Supreme Court awards six months jail term to former promoters of Ranbaxy

The Supreme Court on Thursday sentenced former promoters of Ranbaxy Malvinder and Shivinder Singh, to maximum sentence of six months in jail with Rs 5000 fine each for contempt of court in a case related to concealing information in sale of stakes in their company.

A bench of Chief Justice U U Lalit and Justices Indira Banerjee and K M Joseph also refused to vacate its status quo order on Malaysia’s IHH Healthcare Berhad’s open offer for Fortis Healthcare, as it asked the Delhi High Court to consider the issue.

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The status quo order would mean that IHH, which had in July 2018 won the bidding war for Fortis with its Rs 4,000-crore offer, will have to wait until the High Court decided the matter.

The bench also asked the HC to consider the appointment of forensic auditors to examine the transactions involved in the deal.

The court said, “All the properties offered by Singhs in their attempt to partially purge themselves of contempt shall also be available to HC” and consequently there shall be attachment of these assets which may await the directions from the executing court.

The Malaysian firm had in November 2018 acquired a 31 per cent stake in Fortis Healthcare in 2018 for 1.1 billion dollars through a bidding process. The acquisition triggered a mandatory open offer for IHH to acquire another 26 per cent stake in Fortis Healthcare.

The apex court had in 2018 put on hold the sale of Fortis Healthcare to IHH, on a contempt plea filed by Japanese drug maker Daiichi Sankyo against the Singh brothers.

The court, while disposing of various appeals, including suo motu contempt, directed the HC to decide all the related issues while considering the execution proceedings.

“Everything goes back to the executing court,” Justice Lalit said while reading out the judgement.

Fortis Healthcare, for their part, had told the court that the status quo order restraining it from transferring Rs 4,000 crore it received from Malaysian company did not cover any transaction with RHT Health Trust, Singapore, in which Malvinder and Shivinder allegedly had substantial interest till 2017. The hospital chain also said that it was not even a party before SC then.

The SC had on February 15, 2018 allowed banks and FIs to sell shares of Fortis pledged with them on or before August 11, 2017. However, it had barred sale of shares which were pledged after August 11, 2017.

After the sale of Fortis to IHH materialised in July 2018, Daiichi had moved the court alleging that the Singh brothers had created fresh encumbrances on their shares which was barred by the SC. Despite the statements and undertakings given by the former promoters to the HC, Singhs in “subterfuge” and without informing the HC had alienated their shareholdings (encumbered and unencumbered) from time to time, Daiichi had argued.

Daiichi Sankyo is pursuing the enforcement of Rs 3,500 crore arbitration award against the Singh brothers pronounced by a Singapore tribunal for concealing information regarding wrongdoing at Ranbaxy Laboratories while selling it to it for 4.6 billion dollars in 2008.

In 2019, the top court held Singh brothers guilty of contempt for violating its earlier orders that had restrained them from divesting their shares in Fortis Healthcare. However, it gave them one more chance to purge themselves of the contempt if each of them deposited Rs 1,170.95 crore. Both the brothers are in Tihar jail in a case filed by Religare FinVest -- an arm of Religare Enterprises, for allegedly causing wrongful loss worth Rs 2,397 crore.