Ranbaxy to Religare: A snapshot of legal cases involving Singh brothers

The curtain seems to be drawing on the erstwhile promoters of pharmaceutical major Ranbaxy and the country’s second-largest hospital chain, Fortis Healthcare. Embroiled in multiple legal cases across jurisdictions, Malvinder Mohan Singh and his younger brother Shivinder Mohan Singh are in police custody following a complaint of fund siphoning, filed by the financial services company that they founded and once owned.

Here is a snapshot of various legal cases that the Singh brothers are involved in:

Daiichi Sankyo-Ranbaxy case

The Singhs have been feeling the heat from this marquee case since 2013 when the Japanese drugmaker challenged them in a tribunal in Singapore for concealing information regarding wrongdoings at Ranbaxy. Armed with a favourable order, Daiichi Sankyo approached the Delhi High Court and the Supreme Court for the enforcement of the award.

Issue:  An arbitral tribunal in Singapore held the two brothers guilty of misrepresenting and concealing the “genesis, nature and severity of the US regulatory investigations” when Daiichi Sankyo bought their 34.82 per cent stake in Ranbaxy in 2008. It asked the Singh siblings to cough up Rs 3,500 crore.

Status:  The case has been ongoing for more than three years now in the Delhi High Court. In the latest order of September 27, the HC has asked for a deposit of nearly Rs 6,000 crore with the court registry within 30 days. The Supreme Court, meanwhile, has reserved its judgment on whether the Singh brothers are guilty of contempt of court for having sold their stake in RHC Holding, despite the court’s clear orders against it.

HDFC-RHC Holding Insolvency case

In 2018, HDFC approached the National Company Law Tribunal (NCLT) seeking to initiate insolvency proceedings against RHC Holding, an entity promoted by the Singh brothers.

Issue:  HDFC said RHC Holding had defaulted on payments of nearly Rs 41 crore, and was not responding to the bank’s requests for repayment. It also alleged that RHC Holding did not fall under the ambit of a non-banking financial company (NBFC), and thus could not avoid insolvency by taking refuge under that umbrella.

Status:  HDFC’s plea was rejected by the NCLT, following which the company appealed to the National Company Law Appellate Tribunal (NCLAT). The NCLAT too rejected HDFC’s plea and held that RHC Holding was indeed an NBFC and thus insolvency could not be initiated against it. HDFC has now approached the Supreme Court, which had on the last hearing agreed to hear the case.

Religare fraud case

The case, which is currently making the headlines, started on a prompt by the Delhi High Court.

During a hearing in the Daiichi Sankyo-Ranbaxy arbitration case, Religare Enterprises approached the Delhi HC saying that it also should be paid from the amount recovered from the Singh brothers. The company claimed that after an internal audit, it had discovered a fraud of nearly Rs 740 crore committed allegedly by the brothers when they were in charge.

The court prompted Religare Enterprises to file a police complaint against the former promoters. REL then approached the Economic Offences Wing (EoW) of the Delhi Police and filed a complaint.

Issue:  After the exit of the Singh brothers as promoters of Religare Enterprises in 2018, the company conducted an internal audit and found that the two had given loans to companies related to them without following the due process. The EoW in its first information report said that the fraud amount could be as high as Rs 2,300 crore.

Status: The brothers were remanded to a four-day EoW custody last week by a lower court in Delhi.

SFIO probe

Apart from the EoW, the Serious Fraud Investigation Office (SFIO) is probing the role of the Singh brothers in the alleged fund diversion from Fortis Healthcare. After an initial probe, the SFIO had said that the money trail had led them to believe that the fraud could be to the tune of Rs 2,000 crore.

Issue:  The SFIO and the Securities and Exchange Board of India (Sebi) suspect that the Singhs diverted public money from Fortis Healthcare to Gurinder Singh Dhillon, head of Radha Soami Satsang Beas and other religious bodies.

Status:  Malvinder has been named the chief accused in the case. He has moved the Delhi High Court, seeking quashing of the EoW FIR, claiming that the SFIO and EoW probe cannot go parallel. The court has reserved its order on the issue.

It is, however, unlikely that the elder Singh sibling will get any relief from custody, say experts. “In case no interim protection is granted by the high court, he will have to move the Supreme Court quickly to obtain an ad-interim relief,” said Sandeep Grover, partner at ORTIS Law Offices.