The Supreme Court Thursday directed 17 banks and financial institutions of former Ranbaxy promoters Malvinder and Shivinder Singh to place on record the basic documents pertaining to loans for which the shares of Fortis Healthcare Ltd (FHL) were pledged with them. A bench of Justices U U Lalit, Indira Banerjee and K M Joseph also asked the banks to place on record the nature of securities offered in connection with such loans as well as the details of the encumbered/ unencumbered FHL shares in the name of Fortis Healthcare Holding Private Limited (FHHPL), as held by them in September 2016.
The banks were also asked to place on record similar details as on August 11, 2017 as also of shares of FHL standing in the name of FHHPL which were put by them under encumbrance after this date. The top court directed the banks and financial institutions (FIs) to file responses by February 22.
The matter is posted for next hearing on February 24. The order came after senior advocates Rakesh Dwivedi and Arvind P Datar said the role of banks should be scrutinised in the scenario. Datar, appearing for Japanese firm Daiichi which is in a legal tussle with the Singh brothers, argued that there would normally be a basic arrangement or loan agreement, in terms of which various kinds of securities including charge over properties, corporate and personal guarantees would be offered; and that a pledge of shares would only be by way of an additional security.
However, none of the banks/FIs had indicated why the unencumbered shares were sought to be put under encumbrance or the shares were sold when other forms of securities were available, he said. Datar further submitted that the arrangements under which the shares were pledged must be disclosed so that the purpose for which the basic accommodation or loan was obtained would also be clear.
He said that with various orders passed by the Delhi High Court and the top court, the concerned
individuals and corporate entities could not sell the shares held by FHHPL directly and, therefore, the arrangement was structured in such a way that the shares were proceeded against by banks and FIs. It was submitted that the banks/FIs had intervened in the matters pending before this Court, that they were definitely aware of the award granted in favour of Daiichi Sankyo Company Ltd and that the role of banks and financial institutions would, therefore, require closer scrutiny.
The top court on November 15, 2019 had held former Ranbaxy promoters guilty of contempt of court for violating its order asking them not to divest their shares in FHL. The top court had earlier asked the Singh brothers to give it a plan as to how they would honour the arbitral award of Rs 3,500 crore granted by a Singapore tribunal against them and in favour of Japanese drug manufacturer Daiichi Sankyo. The top court held them guilty of contempt of court and said that they had violated its earlier order by which the sale of their controlling stakes in Fortis Group to Malayasian firm IHH Healthcare was put on hold.
The Japanese firm had filed contempt petition against the former Ranbaxy promoters alleging that execution of their arbitral award had been in jeopardy as the Singh brothers disposed of their controlling stakes in Fortis Group to the Malaysian firm.