Delhi High Court has asked brothers Malvinder and Shivinder Singh to personally appear in the court on August 10 to explain the reasons for discrepancies in their statements over holdings in Fortis Healthcare. This would be the first time the Singh brothers have been summoned to court in this matter.
This summons was in response to a plea filed by Daiichi Sankyo against the Fortis-IHH Healthcare deal. In course of the arguments, the judge observed that “things are getting out of hand”. In a strong message to the brothers, the judge noted that the Singhs will have to cough up 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.
A legal counsel indicated that discrepancies arose in the valuation of assets under the control of the Singh brothers.
The legal counsel for Daiichi Sankyo argued that the Singh brothers, RHC Holding and Fortis Healthcare are a single entity. This was objected to by the Fortis counsel on the ground that the Singhs are not in control of the company any longer. The Singh brothers tendered their resignation as directors of Fortis Healthcare in February this year and currently hold negligible shareholding in the company.
The Japanese drugmaker, which won an arbitration, award against Singh brothers moved the court, seeking an injunction on Fortis Healthcare stake sale to IHH Healthcare Berhad. A similar application was moved in March this year when Fortis Healthcare and TPG-backed Manipal Hospital decided to merge their business.
Experts fear a prolonged legal case may delay the closing of the Fortis-IHH Healthcare deal. This may have an impact on the cash flow of the cash-strapped healthcare chain, they added.
The court wants to understand that whether the Singh brothers and entities related to them had sufficient funds to honour the Japanese drug maker's arbitration order.
There were no comments or reaction to the court’s observations from RHC Holding, the holding company of Singh brothers. However, sources close to the Singh brothers said that they are 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 the source. Gurinder Singh Dhillon, maternal uncle of Malvinder and Shivinder Singh, currently heads the Radha Soami Satsang Trust. It is learnt that private equity giants are interested in buying some of the office real estate portfolio that belong to the Dhillons, and the deal size can run into around Rs 1 bilion.
Fortis Healthcare did not react to developments in the Delhi High Court at the time of this copy going online. The detailed order by the single judge court is expected on Thursday.