India’s capital markets regulator has asked Fortis Healthcare to recover 4.03 billion rupees ($55 million) from its founder brothers and firms related to them, pending an investigation into loans made by the company.
Tycoon brothers Shivinder Singh and Malvinder Singh and eight firms related to them should jointly pay the sum with due interest to Fortis within three months, the Securities and Exchange Board of India (SEBI) said in its order on Wednesday.
“A detailed investigation of the entire scheme employed in this case is necessary to find out the role of each entity in the alleged routing of funds,” SEBI said.
SEBI will carry out a detailed investigation, but said it was issuing an interim order to protect the interests of Fortis Healthcare shareholders and prevent any further “deterioration” of company funds or assets.
It also barred the Singh brothers and the firms from selling any assets or from diverting any funds except for meeting daily expenses till such a probe was completed.
Reuters could not reach the Singh brothers for comment, while Fortis did not immediately respond to a request for comment outside regular business hours.
The eight firms and the Singh brothers, who have also been ordered not to associate themselves with any Fortis-related business, have 21 days to file a reply from the day they receive the order, SEBI said.
Cash-strapped Fortis, which operates about 30 private hospitals in India, accepted an investment offer from Malaysia’s IHH Healthcare Bhd in July after an extended bidding war for control of the company.
It is unclear whether the SEBI order will affect the timing of the closing of that deal.