Delhi High Court directs Singh Brothers to disclose foreign bank accounts, properties
Former Fortis Healthcare promoters Malvinder and Shivinder Singh have been restrained from operating their bank accounts in India and Singapore for the moment as the Delhi High Court wants to understand whether they will be able to satisfy a Rs3,500-crore arbitration award against them.
The Singhs, personally present at the high court on Friday, were questioned on the bank accounts and properties they held in India and abroad. This is the first time the brothers have made an appearance at the Indian court since Daiichi Sankyo initiated the arbitration award enforcement proceedings against them in 2016.
Justice Rajiv Shakdher, currently hearing the case, suggested the brothers should declare themselves insolvent if they were unable to pay Daiichi's award, but that their assets could not be kept away from the court in this matter. The court will hear this case next on September 5.
“If they don’t have the money, why don’t they declare themselves insolvent? Either they have the money or they don’t have the money,” Justice Shakdher told the Singhs’ counsel on Friday.
In the meantime, the judge has not passed any orders to block an upcoming extraordinary general meeting (EGM) on August 13 for Fortis shareholders to approve a proposed deal between the hospital chain and Malaysian healthcare group IHH. Daiichi had sought to stall this EGM claiming that its second proposal to de-promoterise the Singhs would “cut the umbilical cord” tying the brothers to Fortis Healthcare and would leave the Japanese firm “with nothing”.
The court directed the Singhs to disclose details of bank accounts held in India and outside the country, including statements of these accounts from April 2016 till present. The brothers will also have to disclose any property held in India and abroad.
Apart from this, the Singhs’ holding companies RHC Holding Pvt Ltd and Oscar Investments Ltd, have also been directed to place on record bank statements for the same period.
Malvinder Singh has been directed not to finalise any sale or transaction related to an apartment he had bought in Singapore, for which he had taken a loan from DBS bank. Singh was in the process of finalising a sale of this property as he is unable to pay the EMI.
The court has directed him to produce the apartment’s title document as well as the gift deed for a sculpture, valued at over Rs7 crore, that he had gifted to his daughter last year.
Any additional bank accounts previously not disclosed would also have to be disclosed, according to the judge.
During the proceedings on Friday, Shivinder Singh told court that an inherited property in India had already been encumbered and was sold for around Rs 185 crore to pay back IndiaBulls.
He also told court that the Singh family had “nothing” to do with Religare Health Trust in Singapore, which holds 12-14 assets that Fortis Healthcare plans to buy back following its Rs4,000-crore deal with IHH. Daiichi had argued that the brothers held stake in the foreign trust, but Singh clarified that the family was not receiving any benefits from this trust since he and his brother were de-promoterised as shareholders.
He further added that the family “never” held any stake in Prius Commercial Real Estate Pvt Ltd after Daiichi raised issue with the brothers’ reported talks to sell six commercial properties held by the company to Black Rock for a consideration of Rs 1,000 crore.
His stake in Fortis Healthcare are “as good as nothing now” and the shares he held in the company were already transferred towards part payment of Daiichi’s award, he said.
The Singhs’ “extensive” negotiations with “motivated” buyers to secure a deal for their controlling stake in Fortis over the last year had been “thwarted” by Daiichi’s constant interventions at court, according to the brothers’ reply at court.
The brothers’ controlling stake in Fortis was diminished following an order by the Supreme Court in February this year that allowed banks to invoke and sell Fortis shares pledged to them, argued their counsel, Amit Sibal.
“We were trying to avoid a fire sale,” he said. “At every stage, we were trying a stake sale,” he added.
However, Justice Shakdher also questioned the counsel over why they did not disclose the existence of a top-up agreement that was linked to the brothers shares in Fortis pledged to different banks when they had disclosed the value of their unencumbered assets to court last year.
While the brothers did not divest unencumbered shares following their disclosure, the top up agreement allowed banks to encumber more shares if the value of Fortis’ stock dropped below a certain threshold, explained Sibal.
“How can you file an affidavit that only speaks half-truth?” Justice Shakdher asked.
During the last hearing on August 1, the court had summoned the brothers in order to understand the assurances that they had given last year to ensure that sufficient funds would be available to satisfy Daiichi's award.
