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Singh brothers get 6-month jail term in Fortis-Daiichi Sankyo case

When the brothers did not pay the arbitral award enforced by the Delhi High Court, Daiichi had filed a special leave petition in the apex court in 2018

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Singh brothers | Fortis Healhcare | BS Web Reports

Bhavini Mishra & Sohini Das  |  New Delhi/Mumbai 



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While analysts have maintained a cautious stance on Fortis Healthcare, the hospital group said on Thursday that it would be seeking legal advice for the future course of action

The on Thursday awarded a six-month jail term to Malvinder Singh and Shivinder Singh, former promoters of Fortis Healthcare, in a case filed by Japanese firm and ordered a forensic audit of the Fortis-IHH deal.

The apex court also remanded the matter to the while continuing the stay on the IHH open offer.

The were sentenced after civil detention proceedings for failing to comply with the court’s orders to pay an arbitral amount to Daiichi. The top court had registered a ‘contempt of court’ case against them in 2019, asking why they should not be punished.

Shares of Fortis Healthcare fell 15 per cent on the bourses after the verdict.

Malaysia’s IHH Healthcare had, in 2018, acquired a 31 per cent controlling stake in Fortis by paying $1.1 billion in a bidding process overseen by an independent board.

This set off an open offer to acquire another 26 per cent of Fortis shares. The open offer was not pursued as Daiichi had filed a plea against it. Daiichi had challenged the Fortis-IHH deal to recover the Rs 3,600 crore arbitration award it had won in a Singapore tribunal against the .

Former promoters Malvinder Singh and Shivinder Singh were accused of concealing information regarding wrongdoing in the company when they sold a majority stake in it to Daiichi in 2008. The Singapore tribunal had in 2016 awarded Daiichi Rs 3,600 crore in damages.

Filing a petition against the and Indiabulls, Daiichi alleged that both parties had pledged 1.7 million shares of Fortis Healthcare, held by Fortis Healthcare Holding, despite the apex court forbidding it.


When the brothers did not pay the arbitral award enforced by the Delhi High Court, Daiichi had filed a special leave petition in the apex court in 2018. The deal between Fortis and IHH was signed in August 2018. In December 2018, the SC stayed the IIH open offer.

When the Singh brothers were selling earlier, the company faced an investigation by the US Food and Drug Administration and the US Department of Justice. The Singapore Arbitration tribunal had found the brothers guilty of making false claims and fraudulently misrepresenting and concealing the probe by the US into when Daiichi bought a 34.82 per cent stake for $2.4 billion in 2008. In 2013, Daiichi sold Ranbaxy to Sun Pharmaceuticals.

On February 15, 2018, the apex court allowed banks and other financial institutions to sell Fortis Healthcare shares pledged with them by the Singh brothers, before August 31. The court had also forbidden the Singh brothers from pledging any more shares in the company.

While analysts have maintained a cautious stance on Fortis Healthcare, the hospital group said on Thursday that it would be seeking legal advice for the future course of action.

“We understand that the proceedings before the have concluded with certain directions and the suo-motu contempt has been disposed of. We will go by the directions of the and will be seeking legal advice regarding our future course of action,” said a Fortis spokesperson. The spokesperson added that they remained committed to the core purpose of patient care, and that they would keep all stakeholders “informed” as required.

Kunal Randeria, analyst with Edelweiss, said the overhang on Fortis continues. “The SC seems to have taken middle ground. While it seems unlikely, forensic audit increases the risk of unknown skeletons coming out of the closet. Fundamentally, we remain positive on the stock given its strong operating performance and calibrated expansion plans,” Randeria said.

Meanwhile, IHH Healthcare informed the Malaysian bourses that it was awaiting a written judgement of the Supreme Court of India.


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First Published: Thu, September 22 2022. 11:49 IST

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