Escorts-Fortis Healthcare deal in trouble Mohini Bhatnagar

26 November 2005

New Delhi: The Escorts Fortis deal is in rough weather as the Delhi Development Authority (DDA) has again cancelled the lease of the land allotted to the Escorts Heart Institute and Research Centre EHIRC).

S Jaipal Reddy, urban development minister, a few days ago announced in the Lok Sabha that the EHIRC had violated the terms of allotment of free beds to the extent of 25 per cent. Further he said the institute had illegally merged with a Chandigarh-based society bearing the same name. He said the Chandigarh- based institute is not a non-profit making charitable society.

DDA had initially cancelled the 1982 lease agreement of EHIRC on 6 October 2005 saying that the institute had violated the initial condition for providing 25 per cent beds to the poor after EHIRC changed into a commercial undertaking. The DDA has directed the institute to give up the land and building.

In response EHIRC filed two petitions — a civil suit and another case under the Arbitration and Conciliation Act, 1996 — asking the court to direct the DDA not to dispossess it from the land. The Institute also offered to buy the land at the prevailing land rates.

The trouble began after Escorts group founder H P Nanda''s death, in 2000, when his son Rajan Nanda, the Escorts chairman, introduced a proposal to convert EHIRC (registered as a not-for-profit society) into a corporate entity so that it could tie up with an international partner. The board of the company on which his brother Anil Nanda was vice-chairman and managing director approved the proposal.

However, the law does not allow the conversion of a ''not for profit'' charitable trust into a ''for-profit'' corporate.

EHIRC was ultimately converted into such an entity.