Make India Samrt Pvt. Ltd vs Safeway Insurance Tpa Pvt. Ltd

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NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI Company Appeal (AT) (Ins.) No. 1298 of 2022 & L.A. No. 3970 of 2022 IN THE MATTER OF: Make India Smart Pvt. Ltd. ...Appellant Versus Safeway Insurance TPA Pvt. Ltd. ...Respondent Present: For Appellant: Mr. Davesh Bhatia, Mr. Sadre Alam, Advocates. For Respondent: Mr. Siddharth Praveen Acharya, Mr. Lakshay Sharma, Mr. Bhuvnesh Vyas, Advocates. JUDGMENT

Per: Justice Rakesh Kumar Jain:

This appeal is filed by the Operational Creditor, namely, Make India

Smart Pvt. Ltd. under Section 61 of the Insolvency and Bankruptcy Code,

2016 (in short 'Code') being aggrieved against the order dated 14.10.2021

by which an application filed under Section 9 r/w Rules 6 of the Insolvency

and Bankruptcy (Application to Adjudicating Authority) Rule, 2016 (in short

'Rules'), bearing CP (IB) No. 1025/ND/2018, against Safeway Insurance TPA

Pvt. Ltd. (Corporate Debtor), for the resolution of an amount of Rs.

1,80,18,889/- excluding interest for the default having occurred on

12.05.2017, has been dismissed.

2. The brief facts of this case are that the Appellant/OC, being service

provider rendered services for making smart cards whereas the CD is an

insurance third party administrator (insurance TPA) which availed the

services of the Appellant for issuance of insurance smart cards in the rural

areas.

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3. As per the Appellant, three separate agreements were entered into

between the parties on 24.01.2013, 01.03.2013 and 24.12.2013 by which

the CD availed the services of the Appellant for issuance of smart cards for

rural population in several districts under the Rashtriya Swasthya Bima

Yojana Scheme (RSBY Scheme) launched by the Government of India. The

agreement dated 24.01.2013 was pertaining to the districts of Rohtak &

Ambala, the agreement dated 01.03.2013 was regarding several districts of

Rajasthan and agreement dated 24.12.2013 was pertaining to districts of

Murshidabad and Nadia.

4. It is alleged that the CD continuously made the payments on the

invoices raised by the Appellant but it stopped making payments on

12.05.2017.

5. The Appellant issued demand notice under Section 8 of the Code on

18.01.2018 by which the amount of Rs. 1,80,18,888/- was demanded. The

CD replied to the notice on 15.02.2018 in which it raised number of disputes

which were to be settled, because of poor quality of services provided by

the Appellant in the state of Rajasthan and West Bengal.

6. It was also the case set up by the CD that the agreements contained a

clause that payment shall be made by the CD to the Appellant back to back

as per the payment received by them from the Insurer.

7. The CD also filed reply to the petition filed under Section 9 of the Code

in which similar issues were raised about the poor quality of services which

envisages pre-existing dispute and also that the payment was to be made to

the Appellant on receipt from the Insurer.

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8. The Tribunal after taking into consideration the clause regarding

payment similarly existing in all the agreements, came to a conclusion that

the default in payment of the amount would start only when CD would

receive the payment from the Insurer. The date of default has been given by

the Appellant as 12.05.2017 but it has been found that the CD has not

committed the default because the payment was not received from the

insurer, therefore, the application was dismissed on the ground that the

element of default is not fulfilled. However, the Tribunal also observed that

the Appellant shall be at liberty to resort to other legal remedies (other than

IBC) for recovery of money, if any.

