Are Doctor Consultants different from Employees? SC questions during insolvency of hospital

This comes after a doctor approached the top court contending that such discrimination would violate Section 30(2) Explanation 1 of the Insolvency and Bankruptcy Code, Article 14 of the Constitution of India, and the top court judgment in the Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta and Ors., adds Live Law.

While considering the plea, the top court bench comprising of Justices Indira Banerjee, and J.K. Maheshwari has recently issued notice in the matter.

Senior Advocate Nakul Dewan, Advocates Mukund P Unny, Sankar Panicker, and Sriram P appeared on the behalf of the appellant doctors.

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As per the latest media report by Live Law, the appeal is the result of the insolvency resolution proceedings of PVS Memorial Hospital Pvt Ltd situated at Kochi. When the consultant doctor had approached the NCLT Kochi bench and made an application seeking rejection of the recommendations made in the Resolution Plan (for corporate debtor - PVS Memorial Hospital Pvt Ltd.), the bench had dismissed the application. Consequently, challenging the order, the doctor approached the NCLAT Chennai, which also rejected his application. Following this, the doctor approached the top court and filed the appeal.

The daily adds that the Resolution plan clarifies that "Other Operational Creditors" including the consultant doctors receive only 2.34% whereas employee doctors receive 99.29% of their dues.

Alleging discrimination between the employee doctors and the consultant doctors, the petitioner doctor in his appeal contended that such a discrimination would violate Section 30(2) Explanation 1 of the Insolvency and Bankruptcy Code, Article 14 of the Constitution of India, and the top court judgment in Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta and Ors.

It has further been contended by the appellants that the Resolution Plan was prepared on the basis of a completely erroneous and perverse valuation report submitted by a Registered Valuer, which rendered it violative of Regulation 35(1) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

Arguing that NCLAT had erred as it didn't consider the fact that the consultant doctors couldn't be punished for being seniors and not being in the rolls of the Corporate Debtor, the appeal further added, "Exclusion of the Consultant Doctors from the rolls of the Corporate Debtor Hospital was not their choice. Hospitals, as a normal practice, across the world hire the services of senior specialist doctors on consultancy basis and they perform critical health care services like surgeries and diagnosis with the help of junior doctors who may or may not be in the rolls of the Corporate Debtor. In spite of performing more important or significant functions of a doctor, there is a difference of about 96.95% between the consultant doctors and employee doctors. It is also not the case of anyone that consultant specialist doctors do not spend much time in the hospital as that of employee doctors. Even as the consultant doctors perform the same duties and spend almost equal amounts of time in the hospital, they have been grossly discriminated against per Approved Resolution Plan."

At this outset, the appellants further placed their reliance upon the judgment in Binani Industries Ltd. v. Bank of Baroda, where it had been clarified that discrimination between the Operational Creditors will be in violation of the provisions of the code and if the Operational Creditors are ignored and provided with 'liquidation value', then in such case, none of the creditors will supply the goods or render services on credit to any of the Corporate Debtor.

To view the Supreme court order, click on the link below.