The Delhi High Court yesterday directed the erstwhile promoters of Fortis Healthcare (FHL), the Singh brothers, to appear in person for the next hearing of case filed by Daiichi Sankyo against the Fortis-IHH Healthcare deal. This is the first time that Malvinder and Shivinder Singh have been summoned to court in connection to the Daichii Sankyo-Ranbaxy tussle, where the Court in February upheld the Rs 3,500 crore arbitral award in favour of the Japanese drug maker.
According to The Business Standard, the high court asked the Singh brothers to personally appear in the court on August 10 to explain the reasons for discrepancies in their statements over their holdings in FHL. The court wants to understand that whether the Singh brothers and entities related to them have sufficient funds to honour the arbitration order.
In the course of the arguments, Justice Rajiv Shakdher observed that "things are getting out of hand" and sent out a strong message to the siblings asking them to cough up the arbitration award money "by any means" or go behind the bars. "Wherever you have to get it (money) from, you get it. You can't take the court for a ride," the judge said.
To remind you, soon after the FHL approved the bid submitted by Malaysia's IHH Healthcare Berhad, Daiichi had moved court to block the deal. In its plea, Daiichi had reportedly contended that the proposed transaction "will contravene orders issued by this honourable court, the honourable Supreme Court of India as well as significantly defeat the execution of the award in India". The Japanese company had further argued that the value of the unencumbered assets disclosed to court by Singhs' two holding companies had to be maintained.
The daily reported that Daiichi's legal counsel had argued that the Singh brothers, RHC Holding - the holding company through which the Singh brothers had made the sale to Daiichi - and FHL are a single entity. However, the Fortis counsel objected to the same on the ground that the Singhs are no longer in control of the company. The Singh brothers tendered their resignation as FHL directors in February, after they lost the case over the enforcement of the arbitration award.
Sources close to the Singh brothers told the daily that the duo is trying to monetise real estate assets of family members to raise funds. "The brothers cannot sell their assets as there is a 'status quo' order on them. Therefore, they are trying to strike deals on properties that belong to the Dhillon family, who are related to the Singh brothers through their maternal side," said a source.
Private equity giants are reportedly interested in buying some of the office real estate portfolio that belong to the Dhillons -- Gurinder Singh Dhillon, maternal uncle to the brothers, currently heads the Radha Soami Satsang Trust - and the deal size can run to Rs 100 crore.
The big concern for FHL is that a prolonged court battle could delay its deal with IHH, which would be pretty bad news for the cash-strapped healthcare chain.