Allow IHH Healthcare to make an open offer: Fortis plea in Supreme Court

Fortis Hospitals Limited on Thursday approached the Supreme Court urging it to allow Malaysia's IHH Healthcare to make an open offer to shareholders for purchase of Fortis shares, in line with norms of the Securities and Exchange Board of India (SEBI). In its pleadings before the top court on Thursday, Fortis said that the open offer was the right of the shareholders and that should not be undermined  especially since the former promoters of Fortis Healthcare, Shivinder Mohan Singh and Malvinder Mohan Singh no longer held a controlling stake in the company.

The open offer would have been triggered after IHH Healthcare bought a 31.1% stake in Fortis Healthcare for Rs 4,000 crore on November 13. IHH had planned to buy an additional 26 per cent stake from public shareholders. The said open offer was scheduled to be made on December 18.

Four days before the open offer could be triggered, the top court asked all parties to maintain a status quo with respect to the sale of Fortis Healthcare’s stake to IHH Healthcare. The top court’s order came on a plea moved by Daiichi Sankyo, which alleged that the Singh brothers and Indiabulls had created fresh encumbrances for around 17 lakh of the total 23 lakh shares of Fortis despite the apex court forbidding it.

A three-judge Bench headed by Chief Justice Ranjan Gogoi on Thursday heard a contempt petition by Japanese drug-maker Daiichi Sankyo. While Daiichi alleged that the brothers had violated orders of the top court and hence were in contempt, the elder brother Malvinder Mohan Singh's counsel Senior Advocate Dushyant Dave told the court that the real offender of the orders was Indiabulls Real Estate Limited and its sister concern.

Indiabulls and its sister concern had, despite repeated letters, sold shares of Fortis, kept in a depository account in spite of being told that it would amount to contempt of top court’s orders, Dave said. The company, however, contested this plea and said that the shares were sold after the court's permission.

The three-judge bench heard all the parties at length and reserved its verdict on the contempt plea moved by Daiichi.

The Japanese drug-maker is fighting a prolonged battle for enforcement of its Rs 3500 crore decree that it obtained from a Singapore tribunal. The tribunal had held that the brothers had, while selling their stake in Ranbaxy to Daiichi in 2008, hidden information regarding a probe the company was facing from the US Food and Drug Administration and the Department of Justice. To resolve the potential civil and criminal liability that could have arisen due to the suit by both the US agencies, Daiichi had agreed to pay $500 million as a part of the settlement agreement. Daiichi had later sold its stake in Ranbaxy to Sun Pharmaceutical Industries in 2015 for a sum of Rs 22,679 crore.