Recently I came across the Supreme Court order of Directing Malvinder Singh and Shivinder Singh to submit a concrete plan for paying Rs 3,500 crore to Daiichi Sankyo as directed by a Singapore tribunal in Business Today.
About Ranbaxy
Ranbaxy Laboratories Limited is basically a pharmaceutical company that was incorporated in India in 1937. Ranbaxy exports its products to 125 countries with manufacturing facilities in seven countries.
Daiichi Sankyo – a Japanese pharmaceutical company gained majority control in June 2008 by acquiring a 34.8% stake in Ranbaxy for a value of $2.4 billion. Later Daiichi – Sankyo completed the takeover of the company in a deal worth $4.6 billion by acquiring a 63.92% stake in Ranbaxy. This valued the company at about $8.5 billion or INR 36,000 crores in 2008
Arbitration Case
The acquisition of Ranbaxy by Daichi Sankyo in June 2008 from the original promoter family had got mired in a series of controversies regarding diligence disclosures by the promoters.
In September 2008. barely three months after Daiichi took control of Ranbaxy, the US FDA banned 30 generic drugs manufactured from three of Ranbaxy‘s units in India citing gross violation of approved manufacturing norms. Later, the US department of justice moved a motion against the company in a local court alleging forgery of documents and fraudulent practice.
With FDA putting Ranbaxy on watch, Daiichi Sankyo also proceeded to initiate legal proceedings against the the former promoters of India‘s biggest drug maker Ranbaxy Laboratories Limited — Malvinder Singh and family for concealing and misrepresenting critical information.
In November 2012 Daiichi files a case against the Singh brothers at the Singapore International Arbitration Centre for fraud, alleging that the duo had concealed and misrepresented critical information relating to the FDA investigations while negotiating the deal.
This has led to an arbitration court in Singapore levying a fine of $500 million on former shareholders of India‘s Ranbaxy Laboratories for concealing the severity of its regulatory issues with United States Federal Drug Administration (USFDA)
In April 2016 The arbitration panel, in a two-to-one majority, finds in favour of Daiichi and orders the Singh brothers to pay the Japanese firm a penalty of $500 million. The former Ranbaxy promoters immediately challenge the tribunal’s decision before the Singapore Court of Appeal and the Delhi High Court.
In Jan 2018 The Delhi High Court upholds the decision by the Singapore arbitration tribunal (and subsequently the Supreme Court, too).
In Dec 2018 the High Court of Singapore dismisses the Singh brothers’ plea to stay the arbitration award in favour of Daiichi. The Supreme court on March 2019 asks the Singh brothers to come up with plans to pay the $500 million arbitration award to Daiichi within two weeks.Miffed at their less-than-satisfactory responses, the bench announces that it will straightaway hear Daiichi’s contempt petition on the date of the next hearing, will send the brothers to jail if found guilty.
References:
Business Management 