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
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.