My key takeaways on Fortis SC order dated November 15, 2019

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 shareholding in Fortis hospital.

·       SC originally ordered on 11^th  August 2017 and  clarified on 31^st  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 in application in SC and stated that transaction between Fortis and IHH has been completed on 13. 11. 2018

·       On 15^th  January 2019 Daiichi filed in SC a prayer to restrain Fortis from transferring  4000 crores received from IHHH to Singapore based RHT. Forrtis said it has already been transferred on 15.01.2019. The most important w.r.t. Open offer,   para 48 is 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 respondentscontemnors

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’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.

6.     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?