Delhi HC allows Singh brothers to sell Fortis stake with a rider


New Delhi: The Delhi high court on Wednesday cleared the way for former Ranbaxy promoters Malvinder and Shivinder Singh to potentially sell a stake in Fortis Healthcare Ltd on the condition that the disclosed value of their unencumbered assets will remain unaffected.

The order was passed to afford protection to Japanese drugmaker Daiichi Sankyo Ltd in terms of ready realizable value of assets at a later stage. As a result, value of stake in holding companies, namely RHC Holding Pvt. Ltd and Oscar Investments Ltd, would not change.

The value of unencumbered assets held by the Singh brothers in both these companies amounts roughly to the arbitration award of Rs2,500 crore handed down by a Singapore tribunal in 2016 in favour of Daiichi in relation to its 2008 purchase of a majority stake in Ranbaxy.

“Corporate transactions cannot be stalled at the behest of a decree holder, Daiichi in this case,” Justice Sanjeev Sachdeva said, adding that irrespective of any transaction by the Singh brothers, the value of unencumbered assets could not be diminished.

ALSO READ: IHH Healthcare set to seal deal for Fortis, SRL stake

RHC Holdings has an 80.67% in Fortis Healthcare Holding Pvt. Ltd while Oscar Investment holds the remaining 19.33%. Fortis Healthcare Holdings in turn has a 52.5% stake in Fortis Healthcare.

Daiichi had moved the court earlier in the day in a contempt plea against the Singh brothers, alleging that the proposed stake sale by them in Fortis Healthcare was in contravention of earlier orders and would adversely affect recovery under the arbitral award.


Sandeep Sethi, counsel for the Singh brothers, while not confirming the deal, told the court that there was a likelihood of infusion of fresh capital due to which the valuation of assets could increase.

In April, the Japanese company had similarly opposed the sale of an 80% stake in Religare Health Insurance Co. Ltd to a group of investors led by private equity firm True North and submitted that the Singh brothers had violated a previous order requiring them to take court permission to part with unencumbered assets.

The arbitral award came after Daiichi alleged that the Singh brothers had concealed crucial information while selling Ranbaxy to it for $4.6 billion in 2008. The Singh brothers are contesting the award.

Sun Pharmaceutical Industries Ltd purchased Ranbaxy from Daiichi in a $3.2 billion acquisition it completed in 2015.

Mint reported on 20 June that IHH Healthcare Bhd, Asia’s largest private hospital operator, is set to buy a controlling stake in Fortis Healthcare and SRL Diagnostics Ltd from the Singh brothers in a deal that values the two companies at close to $2.9 billion.

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