Supreme Court refuses permission to Singh brothers to sell Fortis shares2 min read . Updated: 01 Sep 2017, 06:37 AM IST
Supreme Court also refused permission to banks, with whom the Singh brothers have pledged Fortis shares, to sell them
New Delhi: The Supreme Court on Thursday refused to give the Singh brothers (Malvinder and Shivinder, the original promoters of Ranbaxy and Fortis) permission to sell Fortis shares. It also refused permission to banks with whom the Singhs have pledged Fortis shares to do the same.
Shares of Fortis were down 6.6% at 12.30pm, reacting to the court’s order.
On 11 August, the court had asked companies controlled by the Singhs to not sell shares in Fortis. The Singhs subsequently approached the apex court on 23 August asking for permission to sell shares in Fortis already pledged with the banks.
In Thursday’s order, the Supreme Court restrained the Singhs from disposing off any of their assets (both encumbered and unencumbered) till the final disposal of the case on 31 October. Encumbered assets are those pledged or offered as collateral to a lender.
The court’s 11 August order was in response to a plea by Daiichi Sankyo Ltd. That plea followed a 21 June order by the Delhi high court that cleared the way for the Singhs to potentially sell a stake in Fortis Healthcare Ltd, on the condition that the disclosed value of their unencumbered assets remained unaffected.
Daiichi bought Ranbaxy Laboratories from the Singhs in 2008 for $4.6 billion. In 2014, it sold Ranbaxy to Sun Pharmaceuticals for $3.2 billion. By then it had already launched arbitration proceedings against the Singhs in Singapore, alleging that they withheld information on Ranbaxy (and its problems with the US Food and Drug Administration) at the time of the deal.
In 2016, the Singapore arbitration court ordered the Singhs to pay up Rs2,562 crore in damages to Daiichi. The total value of their dues after interest addition and legal fees came to Rs3,500 crore.
Since then, Daiichi and the Singhs have been locked in litigation over the enforcement of the Singapore court’s award.
The Japanese company has sought to block efforts by the Singhs to sell their stake in Fortis Helthcare Holding Ltd, held through holding companies RHC Holding Pvt. Ltd and Oscar Investments Ltd.
Fortis Healthcare Holding, in turn, owns around 37% of Fortis Healthcare Ltd (down from around 52% in June).
IHH Healthcare Bhd, Asia’s largest private hospital operator, is set to buy a controlling stake in Fortis Healthcare and SRL Diagnostics from billionaire brothers Malvinder and Shivinder Mohan Singh in a deal that values the two companies at close to $2.9 billion, Mint reported in June, citing two people familiar with the matter. The deal is yet to close.
On Thursday, Yes Bank and Axis Bank, which hold mortgaged shares of Fortis against loans to the company, prayed before the court to be allowed to dispose off the same. The bench led by justice Ranjan Gogoi, however, has restrained them from selling off the shares.