/-, comprising ₹1,10,28,371/- as principal and interest at 18
