SC clarifies Singh brothers can't sell any Fortis shares

The Supreme Court Thursday clarified that there should be no change in ownership of Fortis Healthcare Ltd's shares held by former promoters Malvinder Singh and Shivinder Singh. This effectively means that the Singh brothers and entities now cannot borrow by offering their shares as collateral. The court was Thursday hearing two applications by Axis Bank and YES Bank, who had sought to sell their shares in the company in order to recover the money it owes them. On Aug 11 as well, the apex court had asked the brothers to maintain their shareholding in the company. The court had then given the order while hearing Japanese drug maker Daiichi Sankyo's plea to block sale of shares by the Singh brothers in the healthcare company. The case will be heard next on Oct 31, as already fixed.

The lawyer for YES Bank Thursday pleaded that the company owes the bank 16 bln rupees, and if its share prices fall, it will become difficult to recover the money. When shares are pledged as collateral for a loan, lien is created in favour of the lender, effectively permitting the lender to sell the shares if the borrower defaults on the loan.

"Clutch on to your shares, their value may go up," a bench headed by Justice Ranjan Gogoi told the banks. Daiichi had challenged a Jun 21 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 Aug 11 order was passed to afford protection to Daiichi Sankyo in terms of ready realisable value of assets at a later stage.

The court was hearing two applications by Axis Bank and YES Bank, who had sought to sell their shares in the company