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Judgment
ORDER
PER: SHRI ASHOK KUMAR BHARDWAJ
The captioned petition has been preferred under Section 9 of the Insolvency and Bankruptcy Code, 2016 (for brevity, the ‘IBC, 2016’) read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, by GHV Advanced Care Pvt. Ltd. the ‘Applicant/ Operational Creditor’) praying therein to initiate the Corporate Insolvency Resolution Process against M/s Diyos Men's Health Centers Private Limited (for brevity, the ‘Respondent/ Corporate Debtor/CD’).
As stated in the Petition M/s Diyos Men's Health Centers Private Limited is a company incorporated in terms of the provisions of the Companies Act, 2013 with CIN U74999DL2016PTC302158 having its Registered Office at A-1 /26 F/F, Ch. Chhandu Singh Marg, Near Green Field School, Safdarjung Enclave, New Delhi – 110029, thus is amenable to the jurisdiction of this Tribunal. The Authorized Share Capital of the Respondent is Rs. 4,38,00,000/- and its Paid-up Share Capital is Rs. 4,37,00,000/-.
Stating tersely, the case of the Petitioner (Operational Creditor) is that the parties had executed an Agreement dated 11.03.2021 in terms of which the parties had agreed to provide jointly, the healthcare services to the patients, as per the terms and conditions including financial terms, as enumerated therein. It is the case of the Applicant that the parties had inter alia had agreed thus: -
(i)Qua any patient brought in by Operational Creditor, the Operational Creditor shall be responsible for final bill to be raised on the patient, in coordination with Corporate Debtor.
(ii)The Corporate Debtor will discharge the patient upon collection of dues from the patients/on agreement for mode of collection in consultation with Operational Creditor.
(iii)Regarding timely payment of dues, based on a timeline, as mutually agreed between the parties for the purpose of settlement of dues.
(iv)The Corporate Debtor could not outsource insurance claim submission for any cashless/ reimbursement patient without written consent of Operational Creditor.
To establish the existence of debt and default the Operational Creditor espoused thus:
The Corporate Debtor was making ad-hoc payments to Operational Creditor against the Bills, and the payments were duly credited in the books of accounts maintained by Operational Creditor. As per the books of accounts maintained by Operational Creditor, a sum of INR 1,19,70,302.04/- (Indian Rupees One Crore Nineteen Lakh Seventy Thousand Three Hundred and Two and Four Paisa only) is due and payable by the Corporate Debtor to the Operational Creditor.
Accordingly, the officials of Operational Creditor had approached the Corporate Debtor on various occasions and demanded the payment of their dues. However, the Corporate Debtor failed to release the aforesaid acknowledged and admitted amount/debt.
On inspection of the Balance sheet for the year ended 2021-2022 qua the Corporate Debtor, it is observed that the CD acknowledged its liability for the amount of Rs. 55,70,635/- (Indian Rupees Fifty Five Lacs Seventy Thousand Six Hundred and Thirty Five only).
Since the Respondent defaulted in making the payment of operational debt, it served upon it Demand Notice dated 17.04.2023 under Section 8 of IBC, 2016, at the registered office of the Respondent vide speed post.
The particulars of amount of debt allegedly defaulted to be paid, by the applicant are mentioned in Part IV of the Application. The part reads thus:
From perusal of the Part-IV of the Application (ibid) it is observed that the Applicant had claimed Rs. 1,19,70,302.04/- as an unpaid operational debt and has relied upon the date of 21.04.2022 as the date of default.
On issuance of Notice, the Respondent entered its appearance. Despite opportunities the Respondent failed to file its reply. In the wake its right to file reply was forfeited vide order dated 30.11.2023. However, in the interest of justice the submissions put forth by the Ld. Counsel for the Respondent were heard.
