The Delhi High Court on Monday directed former Ranbaxy promoters Malvinder and Shivinder Singh to abide by their assurance to protect the interests of Japanese drugmaker Daiichi Sankyo and that any sale of assets by them cannot take place without first informing the court.
The brothers, who are locked in a dispute with Daiichi, were also asked to submit the value of their unencumbered assets and shares in various group entities. The court also allowed Daiichi to peruse previous asset declarations given by the brothers in Singapore and other courts, provided the latter furnished an affidavit of confidentiality in this regard.
The brothers are required to file an affidavit within two weeks assuring that the value of their assets is enough to secure the penalty amount of Rs 2,562 crore awarded to Daiichi by a Singapore arbitral tribunal last year. The next date of hearing on the matter is on March 14.
A Singapore tribunal had last year ordered the Singh brothers to pay the Japanese drugmaker Rs 2,562 crore in damages for concealing information regarding wrongdoing at Ranbaxy while selling the company for $4.6 billion in 2008. The Singh brothers are contesting this arbitration award in the Delhi HC. Along with interest and legal fees, the total liability was last pegged at Rs 3,500 crore.
Daiichi, which is no longer the owner of Ranbaxy after it sold the company to Sun Pharma for $3.2 billion in 2014, has sought a direction to Singh brother to secure the award amount by depositing it in the HC or attachment of the movable and immovable assets and properties in which the Singh brothers have any beneficial interests until the disposal of the petition. This was after reports surfaced that the Singh brothers were looking to rope in an investor in Fortis Healthcare and any divestment would dilute assets and hamper recovery of damages from them.
Senior counsel Harish Salve, who represented the Singh brothers, argued that value of the duo’s shares is more than twice the arbitration award and they are not selling a single share in the companies, but are only looking to bring in strategic investments.
He said that the Indian hospitals chain Fortis Healthcare is looking to raise further capital and is in talks for raising funds through a share issue and only fresh shares were being issued.
He also told the court that Fortis Healthcare is expecting a healthy premium for shares of the Singh brothers.
However, senior counsel CA Sundaram and Arvind Nigam, appearing on behalf of Daiichi, argued that the past conduct of the Singh brothers doesn’t give much confidence. Sundaram argued that the brothers were planning to sell their controlling stake in Fortis Healthcare to global private firm TPG Capital for Rs 3,000 crore. The brothers currently own 63% stake in Fortis Healthcare. However, 80% of this is already pledged with lenders.
Last week, the brothers had assured the HC that they would not pursue any stake sale in Fortis Healthcare, a plea sought by Daiichi to secure the arbitration award.
Daiichi has been seeking an interim order from the HC since May last year when the matter first reached the courts after the arbitral award that the brothers be directed not to dispose of any of their assets.
Daiichi had alleged the brothers had concealed crucial information while selling majority stake in Ranbaxy Laboratories for $4.6 billion in 2008. However, soon after, Ranbaxy came under the scrutiny of the US Food and Drug Administrator for non-compliance with the manufacturing standards for exporting drugs to US, Daiichi — the new owners of Ranbaxy — agreed to pay $500 million in settlement fees in 2013, but sought legal recourse to recover the amount from previous promoters — the Singh brothers — following which a Singapore tribunal last year ordered the brothers to pay $385 million (Rs 2,562 crore) as compensation.