Fortis Healthcare case: Sebi modifies interim order against Singh brothers

The Securities and Exchange Board of India (Sebi) on Friday modified its interim order passed against the Fortis Healthcare former promoters, Malvinder Singh, Shivinder Singh, and seven others in connection with the alleged fund diversion and misrepresentation of financial statement of the hospital chain.

The move comes after both Fortis Healthcare (FHL) and Fortis Hospitals (FHsL) raised concerns over the recovery of outstanding dues of Rs 4.03 billion. According to them, FHsL, being a 100 per cent wholly owned subsidiary, is not required to pay the outstanding amount to FHL as recovery by FHL from its own subsidiary would lead to discharge of the liabilities of the other entities. According to Sebi's October 17 order, only FHL was directed to recover dues along with interest from all 10 entities.

Now, according to the modified order, Sebi directed both (FHL) and FHsL to take necessary steps to recover dues from all nine-entities, including promoters and Religare Finvest and also not to dispose of any of their assets without the prior permission of Sebi. Also, the Singh brothers, founders of Fortis Healthcare, have been directed not to associate themselves with the affairs the company in any manner.

During 2017-18, Fortis Healthcare made a provision for Rs 4.45 billion “exceptional loss” on account of loans extended to three borrowers. However, Sebi found that prima facie the loss was entirely due to diversion of funds to promoters and promoter related entities.

Securities and Exchange Board of India ( SEBI )