Supreme Court puts Fortis deal with IHH on hold

Supreme Court puts Fortis deal with IHH on hold

Mumbai: The Supreme Court on Friday ordered status quo with regard to the sale of controlling stakes of Fortis Healthcare to Malaysian IHH Healthcare by former Ranbaxy promoters and hospital operators — Malvinder and Shivinder Singh. The apex court was hearing the plea of Japanese firm Daiichi Sankyo which is seeking to recover Rs 3,500 crore, awarded to it by a Singapore tribunal in its case against Malvinder and Shivinder Singh. The Japanese firm, which has filed the contempt plea against the Singh brothers in the apex court, has said that it was promised some shares of Fortis Healthcare by the Singh brothers.

“Status quo with regard to sale of the controlling stake in Fortis Healthcare to Malaysian IHH Healthcare be maintained,” said a bench comprising Chief Justice Ranjan Gogoi and Justices S K Kaul and K M Joseph. The top court also issued notices to the Singh brothers asking them to explain as to why contempt proceedings be not initiated against them for allegedly violating its earlier order by pledging the shares.

The board of Fortis Healthcare had approved in July a proposal from IHH Healthcare to invest Rs 4,000 crore by way of preferential allotment for a 31.1 per cent stake. The Malaysian IHH Healthcare became the controlling shareholder of Fortis Healthcare Ltd by acquiring a 31.1 per cent stake in the company.

Daiichi had bought Ranbaxy in 2008. Later, it had moved the Singapore arbitration tribunal accusing that the Singh brothers had concealed information that Ranbaxy was facing probe by the US Food and Drug Administration and the Department of Justice, while selling its shares.

Daiichi had to enter into a settlement agreement with the US Department of Justice, agreeing to pay $500 million penalty to resolve potential, civil and criminal liability. The company had then sold its stake in Ranbaxy to Sun Pharmaceuticals for Rs 22,679 crore in 2015.

A Singapore tribunal had passed the Rs 3,500 crore arbitral award in Daiichi’s favour back in April 2016 on grounds that that the Singh brothers had withheld information that their company was facing probe by the US Food and Drug Administration and the Department of Justice while selling its shares to the Japanese company. The Japanese drugmaker had further argued that the value of the unencumbered assets disclosed to court by FHL’s promoter brothers, Malvinder and Shivinder Singh’s two holding companies had to be maintained.

In its contempt plea, Daichii alleged that the Singh brothers and Indiabulls had created fresh encumbrances for nearly 1.7 million shares of the total 2.3 million shares that were left after the top court’s order. The February 15 order allowed banks and financial institutions to sell FHL shares pledged with them on or before August 31 by the Singh brothers.

The Supreme Court had, at the time, clarified that there could be no fresh encumbrances created by promoters and others, directing maintenance of a status quo. But Daichii claimed in its petition that Indiabulls created encumbrances for 1.2 million shares while the rest had either been created by Singh brothers or other third parties.


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