Supreme Court orders status quo on Fortis Healthcare sale to Malaysia’s IHH Healthcare

In a big win for the Japanese Drugmaker Daiichi Sankyo, the Supreme Court has today stayed the sale of Fortis Healthcare to Malaysia’s IHH Healthcare. The Court has directed the parent company of Fortis Healthcare, Malvinder-Shivinder Singh owned RHC Holding and Oscar Investment to maintain status quo with respect to the deal.

The order comes at a time when Daiichi Sankyo’s plea seeking to prevent the Rs. 4,000 crore deal has been pending before the Delhi High Court for over five months.

The order was delivered by the Bench headed by Chief Justice Ranjan Gogoi in Daiichi Sankyo’s contempt plea against Oscar Investment and RHC Holding as well as Indiabulls Housing Finance.

Daiichi has alleged that RHC Holding and Oscar Investment have created fresh encumbrances with respect to 12,50,000 shares of Fortis Healthcare with Indiabulls Housing Finance, in spite of the Supreme Court’s order prohibiting the creation of any further encumbrances in the company. Daiichi has also alleged that the two brothers have also not honoured their “numerous assurances that there will be no fait accompli and their assets will always be available” towards the satisfaction of Daiichi’s Rs 3,500 crore claim.

The Court has also issued notice to Indiabulls Housing Finance, Oscar Investment and RHC Holding while directing them to maintain a status quo on the deal.

In August 2017, the Supreme Court had directed the Singh brothers to maintain the status quo in terms of shares held by them in Fortis Healthcare through RHC Holding and Oscar Investment. Thus, the sale of Fortis shares by Axis Bank Ltd, Yes Bank and RBL Bank Ltd, pledged with the banks, was also stayed. In February 2018, the order was modified by the Court subsequently by allowing the banks to sell Fortis shares pledged with them before 31 August.

Daiichi Sankyo and the Singh brothers have been entangled in a complex web of litigation since a Singaporean arbitral tribunal  found the Singh brothers and others including the alleged contemnors, RHC Holdings and Oscar Investments, guilty of several misconducts when Daiichi bought their 34.82% stake for $2.4 billion in 2008 and awarded Rs 3500 crore to Daiichi Sankyo.

On January 31 this year, Justice Jayant Nath of the Delhi high court had upheld the enforceability of the Rs. 3500 crore award.

The execution proceedings for the said award are currently pending before a single judge Bench of the High Court.

On December 13, the Apex Court also rejected Axis Bank’s plea seeking to release of a sum of approximately Rs. 9 crores received by Daiichi Sankyo in its favour, citing an order of attachment from the Debt Recovery Tribunal. This amount was realized from the sale of unencumbered listed shares owned by the two brothers, pursuant to the High Court’s order passed earlier this year.

Daiichi Sankyo was represented by  Senior Advocates Fali S. Nariman, Jaideep Gupta and Krishnan Venugopal with Advocates Amit K. Mishra, Kanika Singhal, Mohit Singh, Shashank Manish, Turab Ali Kazmi, Samridhi Hota, Rohan Jaitley, Aditya Shankar, Maitrayee Banerjee and AOR Kunal Chatterji.  

Read the order: