SC asks Fortis to submit details of Rs 4000 crores IHH deal, Singh brothers role by March 1

The bench, on Wednesday, has also posed the question as to why IHH hadn't proceeded with the mandatory Rs 3000 open offer when it had shown urgency to seal the Rs 4000 deal. The Supreme Court has asked the company on Wednesday, "Does your contractual obligation take priority over the SC order."

Medical Dialogues team had earlier reported that Malaysia's IHH Healthcare had announced in 2018 that it would not be able to proceed with the open offer for Fortis Healthcare for the time being, following the Supreme Court order to put on hold sale of controlling stake in the Indian hospital chain. In a regulatory filing, IHH Healthcare, however, had further mentioned that the apex court's order would not impact the acquisition of a 31.1 percent stake in Fortis for Rs. 4,000 crores, which had been completed on November 13.

Read also: IHH Unable To Proceed With Fortis Open Offer After SC Status Quo On Deal

The dispute between the Singh brothers and the Japanese drugmaker Daiichi Sankyo fumed after the Singh Brothers (Malvinder Mohan Singh and Shivinder Mohan Singh) were accused of suppressing critical information while selling their pharma firm Ranbaxy Laboratories to Daiichi. However, the non-disclosure of facts came to the front after the manufacturing plant faced severe regulatory issues with the US Food and Drug Administration (USFDA). Thereafter, a lawsuit was moved by Daiichi with a Singapore arbitration tribunal that directed the Singh brothers to pay Rs 2,562 crore to settle the dispute.

Following this, the Supreme Court of India had on December 14, 2018, passed an order directing to maintain the status quo with regard to the sale of the controlling stake in Fortis Healthcare to Malaysian IHH Healthcare Berhad.

Also Read: SC asks 17 lenders To Place Loan Records Of Singh brothers, Fortis Healthcare

As per the latest media report by Financial Express, the Apex Court has mentioned on Wednesday that FHL had been quick to transfer Rs 4,000 crore received from Malaysian healthcare major IHH to RHT, Singapore. On the other hand, it had not taken a call on the Rs 3,000 crore that had been kept in the escrow account for the open offer. FHL had cited the pendency of the Supreme Court case as the reason.

Pointing out the divergence/dichotomy in the company's stand, the Supreme Court has asked for the reason for such double standing on the part of FHL.

Rakesh Dwivedi and Amit Mishra, counsel for Daiichi alleged before the court that even after the resignation of Singh Brothers in February 2018, they were 'influencing' the company by enjoying the controlling stake till May 2018 through other directors including their spouse.

Financial Express reports that the counsel for Daiichi pointed out before the Apex Court, "IHH has aided and abetted the whole exercise. Let RHT disclose who are the unitholders. Malvinder had 29% shares… Big game being played."

Meanwhile, FHL layer Rajiv Nayyar contended before the court, as reported by the daily, that a substantial portion of consideration had been transferred to RHT, which utilized funds in various ways including paying dividends to the unitholders.

However, the SC bench pointed out a dichotomy in the statement and stated, "you are saying you paid dividend to unitholders including FHHL and that means it had come back to Singhs. Explain this dichotomy."

The apex court has also asked FHL to produce the July 31, 2018 document that had informed Sebi about the changes in shareholding after IHH brought 31% stake in the hospital chain. The bench has further asked for clarification about the role and status of Radha Soami Satsang Beas chief Gurinder Singh Dhillon in RHT.

Taking note of the allegations by Daiichi, the bench has asked if the shadow of the former promoters Malvinder and Shivinder Singh influenced the functioning of FHL even after their exit. Giving a hint that siphoning of funds after the contempt order would be dealt with separately, the SC has further observed on Wednesday, "The ever persuasive control of Singhs continued even after their exit."

Meanwhile, the banks and financial institutions have been given one last chance by the Supreme Court to give clarifications by Monday regarding their role in the Fortis-IHH deal. They have also been asked to submit the detailed loan documents by which financial aids had been advanced to the hospital chain along with the securities offered by the Singh Brothers. The case would be next heard on March 1, 2021.