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February 02, 2018

Daiichi wins Enforcement of the foreign award against Singh brothers worth Rs 3,500 cr


Anand-Pathak-&-Gopal-Subramaniam

With the win of Daiichi Sankyo against billionaire Singh brothers of Rs 3,500 crore, the Delhi High Court has permitted international arbitration award enforcement in India. The reason for the win by Daiichi Sankyo was because the former Ranbaxy promoters Malvinder Singh and Shivinder Singh had concealed information about erstwhile Ranbaxy Laboratories Ltd., which was India’s largest drug maker, at a time when Daiichi purchased it from the brothers for $4.6 billion in 2008.

Daiichi Sankyo was led by Mr. Gopal Subramanium, Mr. Arvind Nigam and Mr. Arun Kathpalia, Senior Advocates, advised by P&A Law Offices, New Delhi, with a team led by Managing Partner Mr. Anand S. Pathak; Partner Mr. Amit Kumar Mishra; Principal Associate Mr. Akshat Hansaria; Senior Associates Mr. Abhijeet Sinha and Mr. Mohit Singh; Associates Mr. Akshay Puri and Ms. Samridhi Hota.

P&A Law Offices had also represented Daiichi Sankyo in the arbitration proceedings in Singapore and is presently assisting Daiichi Sankyo in the set-aside proceedings in Singapore too.

In May 2016, after their win, Daiichi had appeared before the court to collect his dues, but were counter attacked by the Singh brothers as they had challenged the petition contending that “substantive objections” existed under India’s arbitration law making the award unenforceable.

The High Court in its decision has noted that “Based on the evidence on record the Arbitral Tribunal concluded that at the time of due diligence meeting that took place on 26.5.2008 it was beyond reasonable doubt that Mr. Malvinder, Mr. Kaul and Mr. Deshmukh were aware about SAR and believed that it had triggered both the US investigations and that Ranbaxy was very seriously exposed… The Arbitral Tribunal concluded that it is beyond reasonable doubt that Mr. Malvinder, Mr. Kaul and Mr. Deshmukh acted fraudulently and dishonestly misleading the petitioner/claimant [Daiichi Sankyo] about the genesis, nature and severity of the US Regulatory investigations and deliberately concealed the Self-Assessment Report (SAR) from the claimants [Daiichi Sankyo].”

The high court said Daiichi can claim the amount from the Singh brothers and their companies but not from their children, who were named in the filed suit and that it was “clearly” within the domain of the arbitration tribunal to assess damages. The Arbitral Tribunal also analyzed that Mr. Singh and his associates were aware of an imputing internal document called the Self-Assessment Report (“SAR”) that indexed in great detail the fabricated regulatory filings in over 40 countries in relation to over 200 products made by Ranbaxy and the sale of adulterated drugs by the company; yet, they misled, actively concealed and fraudulently misrepresented to Daiichi about the SAR, its genesis and severity and its possession by the US authorities.

Challenging the order of enforcement of arbitral law in India, Singh brothers have separately challenged the award in the Court of Appeal of Singapore. “We are disappointed with the ruling,” said a RHC Holding Pvt. spokesperson, in an emailed statement.

Separately, the Supreme Court has discouraged the Singh brothers from selling any of their burdened or unencumbered assets in Fortis Healthcare in another petition filed by Daiichi.

In conclusion, the Singapore tribunal had directed the Singhs and the other respondents (excluding the minor respondents) to pay Rs 2,562 crore in damages; however, with interest and legal fees, the award is now valued at Rs 3,500 crore.

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