Justice Shakdher had told the Singhs' counsel that "somebody" would have to "cough up" Daiichi's money or "go behind bars".
The Singhs, personally present at the high court on Friday, were questioned on the bank accounts and properties they held in India and abroad. This is the first time the brothers have made an appearance at the Indian court since Daiichi Sankyo initiated the arbitration award enforcement proceedings against them in 2016.
Justice Rajiv Shakdher, currently hearing the case, suggested the brothers should declare themselves insolvent if they were unable to pay Daiichi's award, but that their assets could not be kept away from the court in this matter. The court will hear this case next on September 5.
“If they don’t have the money, why don’t they declare themselves insolvent? Either they have the money or they don’t have the money,” Justice Shakdher told the Singhs’ counsel on Friday.
In the meantime, the judge has not passed any orders to block an upcoming extraordinary general meeting (EGM) on August 13 for Fortis shareholders to approve a proposed deal between the hospital chain and Malaysian healthcare group IHH. Daiichi had sought to stall this EGM claiming that its second proposal to de-promoterise the Singhs would “cut the umbilical cord” tying the brothers to Fortis Healthcare and would leave the Japanese firm “with nothing”.
The court directed the Singhs to disclose details of bank accounts held in India and outside the country, including statements of these accounts from April 2016 till present. The brothers will also have to disclose any property held in India and abroad.
Apart from this, the Singhs’ holding companies RHC Holding Pvt Ltd and Oscar Investments Ltd, have also been directed to place on record bank statements for the same period.
Malvinder Singh has been directed not to finalise any sale or transaction related to an apartment he had bought in Singapore, for which he had taken a loan from DBS bank. Singh was in the process of finalising a sale of this property as he is unable to pay the EMI.
The court has directed him to produce the apartment’s title document as well as the gift deed for a sculpture, valued at over Rs7 crore, that he had gifted to his daughter last year.
Any additional bank accounts previously not disclosed would also have to be disclosed, according to the judge.
During the proceedings on Friday, Shivinder Singh told court that an inherited property in India had already been encumbered and was sold for around Rs 185 crore to pay back IndiaBulls.
He also told court that the Singh family had “nothing” to do with Religare Health Trust in Singapore, which holds 12-14 assets that Fortis Healthcare plans to buy back following its Rs4,000-crore deal with IHH. Daiichi had argued that the brothers held stake in the foreign trust, but Singh clarified that the family was not receiving any benefits from this trust since he and his brother were de-promoterised as shareholders.
He further added that the family “never” held any stake in Prius Commercial Real Estate Pvt Ltd after Daiichi raised issue with the brothers’ reported talks to sell six commercial properties held by the company to Black Rock for a consideration of Rs 1,000 crore.
His stake in Fortis Healthcare are “as good as nothing now” and the shares he held in the company were already transferred towards part payment of Daiichi’s award, he said.
The Singhs’ “extensive” negotiations with “motivated” buyers to secure a deal for their controlling stake in Fortis over the last year had been “thwarted” by Daiichi’s constant interventions at court, according to the brothers’ reply at court.
The brothers’ controlling stake in Fortis was diminished following an order by the Supreme Court in February this year that allowed banks to invoke and sell Fortis shares pledged to them, argued their counsel, Amit Sibal.
“We were trying to avoid a fire sale,” he said. “At every stage, we were trying a stake sale,” he added.
However, Justice Shakdher also questioned the counsel over why they did not disclose the existence of a top-up agreement that was linked to the brothers shares in Fortis pledged to different banks when they had disclosed the value of their unencumbered assets to court last year.
While the brothers did not divest unencumbered shares following their disclosure, the top up agreement allowed banks to encumber more shares if the value of Fortis’ stock dropped below a certain threshold, explained Sibal.
“How can you file an affidavit that only speaks half-truth?” Justice Shakdher asked.
During the last hearing on August 1, the court had summoned the brothers in order to understand the assurances that they had given last year to ensure that sufficient funds would be available to satisfy Daiichi's award.
Justice Shakdher had told the Singhs' counsel that "somebody" would have to "cough up" Daiichi's money or "go behind bars".
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