Daiichi approached the high court last year to seek the enforcement of a Rs 2,562 crore Singapore arbitral award delivered in April 2016, along with an additional claim of Rs 1,000 crore in interest and lawyers’ fees incurred in connection with the proceedings. The award came in the backdrop of actions initiated by the Japanese company against the former Ranbaxy promoters
with regard to their purchase of a majority stake in the Indian pharmaceutical enterprise for $4.6 billion in 2008.
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 2013. The company went on to sell their stake in Ranbaxy to Sun Pharmaceuticals
for $3.2 billion in 2015.
Since the initiation of the claim, Daiichi has alleged several irregularities on the part of Singh brothers, including false asset declarations and attempts at diluting stake in their concerns, including those held by holding companies
Oscar Investments and RHC Holdings. The claims had led the high court to direct the former Ranbaxy promoters
not to part with any unencumbered (charge-free) assets without first seeking the permission of the court.
Daiichi has also taken the issue up to the Supreme Court where they had highlighted repeated attempts at selling the stake in one of their group companies, Fortis Healthcare. On August 22, NSE data showed a sale of 4.5 million shares (0.9% stake) to Rekha Jhunjhunwala, wife of investor Rakesh Jhunjhunwala. After hearing Daiichi’s submissions, the apex court restricted the sale of all Fortis Healthcare shares (encumbered or unencumbered) by the promoters or lender institutions, till further hearings.
The former Ranbaxy promoters
had reportedly also entered earlier negotiations with Malaysian group IHH Healthcare Bhd for selling the stake in the company, which eventually fell through during the course of the dialogue. The Singh brothers have always maintained that all proposals to part with shares are to infuse capital for the smooth functioning of the entity and would not affect their ability to pay for the arbitral award if it is finally upheld by the high court.
Justice Jayant Nath on Wednesday reserved the verdict on the year-long enforcement proceedings after hearing concluding arguments made by the lawyer for the Singh brothers, senior advocate Neeraj Kishan Kaul. While summing up his defence, Kaul highlighted the various objections made by the former Ranbaxy promoters
to the enforcement of the award — including aspects of violation of fundamental public policy, non-enforceability of consequential damages and the bar of jurisdiction and limitation on Daiichi’s claim.
Lawyers of the former Ranbaxy promoters
had earlier stated that Daiichi’s claims — before the tribunal and the court — were untrue and made to extract unjustified reparations from the Singh brothers. They had also 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. The court has now directed the Singh brothers to file any further written objections to the claim by September 20.