Ask us before selling Fortis stake: Delhi HC tells former Ranbaxy promoters Singh brothers

By: | Updated: March 7, 2017 9:18 AM

The Delhi High Court has reportedly reinforced stay on former Ranbaxy promoters, brothers Malvinder Singh and Shivinder Singh, from selling or diluting stake in their healthcare venture Fortis Hospitals.

Malvinder & Shivinder SinghThe court has said that the Singh brothers furnished inadequate information on their assets, and has sought clear details of their assets to secure arbitration award to Daiichi Sankyo, TV news channels reported. (Image: Reuters)

The Delhi High Court has reportedly imposed restrictions on former Ranbaxy promoters, brothers Malvinder Singh and Shivinder Singh, from selling or diluting stake in their healthcare venture Fortis Hospitals, and has asked them to seek its approval before selling or issuing new shares in the company, in the ongoing dispute with Japanese drugmaker Daiichi Sankyo.

The court has said that the Singh brothers furnished inadequate information on their assets, and has sought clear details of their assets to secure arbitration award to Daiichi Sankyo, TV news channels reported.

Earlier January, Delhi High Court had told Singh brothers to declare the value of their unencumbered share holdings in various group companies by February 8. It had told the Singh brothers to furnish assurance that it will get Rs 3,500 crore in case the damages are awarded to Daiichi Sankyo, while allowing the Japanese firm to access previous asset declarations by the Singh brothers on condition of maintaining confidentiality.

The court is due to hear the case next on March 14. It will further hear on March 27 the case in which Daiichi Sankyo is seeking Rs 3,500 crore from Singh brothers towards award for damages related to regulatory penalties paid on behalf on Ranbaxy.

Daiichi Sankyo had acquired a majority stake in Indian drugmaker Ranbaxy Laboratories Ltd – then promoted by the Singh brothers – for Rs 22,000 crore in 2008.

However, soon after, the Indian company came under the scrutiny of the United States Food and Drug Administrator for non-compliance with the manufacturing standards for exporting drugs to the US. The company faced huge fines and sharp erosion in valuation.

Daiichi sankyo – the new owners of Ranbaxy – agreed to pay $500 million to settle a lawsuit and the US federal charges, but sought legal recourse to recover the amount from previous promoters – the Singh brothers. Earlier last year, a Singapore tribunal ordered the Singh brothers to pay $385 million to Daiichi Sankyo towards compensation.

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The Japanese company moved the court again after that – this time in India – seeking freezing of Singh brothers’ assets in order to be able to recover its compensation award.

Following this, the Delhi High Court had accepted Daiichi Sankyo’s plea to hear an application to block a proposed sale of shares in Indian hospitals chain Fortis Healthcare by the Singh brothers, after reports that TPG Capital plans to buy controlling stakes in Fortis Healthcare and SRL-Fortis Malar Hospitals for Rs 3,000 crore.

Singh brothers had contended that they are not selling any stake, but are merely looking to infuse capital into the company.

It must be noted that Daiichi Sankyo is no longer the owner of Ranbaxy. It sold the company to another Indian pharmaceutical giant Sun Pharma for $3.2 billion in 2014.

 

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