Singapore: An arbitration court in Singapore has directed former promoters of Ranbaxy laboratories Ltd, Malvinder Mohan Singh and Shivinder Mohan Singh to pay damages worth Rs.2,562.78 crore to Japan’s Daiichi Sankyo Co. Ltd. The directive comes in the face of having concealed facts when they sold their 34.82% stake in Ranbaxy, to the latter for $2.4 billion in 2008. The deal when it took place was valued at $ 4.6 billion.
The concealment of facts came to light during a US Food and Drug Administration (FDA) investigation of Ranbaxy processes. In 2013, when Daiichi filed an arbitration case in Singapore against the Indian promoters, for misrepresentation and concealments of facts, the Singapore International Arbitration Centre (SIAC), provider of neutral arbitration services to the international business community, issued a decree against the Singh brothers. The Daiichi Sankyo Co Ltd, had filed this case seeking compensation for the losses that it had been forced to pay the US Department of Justice.
Malvinder Singh, the senior of the two promoters, refused to comment while, RHC Holdings, a respondent and mediator through whom the transaction had met culmination said that the dua may challenge the decree. The press release issued by the respondent stated that as go- betweens they had ruled in favour of Daiichi. However, Daiicchi Sankyo did not come forth with any reactions.
In 2013, Ranbaxy now owned by the Daiichi’s management, in order to get away after pleading guilty to criminal charges by the USFDA and the US. Department of Justice, paid a fine of $500 million. The charges against the company then had been of “falsifying data” and “concealing and misrepresenting” in the processes of manufacturing and distribution of drugs, in the factories at Paonta Sahib (Himachal Pradesh) and Dewas (Madhya Pradesh) reports live mint.
The USFDA on the other hand banned Ranbaxy products manufactured in the Indian plants at Mohali (Punjab), Dewas, Paonta Sahib and Toansa (Punja) from entering the US. The company went into a mediation mode with the USFDA immediately. Arun Sawhney, who headed Ranbaxy from 2008 to 2015, feigned ignorance to the whole episode.
Since the arbitration was conducted under the New York convention in Singapore, Daiichi is at liberty to enforce the decree anywhere in the world, stated a source following legal developments . As the Singh duo is personally accountable for the developments, Daiichi can redress an Indian court to enforce the award. It can even recover its losses by having the two brothers sell their assets.
The verdict in the case comes as a face saver, giving confidence to investors to continue investing in the Indian pharmaceutical industry; and giving pellucidity to the investment scenario in India .