The battle for the Fortis brand is now being fought in a district court in Delhi. In a court filing, Fortis Healthcare has denied conferring ownership rights of the brands ‘Fortis’, ‘SRL’ and ‘La-Femme’ to Participation Finance & Holding, a Dehradun-based debt recovery and asset servicing company.
In February, Participation Finance took RHC Holding—the promoter group holding company—along with Fortis and other related parties to the court, alleging implied ownership of the brands in lieu of fees for certain services rendered.
The Dehradun-based firm had acquired a clutch of bad loans from Religare Enterprises and is believed to be the recipient of funds that were diverted from Fortis Hospital, through Inter Corporate Deposits, last year.
Religare is the financial services arm of Malvinder Singh and Shivinder Singh, the former promoters of Fortis.
Participation Holding has claimed that it was assigned the Fortis brand as part of a settlement between them and the Singh brothers.
According to court documents, RHC Holding is the original owner of the brands, and the brand ownership currently rests with RHC Healthcare Management Services, a sister concern.
Fortis was granted the licence to use the Fortis logo under a 10-year licence user agreement that was valid between 2005 and 2015, the documents said.
Fortis said in the court filing that in September 2017, it had entered into a non-binding term sheet with Hong Kong-based investor Wallmark Holding for the transfer of ownership rights of the brands.
Fortis Healthcare, however, denies signing any binding agreement with Wallmark Holding and claims that the term sheet lapsed in due course of time.
In the court hearing on Thursday, a legal counsel representing Wallmark Holding said that the Hong Kong-based investor wanted to be party to the on-going case. The case has now been posted for further hearing in September.
An email sent to Fortis Healthcare in relation to the case did not elicit any response.
Meanwhile, the board of Fortis is in the process of finalising a suitor for the second-largest hospital chain in the country.
Earlier, a probe ordered by the company had found systemic lapses pertaining to loans granted to entities that were related to former promoters, resulting in doubtful recovery, widening of loss as well as litigation.
Fortis has been in controversy since last year and the Singh brothers have been accused of siphoning funds from the company. Fortis has said last week that it had initiated legal action to recover the funds.
In February, the company had appointed law firm Luthra & Luthra to carry out a probe after reds flags were raised on inter-corporate deposits (ICD) of Rs 4.94 billion, given to promoter related entities in July 2017.The report was reviewed by the board in its meeting last week, which stated there were certain systemic lapses in assigning of the ICDs from Fortis to a “third party” in September. It found that no diligence was undertaken in relation to the assignment, and it was not approved by the treasury committee.