The Supreme Court has issued a contempt notice to Fortis Healthcare for allegedly violating its status quo order dated December 14, 2018, regarding selling a controlling stake to IHH Healthcare Berhad.
"The court has vide the notice sought an enquiry into consummation of the acquisition of healthcare assets from RHT Health Trust by the company. The court has also sought an enquiry into whether the subscription by IHH to the shares of the company was undertaken after the status quo order was issued by the Court on December 14, 2018, and accordingly, if such subscription was in violation of this status quo order," Fortis Healthcare said in a statement on Monday.
Fortis has firmly stated that no part of the proceeds from the stake sale to IHH Healthcare was paid to Malvinder Singh, Shivinder Singh, or any of their controlled entities, and they were not in control of the company at the time of IHH transaction or RHT transaction.
Against a plea filed by Daiichi Sankyo, the apex court had ruled last year that status quo regarding the sale of the controlling stake in Fortis Healthcare to Malaysian IHH Healthcare Berhad be maintained. The Japanese firm had said in its plea that it was promised shares of Fortis Healthcare by erstwhile promoters Singh brothers.
Fortis has stated that it is currently evaluating the judgement and "exploring legal means to address it in an expeditious manner keeping in mind the best interest of all stakeholders". The company intends to argue before the court that the transaction with IHH Healthcare was consummated on November 13, 2018, a month before the status quo order was passed by the Supreme Court.
In July last year, Fortis Healthcare board had approved a proposal from IHH Healthcare to invest Rs 4,000 crore by way of preferential allotment for a 31.1 per cent stake. IHH Healthcare had become the controlling shareholder of Fortis by acquiring a 31.1 per cent stake in the company.
The company stated that it will present before the court that stake sale to IHH Healthcare was done through fresh preferential allotment of shares and shareholders' approvals were sought for the same through an Extraordinary General Meeting on August 13, 2018. Fortis also emphasised that IHH Healthcare was selected in a transparent manner and after receiving all due approvals.
"Separately, the RHT Transaction which was consummated on January 15, 2019, was also undertaken in the best interest of the company. As a result of this, Fortis bought back hospital properties worth approximately Rs 4,666 crore by acquiring securities in the RHT Trust's Indian entities that had ownership of these properties," Fortis said in its statement.
Fortis said that the move helped in saving Rs 270 crore per annum in clinical establishment fees that it was paying to RHT Health Trust, which enhanced the company's profitability. The company also stressed that at the time of the transaction, the Singh brothers of any of their controlled entities were not unitholders in RHT Health Trust.
"Further, and as mentioned above, at that time the erstwhile promoters (Singh brothers) were completely de-linked from the company in terms of the board or operations or management and held a minuscule 0.16 per cent stake in the company," Fortis stated.