Resolution Plan challenged in Supreme Court
A counter statement in insolvency proceedings of Kochi-based PVS Memorial Hospital does not find any alleged instance of arbitrariness against either employee doctors or consultant doctors in the respective resolution plan since claims were admitted based on respective forms submitted by each.
Appeal in Supreme Court
A civil appeal was filed in the Supreme Court against an order of the Chennai Bench of the NCLAT, which had rejected a consultant doctor’s challenge seeking rejection of recommendations in the Resolution Plan for the corporate debtor (PVS Memorial Hospital).
A major burden of the appeal was ‘disparity in treatment’ vis-a-vis employee doctors, 99.97 per cent of whose claim was approved against only 2.34 per cent of consultant doctors. The Resolution Plan had discriminated between ‘two classes of operational creditors.’
The Resolution Professional clarified that the classification of appellants as ‘operational creditors’ was not on his discretion but purely based on the nature of the job as well as the type of the claim submitted.
Claim by operational creditors
The appellants had submitted claims in Form B specified under the CIRP (Corporate Insolvency Resolution Process) Regulations. Form B filed under Regulation 7 of IBBI (CIRP) Regulations is ‘proof of claim by operational creditors except for workmen and employees.’
They are not full-time employees, nor do their names appear on the muster rolls as ‘employees.’ They are consultants and paid ‘professional fees’ whereas employee doctors were paid ‘salary.’
The corporate debtor had deducted the Tax Deducted at Source (TDS) for consultant doctors as per provisions of Section 194J, and for employee doctors as per Section 192 of Income Tax Act, 1961. TDS on the professional fees of the appellants were deducted in accordance with Section 194 J.
Not bound by service rules
Consultant doctors were not engaged on a monthly salary/remuneration and therefore not bound by service rules and regulations of the hospital. Employment agreements with employed/resident doctors did not contain terms and conditions applicable in the case of consultant doctors.
Consultant doctors were also not entitled to any regular/employee benefits, and they discharged only professional services against payment of consultancy fees.
Appellants, being consultants of the corporate debtor, were permitted to carry out private practice or independent consultation with any other clinics/hospitals. The main appellant, while providing professional services to the corporate debtor, was himself practicing as a consultant in various other hospitals, as evident from Form 26 AS.
On the other hand, employee doctors worked exclusively for the corporate debtor and were not permitted to do private practice or work with any other organisation. The corporate debtor had full control over them as it fixed their working hours and working days in contrast with terms of engagement of consultant doctors.