The National Company Law Tribunal's (NCLT's) principal Bench in New Delhi on Friday allowed Fortis Healthcare co-founder Shivinder Singh to dismiss the case against his brother Malvinder Singh and former Religare Enterprises chief Sunil Godhwani. Following this, Shivinder announced that a split was unavoidable and the truce was only a temporary one.
Stressing that this is only a withdrawal of the application, and not the allegations, Shivinder’s lawyers claimed, “The two brothers cannot conduct business together, so a split is inevitable now. In RHC Holdings the brothers have equal shareholding through their investment arms Shivi Holdings and Malav Holdings. RHC has subsidiaries. Now, an equalisation of businesses has to happen,” said Ranjana Roy Gawai, counsel for Shivinder.
Either the subsidiaries would be separated from RHC or there would be a decision on who would pay up the money to creditors of each of these companies.
These matters would be taken up at the mediation meetings the brother duo would hold in the presence of family members. It is learnt that an internal deadline has been set for them to arrive at a mutually agreeable decision. If the talks fail, Shivinder would take "fresh action". Sources claimed that both were keen on arriving at a resolution or a common minimum point over the next few weeks.
Gawai said lawyers would not be present at the mediation meetings. "It is now strictly a family matter. However, once a broad understanding is reached between the two parties, the lawyers would get involved to work out the finer details," she said.
Meanwhile, Shivinder said "repeated urging" by his mother and other family members prompted him to take the decision of withdrawing the plea.
"The decision to file the case was made with a very heavy heart and after careful deliberation. The decision to withdraw was weighed equally seriously. I did so because my primary goal remains to address and resolve the group's issues through constructive and transparent engagement with Daiichi Sankyo and our other creditors. It is clear that my brother and I cannot do so together," Shivinder said in a statement.
He added that he intended to use the mediation to reach a critical decision, whether he or his brother takes "full responsibility for resolving the group's issues with Daiichi Sankyo and other lenders". One of their major liabilities includes the $500-million arbitration award Japanese drug maker Daiichi won in a Singapore court against the Singh brothers on matters related to the sale of Ranbaxy. According to reports, the Singh brothers are saddled with total a debt of around Rs 130 billion.
Speaking to Business Standard, Shivinder said one of them had to take the responsibility to handle the issues plaguing the group and resolve it in a manner that saved the group's entities from further damages. It is obvious that the monetary liability in the Daiichi case and other lenders would not be taken up by a single brother, he added.
He also clarified that that his decision to dissociate from his brother stood. "To allay justifiable skepticism, let me be clear. The decision to disassociate from my brother and tread an independent path stands."
Religare Enterprises counsel, which is also a respondent in the case, however, said since there were allegations against the Singh brothers of siphoning off company funds, they would try to recover the amount from them. The NCLT has asked Religare to move a separate application if they wished to initiate any action.
In his September 4 petition before the NCLT, Shivinder along with his wife Aditi Singh, and his holding company Shivi Holdings had alleged that his elder brother Malvinder Singh and Godhwani were responsible for "systemic lapses", which had undermined the interests of their companies
(RHC Holdings etc).
Already their public shareholdings (in Fortis Healthcare) have been seized by lenders. The stock market regulator and the Serious Fraud Investigation Office are investing irregularities in the firm after these allegations came up.