Supreme Court awarded 6 months jail term to Singh brothers in Fortis-Daiichi Sankyo case [22.9.2022]

The Supreme Court on Thursday awarded six months in jail to brothers Malvinder Singh and Shivinder Singh in the Daiichi-Fortis case and ordered a forensic audit of the Fortis-IHH deal.

Disposing of Japanese drugmaker Daiichi Sankyo's plea, the apex court remanded the matter to the Delhi High Court while continuing the stay on IHH's open offer.

Malaysia's IHH Healthcare had, in 2018, acquired a 31 per cent controlling stake in Fortis by paying $1.1 billion in a bidding process overseen by an independent board. This triggered an open offer to acquire another 26 per cent of Fortis shares from the market. The open offer was not pursued as Daiichi had filed a plea against it.

Daiichi had challenged the Fortis-IHH deal to recover the Rs 3,600 crore arbitration award it had won in a Singapore tribunal against Fortis' erstwhile promoters, brothers Malvinder Singh and Shivinder Singh.

Former Ranbaxy promoters Malvinder Singh and Shivinder Singh were accused of concealing information regarding wrongdoing at Ranbaxy when they sold a majority stake in the company to the Japanese firm Daiichi Sankyo in 2008. The Singapore tribunal had in 2016 awarded Daiichi Rs 3,600 crore in damages.

Filing a petition against the Singh brothers and Indiabulls, Daiichi alleged that both parties had pledged 1.7 million shares of Fortis Healthcare, which was held by Fortis Healthcare Holding, despite the apex court forbidding it.

The deal between Fortis and IHH was signed in August 2018. In December 2018, the SC stayed the IIH open offer.

When the Singh brothers were selling Ranbaxy, the company faced an investigation by the US Food and Drug Administration and the US Department of Justice. The Singapore Arbitration tribunal had found the brothers guilty of making false claims in a self-assessment report and of fraudulently misrepresenting and concealing the probe by the US into Ranbaxy when Daiichi bought their 34.82 per cent stake for $2.4 billion in 2008.

On February 15, 2018, the apex court allowed banks and other financial institutions to sell shares of Fortis Healthcare, pledged with them by the Singh brothers, before August 31. The court had also forbidden the Singh brothers from pledging any more shares in the company.

There are several other cases against the Singh brothers.

Singh brothers were also charged with siphoning Rs 403 crore from Fortis Hospitals in 2017. The Securities Exchange Board of India (Sebi) had asked Singhs to return the money within 90 days, with interest due.

The brothers withdrew Rs 403 crore from the hospital chain and diverted it for other uses. The ultimate beneficiary was RHC Holding, the parent company of the Fortis-Religare group. Singhs were promoters of Fortis Healthcare till March 2018.

In another case, the Singh brothers took loans worth Rs 2,315 crore from Religare Enterprises and Religare Finvest. In 2019, the court ordered Religare to recall the loans and not dispose of any assets till the loans were repaid to Fortis Healthcare.

22 Sep 2022