Fortis to SC: Order stopping transfer of Rs 4k cr didn’t cover any transaction with RHT

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New Delhi | Published: February 8, 2019 5:23:28 AM

It said that 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.”

Fortis, supreme court, Shivinder Singh, Malvinder Singh, RHT Health Trust, Singapore, IHH HealthcareThe impugned order is 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, according to the reply.

Denying any wrongdoing and violation, Fortis Healthcare (FHL) told the Supreme Court on Thursday that its December order restraining it from transferring Rs 4,000 crore it received from Malaysia’s IHH Healthcare did not cover any transaction with RHT Health Trust, Singapore, in which the former promoters of the hospital chain — Malvinder Singh and Shivinder Singh — allegedly had substantial interest till 2017.

It said that 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.” 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.

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“The order of December 14 does not cover the transaction between FHL and RHT Health Trust through which no controlling stake in FHL is being transferred to IHH. As such, the question of restraining transfer of funds from to RHT does not arise and any such transfer does not go against the order,” FHL said in its reply to the application filed by Japanese firm Daiichi Sankyo seeking to restrain any such transfer of funds it received from Malaysia’s IHH Healthcare to RHT Health Trust, Singapore.

The order did not bar the transaction between FHL and RHT for purchase of assets, given that the same is being conducted at a level below of FHL, by way of making downstream investment in Indian subsidiaries of RHT and given that no controlling stake in FHL is being transferred to IHH pursuant to RHT transaction, the affidavit stated.
Daiichi is attempting to prevent the open offer by wrongly seeking to bring into question the transaction between FHL and RHT Health Trust, which already stands concluded, FHL said. The Singh brothers and their entities have no interest in RHT or its assets nor any money has being transferred to them, FHL said. The number of shares in respect of which the contempt is alleged is 12.25 lakh, which constitute a minuscule percentage which has no impact on the controlling interests, it added.

The impugned order is 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, according to the reply. IHH is also an indirect 100% parent entity of NTK, it said.

“The acquisition of RHT assets, by way of downstream acquisition of the sale securities of Indian companies is part of the business decision taken by FHL — which was taken with a view towards value accretion and maximization and found favour from IHH and its shareholders as well,” it stated.

Daiichi had alleged that FHL has received `4,000 crore from IHH Healthcare in India and the same should not be used by the former to re-purchase the assets of RHT Health Trust. “The imminent threat and apprehension is that Rs 4,000 crore (received by FHL) is to be paid out to a trust in Singapore, in which the Singh brothers and other judgment debtors had substantial interest till 2017,” the Japanese pharma major said.

The Supreme Court had on December 14 put on hold the sale of controlling stake (31%) in FHL to the Malaysian company, on a contempt plea filed by Daiichi Sankyo against the Singh 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 war for Fortis with its Rs 4,000-crore offer, had to wait and couldn’t have gone ahead with its open offer which was scheduled to commence from December 18.

Daiichi Sankyo is pursuing the enforcement of `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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