SC asks Fortis to furnish by March 1 all details of stake sale deal to IHH

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February 25, 2021 4:00 AM

“How this divergence happened? Does your contractual obligation take priority over the SC order,” Justice Lalit asked.

A bench comprising justices UU Lalit and KM Joseph asked FHL to file a “comprehensive affidavit” explaining “all the steps since when the idea of bringing in the Malaysian entity germinated and when all the formalities of the deal were completed".A bench comprising justices UU Lalit and KM Joseph asked FHL to file a “comprehensive affidavit” explaining “all the steps since when the idea of bringing in the Malaysian entity germinated and when all the formalities of the deal were completed".

The Supreme Court on Wednesday asked Fortis Healthcare (FHL) to furnish by March 1 all the details — from germination to completion — of its stake sale deal to Malaysian healthcare major IHH Berhad for Rs 4,000 crore.

It also asked FHL to explain why IHH did not proceed with the mandatory Rs 3,000-crore open offer when it had shown urgency in transferring `4,000 crore to RHT Health Trust, Singapore, despite the SC having directed it to maintain status quo on December 15, 2018. IHH had in July 2018 bought 31% controlling stake in Fortis Healthcare for Rs 4,000 crore through the bidding route.

A bench comprising justices UU Lalit and KM Joseph asked FHL to file a “comprehensive affidavit” explaining “all the steps since when the idea of bringing in the Malaysian entity germinated and when all the formalities of the deal were completed”.

The bench noted that on one hand, FHL was quick to transfer Rs 4,000 crore received from Malaysian healthcare major IHH to RHT, Singapore. And on the other hand, it had not taken a call on the Rs 3,000 crore which were lying in its coffers (kept in escrow account for open offer), citing the pendency of the case in the SC. It asked the hospital chain to explain why there is so much “divergence/dichotomy” in its submissions/stand.

“How this divergence happened? Does your contractual obligation take priority over the SC order,” Justice Lalit asked.

The apex court also asked FHL to produce the July 31, 2018 document by which it had informed Sebi about the changes in shareholding after IHH brought 31% stake in the hospital chain. The judges also asked FHL to tell about Radha Soami Satsang Beas chief Gurinder Singh Dhillon’s role and his status in RHT.

Further, the SC asked if the shadow of former promoters Malvinder and Shivinder Singh overwhelmed the functioning of FHL even after their exit on February 8, 2018. “The ever persuasive control of Singhs continued even after their exit,” SC observed. It also indicated that siphoning of funds after the contempt order will be dealt separately.

However, Daiichi alleged that even after their resignation, they could “influence” and had enjoyed controlling stake till May 2018 through other directors including their spouse. “IHH has aided and abetted the whole exercise. Let RHT disclose who are the unitholders. Malvinder had 29% shares… Big game being played,” Daiichi senior counsel Rakesh Dwivedi and counsel Amit Mishra argued.

The top court posted the matter for hearing on March 3.

When FHL layer Rajiv Nayyar told the SC that a substantial portion of consideration was transferred to RHT, which utilised funds in various ways including paying dividends to the unit holders, SC pointed out that there was a “contradiction” in his stand. “You are saying you paid dividend to unitholders including FHHL and that means it had come back to Singhs. Explain this dichotomy,” it said.

Lenders have also been given last opportunity to explain by Monday their role in the Fortis-IHH deal and also to furnish, among other documents, details of loans that were advanced to the hospital chain and the securities that were offered by Singhs in connection with such loan arrangements.

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