SC Holds Malvinder, Shivinder Singh Guilty Of Contempt Of Court For Selling Their Stakes In Fortis To Malaysian Firm

The Supreme Court has held former Ranbaxy promoters Malvinder Singh and Shivinder Singh guilty of contempt of court.

The top court has indicted them for violating its order which had asked them not to divest their shares in Fortis Healthcare Limited.

However, the Supreme Court bench comprising of Chief Justice of India Ranjan Gogoi, Justice Deepak Gupta and Justice Sanjiv Khanna also held that the contempt could be purged by the Singh brothers upon payment of Rs 1,175 crore each.

The Supreme Court has also initiated suo motu contempt proceedings against Fortis Healthcare Ltd and has refused to lift the stay on the IHH Healthcare's open offer for Fortis. The court is set to hear the question of this open offer for Fortis in February 2020.

This effectively halts Malaysian company IHH Healthcare Berhad’s open offer to Fortis shareholders which would have brought its holdings in Forts Healthcare Ltd to more than 50%. IHH Healthcare is already Fortis’ largest shareholder with a 31% stake.

Holding the former Ranbaxy promoters guilty of contempt of court, a Supreme Court bench comprising Chief Justice Ranjan Gogoi and Justice Deepak Gupta stated that the Singh brothers had violated its earlier order to put on hold the sale of their controlling stakes in Fortis Group to Malaysian firm IHH Healthcare.

The top court also stated that it would hear the Singh brothers about the quantum of sentence later.

Earlier the Supreme Court had asked the Singh brothers to give it a plan on how they would honor the arbitral award of Rs 3,500 crore granted by a Singapore tribunal against them in favor of the Japanese drug manufacturer Daiichi Sankyo.

In this connection, it may be recalled that Daiichi Sankyo had filed contempt petition against the former Ranbaxy promoters alleging that execution of their arbitral award had been in jeopardy since the Singh brothers had sold off their controlling stakes in Fortis Group to the Malaysian firm IHH Healthcare Berhad.

Daiichi Sankyo has stated that it had been promised some Fortis Healthcare Ltd shares by the Singh brothers in a decade-old fraud claim, before those shares were seized by the creditors of the Singh brothers.