The former promoters of Fortis Healthcare Ltd were facing a court battle after Daiichi had challenged the Fortis-IHH share deal to recover the Rs 3,600 crore arbitration award
The Supreme Court has held the former promoters of Fortis Healthcare Ltd Malvinder Singh and Shivinder Singh have “failed to purge themselves of contempt” by not making a genuine attempt to pay Rs 1170.95 crore each towards honouring an arbitral award against them, and handed down six months jail term to them.
The contempt proceedings arose out of an action initiated by Japanese firm Daiichi Sankyo Company Limited, seeking enforcement of a foreign arbitral award made in Singapore on April 29, 2016 to the tune of Rs 3,600 crore in its favour and against 20 respondents including Malvinder Mohan Singh, Director of Oscar Investments Limited and RHC Holding Private Limited and Shivinder Mohan Singh, Director of Oscar Investments Limited.
The former promoters of Fortis Healthcare Ltd were facing a court battle after Daiichi had challenged the Fortis-IHH share deal to recover the Rs 3,600 crore arbitration award.
The IHH-Fortis deal is stuck due to the legal fight between Daiichi and the former promoters of Fortis Healthcare.
It was alleged that besides the contemnor firms, the Singh brothers devised a well-planned scheme to dilute the share-holdings held by the companies controlled by them and, consequently, attempted to frustrate the execution of the arbitral award.
The top court, while holding the former promoters of Fortis Healthcare Ltd guilty of contempt, on November 15, 2019 had granted them a chance to purge themselves of the contempt.
The bench had said if each of them deposited a sum of Rs 1170.95 crore in the court, then it may consider dealing with them in a lenient manner.
In a judgement delivered on Thursday, a bench headed by Chief Justice Uday Umesh Lalit said, “Insofar as the role played by Contemnor Nos.9 and 10 (Singh brothers) is concerned, the matter rests in a narrow compass i.e., whether they have purged themselves of contempt or not? The kind of assets that have been offered by said Contemnor Nos.9 and 10 in their affidavit are so inadequate that it is impossible to satisfy the amount awarded in favour of Daiichi in the foreign arbitral award.
“We are, thus, left with no alternative but to hold that said Contemnor Nos.9 and 10 have failed to purge themselves of contempt. As a matter of fact, there is no genuine attempt on their part. The question then comes up is about the quantum of sentence. Considering the enormity of their actions, in our view, the maximum sentence that can be awarded, must be imposed," the court said.
The bench, also comprising Justices Indira Banerjee and K M Joseph, sentenced them to six months imprisonment and fine of Rs.5,000/- for having committed contempt of court with default sentence of two months.
CJI Lalit, writing the 74-page judgement, disposed of the pending pleas and asked the Delhi High Court, before which the executing proceedings are pending, to consider appointment of forensic auditor or auditors to analyse the transactions, whether they were bona fide, entered into by the banks and financial institutions with regard to transfer or shares held by the Singh brothers and the firms.
“The executing court may also consider issuing appropriate process and appointing forensic auditor(s) to analyse the transactions entered into between FHL and RHT and other related transactions,” it said.
It also ordered transfer of Rs 17.93 crore from the Registry of the apex court to the executing court along with the interest accrued.
The amounts were deposited by eight officials of Indiabulls group of firms for purging them of contempt.
While holding the eight officials guilty of its contempt in 2019, the top court had afforded them an opportunity to deposit the value of 12,25,000 shares as on August 31, 2017 in the Bombay Stock Exchange, saying in case they purge themselves of the contempt, it would take a lenient view while imposing the sentence. The case against them was closed after payment.
In one of the directions, the bench said certain shares which are still lying with the banks and financial institutions shall be made available to the executing high court.
“All the properties offered by Contemnor Nos.9 and 10 (Singh brothers) in their attempt to partially purge themselves of contempt shall also be available to the executing court and shall abide by such directions as the executing court may deem appropriate to pass.
"Consequently, there shall be attachment of all those assets which may await the decision or direction to be passed by the executing court in due course of time which may also include the questions whether the assets in question apparently in the names of certain persons/ entities can be proceeded against,” it said.
All pending proceedings before the courts concerned, including the First Information Reports and proceedings before NCLT shall be taken to logical conclusion in accordance with law, it said.
The bench directed its Registry to send copies of all volumes, submissions and pleadings filed by the parties in the instant matters to the executing court for facility and record.
The Japanese firm alleged attempts were made by the Singh brothers and their companies to frustrate the execution of the arbitral award.