Dai­ichi Moves SC to Block Sale of Shares by For­tis Pro­mot­ers

Ap­peal against HC or­der that po­ten­tially gave Singhs green light, with riders, to get into deals

The Economic Times - - Companies: Pursuit Of Profit - Prabha.Ragha­van @times­group.com

New Delhi: Dai­ichi Sankyo’s le­gal tus­sle to re­cover ₹ 3,500 crore from for­mer Ran­baxy pro­mot­ers Malvin­der and Shivin­der Singh has taken an­other sharp turn, with the Ja­panese drug maker mov­ing the Supreme Court to block sale of pro­moter shares in For­tis Health­care.

Dai­ichi is ap­peal­ing against a Delhi High Court or­der of June 21 that po­ten­tially gave the broth­ers a green light to en­ter into cor­po­rate trans­ac­tions, pro­vided they main­tained the value of un­pledged as­sets they dis­closed to court. Th­ese could be con­sid­ered to pay Dai­ichi’s award, if it won its case to en­force it.

Dai­ichi’s lat­est pe­ti­tion says the com­pany would face “ir­repara­ble loss” un­less the Supreme Court took steps to pre­vent “vi­o­la­tion” of spe­cific orders passed by the Delhi High Court in March and June. “Grave prej­u­dice would be caused if the in­terim relief is not granted to the pe­ti­tion­ers,” reads the pe­ti­tion, a copy of which ET has seen.

Dai­ichi’s ap­peal pe­ti­tion will be heard on Fri­day. “The mat­ter is sub ju­dice and we can­not com­ment,” a spokesper­son for RHC Hold­ings, one of the pro­moter en­ti­ties of the Singh broth­ers, told ET.

The high court had told Dai­ichi that cor­po­rate trans­ac­tions such as stake sales in For­tis could not be stalled at the be­hest of a de­cree holder. “Dai­ichi’s po­si­tion re­mains clear — di­lu­tion/sale of share­hold­ing of For­tis Hold­ing in For­tis Hos­pi­tals (run by For­tis Health­care) is in vi­o­la­tion of the or­der dated March 6 passed by the Delhi High Court,” Dai­ichi’s coun­sel told ET.

The or­der states that Singhs-owned com­pa­nies Os­car In­vest­ments and RHC Hold­ings will ap­proach court if any change is pro­posed in the sta­tus of the un­pledged as­sets they have dis­closed. Os­car and RHC, the Singhs’ com­pa­nies, jointly own For­tis Health­care Hold­ings, which in turn holds the broth­ers’ con­trol­ling stake in their flag­ship hos­pi­tal chain.

Apart from an ap­peal on the Delhi court’s June or­der, Dai­ichi has also sought in­terim relief from the Supreme Court to en­sure the broth­ers main­tain their con­trol­ling stake in For­tis through For­tis Health­care Hold­ing. “Res­train Os­car In­vest­ments Ltd and RHC Hold­ings Pvt Ltd from giv­ing ef­fect to any pro­posed sale/di­lu­tion of con­trol­ling share­hold­ing of For­tis Hold­ing’s 45.70% in For­tis Health­care,” reads the pe­ti­tion. The pe­ti­tion re­quests the apex court to di­rect Os­car and RHC to take prior ap­proval of the Delhi High Court be­fore changing their share­hold­ings in their down­stream com­pa­nies “either di­rectly or in­di­rectly.” The Ja­panese com­pany also seeks to stay a postal bal­lot res­o­lu­tion from May that has al­lowed the broth­ers to in­crease the share­hold­ing limit of for­eign in­vestors in their flag­ship hos­pi­tal group to 74%, from 24% pre­vi­ously. RBI ap­proved this in­crease in July.

Since January, pro­moter hold­ing in For­tis has come down from 62.9% to 40.2% as the Singhs have been sell­ing their shares in the mar­ket.

Dai­ichi has been locked in a case against the Singhs for over a year to re­cover an ar­bi­tra­tion award that a Sin­ga­pore tri­bunal granted against the broth­ers for con­ceal­ing in­for­ma­tion of wrong­do­ing at Ran­baxy while sell­ing the com­pany for $4.6 bil­lion in 2008.

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