Fortis case: Supreme Court allows financial institutions to sell pledged shares
New Delhi: The Supreme Court on Thursday lifted its stay on sale of shares of Fortis Healthcare Ltd pledged with banks by former Ranbaxy promoters, Malvinder and Shivender Singh before 31 August.
Banks including Axis Bank Ltd, Yes Bank, RBL Bank Ltd were earlier restrained by the apex court from selling pledged shares in Fortis Healthcare and were directed to maintain status quo with regards to both encumbered and unencumbered shares.
Modifying its earlier orders dated 11th and 31 August, a bench headed by Justice Ranjan Gogoi said, “We clarify our interim orders to mean that the status quo granted shall not apply to shares of Fortis Healthcare Limited held by Fortis Healthcare Holding Pvt. Ltd. as may have been encumbered on or before the interim orders of this court.”
Daiichi had challenged a 21 June order of the Delhi high court allowing the Singh brothers to potentially sell a stake in Fortis Healthcare on the condition that the disclosed value of their unencumbered assets would remain unaffected.
The restraining order was passed to afford interim protection to Japanese drugmaker Daiichi Sankyo Ltd in terms of ready realizable value of assets at a later stage.
The value of unencumbered assets held by the Singh brothers in both these companies amounts roughly to the arbitration award of Rs2,500 crore handed down by a Singapore tribunal in 2016 in favour of Daiichi in relation to its 2008 purchase of a majority stake in Ranbaxy.
RHC Holdings has an 80.67% stake in Fortis Healthcare Holding Pvt. Ltd, while Oscar Investment holds the remaining 19.33%. Fortis Healthcare Holdings in turn has a 52.5% stake in Fortis Healthcare.
The arbitral award came after Daiichi alleged that the Singh brothers had concealed crucial information while selling Ranbaxy to it for $4.6 billion in 2008. The Singh brothers contested the award in the Delhi high court.
On 31 January, the Delhi high court upheld the April 2016 award by an arbitration tribunal in Singapore which had ruled in favour of Daiichi. The tribunal had directed the Singh brothers to pay about Rs2,563 crore in damages, plus interest of 4.44% per year from 7 November 2008 to the date of the award.
An appeal against this order is going to be heard on Friday.