Yes Bank, Axis Bank plea to sell Fortis Healthcare pledged shares rejected by SC

By: | Published: October 13, 2017 5:04 AM

Refusing to 'tinker' with its earlier orders, the Supreme Court on Thursday rejected banks’ request to allow them to sell pledged shares of Fortis Healthcare Holding to recover their dues.

Yes Bank, Axis Bank, Fortis Healthcare,Supreme CourtSupreme Court was hearing Daiichi Sankyo’s appeal to block Singh brothers’ efforts to sell their stake in Fortis Healthcare Holding.

Refusing to ‘tinker’ with its earlier orders, the Supreme Court on Thursday rejected banks’ request to allow them to sell pledged shares of Fortis Healthcare Holding to recover their dues.

The court said it was not inclined to hear the lenders’ now and would hear the Daiichi Sankyo’s main plea to block sale of shares by Fortis promoters Malvinder and Shivinder Singh in the hospital group.

Four banks, including YES Bank and Axis Bank, had sought intervention in the case and requested the bench headed by justice Ranjan Gogoi to allow them to dispose of mortgaged shares in the hospital chain. However, the bench refused to hear them, saying it would first like to hear “the case on merits” on October 25. The lenders may be heard at the next date, but after the main case is taken up.

The Singh brothers have pledged shares worth Rs 1,582.75 crore with YES Bank and Rs 390 crore with Axis Bank. Besides, the duo owe another Rs 413 crore to ECL Finance and Rs 55 crore to RBL Bank.

The apex court had on August 31 refused to allow Fortis promoters to sell their encumbered and unencumbered shares held by one of their companies in Fortis Healthcare to reduce their debt burden.

The SC is hearing Japanese drugmaker Daiichi Sankyo’s appeal to block efforts by the Singh brothers to sell their stake in Fortis Healthcare Holding. Daiichi moved the SC to secure assets of the Fortis Healthcare promoters to realise the Rs 2,560-crore arbitration award it had won in Singapore last year over its Ranbaxy deal. Along with interest and legal fees, the total liability was last pegged at Rs 3,500 crore.

It challenged the Delhi High Court’s June order that had cleared the way for Singh brothers to potentially sell a stake in Fortis Healthcare Holding.

The Singh brothers control RHC Holding and Oscar Investments, which jointly own Fortis Healthcare Holding — the company that holds their stake in the hospital group. RHC Holdings has an 80.67% in Fortis Healthcare Holding while Oscar Investment holds the remaining 19.33%. Fortis Healthcare Holdings, in turn, has a 52.5% stake in Fortis Healthcare.

The two companies had also sought permission to sell their shares in Fortis Healthcare already pledged to lenders on the grounds that they have to pay their loan liability of Rs 468.37 crore by August-end.Though the HC’s interim order of June 22 ensured that the value of unencumbered assets held by the Singh brothers in holding companies should not change, the court said that “corporate transactions cannot be stalled at the behest of a decree holder, Daiichi in this case.”

Daiichi, which is no longer the owner of Ranbaxy after it had sold the company to another Indian pharmaceutical major Sun Pharma for $3.2 billion in 2014, alleged that the Singh brothers were “attempting to frustrate the enforcement of an arbitral award” in its favour by systematically selling their assets. It further said while Fortis Holdings had a 52.20% stake in Fortis Heathcare as on March 31, 2017, its shareholding decreased to 39.71% on July 20, 2017, pursuant to a sale of shares in the open market.

A Singapore tribunal had last year ordered the Singh brothers to pay the Japanese drugmaker `2,562 crore in damages for concealing information regarding wrongdoing at Ranbaxy while selling it for $4.6 billion
in 2008.

The Singh brothers are contesting this arbitration award in the high court, which has reserved its judgment.

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