Supreme Court sends Malvinder, Shivinder Singh to jail for contempt; orders forensic audit of Fortis-IHH deal

The Supreme Court today sentenced former Ranbaxy promoters Malvinder Singh and Shivinder Singh to six months' imprisonment in a contempt case for concealing information regarding wrongdoing while selling their stake in Ranbaxy Laboratories in 2008. .The Bench of Chief Justice of India UU Lalit and Justices Indira Banerjee and KM Joseph also slapped the Singh brothers with a fine in the contempt case filed against them by Japanese drug maker Daiichi Sankyo.If the fine was not paid as imposed, the sentence would stand extended by another six months, the Court clarified..The Court also asked the Delhi High Court before which the proceedings in execution are pending, to consider appointment of forensic auditor(s) to analyse the transactions entered into by the noticee banks and financial institutions and to look into whether such transactions were bona fide and entered into in commercial expediency. .The Singh brothers, along with other entities, allegedly diverted funds from Fortis Healthcare for the ultimate benefit of RHC Holding, an entity indirectly owned and directly controlled by them. In 2018, IHH acquired a 31 percent stake in Fortis Healthcare, triggering an open offer for another 26 percent.Daiichi Sankyo challenged the Fortis-IHH deal to recover ₹3,600 crore from the Singh brothers..In January 2018, the Delhi High Court ruled that the ₹3,500 crore arbitration award that Daiichi Sankyo won against the Singh brothers for concealing information about the erstwhile Ranbaxy Laboratories, was enforceable in India. Daiichi Sankyo then filed a petition to enforce the arbitral award passed by a Singapore tribunal in 2016.The Securities and Exchange Board of India (SEBI) had also barred the Singh brothers from accessing the securities market for a period of three years. They have also been restrained from being associated as directors or key managerial personnel in a listed company or SEBI-registered intermediary of any market infrastructure institution (MII). .(Read Judgment)