Fortis Healthcare promoters Malvinder Mohan Singh and Shivinder Mohan Singh announced late on Thursday their decision to resign from the board of the hospital chain.
This follows a recent Delhi High Court decision to enforce a Rs 35 billion arbitration award, given by a Singapore tribunal and won by Daiichi Sankyo in 2016.
Malvinder was executive chairman and Shivinder non-executive vice-chairman of Fortis Healthcare.
In a joint letter addressed to the board of directors of Fortis Healthcare, Malvinder and Shivinder said: “In the light of the recent High Court judgement, upholding the plea of Daiichi Sankyo, to enforce the arbitration award, we believe this is in the interest of propriety and good governance.”
Justifying the move, the billionaire brothers said: “It is intended to free the organisation from any encumbrances whatsoever that may be linked to the promoters”.
The board will then be enabled and empowered better to guide the organisation without being affected by the judgement or the association of the promoters.
The Singh brothers requested the board to look at inter-group transactions while distancing the promoter group from the operations of the organisations.
The company said in a statement to the NSE the board would discuss the matter in detail on February 13.
Following the $4.6 billion sale of Ranbaxy Laboratories, which the Singh family ran, to Daiichi in 2008, the Singh brothers have been accused of concealing information that the company was being probed by the US Food and Drug Administration and the Department of Justice.
A Singapore tribunal had upheld the plea of Daiichi. Later Daiichi approached the Delhi High Court in 2016 to seek the enforcement of the tribunal award.
Legal experts and corporate lawyers have interpreted the move by the Singh brothers as a reaction to any attachment order by the courts to enforce the award.
“The company wants to distance itself from the deeds of the promoters,” said a Delhi-based corporate lawyer. Some saw this as a precursor to a selloff deal. Over the past few months, the Singh brothers had intensified efforts to sell the group’s assets to raise funds to tide over their legal problems.
The Fortis scrip closed on Thursday at Rs 126.35 on the National Stock Exchange. Shares of Fortis Healthcare and Religare Enterprises were under pressure last week following adverse rulings by the Delhi High Court.
The Japanese company had later sold its stake in Ranbaxy to Sun Pharmaceutical Industries for Rs 226.79 billion in 2015.