NCLAT Dismisses Dr’s Appeal against Patanjali Hospitals Private Limited, Citing Continuous Breach of service contract

The Chennai bench of the National Company Law Appellate Tribunal (NCLAT) in a recent ruling dismissed the appeal filed by Dr and director of Patanjali Hospitals Private Limited against the hospital itself citing the Continuous Breach of service contract.

The Appellant , Dr. Thoyajakshi Bai Sakranaik is the Applicant to the Proceedings of Company Petition No. 127/BB/2023. She agitates her grievance being aggrieved as against the impugned order dated 01.05.2025, as it has been passed by the Ld. National Company Law Tribunal, Bengaluru Bench, whereby, post hearing of the Company Petition, on 22.05.2025, the Tribunal had declined to grant an Interim Order prayed for to the effect of keeping the proposal of the proposed EGM of Respondent No. 1 in abeyance.

An interlocutory application, which seeks for grant of an interim order in a pending proceeding under Sections 241 & 242 of the Companies Act, 2013, or for that matter, in any judicial proceedings before a court of law engaging deciding a right of a party, is in the nature of an absolutely discretionary remedy, which would be exclusively depending upon the establishment of a fact and the right and the likelihood of prejudice, which will be caused to the applicant who has applied for the grant of such interim order.

The Tribunal while declining to grant the interim order, as against the conduct of the proposed EGM of Respondent No. 1 Company, it has observed that the meeting of the Board of Directors of the company was called vide their letter dated 29.04.2025, in which a resolution to hold the EGM on 23.05.2025, for considering the removal of the Appellant from the Directorship of the Company (Respondent No. 1) was passed.

As per, the Audit Report, submitted by the M/s. Yedida and Associates, which was furnished by the Respondent’s Advocate the total amount collected in cash from the patients during the period from 01.01.2021 to 31.03.2023, was Rs 1,38,52,270/-, whereas the amount, remitted into cash counter of the hospital was only Rs. 56,05,900/-, leaving an amount of Rs. 82,46,370/- as allegedly retained by the Appellant which is allegedly misappropriated by her.

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The Audit Report of M/s. Yedida and Associates is based on the patient register and is not intended to single out the Appellant as it also mentions about the other doctors in the Report. Despite having committed to function as a medical professional with the Respondent Company based on the service contract, the Appellant has engaged herself in taking outside patients and providing them medical services on regular basis which were not permitted by the terms of the contract of employment of the Appellant.

The Tribunal has further noted that, it has also come on record, that there are various other sets of litigation, which are simultaneously going on between the parties, which would be apparent from the documents which, has been placed on record, which the Appellant chose not to disclose even during oral submissions and thus has not come with clean hands.

It has further observed that the resolution to appoint a Forensic Auditor dated 22.04.2024, was not objected by the Appellant till she moved to press upon the stay application for the grant of the interim relief.

Tribunal has further observed that the Appellant had functioned in a fashion detrimental to the interest of the Respondent No. 1, to whom she was contractually bound to render the services by changing over and above what they have been billed at the hospital and therefore she cannot claim to be oppressed and that by attending to patients in other medical facilities and thereby promoting such facilities, may attract Section 166 of the Companies Act, 2013.

The tribunal comprising observed that Justice Sharad Kumar Sharma, Member (Judicial) and Jatindranath Swain, Member (Technical) observed that the Appellant has to come with clean hands for grant of equitable relief, the rejection of the prayer for the grant of interim relief cannot be legally faulted with, because the actions of the Appellant have prima facie have resulted in continuous breach of service contract.

Besides that, the grant of an interim relief in a judicial proceeding, is absolutely a discretionary remedy depending upon the establishment of the prima facie case. It is not mandatory to exercise discretion by the court exercising the judicial powers, in a manner expected by the Applicant to the proceedings, for the grant of an interim relief.

Owing to the apparent commissions and omissions on part of the Appellant as recorded by Tribunal being apparently in violation to the statute, the proceedings drawn by way of carrying out the proposed Extraordinary General Meeting of the Respondent Company does not appear to suffer from any legal vices. Apart from it, rejection of the interim relief as prayed for, being of an interlocutory nature, will not amount to be an adjudication of any of the rights, which is still a subject matter of the appeal, as it would still be left open to be independently decided after the exchange of pleadings and enabling the parties to lead their evidence.

A denial to grant the interim relief by the impugned order of 01.05.2025 owing to the conduct which, was considered by the Tribunal as unbecoming of a medical officer for Respondent No. 1, to whom the Appellant owed an allegiance, does not suffer from any legal vices and hence does not call for any interference.

Apart from the fact that, it is an interlocutory order, the impugned order is based on sound reasoning, and the equity does not support the case of the Appellant. The appeal is ‘misconceived’ and the same is accordingly ‘rejected’.

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