Former promoters of Ranbaxy tell Delhi High Court they can pay fine to Daiichi
Former Ranbaxy promoters Malvinder Singh and Shivinder Singh on Tuesday assured the Delhi High Court they would keep assets secure to be in a position to make the Rs 3,500-crore (Rs 35-billion) payment to Japanese conglomerate Daiichi Sankyo, which had in 2008 bought a majority stake in the Indian pharma major.
A Singapore arbitration court recently imposed this fine after it found the Singh brothers guilty of concealing information while striking the deal with the Japanese company.
Daiichi filed an appeal in the Delhi High Court asking for an interim order to secure the Singh brothers’ assets equivalent to the extent of the award amount, Rs 2,562 crore (Rs 25.62 billion), decided by the Singapore arbitration court.
In addition, Rs 1,000 crore has to be paid as interest and lawyers' fees.
In its petition, the Japanese company expressed apprehension that the brothers would dispose their assets and take them out of India by the time the court arrived at a final decision on this award.
“We have an imminent fear that there may be various alienations (asset sell-off) by RHC Holdings in case there are no protective measures provided by the court.
We request you to ask the respondents (Singh brothers) to issue a statement of safeguard and security,” said Gopal Subramanium, appearing on behalf of Daiichi Sankyo.
The Singh brothers have a majority shareholding in RHC Holdings, a private limited company with assets of around Rs 10,000 crore (Rs 100 billion).
Fortis Healthcare and Religare, which are listed companies, are controlled through RHC Holdings.
Justice V Kameswar Rao, who presided over the proceedings in Delhi High Court, said he needed to be sure that the award was secure.
He did not issue a formal order after Kapil Sibal, who was arguing for the Singh brothers, told the judge any such court order to issue a formal statement of assurance would adversely affect the listed companies. He said since these two companies were listed, there was no need for apprehensions of a quick asset sale.
“They (Daiichi Sankyo) have shown no evidence whatsoever which can be considered as basis for their apprehension,” he said.
In response to queries from Business Standard, the RHC Holdings spokesperson said it could not offer any comment because the matter was sub judice.
The stocks of Fortis Healthcare and Religare did not show much movement on Tuesday, increasing by 0.12 per cent and decreasing by 0.04 per cent, respectively.
In 2013, Daiichi had launched the arbitration proceedings in Singapore, alleging that the Singh brothers had concealed and misrepresented critical information concerning US Food and Drug Administration and Department of Justice investigations into Ranbaxy in 2008, when the Japanese major acquired a controlling stake in the company.
Consequently, the arbitration court awarded Daiichi Rs 2,562 crore through a 2-1 majority order.
Justice AM Ahmadi, former Chief Justice of India, gave the dissenting opinion dismissing all claims of the Japanese company.
CASE HISTORY: The troubled timeline of the Ranbaxy-Daiichi deal
- 2006: US FDA issues warning letter to Ranbaxy’s Paonta Sahib facility
- 2007: A whistle-blower’s lawsuit alleges Ranbaxy defrauded Federal programmes
- Jun 2008: Daiichi Sankyo acquires majority stake in Ranbaxy
- Sep 2008: FDA imposes import alert on Ranbaxy’s Paonta Sahib and Dewas factories; bans 30 drugs
- May 2013: Criminal charges filed; Ranbaxy agrees to pay a fine of $500 million
- Sep 2013: US bans imports from Ranbaxy’s new formulations factory in Mohali
- Nov 2013: Daiichi Sankyo accuses Singh brothers of hiding information regarding investigations, files a case in a Singapore court
- Jan 2014: US FDA bans imports from Ranbaxy’s main API factory, Toansa
- Apr 2014: Sun Pharmaceutical acquires Ranbaxy in a $4-billion deal
- Sep 2015: Shivinder Singh steps down, joins Radha Soami Satsang Beas, an Amritsar-based spiritual organisation
- Apr 2016: Singapore arbitration court gives a 2-1 majority award in favour of Daiichi Sankyo; asks brothers to pay them around Rs 3,500 crore
Note: The Singh brothers are likely to appeal against the order
Image: Malvinder (left) and Shivender Singh. Photograph: Kind courtesy, Ranbaxy