Summary
Daiichi Sankyo sought to enforce a Singapore arbitral award of about Rs. 2,562 crore against Malvinder and Shivinder Mohan Singh and their entities. Despite assurances and status quo orders, their Fortis Healthcare stake, held through FHHPL, dwindled to almost nothing. In 2019 this Court held them guilty of contempt and gave them a chance to purge it. It now found the assets offered grossly inadequate and the attempt not genuine. It imposed the maximum sentence of six months' imprisonment and a fine of Rs. 5,000 each. Whether the banks that sold pledged shares, and the Fortis–IHH–RHT transactions, defied court orders turned on disputed facts unsuited to contempt proceedings against non-parties. These were left to the executing court, with a suggested forensic audit and the deposits, shares and offered properties placed at its disposal.
Issues
- Whether Malvinder and Shivinder Mohan Singh, already held guilty of contempt for diluting FHHPL's shareholding in Fortis Healthcare contrary to assurances and status quo orders, had purged the contempt, and what sentence followed.
- Whether the banks and financial institutions that invoked pledges on and sold FHL shares acted in deliberate defiance of the courts' orders or for commercial expediency.
- Whether the transfer of about Rs. 4,000 crore by FHL to RHT Health Trust after IHH's investment was bona fide or designed to put assets beyond the award-holder's reach, and how these questions should be resolved.
Provisions considered
- Section 2(b), Contempt of Courts Act, 1971Wilful breach of undertakings to the High Court and disobedience of this Court's status quo orders was civil contempt. Because the attempt to purge failed, the maximum sentence of six months' imprisonment and a fine was imposed. (¶¶ 7, 26)
- Article 129, Constitution of IndiaExercised to punish the contemnors. The Court recognised that contempt jurisdiction can extend to sequestration-type directions but declined to use it against non-party banks without a factual inquiry. (¶¶ 26, 28)
- Sections 48 and 49, Arbitration and Conciliation Act, 1996The foreign award had become enforceable as a decree. The executing court was given the deposits, shares and offered properties, and asked to consider forensic audits to aid recovery. (¶¶ 1, 30)
Held
- The brothers had already been held guilty of contempt and given a chance to purge it. The assets they offered were so inadequate that the award could not be satisfied, and there was no genuine attempt to purge. (¶ 26)
- Given the enormity of their conduct, the maximum sentence was imposed: six months' imprisonment and a fine of Rs. 5,000 each, with two months' further imprisonment in default. (¶¶ 26, 30)
- Whether the banks' conversion of unencumbered shares into encumbered ones, and their later sales, were covered by antecedent arrangements or by the order of 15.02.2018 could not be decided on the record. The banks were not parties to the original proceedings and pleaded commercial expediency, so the issue required factual inquiry. (¶¶ 27, 28)
- Prima facie, FHL's acquisition of the RHT assets appeared to serve its business structure, but the question also needed inquiry. The executing court was asked to consider appointing forensic auditors for the bank transactions and the FHL–RHT dealings. (¶¶ 28, 29, 30)
- The Rs. 17.93 crore deposited by the Indiabulls contemnors, with interest, the FHL shares still held by banks such as RBL, and the properties offered by the brothers were to be available to, and attached for, the executing court. (¶ 30)
Result
Directions issued. Malvinder and Shivinder Mohan Singh were sentenced to six months' imprisonment and a fine of Rs. 5,000 each, with two months' further imprisonment in default. The SLP and the contempt petitions were disposed of, with the executing court to consider forensic audits and to deal with the transferred deposit, shares and attached properties.