HC says Fortis to mention Escorts ownership disputable and go public

New Delhi Apr 5(UNI) The Delhi High Court has directed the Fortis Healthcare Ltd (FHL) to mention in all publicity material that the ownership of Escorts Heart Hospital is sub judice while issuing public issue to raise money.

Justice Gita Mittal said in the interest of justice the FHL should 'disclose the order of injunction' in respect of the Escorts Heart Institute and Research Centre (EHIRC) in all advertisements issued by it in respect of public issue and invitation for subscription.

The Judge also directed the Fortis to mention about the status of EHIRC in respect of its ownership in the red herring prospects.

The court impleaded FHL as a party in the litigation, and issued notices to the respondents- Escorts Chairman Rajan Nanda, his wife Ritu Nanda and EHIRC to file their replies by May 1, the next date of hearing.

Nanda's estranged brother Anil Nanda had filed a petition in the High Court seeking direction to restrict FHL from raising money by issuing initial Public Offer (IPO) terming the purchase of EHIRC by the company.

Anil in the contempt petition sought direction to the FHL to delete the name of EHIRC from Fortis Healtcare's proposed IPO.

''The high court had prima facie held that conversion of the charitable trust to a company was not bona fide,'' said the petition.

Anil contended if the High Court was to restore the charitable trust status of EHIRC, then FHL would not be able to recover its money as the hospital would not be open for commercial exploitation.

The counsel appearing for Anil argued that FHL had not disclosed the true contents of the Delhi High Court order in the prospectus of information filed before the SEBI for the public issue.

Hence, the public investments in the proposed IPO stands at a huge risk of being lost, the complaint said. FHL would not be entitled to use the funds received from the proposed public offer by diluting EHIRC's assets as that would form the part of the corpus of the charitable society, it added.

In September 2005, FHL had acquired 90 per cent equity in EHIRC for Rs 650 crore, but the sale was later challenged by Anil Nanda in the High Court. Anil said that the heart institute is a charitable organization set up by their father S P Nanda and could not be sold as a commercial venture.

UNI