Ranbaxy's Singh bros must pay Daiichi Rs3,500 cr, rules HC
01 February 2018
In a major victory for Daiichi Sankyo and a setback for former Ranbaxy Laboratories promoters Malvinder and Shivinder Singh, the Delhi High Court has allowed the Japanese firm to collect over $500 million (Rs3,500 crore) from the brothers as part of an international arbitration award.
|Malvinder Mohan Singh and Shivinder Mohan Singh|
This comes a day after it was reported that a New York-based investor accused Religare Enterprises promoters Malvinder and Shivinder Singh of "diversion, siphoning and digression of assets" in a lawsuit filed in the Delhi High Court.
The court however said the company can't enforce the Rs3,500-crore award against the children of the Singhs.
The shares of the Singhs' Fortis Healthcare, India's second largest hospital chain, dropped 7 per cent after the judgement.
In a petition filed at the Delhi HC, Daiichi had sought to enforce collection of Rs3,500-crore arbitration award it won at a Singapore tribunal in 2016 against Ranbaxy.
Daiichi had taken the Singhs to the Singapore tribunal in 2013 after pleading guilty to felony charges related to Ranbaxy making and distributing adulterated medicines in the US and falsifying data. The firm eventually had to reach a $500-million settlement with the US Department of Justice over these allegations.
Daiichi alleged the Singhs concealed information regarding wrongdoing at Ranbaxy, once India's largest drug maker, when selling the firm to the Japanese company for $4.6 billion in 2008.
The Singapore arbitration tribunal had ruled in Daiichi's favour, directing the Singhs to pay Rs2,562 crore in damages. Including interest and legal fees, the award is valued at Rs 3,500 crore now.
In 2013, Daiichi had pleaded guilty in a US court after it was accused of selling adulterated medicines. Daiichi later settled the case for $500 million with the US government, but accused the Singhs of hiding information about manufacturing and selling adulterated drugs in the United States and producing false data during the sale of the company in 2008.
Appealing against the award in India as well as in Singapore's Court of Appeal, the Singh brothers had argued the award money was not enforceable under Indian law.
Meanwhile, New York-based investor Siguler Guff & Co, which owns six per cent stake in Singhs' Religare Finvest, has alleged they indulged in "diversion and siphoning" of funds to clear their personal debts of at least $1.3 billion. According to a Reserve Bank of India inquiry over Religare's books of 2016, the Singhs reportedly gave 21 loans worth millions to independent companies that rerouted at least $300 million to private firms linked to the brothers on the same day.
Denying the allegations, Religare said the company and its promoters were considering taking appropriate action against relevant persons for disparaging their reputation as "all the allegations made are completely baseless and have been responded to by Religare in the High Court of Delhi"