Not Liable for Singh Brothers’ Actions: Fortis Backs Stake Sale in Delhi HC

Distancing itself from former promoters Malvinder Mohan Singh and Shivinder Mohan Singh, Fortis Healthcare Ltd on Monday opposed Daiichi Sankyo Co Ltd’s plea to stop the sale of its stake to Malayasia’s IHH Healthcare Berhad. In its pleadings before the Delhi High Court, the hospital chain said that it was neither a party to the arbitration between the Singh brothers nor to the execution of the Rs 35-billion award and thus, should not be dragged in between. All the undertakings had been given by former promoters who were no longer attached to the company in any way, it said. The hospital chain was now held by banks and the public, the lawyer appearing for Fortis Healthcare told the court. Japanese pharmaceutical company Daiichi Sankyo had in July this year approached the Delhi HC seeking a stay on Fortis Healthcare’s stake sale to IHH Healthcare. Daiichi had moved the petition after Fortis Healthcare had on July 13 said that its board had unanimously accepted a binding offer from Malaysia’s IHH Healthcare Berhad, which plans to invest Rs 40 billion in Fortis by way of preferential allotment at Rs 170 per share.

In its petition, Daiichi Sankyo had said that the hospital was the only key underlying asset of RHC Holding Pvt Ltd, which was its judgment debtor, and that a sale of the hospital chain would mean Daiichi Sankyo would be left with just a paper decree. RHC Holding, the holding company of Fortis Healthcare, was once equally held by the Singh brothers. After being found guilty by a Singapore Tribunal of fraudulently misrepresenting and concealing the genesis, nature and severity of the US regulatory investigations of Ranbaxy when Daiichi Sankyo bought their 34.82 percent stake for USD 2.4 billion in 2008, the two brothers had assured the Delhi HC that their stake in the company would always be available for enforcement of the award. The Singapore Tribunal had also asked the Singh brothers to pay Rs 35 billion to Daiichi Sankyo. The judgment was later upheld by the Delhi HC. The two brothers, Daiichi Sankyo has alleged, have subsequently diluted their stake to as low as 0.66 percent and thus, cheated them of their dues. The court will next hear Fortis Healthcare’s plea on December 10. – Business Standard