Shivinder can’t absolve himself of legal liabilities, say experts
At NCLT, Shivinder pleads to remove brother from RHC Holding’s board
A day after the younger Singh sibling, Shivinder, alleged mismanagement of the group companies by elder brother Malvinder, the former Fortis promoters spent most of their day taking legal opinion. Observers close to the family said the infighting, now out in the open, has taken a turn for the worse.
Shivinder was, in fact, not present in Delhi High Court on Wednesday during the Daiichi Sankyo case hearing. Malvinder was in court to observe the proceedings.
Legal experts said the brewing legal skirmish between the siblings is unlikely to have any material impact on the cases that the brothers face. “Shivinder cannot absolve himself of any legal liabilities that arise in these cases,” said a company law expert. In the eyes of law, he is bound by all the duties, obligations, and liabilities of a promoter and that of a director on the board, added another lawyer. Malvinder was executive chairman and Shivinder the nonexecutive vice-chairman when they resigned from the Fortis Healthcare board in February this year.
Speaking to Business Standard, Shivinder admitted to the ensuing legal cases standing as they are. “I am discussing the minutiae with my lawyers. I understand the legal cases would continue according to the law of the land,” he said.
Agencies reported the plea filed before the New Delhi Bench of the National Company Law Tribunal by Shivinder has alleged that his wife’s (Aditi’s) signatures were forged by Malvinder. The plea also said the elder sibling perpetrated illegal financial transactions and led the company into an unsustainable debt trap. The petition is likely to come up for hearing on Thursday. In the plea, Shivinder also allegedly asked for the removal of Malvinder from the board of RHC Holding, alleging “blatant acts of mismanagement” by him. The younger brother also requested before the tribunal to allow him or his authorised representatives to inspect the statutory records of RHC Holdings and taking copies thereof.
Legal experts said Shivinder, despite dragging his brother to court, cannot get off the hook in the ongoing cases. According to J N Gupta, managing director (MD) of Stakeholders Empowerment Services, a proxy advisory firm, the board has collective liability. “No one can say he was in a non-executive role and hence, did not know what was happening,” he said.
Shriram Subramanian, founder and MD, InGovern Research Services, another proxy advisory firm, too, agrees. “From a minority shareholder perspective, the allegations do not hold much water. They were both party to all the decisions taken by the board and were equally responsible for destroying shareholder wealth,” he added.
Some experts say the legal wrangle within the promoter group, amidst allegations of mismanagement, could prepare the ground for a thorough investigation by the ministry of corporate affairs into the operations of the group companies.
Fortis Healthcare is currently under scrutiny for unauthorised sanctioning of loans to promoter group companies. “The investigation could be extended to Religare Enterprises and RHC Holding,” a lawyer noted. Further, the bickering within the promoter group could persuade minority shareholders to seek redressal for erosion of shareholder wealth that the group companies have suffered in recent years, lawyers added.