Another stalemate?

"I would like to draw your attention to the Parsi Lying-in Hospital (PLIH) litigation which ended up in the Supreme Court. The main dispute raised in that case was that there was no public advertisement regarding the proposal. Whereas one can only hope that history will not repeat itself, we would be amiss in our duty if we did not take cognizance of the lessons that could be learnt from that case.”
That ominous warning delivered by Bombay Parsi Punchayet (BPP) trustee Kersi Randeria via an email dated October 31, 2017 to the president of The B. D. Petit Parsee General Hospital (PGH) Homa Petit underlined the growing tension between the two august institutions over the "New Secular Hospital Project.” The Project referred to is the cosmopolitan, state-of-the-art hospital to be set up thanks to the magnanimous donation of USD 22.5 million (Rs 147,00,93,750) by Pervin and Jal Shroff of Hong Kong.
PGH signed an agreement with the Medanta Group (The Medicity, Gurgaon), on October 25 to equip, operate and manage a separate new cosmopolitan hospital in the PGH complex. The new building will be the property of the PGH and no portion of the land or building is being alienated.
The new hospital will be cosmopolitan while the existing Hospital (PGH) will continue to be for Parsi Zoroastrians only. Medanta will pay an annuity to PGH as well as a percentage of the revenue earned. This will enable PGH to continue to offer medical relief to the disadvantaged. The new cosmopolitan hospital will provide facilities in several disciplines such as cardiology, nephrology, oncology, etc. Parsis will also get the benefit of the super-specialty and diagnostic facilities such as Petscan, MRI, etc. Medanta will give preference to Parsi patients referred by PGH, and charge concessional rates. They will financially bear the cost of training nurses and medicals at PGH.

Though the PGH is run by an elected managing committee, the property is owned by the BPP. Similarly for the PLIH, the institution is run by a managing committee while the property vests with the BPP. In both cases, the BPP trustees claimed they were the trustees of the two Hospitals.
In the PLIH saga then BPP chairman Dinshaw Mehta and erstwhile BPP trustee Khojeste Mistree wanted to serve on the Hospital’s managing committee. Their request was turned down. Thereafter the BPP initially turned down a proposal to lease the property to Krimson Health Care Private Limited to convert the building into a specialist orthopedic hospital. A 30-year, renewable lease was to be entered into with Krimson bearing the costs of setting up the new Rs 100 crore (USD 15,270,680) hospital.
After the 2015 elections, the BPP and the Bombay High Court okayed the proposal but Mehta moved the Supreme Court. Frustrated with the delays, Krimson backed out of the deal. No other meritorious proposal has come forth since.
In the case of the PGH, BPP chairman Yazdi Desai and Randeria wanted to be taken on the Hospital’s managing committee. Their request was rejected. Subsequently the BPP began to raise queries on the Project. Without the trustees signing the papers to proceed with the venture, the proposal could be stymied.
In the case of both, the PLIH and the PGH, the respective managing committees aver the BPP trustees are only the custodians of the property and must carry out the instructions of the managing committee. The BPP rejects that claim and state they are the trustees of the two Hospitals. The matter may eventually land up in court. By which time the donor and Medanta may lose patience.
The PGH suffers operational losses of around Rs 10 crore (USD 1,527,300) annually and without the new Project will find it difficult to finance the disadvantaged, free and subsidized patients.
On October 25 Desai had stated in an email to Petit, "We would like to state for the record that we the trustees of the BPP are very uncomfortable with the way things have panned out regarding this Project and the role you are relegating us to play in it.” On the same day in an email to BPP trustee Viraf Mehta copied to Petit and others, Desai stated, "With this mail I request Petit to postpone the signing of the agreement with Medanta so as to allow the BPP trustees reasonable time to examine the agreement and the due diligence report (to be provided by Viraf).”
Petit responded the same day explaining, "It has never been our intention to finalize the management agreement with Medanta keeping the BPP trustees in dark. You will recall our visit (to the) BPP office to update you all on what lines we were trying to find a suitable partner for the New Hospital Project. It was only because of our non-disclosure agreement with Medanta that we could not lay out details of the agreement till all terms were crystallized. The moment we finalized the terms, we informed you of the same at our meeting at the Hospital board room. In fact, we were very happy that you all were quite enthused after that meeting with the terms we negotiated. So, at the cost of repetition, please allow me to say that at no point in time, we wanted to hold back any information from you.
"Now that you have raised a few questions, we will be happy to answer all your doubts. You may also examine all the documents and seek any clarification from the attorney of your choice on this agreement. We are quite transparent about our dealings and we would not like to stake our personal integrity or reputation for the sake of this project, which, you will agree, was conceived and (is) being executed with the intention of helping our community and saving PGH from its current financial distress.
"Since we have already committed to Medanta for execution of the management agreement this evening, we are going ahead with this program. We trust, you will understand.”
In his email to Desai the next day, Viraf alleged, "The board met with the PGH managing committee almost two weeks ago, plus you were given five days’ notice of the signing being done yesterday. So your email is nothing short of an after-thought.
"Further, if you had such reservations about due diligence and credibility of the Project you should have raised it at the meeting (which) the PGH managing committee had with us earlier, when you were effusive about the great deal the Hospital had achieved and asked for no further details.
"After the date of signing is announced and a high level delegation is arriving from Delhi you arbitrarily without the approval of the board shoot off a very impolite letter doubting the bona fides of an impeccable managing committee. Besides, all you had to do was ask your BPP colleague Zarir Bhathena about your doubts and I am sure he would have allayed them for you. (Bhathena is a trustee of the BPP and also serves on the PGH managing committee — editors).
"As a trustee you had no authority to shoot off the letter without the approval of the board which is most unprofessional on your part. I must add, that your sudden change of tune towards the said transaction seems to stem from the fact that you or your nominees have not been allowed to join the PGH managing committee as members... Hence, I would request you to not create further controversy in a project which is in the interest of the Hospital and our beloved community. The previous board has already sanctioned and approved this project, and it would be highly unethical for us to now create a hindrance.
"As regards your ‘direction’ to me to produce due diligence records, I am humored at your misplaced notions that you have any authority to order me or any trustee. You are my equal as much as you try run away from that fact.
"Nonetheless, Petit was been very magnanimous and kind enough in his email to you yesterday granting you permission to peruse the documents. So you may do so at your leisure.
"Coming to the PLIH issue raised by you. Please note the PLIH managing committee were selling (alienating) the property without a public notice. Hence it was objected and stalled. In this case there is no alienation, just a management contract. It is ironic that you chose to make such a hue and cry in this case but when our PLIH property was being sold without procuring the best bid, you happily tagged along with them and your friend Yazdi Bhagwagar (a noted chartered accountant who serves on the PLIH committee). Makes one wonder if politics or personal vengeance drives your decision making for trust properties.”

