No criminal case against Ranbaxy, Daiichi: AP to SC

Written by Indu Bhan | Indu Bhan | New Delhi | Updated: Nov 1 2013, 16:18pm hrs
The Andhra Pradesh government has told the Supreme Court that no criminal case is made out against Ranbaxy and Daiichi top brass in the acquisition of shares of the Hyderabad-based Zenotech Laboratories as the case is civil in nature.

Case is to be referred as civil in nature as no offence is made out against the accused persons... The evidence available on record does not disclose any offences u/s 120(B), 406, 409 of IPC... Thus the investigating officer is advised to close the case on the grounds that there is no evidence justifying any criminal action, the status report filed by the AP police has stated in its final report filed in SC.

The AP police had last year said that there is no evidence against the accused persons to show that they have acted with malafide intention to cause wrongful loss to the complainant. The case is to be referred as civil in nature.

These investigations details were filed following the apex courts directions in September, seeking a status report on the AP police probe into the criminal complaint filed by Zenotech Laboratories promoter and managing director Jayaram Chigurupati, which accused officials of Ranbaxy Laboratories and Daiichi Sankyo of criminal breach of trust.

Daiichi-Sankyo, which had acquired a controlling stake in Ranbaxy in 2008, is locked in a legal battle with the minority shareholders of Zenotech over the open offer price for over three years. The takeover of Ranbaxy in 2008 had also resulted in Daiichi-Sankyo indirectly acquiring a controlling stake in Zenotech as Ranbaxy already had a controlling stake in Zenotech of over 45%.

Therefore, Daiichi had to come out with an open offer in accordance with the Sebi regulations and fixed a price of R113.62 per share. But due to a dispute over price valuation, the offer became a matter of litigation. Later, the SC fixed Daiichi Sankyos open offer price for Zenotech at R113.62 per share, after setting aside the Securities Appellate Tribunals order that had asked the Japanese drugmaker to offer a much higher price of R160 per share for acquiring an additional 20% stake in Zenotech.

Soon after the acquisition, Chigurupati had filed a complaint in Hyderabad, accusing several top officials and directors of the Indian firm of acting under undue influence of Daiichi officials and illegally obtaining sensitive documents from open offer registrars, Karvy Computershare and ICICI Securities.

He had further alleged that Ranbaxy MD Arun Sawhney, its former MD Atul Sobti, Daiichi Sankyo Company chairman Takashi Shoda and director Tsutomu Une and others had collected sensitive documents and acted with malafide intention to cause a loss of R100 crore to him.

Case file

* SC had sought status report on the AP police probe into the criminal complaint filed by Zenotech Lab in September

* Zenotech promoter & MD had accused Ranbaxy and Daiichi-Sankyo officials of criminal breach of trust

* Daiichi is locked in a legal battle with minority shareholders of Zenotech over the open offer price for over 3 years

* Daiichis takeover of Ranbaxy in 2008 had resulted in acquisition of a controlling stake in Zenotech

* As Ranbaxy had 45% stake in Zenotech, Daiichi had to come out with an open offer to meet the Sebi norms