In a major setback for former Ranbaxy and Fortis promoters Malvinder and Shivinder Singh, a Singapore court on Friday dismissed their appeal against a Singapore arbitration tribunal’s 2016 order asking them to pay Rs 3,500 crore as damages to Daiichi Sankyo for concealing and misrepresenting information during the stake sale of Ranbaxy Laboratories in 2008 to the Japanese firm.
This means that the Singh brothers can now no more delay payment to Daiichi Sankyo as the Indian courts have refused also any relief to them. Daiichi had taken the Singh brothers to the Singapore arbitration tribunal in 2013 and the award came in its favour in April 2016.
Daiichi had then moved the Delhi High Court for enforcement of the award to recover the damages from the brothers. However, the brothers challenged the petition.
In January, 2018 the Delhi High Court allowed Daiichi to recover over `3,500 crore as damages from the brothers.
Later in September, the court in a stern order even asked Malvinder Singh to deposit the sale proceeds of around 3.5 million Singapore dollars of his shareholding in Singapore-listed Religare Health Trust within four weeks. It also barred him and Shivinder Singh from moving any assets abroad and directed freezing of their shares in Best Healthcare that owns the Fortis trademark.
It also directed release of `9.38 crore received by them from the sale of their shares in listed companies towards part payment of Daiichi’s `3,500 crore award. Daiichi Sankyo, which finally exited Ranbaxy in April 2014 by selling its stake to the home grown multinational Sun Pharma, had filed the arbitration case in 2013 in Singapore. It had accused the Singh brothers of concealment and misrepresentation of facts and sought compensation for losses. Ranbaxy, under the management of Daiichi, had in 2013 paid $500 million to the US Department of Justice pleading guilty to the charges of felony.
When Ranbaxy was acquired in June 2008 by Daiichi, Malvinder Singh continued to be CEO and MD, but he stepped down in May 2009.
The allegations about the wrong practices of Ranbaxy was first noted by the US FDA in 2006 with a final banning of drugs taking place in September 2008. In December 2011 the company agreed to sign a consent decree with the US authorities to resolve the criminal charges and provisioned $500 million for that. Later, in 2013, it pleaded guilty and paid the amount.
In September 2008, the US FDA had banned 30 generic drugs produced by Ranbaxy at its Dewas (Madhya Pradesh) and Paonta Sahib and Batamandi unit in Himachal Pradesh, citing gross violation of approved manufacturing norms. Later, the US department of justice had moved a motion against the company in a local court alleging forgery of documents and fraudulent practice.
After Daiichi’s allegations, Malvinder Singh had hit back at the Japanese firm stating that it failed to manage the company properly, and therefore was levelling “baseless charges” against him.
Till the time of going to the press on Friday, RHC Holding, the holding firm of the Singh brothers, had not issued any statement with regard to the dismissal of their appeal.
