The Supreme Court on Thursday ordered 17 banks and financial institutions of the former promoters of Ranbaxy Malvinder and Shivinder Singh to put on file the basic documents relating to the loans for which the shares of Fortis Healthcare Ltd (FHL) have been pledged with them .

A bench of Judges UU Lalit, Indira Banerjee and KM Joseph also asked the banks to record the nature of the securities offered under these loans as well as the details of the encumbered / unencumbered FHL shares on behalf of Fortis Healthcare Holding Private Limited ( FHHPL), as he held them in September 2016.

Banks were also asked to record similar information as at August 11, 2017, as well as on FHL shares on behalf of FHHPL that were assumed by them after that date.

The Supreme Court ordered banks and financial institutions (FIs) to file responses by February 22. The case is published for the next hearing on February 24. The order came after senior lawyers Rakesh Dwivedi and Arvind P Datar said the role of banks should be closely scrutinized. in the scenario.

Datar, representing the Japanese company Daiichi which is in a legal dispute with the Singh brothers, argued that there would normally be a basic agreement or loan agreement, under which various types of guarantees, including charges on the properties, corporate and personal guarantees, would be offered; and that a pledge of shares would only be made as additional security.

However, none of the banks / FIs commented on why the unencumbered stocks were sought out to be encumbered or the stocks were sold when other forms of securities were available, he said.

Datar further argued that the arrangements under which the shares were pledged should be disclosed so that the purpose for which the basic housing or loan was obtained is also clear.

He said that with various orders made by Delhi High Court and highest court, the natural and legal persons involved could not sell the shares held by FHHPL directly and therefore the arrangement was structured in such a way as to that actions are pursued against by banks and FIs.

It was alleged that the banks / FIs had intervened in the cases pending before this Court, that they were fully aware of the award granted in favor of Daiichi Sankyo Company Ltd and that the role of banks and financial institutions would therefore require a closer examination.

On November 15, 2019, the Supreme Court found former Ranbaxy promoters in contempt of court for violating its order asking them not to sell their shares in FHL.

The Supreme Court had previously asked the Singh brothers to give it a plan on how they would honor the Rs 3,500 crore arbitration award granted by a Singapore court against them and in favor of Japanese drugmaker Daiichi Sankyo.

The Supreme Court found them in contempt of court and said they had violated its earlier order by which the sale of their controlling stakes in the Fortis group to Malaysian company IHH Healthcare was suspended.

The Japanese company had filed a contempt motion against the former promoters of Ranbaxy, alleging that the execution of their arbitration award had been compromised after the Singh brothers had sold their majority stakes in the Fortis group to the Malaysian company.