RESTRAINED FROM MAKING IT A PRIVATE CO :HC stops Rajan Nanda from converting Escort

The Delhi High Court on Friday restrained industrialist Rajan Nanda from converting charitable trust of Escort Hospital into a private company. A division bench of Justice Mukul Mudgal and Justice Manmohan admitted the plea of Anil Nanda challenging a single bench order, which has earlier dismissed his plea challenging conversion of Escorts Heart Institute and Research Centre (EHIRC) from a trust hospital into a company. Rajan was involved in a legal battle with his younger brother Anil Nanda over the sale of the heart institute to Ranbaxy controlled Fortis Healthcare Ltd for Rs 565 crore.

The court's decision is a set back to Fortis HealthCare, which had raised money through a public issue of equity shares to fund the purchase of EHIRC. This could also affect the functioning of the hospital under the present set up of commercial operation.

"The present appeal is allowed and the order of single bench is set aside," the court said adding that suit is restored in its original position and interim order of 2005 is also restored. In September 2005, the High Court had stayed the sale of the Escorts Heart Institute. Anil Nanda had sought the cancellation of the sale of the institute to Ranbaxy-controlled Fortis Healthcare Ltd.

The single bench had on July 3 last year rejected the plea of the younger Nanda on the technical ground that he did not seek the court's permission before filing the suit. Section 92 of Civil Procedure Code (CPC) says that a private person has to take a permission from the court before filing a suit pertaining to a public trust. "We are of the view that the primary prayer in the suit filed by Nanda was for declaration that amalgamation of EHIRC Delhi with EHIRC Chandigarh and subsequent conversion of amalgamated society with the company was void, is an issue which is not covered by section 92 of CPC," the court said while setting aside the single bench order.

The court also pointed out that "Section of 12 of Societies Registration Act permits amalgamation of two societies with similar objects but does not at all permit amalgamation of charitable societies with a non-charitable or an alleged fraudulent conversion of a charitable institution into a private hospital."
Source:-The Times of India Delhi 17 January 2009 2008 P.23

For any query:- legalpoint@aol.in