Daiichi Sankyo made its fourth attempt in the Delhi High Court on Monday to secure the assets of Malvinder Singh and Shivinder Singh (and their affiliate companies), after claiming that the former Ranbaxy promoters had made false statements in earlier affidavits tendered before the court. The affidavits in question had been submitted by the Singh brothers in line with directions issued on a petition seeking the enforcement of a Rs 2,562 crore Singapore arbitral award in favour of the Japanese pharma major.
Senior advocate C A Sundaram, appearing on behalf of Daiichi began the Monday's proceedings by highlighting a Rs 1,500 crore discrepancy between the figures in the Singh brothers' affidavits and those provided in auditor reports of their holding company, RHC Holdings, submitted after a March 6 order made by the court. "Even today, there is no fair disclosure. The reports submitted by the auditors are completely different to the (Singh brothers') affidavits. They have committed purgery," said Sundaram in support of Daiichi's stance.
Referring to the auditor reports, the Daiichi counsel attempted to show the court that a majority of RHC Holdings' assets were unrealisable, encumbered and of related and unlisted parties. This Sundaram highlighted, was contrary to express undertakings made by the Singh brothers that two of their companies (RHC Holdings and Oscar Investments) had sufficient funds to secure the entire amount of the award. "Their affairs are all over the place and the liabilities are far more than what has been stated. Their conduct is such that I am apprehensive that my (Daiichi's) award will become a paper one. There is a need for security, as assets are still in the process of dilution," remarked Sundaram in court.
Denying Daiichi's claims, the counsel for the former Ranbaxy promoters, senior advocate Harish Salve, vehemently stated that all asset details had been provided accurately and that any differences in the figures were only due to market fluctuations.
"Also, fair enterprise values do not need the deduction of liabilities. In an unlisted company, while making a sale one may even make a premium over and above the declared value," said Salve in support of the asset value of RHC Holdings.
Salve went on to state that Daiichi had in fact made a profit of around Rs 8,000 crore in its sale of Ranbaxy to Sun Pharmaceutical and relevant tax filings made in Japan. The counsel for the Singh brothers then pressed for an independent application to seek the foreign IT returns of the company, a request that was not entertained by the presiding Justice Muralidhar. Rebutting Sundaram's claims that such an application was being made to delay the enforcement proceedings, Salve turned on Daiichi and alleged that it was the Japanese company who had failed to adhere to the court's orders by leaking parts of the arbitral award to the press. "Daiichi wants newspaper positioning, which they will then use to strike a deal for the value of the award," stated Salve in a heated exchange with the opposing counsel.
After hearing the submissions made, the court allowed Daiichi to access a separate set of sealed asset declarations earlier submitted by the former Ranbaxy promoters, to corroborate their claims of discrepancies. Daiichi has been asked to convey all their findings to the Singh brothers such that they may make appropriate responses on the next date of hearing, March 27.
The April 2016 arbitral award, along with the additional claim of Rs 1,000 crore in interest payments and lawyers' fees comes on the backdrop of actions initiated by Daiichi against the former Ranbaxy promoters in relation to their 2008 purchase of a majority stake in the pharmaceutical enterprise. The Japanese company had alleged that the stake sale was made through the concealment and misrepresentation of critical information regarding US Federal Drug Administration and Department of Justice proceedings, which cost Daiichi $550 million in settlement fees in the year 2013. On March 6, Justice Muralidhar had directed the Singh brothers to inform the court before parting with any of their unencumbered assets, in a bid to secure the amount of the award.