The submissions of the Ld. Counsel for the Respondent as noted in order dated 05.12.2023, reads thus:
Additionally, the Ld. Counsel for the Respondent contended that the Agreement entered into between the parties was in the nature of profit sharing and the breach of a Profit-Sharing Agreement cannot be a ground to trigger CIRP. The Respondent further placed reliance on the Judgement of Hon’ble NCLAT in the matter of Prashanth Shekara Shetty vs. Alcuris Healthcare Private Limited & Anr (Company Appeal (AT) (Ins.) No. 359 of 2022), dated 20.10.2022, the contents of which reads thus
“28.In the present matter, the clauses of the agreement entered between the two parties, who are described as “general profit sharing partners” therein, furnish the key to the minds of the makers of this agreement. The clauses of the agreement disclose an intent that both parties shall exercise joint control over the SRV Heart Centre and will be accountable to each other for their respective acts with reference to the functioning of the Cathlab. We also note that both the parties also combined their investments, property, efforts, resources, skill and knowledge in this unit. There are unmistakeable signs of reciprocal rights and obligations contained in the agreement besides evidence of common participation/joint control in the management as well as sharing of profits and losses. When shared control of interest or enterprise and shared liability for profit and losses is so clearly manifested, it cannot be denied that both parties are implicit partners and co-adventurers in the Cathlab venture rather than one being a consumer and the other a service provider. From the material on record, facts and circumstances there arises no clear or unambiguous jural relationship between the two parties as one of Corporate Debtor and Operational Creditor. Rather both the Corporate Debtor and Respondent No. 1 are like the principal as well as the agent of the other party. This spirit is not only captured in the body of the agreement but also demonstrated in the actions and conduct of both parties in their role as “general profit sharing partners”. Thus, for the above reasons, we are not inclined to agree with the contention of the Respondent No. 1 that the outstanding amount so claimed constitutes an operational debt under the IBC. As we hold that the claim is not in the nature of Operational debt, we need not go further to examine whether there was any default in respect of a debt which had become due and payable and whether it was laced with pre-existing dispute.
29.With the aforesaid discussion, we are of the considered view that the Adjudicating Authority has erroneously admitted the application under Section 9 of the IBC. We therefore set aside the impugned order. The orders passed by the Adjudicating Authority initiating CIRP against the Corporate Debtor and appointing Interim Resolution Professional and all other orders pursuant to impugned order are declared illegal and set aside. The Corporate Debtor company is released from the rigours of CIRP and is allowed to function independently through its board of directors with immediate effect. The appeal is allowed with the aforesaid observations. With this IA No. 1321 of 2022 also stands disposed of. No order as to costs. 11. The Applicant has rebutted the submissions made by the Respondent in its written submissions and has stated that the aforesaid Judgement of Hon’ble NCLAT is not applicable to the facts of the case. To buttress the plea a comparison has been drawn by the Respondent in its Written Submissions, the relevant excerpts of which reads thus:
We have heard the submissions of the parties and have perused the documents placed on record. The Respondent has objected to the admission of the Application on the ground that the debt in question is not an operational debt, as the parties were working jointly to provide health care services to the parties. Further, the agreement executed between the parties was in the nature of profit sharing. To buttress the plea the Respondent has relied upon the Judgement of Hon’ble NCLAT (ibid). Per contra the Respondent has contended that the parties had not entered into a joint venture either expressly or impliedly. Further, there was no defined profit sharing ratio between the parties.
In order to resolve the controversy, it is necessary to examine the clauses of the Agreement relevant, with regard to intent of signing the agreement. Thus, we refer to the recital clause of the Agreement, the contents of which reads thus:
From perusal of the above clause it is observed that both the parties have joined hands for providing health care services to prospective patients and joint involvement of both the parties were required for the same.
In order to examine the payment terms we refer to Clause 16 of the Agreement, the contents of which reads thus:
From perusal of the above the profit sharing was determined on case to case basis, like in cash cases, 35% of the settled amount was to be First party's share if settled amount is less than 35%. The aforesaid indicates that the Applicant and Respondent were profit sharing partners.
To further examine the transaction entered between the parties, reference maybe made to one of the invoices raised by the Applicant, which reads thus:
From perusal of the invoices the Applicant has claimed charges/share for providing health services. It is worth observing that the Applicant had not charged any GST in the invoice amount, which indicates that the Applicant had not supplied any services to the Respondent. Even otherwise, the recital clause and payment clause reflect that both the Applicant and Respondent were together supplying services to the patients. However, there was no inter se supply of goods or services amongst them. Hence, we are of the view that the debt of the Applicant does not fall in the category of operational debt
As there were clauses with respect to profit sharing and by implication, we are of the view that the arrangement between the parties was in the nature of joint venture. Ergo, the Application is found devoid of merits and is accordingly rejected.