A public issue of over 56.7 million equity shares by Fortis was reined in after Anil Nanda, brother of Escorts Ltd chairman Rajan Nanda, moved the Delhi High Court terming the sale a fraud and an attempt to hijack the charitable assets of Escorts Heart Institute and Research Centre (EHIRC) for “huge, personal gains”. The development is the latest in the ongoing legal tussle between the brothers, with Anil resisting the alleged sale of EHIRC to Ranbaxy-controlled Fortis Healthcare Ltd for over Rs 585 crore in 2005.

The Delhi High Court had on September 30, 2005, issued a direction to maintain “status quo” on the sale in order to prevent any “further dilution and wiping out of the corpus of charity for personal use”. Justice Anil Kumar had passed the order on a pending suit by Anil Nanda to make void the conversion of EHIRC from a charitable institution to a for-profit limited company (EHIRC Ltd) and the subsequent transfer of allotment of its 90 per cent shares to Fortis.

Passing a series of strictures against Fortis for publishing advertisements of the public issue of shares, Justice Gita Mittal on April 4 restrained Fortis from transferring its shares to “any third parties”, including the IPO that opens on April 16, without full and proper disclosure of facts and facets of the pending litigation. In its advertisement dated April 3, Fortis had mentioned that the Fortis-Escorts combination had “performed 5,000 open heart surgeries, 5,000 angioplasties and 15,000 angiographies during 2006.”

The Court further directed Fortis to disclose to the public in its advertisements that in case of an adverse court order in the suit, which would amount to the re-conversion of EHIRC Ltd back to a charitable trust, the public would run the risk of losing substantial amounts with the likelihood of the value of their equity holdings coming down.

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