Patient Privacy Can't Bar RP's Access To Hospital Management System: NCLT Indore

The National Company Law Tribunal (NCLT) in Indore has ruled that suspended directors of a hospital undergoing insolvency proceedings cannot deny a resolution professional access to its Hospital Management System by citing patient-data privacy.

It held that such access is necessary for the resolution professional to discharge statutory duties during the corporate insolvency resolution process.

A bench of Judicial Member Brajendra Mani Tripathi and Technical Member Man Mohan Gupta passed the order while partly allowing an application filed by Chaya Gupta, the resolution professional of Greater Kailash Hospitals Private Limited.

Gupta alleged that the suspended directors had failed to cooperate by withholding records and digital access required for the insolvency process.

“Patient privacy concerns are not a valid basis to deny an RP — a statutory authority under the Code — access to the hospital's own management system data. The RP's obligation to adjudicate claims correctly and her statutory duties under Sections 18 and 25 of the Code override any such plea.”, the tribunal observed.

The tribunal directed the suspended directors to provide complete login credentials for the Hospital Management System within 15 days. They were also directed to give the resolution professional and her team unhindered access to the system.

The tribunal further ordered them to provide accounting data and records for the period from April 1, 2016, to March 31, 2019. It directed the resolution professional to handle the hospital data carefully.

Gupta approached the tribunal alleging that despite repeated requests, the suspended directors had failed to provide books of accounts, records, documents and digital data required to conduct the insolvency process. She contended that the lack of access had hindered the discharge of her statutory duties.

The suspended directors denied the allegations. They maintained that most of the information had already been shared with either the interim resolution professional or the present resolution professional. They argued that access to the Hospital Management System had been restricted only because of concerns over patient-data privacy.

They also contended that since the committee of creditors had approved the resolution plan, the information sought by the resolution professional was no longer necessary.

The tribunal rejected that contention. It observed that filing of the resolution plan before the tribunal does not bring the insolvency process to an end or extinguish the resolution professional's responsibilities.

“It is made clear that the filing of the Resolution Plan before this Bench does not extinguish the duties of the RP or the corresponding obligations of the Suspended Management under the Code. The RP shall continue to discharge her statutory duties until the Resolution Plan attains finality under Section 31 of the Code.”, the tribunal ruled.

It found that although several documents had been furnished during the proceedings, some information remained outstanding. It directed the suspended directors to provide the remaining records, including the basis of shareholding allotted when the partnership firm was converted into a private limited company. Where records were genuinely unavailable, they were directed to file sworn affidavits confirming their non-availability.

The tribunal also directed the suspended directors and the resolution professional to jointly visit the hospital premises within 15 days. They will be accompanied by their respective teams and the hospital's accounts staff to identify any remaining records required by the resolution professional and resolve pending queries. The tribunal declined to initiate penal action against the suspended directors at this stage.