SC orders status quo on sale of shares of Fortis to Malaysian firm IHH Healthcare

The Supreme Court Friday ordered status quo with regard to the sale of controlling stakes of Fortis Healthcare to Malaysian IHH Healthcare Berhad by former Ranbaxy promoters and hospital operators -- Malvinder and Shivinder Singh. The apex court was hearing the plea of Japanese firm Daiichi Sankyo which is seeking to recover Rs 3,500 crore, awarded to it by a Singapore tribunal in its case against Malvinder and Shivinder Singh.

The Japanese firm, which has filed the contempt plea against the Singh brothers in the apex court, has said that it was promised some shares of Fortis Healthcare by the Singh brothers. "Status quo with regard to sale of the controlling stake in Fortis Healthcare to Malaysian IHH Healthcare Berhad be maintained," said a bench comprising Chief Justice Ranjan Gogoi and Justices S K Kaul and K M Joseph.

The top court also issued notices to the Singh brothers asking them to explain as to why contempt proceedings be not initiated against them for allegedly violating its earlier order by pledging the shares. The board of Fortis Healthcare had approved in July a proposal from IHH Healthcare to invest Rs 4,000 crore by way of preferential allotment for a 31.1 per cent stake.

The Malaysian IHH Healthcare Bhd became the controlling shareholder of Fortis Healthcare Ltd by acquiring a 31.1 per cent stake in the company. Daiichi had bought Ranbaxy in 2008. Later, it had moved the Singapore arbitration tribunal accusing that the Singh brothers had concealed information that Ranbaxy was facing probe by the US Food and Drug Administration and the Department of Justice, while selling its shares.

Daiichi had to enter into a settlement agreement with the US Department of Justice, agreeing to pay USD 500 million penalty to resolve potential, civil and criminal liability.  The company had then sold its stake in Ranbaxy to Sun Pharmaceuticals for Rs 22,679 crore in 2015.