Fortis Healthcare Tells Court SEBI Asked Them To Recover Money From Singh Brothers

Fortis Healthcare Ltd. informed the Delhi High Court that the Securities and Exchange Board of India has asked it to to recover Rs 403 crore from former Ranbaxy Laboratories Ltd. promoters Malvinder and Shivinder Singh, who allegedly diverted funds from the hospital operator and its subsidiary.

Fortis made the submission in a recent affidavit filed in an ongoing case by Japanese drugmaker Daiichi Sankyo against the Singh brothers and their firms. Daiichi moved the high court seeking execution of the Rs 3,500 crore a Singapore tribunal’s arbitral award won by it in April 2016.

Against the backdrop of Daiichi’s ongoing litigation seeking repayment of the amount by Singh brothers, Fortis said that while passing any directions on discharge of claims owed by these persons and entities, the high court may also take into account the directions passed by the SEBI and the corresponding interest of Fortis upon any sum that is sought to be recovered.

Fortis, in its affidavit filed before Justice Rajiv Shakdher, said it wanted to place on record orders passed by the market regulator in connection with an investigation carried out by it pertaining to alleged diversion of funds of Fortis and its subsidiary, Fortis Hospital, by Singh brothers.

SEBI, in an ad interim ex-parte order of Oct. 17, 2018, had directed that Fortis take necessary steps to recover Rs 403 crore along with interest from the Singh brothers and various promoter companies within three months.

The market regulator had also directed the Singh brothers and others not to dispose of or alienate any of their assets or divert any funds without its prior permission, till completion of the investigation.

In March this year, the SEBI gave another order confirming the directions passed in the previous orders.

The high court on Feb. 19, 2018 restrained the brothers and 12 others from selling or transferring their shares or any movable or immovable property as disclosed by them before the high court earlier.

The high court had on Aug. 10, 2018 restrained the Singh brothers from operating their bank accounts in India or abroad and selling any property.

It had directed the brothers and their firms RHC Holding Pvt. Ltd. and Oscar Investments Ltd. to disclose the bank account details.

A Singapore tribunal had in April 2016 passed the award in Daiichi’s favour holding that the brothers had concealed information that their company was facing probe by the U.S. Food and Drug Administration and the Department of Justice while selling its shares.

The high court on Jan. 31, 2018 had upheld the international arbitral award passed in the favour of Daiichi and paved the way for enforcement of the 2016 tribunal award against the brothers who had sold their shares in Ranbaxy to Daiichi in 2008 for Rs 9,576.1 crore. Sun Pharmaceuticals Industries Ltd. had later acquired the company from Daiichi.

It had, however, said that the award was not enforceable against five minors, who were also shareholders in Ranbaxy, saying they cannot be held guilty of having perpetuated a fraud either themselves or through any agent.

Daiichi had moved the high court here seeking direction to the brothers to take steps towards paying its Rs 3,500 crore arbitration award, including depositing the amount. It had also urged the court to attach their assets, which may be used to recover the award.

On Feb. 16, 2018 the Supreme Court had dismissed Singh brothers’ appeal against the high court verdict upholding the international arbitral award.

Singh brothers’ counsel had argued that the award granted consequential damages which were beyond the jurisdiction of the arbitral tribunal and the award cannot be enforced under the provision of the Arbitration Act.

They had claimed that Daiichi was fully aware of all facts and still chose to retain the Ranbaxy shares, instead of terminating the agreement and returning them.