Malvinder and Shivinder Singh, the former promoters of Ranbaxy, who were recently sued by a New York-based private equity firm, faced a setback on Jan. 31 when the Delhi High Court upheld an international arbitral award of Rs 3,500 crore against them.
The arbitration was regarding a case that involved Japanese pharma company Daiichi Sankyo, which bought Ranbaxy Laboratories from the Singh brothers. Daiichi had claimed that the Singh brothers had concealed information about a case against them in the United States’ Justice Department since they flouted the American Food and Drug Department (FDA) regulations.
“The Supreme Court has clearly held that enforcement of a foreign award would be refused only if such enforcement would be contrary to the fundamental policy of Indian Law. While considering enforceability of foreign awards, the court does not exercise appellate jurisdiction over the foreign award nor does it enquire as to whether while rendering the foreign award some errors have been committed,” the high court noted in its verdict, according to the Times of India.
The high court set aside liability against five minors that the international tribunal had awarded since in Indian law an award is not enforceable against children. They were shareholders in Ranbaxy.
The Singapore International Arbitration Centre (SIAC), which provides neutral arbitration services to global business community, had told the Singhs to pay Daiichi the amount for concealing information of wrongdoing at Ranbaxy when they sold their shares in 2008.
“Daiichi Sankyo believes that certain former shareholders of Ranbaxy concealed and misrepresented critical information concerning the U.S. [Justice Department] and [Food and Drug Administration] investigations,” the company said in May 2016. The amount, which was Rs. 2,500 crore initially, increased to Rs. 3,500 crore, including legal fees and interest.
Daiichi had paid $500 million to the United States as penalty to resolve potential, civil and criminal liability. They approached the high court in Delhi in 2016, seeking enforcement of the Singapore International Arbitration Centre’s order that was refused by the Singh brothers.
The Singh brothers are also facing a separate lawsuit filed by United States-based Siguler Guff & Co. for “diversion, siphoning and digression of assets” in the Delhi High Court. The plaintiff has a 6 per cent stake in the financial services firm Religare Finvest Ltd (RFL).