9. Aggrieved against the order dated 14.10.2021, the present appeal has

been preferred in which Counsel for the Appellant has submitted that audited

financial statements of the CD continued to reflect the amounts due of the

OC and in this regard, the Appellant has made reference to the financial

statements for the year ending 31.03.2015, 31.03.2016 and 31.03.2017. It

is also submitted that Respondent has not denied the debt and the only

ground on which the application has been dismissed is that the default has

not been proved. It is submitted that the Tribunal has accepted the bald

statement of the CD and believed the same that the amount has not been

received whereas according to the Appellant, as per information obtained

under the RTI of the Government, the payment has been made to National

Insurance Company (NIC) on or before 31.03.2018. It is also submitted that

the defence taken by the Respondent was a moon shine defence and that

the creditor cannot be made to wait for the recovery of its money. 4

10. On the other hand, Counsel appearing for the Respondent has

submitted that the payment was contingent, depending upon the receipt of

funds from the insurer (back to back basis). First payment : 35% of the

bill amount after 15 working days of the first month's bill, less collected

field amounts. Second payment: 35% of the first month's bill and 35% of

the second month's bill in the subsequent month, subject to state share

payments. Third payment: 25% of the first month's bill and 35% of the

second month's bill in the subsequent month, subject to state payments. It

is submitted that the default alleged to have occurred on 12.05.2017 is

without any basis because the default would arise only if the funds though

received are not remitted. It is also submitted that the services rendered

by the Appellant were below standard or substandard because the National

Insurance Company had imposed a penalty of Rs. 26,17,462/- on the

Respondent due to fake claims arising from the Appellant's enrolment data

in Baran District. It is also submitted that the Appellant issued fabricated

cards with the total liability of Rs. 20 lakhs which was not found in

Government kits but billed by M/s B.M Info Tech & Tecsol Infosystems Pvt.

Ltd. (sub vendor of Appellant) which led to financial adjustments against the

Appellant's payments and damage to the Respondent. It is also submitted

that because of the fabricated smart cards in Nadia District, the district

administration issued show cause notice for the immediate change of the

vendor i.e Appellant and therefore, vendor was changed which lead to

additional financial liability.

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11. Basically, it is submitted that the service rendered by the Appellant

were very poor because of which the Respondent has suffered losses etc.

12. We have heard Counsel for the parties and perused the record with

their able assistance.

13. The Rashtriya Swasthya Bima Yojana (RSBY) is a health insurance

scheme that aims at providing health insurance coverage to the poor families

of India. It provides cashless insurance coverage for hospitalization in both

private and public hospitals. The cost of the insurance premium is borne by

both the central (75 percent) and state (25 percent) governments. Initially, the

scheme was launched by the Ministry of Labour and Employment, but was

transferred to the Ministry of Health and Family Welfare on 1 April, 2015.

14. Admittedly, three agreements were entered into between the

Respondent as a company and the Appellant as the contractor on 24.01.2013

for districts Rohtak and Ambala, on 01.03.20213 for several districts of

Rajasthan and on 24.12.2013 for the districts of Murshidabad and Nadia in

West Bengal. The Respondent/Company was registered as 3rd party

administrator under Section 3 of the Insurance Act, 1938 and in terms of

RSBY agreement, the Respondent was entitled to appoint such number of

intermediaries including the smart card provider for the effective

implementation of the RSBY and for fulfilment of its obligations under the

RSBY agreement. The company thus agreed to appoint the Appellant

(contractor) for the purpose of enrolment of the beneficiaries and to issue

smart cards to them on the terms and conditions of the agreement. 6

15. Since the issue involved is of non-payment of the admitted debt which

has been found to be premature by the Tribunal, therefore, it would be

relevant to refer to the 'Payment' and 'Terms and conations' which is

reproduced as under:-

16. Since, the parties are bound by the terms and conditions of the

agreement in which it has been clearly stipulated that the payment shall

be made by the company to the contractor back to back as per the payment

received by the company from the Insurer. There is no evidence brought on

record by the Appellant that the payment has been received by them from 7

the insurer i.e. NIC except that the information collected under the RTI which

is in regard to the payment by the Govt. to NIC but there is no evidence that

it was further paid the respondent.

17. Thus, in view thereof, there was no default on the part of the

Respondent and hence, the Tribunal has rightly dismissed the application of

the Appellant because the application under Section 7 or 9 of the Code can

be admitted only if the debt and default both are proved to be in existence.

18. Thus, in view aforesaid facts and circumstances, we do not find any

merit in the present appeal and the same is hereby dismissed, however,

without any order as to costs.

I.As, if any, pending are hereby closed.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical)

[Mr. Indevar Pandey] Member (Technical) New Delhi 29th August, 2025.

SC