HC order on Daiichi arbitration: Fortis accepts Singh Brothers' resignation

Fortis Healthcare said its board has accepted the resignations of promoters Malvinder Mohan Singh and Shivinder Mohan Singh.

The board of directors of the company accepted the resignations of Malvinder, Executive Chairman and Shivinder, Non-Executive Vice Chairman, with effect from February 8, 2018, the company said in BSE filing.

As an interim measure, the board has constituted a management committee to oversee the functioning of the company from a strategic and operational guidance perspective and vested the management committee all responsibilities and authorities held by Singh Brothers, it said.

Fortis Healthcare also said the financial results for the second and third quarters of the ongoing fiscal could not be tabled before the Board at today's meeting.

The directors will meet on February 28 to take up the matter, it added.

Last week, the Singh brothers had jointly tendered their resignation to the company's board following the Delhi High Court order upholding the Rs 3,500-crore arbitral award in favour of Daiichi Sankyo.

The resignation was intended to free the organisation from any encumbrances that may be linked to the promoters, the brothers had said in their letter to the board.

The court had on January 31 upheld an international arbitral award of Rs 35 billion (Rs 3,500 crore) passed in favour of Japanese pharma major Daiichi Sankyo, which had alleged that the former promoters of India's Ranbaxy Laboratories had concealed information about proceedings against them by American food and drug department.

A tribunal in Singapore had passed the verdict in favour of Daiichi holding that former Ranbaxy promoters, Malvinder and Shivinder, had concealed information that the Indian company was facing probe by the US Food and Drug Administration and the Department of Justice, while selling its shares.

The high court order paved the way for enforcement of the 2016 arbitral award passed by the Singapore tribunal against the Singh brothers who had sold their shares in Ranbaxy to Daiichi in 2008 for Rs 95.76 billion (Rs 9,576.1 crore). Sun Pharmaceuticals Ltd later acquired the company from Daiichi.

Daiichi had approached the high court in 2016 to seek the enforcement of a Rs 25.62 billion (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 $500 million penalty to resolve potential, civil and criminal liability.

The company had then sold its stake in Ranbaxy to Sun Pharmaceuticals for Rs 226.79 billion (Rs 22,679 crore) in 2015.