New Delhi: Former promoters of India’s Ranbaxy Laboratories Ltd were on Monday directed by the Delhi High Court to maintain status quo on the assets they have disclosed during Japanese pharma major Daiichi Sankyo’s case to enforce a Rs 3,500 crore international arbitral award against them.
The court restrained the former Ranbaxy promoters and brothers, Malvinder Singh and Shivinder Singh, and 12 others from selling or transferring their shares or any movable or immovable property till February 26, the next date of hearing, as disclosed by them before the high court earlier.
They have disclosed their assets to the court in sealed covers on two occasions in December 2016 and March 2017 during the pendency of Daiichi’s plea seeking enforcement of the 2016 arbitral award passed by a Singapore tribunal against the Singh brothers.
“Respondents to maintain status quo with regard to their assets disclosed as on December 2, 2016, and March 14, 2017, in their affidavits till the next date of hearing, February 26,” Justice Jayant Nath said.
The court also directed the brothers and 12 others, including their family members and companies, to come up with a plan on how they seek to deposit the amount of Rs 3,500 crore.
A tribunal in Singapore had passed the award in favour of Daiichi holding that the Singh brothers had concealed information that the Indian company was facing a probe by the US Food and Drug Administration and the Department of Justice while selling its shares.
The high court on January 31 had upheld the international arbitral award passed in the favour of Daiichi and paved the way for enforcement of the 2016 tribunal award against the brothers who had sold their shares in Ranbaxy to Daiichi in 2008 for Rs 9,576.1 crore. Sun Pharmaceuticals Ltd had later acquired the company from Daiichi.
It had however said that the award was not enforceable against five minors, who were also shareholders in Ranbaxy, saying they cannot be held guilty of having perpetrated a fraud either themselves or through any agent.
Daiichi had moved the high court seeking direction to the brothers to take steps towards paying its Rs 3,500 crore arbitration award, including depositing the amount. It has also urged the court to attach their assets, which may be used to recover the award.
During the day’s hearing, senior advocates Arvind Nigam and P V Kapur, appearing for Daiichi, claimed that they do not have faith over the brothers as they have siphoned off a large amount of money and sought that the court should freeze their assets at least till the next date of hearing.
Singhs’ lawyer sought a short adjournment as the main counsel was not available and told the court that they would come up with a plan on the next hearing.
The court said, “you have to give a plan and strategy as to how you will go about it. You should deposit some amount of money. As the amount is large, one can give you some liberty, but you have to give a plan.”
On February 16, the Supreme Court had dismissed Singh brothers’ appeal against the high court verdict upholding the international arbitral award, saying it was not inclined to interfere with it.
Daiichi, in its fresh application in the high court, has said that it has started the process of enforcing the award against the Singhs and other respondents, excluding the brothersâ€™ children, who are minors.
Daiichi had approached the high court in 2016 to seek the enforcement of a Rs 2,562 crore Singapore arbitral award passed in April 2016, along with an additional claim of interest and lawyers’ fees incurred in connection with the proceedings.
The tribunal’s award had come after the Japanese company invoked arbitration clause against Singhs alleging that they concealed important information while selling Ranbaxy in 2008.
Daiichi had entered into a settlement agreement with the US Department of Justice, agreeing to pay USD 500 million penalty to resolve potential, civil and criminal liability. The company had then sold its stake in Ranbaxy to Sun Pharmaceuticals for Rs 22,679 crore in 2015.
Singhs’ counsel had argued the award granted consequential damages which were beyond the jurisdiction of the arbitral tribunal and the award cannot be enforced under the provision of the Arbitration Act. They had alleged that Daiichi was fully aware of all facts and still chose to retain the Ranbaxy shares, instead of terminating the agreement and returning them.
Regarding the award amount, the court said it was clearly within the domain of the arbitral tribunal to assess damages.
The Delhi Debts Recovery Tribunal (DRT) has recently restrained Malvinder Singh, the co-owner of Fortis Healthcare, from selling a posh property in Lutyen’s Delhi and some other assets in a bank loan default case.