Daiichi contempt plea: Delhi HC tells Fortis promoters to respond by Aug 10

Plea had been filed to stop Malvinder, Shivinder Singh from diluting stake in Fortis Healthcare

The Delhi High Court on Tuesday asked RHC Holdings and Oscar Investments (companies owned by former Ranbaxy promoters Malvinder and Shivinder Singh) to respond by August 10 to a contempt application filed against them by Japanese pharmaceutical major Daiichi Sankyo.

Daiichi had filed the plea on June 21 to stop the Singh brothers from selling their controlling stake in Fortis Healthcare, which they claimed would amount to a dilution of their unencumbered assets in their holding companies in violation of the court’s earlier orders. The high court had on March 6 directed the Singh brothers (and their companies) not to part with any unencumbered assets without getting permission.

After hearing the contempt application, the court had asked the Singh brothers not to cause any change to the disclosed value of their unencumbered assets. The former Ranbaxy promoters had previously filed declarations of their assets and undertaken to preserve sufficient assets to cover the Rs 2,562-crore Singapore arbitration award currently being enforced by Daiichi in the high court.

Daiichi has claimed that any stake sale in Fortis Healthcare will lead to a reduction in the Singh brothers’ unencumbered assets in RHC Holdings and Oscar Investments and threaten the realisation of the international arbitration award in favour of Daiichi.

Daiichi’s enforcement of the April 2016 Singapore arbitral award, along with an additional claim of Rs 1,000 crore in interest and lawyers’ fees, comes on the backdrop of actions initiated by the Japanese company against the former Ranbaxy promoters in relation to the purchase of a majority stake in the Indian 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.

The main arguments in the enforcement proceedings will be heard on July 11. In addition to approaching the Delhi High Court, Daiichi is also seeking the realisation of the arbitral award in Singapore and also recently moved the National Company Law Tribunal in Chandigarh to stop Fortis Healthcare from splitting its hospital and diagnostics businesses.