New Delhi: The Delhi high court on Wednesday allowed Daiichi Sankyo Co. Ltd to enforce a foreign arbitral award ordering former Ranbaxy Laboratories Ltd owners Malvinder and Shivinder Singh and 13 others to pay about Rs3,500 crore to the Japanese drugmaker.
In a 115-page verdict, justice Jayant Nath upheld the April 2016 award by an arbitration tribunal in Singapore which had ruled in favour of Daiichi. The tribunal had directed the Singh brothers to pay about Rs2,563 crore in damages, plus interest of 4.44% per year from 7 November 2008 to the date of the award.
The tribunal found the brothers guilty of making false claims in a self-assessment report and of fraudulently misrepresenting and concealing the “genesis, nature and severity of the US regulatory investigations" of Ranbaxy when Daiichi bought their 34.82% stake for $2.4 billion in 2008. The total deal value was $4.6 billion.
Sun Pharmaceutical Industries Ltd in 2014 agreed to acquire Ranbaxy from Daiichi Sankyo for $3.2 billion in stock, in addition to assuming $800 million of debt.
Wednesday’s court verdict, however, held the arbitral award to be unenforceable against minor parties to the dispute.
“Today’s judgment by the Hon’ble Delhi high court has given partial success to some of the sellers of shares of erstwhile Ranbaxy (respondents). The court has held the award to be unenforceable against the minors. However we are disappointed with the ruling against the rest of the sellers. After studying the order in detail the respondents will decide on further course of action," a spokesperson for RHC Holding Pvt. Ltd, the non-banking financial company owned by the Singh brothers, said in an official statement.
The brothers have the option of appealing against the verdict in the Supreme Court.
After a year-long legal battle between Daiichi and the brothers over enforcement of the arbitral award, the verdict was reserved by justice Nath in September 2017.
In 2013, Ranbaxy pleaded guilty to charges related to drug safety and agreed to pay $500 million in civil and criminal fines under a settlement with the US department of justice.
The charges were of non-compliance with drug manufacturing quality norms and related falsification of data in filings made to the US Food and Drug Administration at least six years earlier.
In November 2013, Daiichi took the dispute over the alleged “concealment and misrepresentation" of information to the Singapore arbitration tribunal. In May 2016, Daiichi moved the Delhi high court to enforce the arbitration award.