Randeria’s response
Responding to Viraf’s allegations Randeria had noted in his email of October 31, "On April 4, 2017, a delegation of PGH committee members led by you (Petit), met the trustees of the BPP in the boardroom and shared the trust deed of the PGH as well as some very sketchy details about the proposed new hospital. No details about the management contract were shared.
"In a casual and informal discussion amongst some of us on June 21, 2017… ‘effort’ to identify a management partner was very sketchily touched upon. Again for the sake of record it must be stated that no details/information/documents were shared.
"Thus the meeting in the PGH premises on October 14 was effectively the first meeting when the managing committee briefed the trustees of the PGH. (Randeria claims the BPP trustees are the trustees of the PGH — editors).
"One cannot be faulted for having thought at that time that this would probably be the first of many such meetings to share information, have informed discussions, take measures to protect the trust and its beneficiaries and jointly (the trustees and the members of the managing committee) ensure that we were going ahead with the right management partner and that all safeguards were put in place. Speaking for myself – that is exactly what I thought.
"Even in this meeting, no documents were shown to the trustees of the PGH. No details, barring some of the commercial terms and the name of the company which was to be the management partner, were shared. I took detailed handwritten notes on the small PGH writing pad that was put before us and would be happy to share copies of the same to highlight the ‘details’ that were shared with the trustees. At the point of sounding repetitious one must state that the sharing was nothing but you, Petit, orally giving us some of the financial details…
"During the meeting, my colleague trustee Viraf Mehta had asked you why no public advertisement was being given. The reply was that since it was a management contract, a public advertisement was not mandatory as there was no alienation.
"The chairman Desai had enquired whether the financials were supported/backed by any bank guarantee, etc, a very universally accepted financial safeguard. I am afraid I did not hear your reply although our young colleague (Viraf) has recorded that the chairman’s query stemmed from the chairman’s desire to raise ‘frivolous’ issues out of ‘ulterior motives’…
"However your noting in your email that we (the BPP/PGH trustees) were quite ‘enthused’ about the terms that you had negotiated appears to me as being very superficial. I don’t think one can lay much store by ‘enthused’ in an agreement of such importance.
"Finally on October 21 we received an invitation (to) come and ‘grace the occasion and have a cut of tea!’ It was therefore only on 23rd Monday that we started off-line individual discussions about the news that you were scheduled to sign the management contract on Wednesday 25th which honestly speaking was like a bolt from the blue...
"The reason for recording these details is two fold:
"It appears that you believe that the trustees of PGH have no role to play/say in the management arrangement. Respectfully sir, I disagree.
"Whereas there was no apparent urgency in the signing of the agreement you chose to ignore the request made in writing by the chairman and decided to go ahead and sign the same.
"Personally I believe that this agreement will not be binding on the trustees of PGH but will wait till this evening (when we have our board meeting) for us to discuss this issue, if we have the time (it is not on the agenda).
"We should be able to revert officially as a board once we discuss the issue thoroughly and maybe even take some legal advice regarding the same.
"Let me at this point assure you that we have no intention to oppose the proposal in any way, for the sake of opposition, unless there are legal impediments, tax issues or issues of breach of trust, etc.”