In a blow to brothers Malvinder and Shivinder Singh, the Delhi High Court has dismissed their objections against Japanese drugmaker Daiichi Sankyo Co. Ltd over a Rs 3,500-crore ($550 million) award granted by a Singapore arbitration court.
The Singapore International Arbitration Centre had, in May 2016, slapped a fine of Rs 2,563 crore ($385 million) on the brothers for concealing facts when they sold their stake in erstwhile Ranbaxy Laboratories Ltd to Daiichi in 2008. It had also asked them to pay Rs 950 crore more as interest, legal fees and other expenses that Daiichi incurred.
The brothers had challenged the Singapore panel’s ruling in the Delhi court, arguing that the arbitration award could not be enforced under Indian law.
On Wednesday, Justice Jayant Nath of the Delhi High Court dismissed their objections. However, the court accepted the objections raised by the children of the Singh brothers, saying that the award cannot be enforced against minors.
Noting that the minor children have been saddled with a liability of Rs 3,500 crore, the judge said: “The Award against the minor is shockingly disproportionate.”
He said that the minors, acting through their guardian/agent, have received a total sale consideration of only Rs 14 lakh and that their estate gained Rs 4-5 lakh at best on account of the fraud played by the guardian.
The judge also said that if any fraud was committed by the minors’ natural guardian, Daiichi was free to start proceedings against him. “It is also (an) admitted fact that the guardian who is alleged to have committed fraud is a party to these proceedings and also has suffered award against himself,” he added.
The Singh brothers had sold their stake in Ranbaxy to Daiichi Sankyo in a deal worth about $4.2 billion in 2008. The Ranbaxy deal hurt Daiichi badly and the Japanese company posted a net loss of $3.45 billion in the year through March 2009. Daiichi sold Ranbaxy to Sun Pharmaceutical Industries Ltd in 2014.
Over the past year, the Singh brothers have sold a slew of businesses under their flagship company Religare Enterprises Ltd. These include units involved in global alternative asset management, health insurance, broking and wealth management.
The brothers are also said to be looking to sell their stake in hospital chain Fortis Healthcare Ltd. In March 2017, the Delhi High Court had directed the Singh brothers to disclose their assets after Daiichi sought the court’s intervention against them from selling a stake in the two companies.
In another setback for the Singh brothers earlier this week, private equity firm Siguler Guff & Co’s fund Resurgence PE Investments Ltd (formerly Avigo PE Investments Ltd) filed a case in the Delhi High Court alleging that Religare Finvest fraudulently provided loans to them.
Resurgence PE has a 6% stake in Religare Finvest. This was Resurgence’s second legal case against Religare in as many months.