SC orders forensic audit on Fortis-IHH share sale
The Supreme Court on Thursday awarded six months jail term to former promoters of Fortis Healthcare Ltd, Malvinder Singh, and Shivinder Singh, in a case related to the sale of shares of Fortis to Malaysia-based IHH Healthcare. A bench headed by Chief Justice U U Lalit and Justices Indira Banerjee and K M Joseph also awarded six months jail term to the tainted brothers, who were also former promoters of Ranbaxy and Religare Group. The top court also ordered a forensic audit of the share sale in Fortis Healthcare Ltd.
The former promoters of Fortis Healthcare Ltd were facing the court battle after a Japanese firm, Daiichi Sankyo, had challenged the Fortis-IHH share deal to recover the Rs.3,600 crore arbitration award that it had won before a Singapore tribunal against the Singh brothers. The IHH-Fortis deal is stuck due to the legal fight between Daiichi and the former promoters of Fortis Healthcare.
Brothers Malvinder Singh and Shivinder Singh, who were once shining tycoons in the industry with takeovers and acquisitions fall from grace in 2015 due to many financial irregularities. They have been in prison since 2018 and once in mid-2021, Delhi High Court canceled their bail and sent them back to prison[1]. At one point brothers quarreled with each other, leading to a physical fight in December 2018. Elder brother Malvinder accused Shivinder of attacking him.[3]
In 2018, when some Indian lenders sold the pledged shares of Fortis Healthcare to the Malaysia-based firm, Daiichi went to court alleging that the former promoters of Fortis had assured them that their shares in the Indian hospital chain will cover the arbitral award amount.
On November 15, 2019, the top court held former Ranbaxy promoters Malvinder and Shivinder Singh guilty of contempt for violating its order that had asked them not to divest their shares in Fortis Healthcare Limited. The apex court had during the hearing of a contempt plea asked the Singh brothers to give it a plan as to how they would honour the arbitral award of Rs.3,500 crore granted by a Singapore tribunal against them, in favour of Japanese drug manufacturer Daiichi Sankyo.
The top court had held them guilty of contempt of court and said that they had violated its earlier order by which the sale of their controlling stakes in Fortis Group to Malaysian firm IHH Healthcare was put on hold. The apex court had said it would hear the Singhs on the quantum of sentence later.
The Japanese firm had filed a contempt petition against them alleging that execution of their arbitral award had been in jeopardy as the Singh brothers disposed of their controlling stakes in Fortis Group to the Malaysian firm. Daiichi had bought Ranbaxy in 2008.
Later, Daiichi moved to the Singapore arbitration tribunal alleging that the Singh brothers had concealed information about their company facing a probe by the US Food and Drug Administration and the Department of Justice while selling its shares. Daiichi had to enter into a settlement agreement with the US Department of Justice, agreeing to pay a USD 500 million penalties to resolve potential civil and criminal liability. The company then sold its stake in Ranbaxy to Sun Pharmaceuticals for Rs.22,679 crore in 2015.
A tribunal in Singapore had passed the award in favour of Daiichi. The Delhi High Court had on January 31, 2018, upheld the international arbitral award passed in favour of Daiichi and paved the way for enforcement of the 2016 tribunal award against the brothers who had sold their shares in Ranbaxy to Daiichi in 2008 for Rs.9,576.1 crore. Sun Pharmaceuticals Ltd later acquired the company from Daiichi.
Reference:
[1] Delhi High Court cancels bail granted by trial court to Fortis promoter Shivinder Singh – Jun 14, 2021, PGurus.com
[2] Fortis fight comes to blows: Malvinder Singh accuses Shivinder of assault – Dec 07, 2018, ET
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