The Supreme Court on Friday held former Ranbaxy promoters Malvinder Singh and Shivinder Singh guilty of contempt of court for violating its order asking them not to divest their shares in Fortis Healthcare Limited.
The court held Fortis’ founders guilty of contempt of court and said it could start similar proceedings against the company, according to a judgment Friday.
This effectively halts IHH’s open offer to Fortis shareholders that would have brought its holdings in India’s second-largest hospital company above 50%.
IHH is already Fortis’ largest shareholder with a 31% stake. Fortis shares fell 8% in Mumbai, the biggest drop since March 2018.
IHH is awaiting the written judgment from the court and will thereafter “consult its advisers for its next course of action,” according to its spokesman. Fortis didn’t immediately respond to an email seeking comments.
The court said contempt proceedings have been initiated against Fortis for violation of its December 2018 order to maintain status quo on the deal with IHH.
Daiichi had argued that certain transactions between IHH and Fortis violated the court’s directions.
Also named in the contempt verdict was Indiabulls Housing Finance Ltd, the lender who accepted Singh brothers’ Fortis shares as collateral and then seized them when they failed to repay.
This went against an earlier judicial order that had forbid the Singh brothers from selling or diluting their shareholding in Fortis.
To avoid penal action, Indiabulls can deposit the proceeds from the sale of founders’ pledge shares in Fortis while Singh brothers and their two holding companies can pay up 11.7 billion rupees ($163 million) each.
The court has set Feb. 3 as the next hearing date.
IHH’s attempt to become Fortis’ majority shareholder was halted last year, when Japanese drugmaker Daiichi Sankyo Co. contested the deal as part of its efforts to recover $500 million from the Singh brothers.