Reg. Fortis Open Offer- SC order
analysed
CONTEMPT PETITION
(CIVIL) NO. 2120 OF 2018
IN
SPECIAL LEAVE PETITION
(CIVIL) NO. 20417 OF 2017
My key
takeaways on Fortis SC order dated November 15, 2019
·
Supreme
Court had asked status quo to be maintained with respect to the controlling stake in Fortis hospital.
·
SC
originally ordered on 11th August 2017 and clarified on 31st August 2017. Subsequent to this clarification any sale/transfer of shares
by FHHL after 31st August 2017 will not be allowed by the Honorable Supreme
Court.
·
Indiabulls
and India ventures have transferred the shares in violation of this order and are
held as contemnor.
·
On 9th
January 2019 Fortis filed an application in SC and stated that transaction
between Fortis and IHH was completed on 13. 11. 2018
·
On 15th January 2019 Daiichi filed in SC a prayer to
restrain Fortis from transferring 4000
crores received from IHHH to Singapore based RHT. Fortis said it has already
been transferred on 15.01.2019. The most important w.r.t. Open offer, is
para 48 given below:
·
I.A. No.8948 of 2019 was filed by the petitioner on
15.01.2019 stating that FHL is proposing to transfer Rs.4,000/-
crores approximately, received by it [as a result of the
transferring
of shares to the IHH Healthcare Bhd. (Malaysian Company)] to
RHT Health Trust, Singapore (RHT). Petitioner prayed for restraining this
transfer of funds and compliance of order dated 14.12.2018.FHL filed a reply to
this I.A., which made it apparent that on15.01.2019 itself FHL had completed
the transaction involving acquisition of assets from Singapore based RHT even
though it was fully aware that this Court was seized of
the matter
·
What is
the all important order dated
14.12.2018?
PARA 47
OF THE SC ORDER
47. However, we cannot let the matters
stand as they are. On
14.12.2018, this Court had passed the
following order:
“Issue notice.
The personal presence of the alleged
respondents contemnors
is dispensed with for the present.
Status quo with
regard to sale of the controlling stake
in
Fortis Healthcare to Malaysian IHH Healthcare Berhad
be
maintained.”
The order directs that the status quo
with respect to the sale of
controlling stake in FHL to IHH
Healthcare Bhd. (Malaysian
Company) should be maintained. We are now
told that this sale
had already taken place. This matter
needs to be enquired into
and we have to be certain when this sale
actually took place and
when was the controlling stake in FHL
transferred to the IHH
Healthcare Bhd. (Malaysian Company).
Furthermore, on
09.01.2019, FHL moved an application in
this Court and stated
that the transaction between the FHL and
IHH Healthcare Bhd.
(Malaysian Company) had been completed on
13.11.2018 and
prayed that the order dated 14.12.2018 be
modified insofar as it
pertains to sale of controlling stake in
IHH Healthcare Bhd.
(Malaysian Company).
Some
questions arise:
1. If the sale had already taken
place on 13.11.2018 before the SC order dated 14.12.2018 , why any modification
of the that order was prayed for?
2. Does the Status-quo order of SC restrain the Open Offer? Through the Open offer controlling stake in Fortis is not being sold.
Admittedly, Open Offer will help in completing the compliance.
3. Can Open offer once announced be
cancelled? My understanding is quite clear, it cannot be cancelled even if the
underlying transaction triggering the open offer fails.
4. Should legal compliance be
restrained? Even when it has no damaging effect on the petitioner or his
prayers?
5. Daichii has not prayed for
cancellation/stay/status –quo on sale of controlling stake in FHL.
6. Daichii’s concern is not the
ownership or management of Fortis, its only concern is Funds. Daichii would
like to receive the funds rather than it being transferred to MMS & SMS or
their entities.
7. The funds brought in by IHHH for
the open offer are lying in Escrow account, would not it be more prudent to
allow the Open offer to be completed and if required, the shares acquired in
the Open offer be frozen till such time the SC decides?
In the light of the above, may we humbly request you to
please intervene in the matter and enlighten the Hon’ble Supreme Court that its
order staying the Open offer is :
1.
Causing misery and loss to thousands of small
shareholders.
2.
Causing hindrance in completion of mandatory
legal compliance
3.
It does not any way help the Petitioner’s (Daichii)
cause
4.
The Petitioner did not even pray for such a stay
order.
5.
The petitioner is only concerned with the
diversion of funds and the pay out for Open Offer will not go in the hands of
FHL or Singh brothers. The payment of about Rs.3,400 Crores will go to
thousands of small investors.
6.
If Hon’ble Supreme Court so desires, it may make
restraining orders/freeze on the shares acquired in the Open offer.
7.
For the period of delay, the small shareholders
must be compensated with interest.
Your immediate action will go a long way in helping the
small shareholders.
Thanks & Regards,
For Small Investors’ Welfare Association
Arun Goenka
Authorised Signatory,
