Ranbaxy deal, SC dismisses Singh brothers’ appeal

The Singh brothers, Malvinder and Shivinder suffered yet another jolt on Friday when the Supreme Court dismissed their appeal against the January 31 order of the Delhi High Court that allowed Japanese drug maker Daiichi Sankyo to recover $500 million (over `3,300 crore) from them as per the award by a Singapore arbitration tribunal in April 2016. “We are not inclined to interfere. Our answer at the moment is no,” said a bench led by justice Ranjan Gogoi. The brothers now don’t have any further legal option to block the enforcement of the award. A statement issued by them said that they are disappointed by the SC’s order and are now evaluating the option of challenging the award in Singapore courts.

“We respect the ruling by the Hon’ble Supreme Court of India. However we are disappointed by the decision. The Hon’ble Court decided not to go into the merits of the majority arbitration award. We believe we have been wronged in the majority Singapore arbitration award. The case has hurt and crippled our entire group,” the statement said “We would now like to fight for our Justice and Pride at this point and not for economics only. We are evaluating the option to challenge the majority Arbitration Award in Singapore Courts. We maintain that there was no misrepresentation or concealment in the Ranbaxy deal to Daiichi Sankyo and these are false accusations made against the Respondents four years after Daiichi Sankyo bought Ranbaxy (after around 9-10 months of due-diligence). The products made by Ranbaxy had always been of good quality which even the US FDA maintained in their statements and hence continued to be sold in the US. Despite all the accusations by Daiichi Sankyo, they made profit from the sale in 2015, which is a clear indication of an intrinsic value of Ranbaxy,” it said.

While rejecting the objections raised by the brothers against the enforceability of the arbitration, the Delhi HC had said that the court does not exercise “appellate jurisdiction” over the foreign award nor does it go into procedural defects so as to excuse an award from enforcement on the ground of public policy of India. Daiichi Sankyo, which finally exited Ranbaxy in April 2014 by selling its stake to home-grown multinational Sun Pharmaceutical Industries, had filed the arbitration case in 2013 in Singapore. It had accused the Singh brothers of concealment and misrepresentation of facts and sought compensation for losses. Ranbaxy under the management of Daiichi had in 2013 paid $500 million to the US Department of Justice pleading guilty to the charges of felony.

In May 2016, Singapore’s arbitration tribunal asked the brothers to pay damages of Rs 2,562.78 crore ($400 million) to Daiichi Sankyo for concealing and misrepresenting information during their stake sale in 2008 to the Japanese firm. With interests and legal fees the payable amount now comes to around Rs 3,500 crore. Daiichi had then moved the Delhi High Court for enforcement of the award to recover the damages from the brothers. However, the brothers challenged the petition.

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