M/S. Daiichi Sankyo Company Limited vs Oscar Investments Limited & Ors

S. No.,Quarter Ending,Total Shares,Encumbered Shares,"Unencumbered

shareholding of

FHHPL in FHL

1.,September 2016,"32,50,91,529","27,21,59,955","5,29,31,574

2.,December 2016,"32,50,91,529","25,22,63,248","7,28,28,281

3.,28th Jan 2017,"32,50,91,529","25,19,23,248","7,31,68,281

4.,March 2017,"27,02,41,529","23,18,01,440","3,84,40,089

5.,June 2017,"22,22,11,701","18,38,96,484","3,83,15,217

6.,September 2017,"17,80,26,597","17,53,94,820","26,31,777

7.,December 2017,"17,80,26,597","17,53,94,820","26,31,777

8.,March 2018,"34,20,451","6,89,084","27,31,367

9.,June 2018,"32,82,851","5,51,484","27,31,367

10.,September 2018,"11,53,091","5,51,484","6,01,607

11.,December 2018,"11,53,091","5,51,484","6,01,607

Date,Encumbered Shares,Unencumbered Shares,Total Number of shares,

28.02.2017,"26,81,66,020","3,84,25,509","30,65,91,529 (59.23%)",

31.03.2017,"23,18,01,440","3,84,40,089","27,02,41,529",

31.07.2017,"18,64,94,060","84,89,948","19,49,84,008",

31.08.2017,"17,53,94,820","26,31,777","17,80,26,597",

31.01.2018,"17,53,83,320 (pursuant to a release of

11,500 pledged shares)","26,43,277","17,80,26,597",

28.02.2018,"7,65,584","26,54,867","34,20,451",

31.03.2018,"6,89,084","27,31,367","34,20,451",

16.05.2018,"6,31,484","27,31,367","33,62,851 (0.65%)",

There is no intention of selling any of the unencumbered investments by way of shares held by Respondent No.19. A proposal which is under,,,,

discussion may involve the sale of 29,00,000 equity shares of SRL Limited held by Respondent No.19 and 7.05,000 equity shares of SRL Limited held",,,,

by Malav Holding Private Limited (Respondent No.15) to external investors in the near future. These shares of SRL Limited are encumbered and,,,,

thus not included in the value of unencumbered assets mentioned at paras (4) & (5) above. Obviously this will have to be after obtaining the consents,,,,

of the security holders. The proceeds of such sale will have to be utilized to pare down the debt â€" the net assets of the Respondents will thus remain,,,,

unchanged. The shares being sold [36,00,000] which are below 5% of the share capital of SRL will be sold to an external investor. The further",,,,

proposal under consideration is to merge SRL with another listed group company at a later point of time. Even if this does take place, this will have no",,,,

implications on the next assets of the Respondents.,,,,

There are proposals to issue further capital in the downstream companies [below Respondent No.19]. The net result of issue of shares will be,,,,

accretion in the value of the shares of the upstream company. The promoters would continue to remain the single largest shareholders in the,,,,

companies where fresh capital is being issued to minority investors, and that will create value going forward. The induction of a Private Equity fund or",,,,

some such investor â€" were it to take place â€" will improve the finances of the downstream companies and thus add to the fair value of the,,,,

unencumbered and encumbered shares.,,,,

The value of the unencumbered assets declared is sufficient security for the Award in the event it is enforced. This fair value of the unencumbered,,,,

assets as mentioned in para (5) does not include value of 5 crore equity shares of Fortis Healthcare Limited held by the underlying subsidiary of the,,,,

Respondents which have been kept aside from the aforesaid valuation for the sake of flexibility and debt repayments of various group entities.â€​,,,,

It was, therefore, submitted that it was not just a case of creating encumbrance or pledge but, there were instances of sale of shares and the",,,,

purpose was definitely to reduce the extent of control of FHHPL. He further submitted that at the stage when the applications for,,,,

modification/clarification were preferred by the banks and financial institutions, on the basis of which the order dated 25.02.2018 was passed by this",,,,

Court, none of the banks had told this Court what the consequences of said order would be; and that in a matter of a year-and-half, the shareholding",,,,

of FHHPL stood reduced to negligible level.,,,,

Mr. Arvind P. Datar, learned Senior Advocate, added that there would normally be a basic arrangement or loan agreement, in terms of which",,,,

various kinds of securities including charge over properties, corporate and personal guarantees would be offered; and that a pledge of shares would",,,,

only be by way of an additional security. None of the banks/financial institutions had indicated why the unencumbered shares were sought to be put,,,,

under encumbrance or the shares were sold when other forms of securities were available. He further submitted that the arrangements under which,,,,

the shares were pledged must be disclosed so that the purpose for which the basic accommodation or loan was obtained would also be clear. For,,,,

example, according to him, in November, 2016 a loan agreement was entered into between India Bulls and RHC Holding Private Limited for an",,,,

amount of Rs.350 crores purportedly for ‘construction/development of residential projects’. He submitted that no such project had come up and,,,,

the amount of Rs.350/- crores through successive transactions, was siphoned away. What kind of due diligence was undertaken by the banks/financial",,,,

institutions while extending the loan facility must therefore be brought on record.,,,,

Both the learned Senior Counsel submitted that with various orders passed by the High Court and this Court, the concerned individuals and",,,,

corporate entities could not sell the shares held by FHHPL directly and, therefore, a device was employed and the arrangement was so structured that",,,,

the shares were proceeded against by the banks and financial institutions. It was submitted that the banks/financial institutions had intervened in the,,,,

matters pending before this Court, that they were definitely aware of the Award granted in favour of M/s. Daiichi Sankyo Company Limited; and that",,,,

the role of banks and financial institutions would, therefore, require closer scrutiny.",,,,

In the premises, for the present, we direct all the noticee banks and financial institutions :-",,,,

(a) to place on record the basic documents pertaining to loans advanced or financial accommodations extended in respect of which the shares of FHL,,,,

were pledged with them;,,,,

(b) to place on record the nature of securities offered in connection with such loan arrangements;,,,,

(c) to place on record the details of the encumbered and unencumbered shares of FHL standing in the name of FHHPL, held by them in September,",,,,

2016;,,,,

(d) to place on record the details of encumbered and unencumbered shares of FHL standing in the name of FHHPL, held by them on 11.08.2017;",,,,

(e) to give details of shares of FHL standing in the name of FHHPL, which were put by them under encumbrance after 11.08.2017;",,,,

(f) to give details of shares of FHL standing in the name of FHHPL, sold by banks/financial institutions from January, 2017;",,,,

(g) to disclose whether such encumbrance created after 11.08.2017 was in pursuance of any fresh arrangement or agreement and, if so, the details of",,,,

such agreement/arrangement;,,,,

(h) to disclose whether under such agreement/arrangement any other security was given by the pledgors; and,,,,

(i) to give the value of the encumbered shares as they stood in September, 2016, on 11.08.2017 and on subsequent dates.",,,,

The appropriate responses shall be filed by all the noticee banks and financial institutions on or before 22.02.2021.,,,,

List these matters for further consideration on 24.02.2021.,,,,