Supreme Court pulls up Singh brothers, Fortis and Indiabulls for contempt

Our Bureau | | Updated on: Nov 15, 2019
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Asks brothers to deposit Rs 2350 crore, Indiabulls to deposit value of 12.35 lakh sold shares

The Supreme Court (SC) has ordered former Fortis promoters, brothers Malvinder and Shivinder Singh to deposit up to  Rs 2350 crore within eight weeks, on Friday. The court held the Singh brothers, Fortis Healthcare Limited (FHL) and financial services company Indiabulls in contempt of the court.

Markets closed with FHL in the red as share prices settled at Rs 143.80 a piece on Friday, a drop of 7.94 per cent from previous day’s closing.

The apex court said that the brothers will have to deposit the money in the court registry to purge or set right the wrong that they had caused the Japanese drugmaker Daiichi Sankyo.

The latter had moved the Supreme Court seeking payment under the execution of arbitral award announced by a Singapore court, that the brothers have failed to pay. While Daiichi has to receive over Rs 3500 crore from the brothers, it has been able to get back not more than Rs 50 crore.

Delhi High Court (HC) is the executioner of the award. Daiichi had filed a Special Leave Petition in SC in 2018, after the brothers’ promises to pay fell through in the HC.

While the Singh brothers had promised that their shares in Fortis Healthcare Holdings Private Limited which in turn has invested in Fortis Healthcare Private Limited, an amount running up to  Rs 2300 crores will be kept aside to honour Daiichi’s payments, that did not happen. Last year, Indiabulls sold off up to 12.25 lakh shares of Fortis that were pledged to them, despite court orders which had restrained them from doing so.

The Supreme Court held that Sameer Gehlaut and Gagan Banga Directors in Indiabulls Housing Finance and Indiabulls Ventures Limited, Ashwini Kumar Hooda and Sachin Chaudhary, Directors in Indiabulls Housing Finance Limited, Divyesh Shah and Pinank Shah in Indiabulls Ventures Limited, for knowingly and willfully disobeying court orders up to four times since August 2017. Indiabulls will have to deposit the value that these shares held as of August 31, 2017.

Taking a harsh stand against the brothers, the apex court has registered a suo motu contempt against Singh brothers and Fortis Healthcare as well as other companies in which the brothers held investment like RHC Holding Private Limited and Oscar Investments for willfully violating court orders and have asked them to respond by February 3, 2020 so as to why they should not be punished for contempt.

Three to six months jail term

"If the brothers do not end up paying Rs 2350 crore within eight weeks to the SC, civil detention proceedings can be initiated against them, which involve three to six months of jail term," said a lawyer from P&A Law Offices that represents Daiichi.

Meanwhile the deal signed by Fortis Healthcare with Malaysian health giant IHH Berhad whose huge tranche of their money, up to Rs 3400 crore is stuck in an escrow account at a local Indian bank, since December 2018. This came after the SC announced a stay on the open offer will continue. It is expected to rule on this matter in February 2020.

The earlier over Rs 4000 crore infused by IHH into FHL to strengthen it's sinking health, through preferential allotment, were completely utilized in buying back assets of Religare Health Trust (RHT) which owned a chunk of hospital businesses and had Fortis Healthcare as one of it's investors.

The brothers had sold their ancestral pharmaceutical company Ranbaxy to Daiichi in 2008. Daiichi discovered massive frauds committed by the Singh brothers and their staff in non-disclosure of certain sensitive data to US Food and Drug Administration and other global agencies, leading to drugs of questionable efficacy being delivered to patients across the world. In 2013, Daiichi sold Ranbaxy to Sun Pharmaceuticals.

Meanwhile, Malvinder Singh was picked up by the Enforcement Directorate on Thursday for questioning from Tihar jail in connection to investigations of a case of Rs  740 crore fraud filed against him and his brother Shivinder.

Published on November 15, 2019

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