Fortis case: SC directs Malvinder, Shivinder to appear on March 14

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Updated: February 27, 2019 7:18:17 AM

The CJI said every company’s shareholding has changed but these two individuals (Singh brothers) have remained constant. He further said several companies were involved in this case, but when one lifts the corporate veil of these companies Malvinder Singh and Shivinder Singh’s names appear.

Malvinder Singh and Shivinder Singh

The Supreme Court on Tuesday asked former promoters of Fortis Healthcare (FHL) Malvinder Singh and Shivinder Singh to be personally present before it on March 14 to explain the status of Rs 4,000 crore the hospital chain had got from Malaysia’s IHH Healthcare.

A bench led by Chief Justice Ranjan Gogoi asked the Singh brothers to be personally present before it on the designated date to explain the position with regard to funds that allegedly have been diverted by FHL to re-purchase the assets of RHT Health Trust, Singapore, in which the Singh brothers and other judgment debtors had substantial interest till 2017.

The CJI said every company’s shareholding has changed but these two individuals (Singh brothers) have remained constant. He further said several companies were involved in this case, but when one lifts the corporate veil of these companies Malvinder Singh and Shivinder Singh’s names appear.

“If you lift the veils of (Fortis Healthcare Holding Pvt Ltd and Fortis Healthcare Ltd) you will find Malvinder Singh and Shivinder Singh’s names,” Justice Gogoi said, adding that “we want personal affidavits from them…on what happened to Rs 4,000 crore”.

The apex court on December 14 last year put on hold sale of controlling stake (31%) in FHL to the Malaysian firm on a contempt plea filed by Japanese pharma major Daiichi Sankyo against the brothers. The order for maintaining status quo till further orders of the apex court meant that IHH Healthcare, which had in July won the bidding for acquiring FHL with its Rs 4,000-crore offer, could not go ahead with its open offer, which was was scheduled to commence from December 18, 2018.

Senior lawyer Fali Nariman, appearing for Daiichi Sankyo, accused the Singh brothers of reducing their stakes in Fortis promoted entities despite commitment. He further said the shareholding of Fortis Healthcare Holding, which is owned by Singh brothers, in FHL has been reduced from more than 40% before August 11, 2017 to around 0.2% now.

However, Fortis Healthcare senior lawyer Ranjit Kumar argued that the hospital chain was not a party to the case filed by Daiichi against the Singh brothers, yet its shareholding has been frozen by the apex court.

He argued that the company was being run by the lenders and whatever changes in shareholdings have happened are being done by the bank and FHL or its directors cannot be held responsible for any changes.

The hospital chain said violation of the Supreme Court’s December 14 order did not arise as the status quo was ordered only with regard to the “transaction between FHL and IHH”. According to it, the impugned order restraining it from transferring Rs 4,000 crore it received from IHH did not cover any transaction with RHT Health Trust.

Besides, it said that as on December 14, IHH had already acquired 31% shares of FHL and the latter had already received Rs 4,000 crore by then. And there was no order restraining FHL from undertaking any acquisition of shareholding/assets or seeking loans from FIs, it said, adding that the hospital chain was not even a party before SC.

FHL said that its December order was “impacting not only its business and also the interests of various public shareholders who stand to benefit from the open offer by Northern TK Venture Pte Ltd (NTK) of FHL’s shares”. IHH is also an indirect 100% parent entity of NTK, it said.

Daiichi Sankyo is pursuing the enforcement of Rs 3,500 crore arbitration award against the Singh brothers pronounced by a Singapore tribunal for concealing information regarding wrongdoing at Ranbaxy Laboratories while selling it to it for $4.6 billion in 2008.

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