Delhi High Court Allows Daiichi to Withdraw Rs. 20.5 Crores Deposited with Court The Delhi High Court has allowed Japanese Pharma Company Daiichi Sankyo to withdraw the entire amount of Rs 20.5 crores which was deposited with the High Court Registrar General on the directions passed by the Supreme Court in the case of Daiichi Sankyo Company Limited vs. Oscar Investments Limited and...
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Delhi High Court Allows Daiichi to Withdraw Rs. 20.5 Crores Deposited with Court
The Delhi High Court has allowed Japanese Pharma Company Daiichi Sankyo to withdraw the entire amount of Rs 20.5 crores which was deposited with the High Court Registrar General on the directions passed by the Supreme Court in the case of Daiichi Sankyo Company Limited vs. Oscar Investments Limited and Others (2022).
The single judge Justice Yashwant Varma directed the Registrar General to take expeditious steps for its release subject to due verification.
Senior Advocate Arvind Nigam appeared for execution petitioner- Daiichi Sankyo whereas Senior Advocate Jayant Mehta and Advocates Aditya Dewan and Devina Sehgal appeared for Respondents.
The Court was dealing with the plea of Daiichi Sankyo for being accorded permission to withdraw the amount of Rs. 20,54,65,962.22 transmitted to the Registrar General of the High Court pursuant to the order of Supreme Court by the erstwhile promoters of Ranbaxy- Malvinder Mohan Singh and Shivinder Mohan Singh- were sentenced for six months imprisonment and levied Rs. 5,000 fines on each for contempt of court.
The brief background of the case is that, Daiichi Sankyo had approached the Arbitral Tribunal accusing that the Singh brothers and the related entities were concealing information regarding wrongdoing at Ranbaxy during the time when they sold majority stake in Ranbaxy to Daiichi in 2008. The Tribunal issued an award on April 29, 2016, according to which the 20 judgment debtors had been held jointly and severally liable to pay a sum of approximately Rs. 2,562 crores with further additional pre-award interest at the rate of 4.44 per cent and post award interest at the rate of 5.33 per cent aggregating to more than Rs. 4,000 crores.
The Apex Court had ordered the Executing Court, (the Delhi High Court), to appoint forensic auditors to analyze the transactions entered between Fortis Healthcare Ltd and Religare Health Trust and other related transactions.
The Supreme Court in its order, had directed that the amount of Rs. 17.93 crore which stood deposited in the Registry of the Court shall be transmitted to the executing Court, along with interest accrued thereon. The said amount was to be available to the Executing Court while considering execution of the instant foreign arbitration award.
When Daiichi raised claim on the deposit amount, Fortis Hospitals Limited (FHsL) and IHFL raised objections.
It was contended by FHsL that the amount deposited in the Supreme Court was obtained by IHFL by the sale of 12,25,000 shares of Fortis Healthcare Ltd held by Fortis Healthcare Holding Pvt Ltd (FHHPL) and it was for purging the contempt which had been found to be committed. It was further contended that these shares were pledged in favor of IHFL and the company sold the shares.
FHsL further argued that it was neither a judgement debtor nor a garnishee in the present enforcement proceedings and Daiichi, merely by virtue of being the entities in favor of who an awarded came to be rendered, cannot be recognized to have a superior or supervening right over the monies. It added that the Securities and Exchange Board of India (SEBI) has ordered in favor of FHsL for recovery of money from several of the judgment debtor (the individuals and companies against whom the Arbitral Tribunal issued the order) companies and if the money held by the Court were to be released exclusively in favor of Daiichi, it would cause irreparable loss to the hospital firm and its various other creditors.
Dismissing the objections raised by FHsL and IHFL against Daiichi’s request to withdraw the deposit, Justice Yashwant Varma in his order came down heavily on IHFL raising the objections in the matter, in line with its arguments made in the Supreme Court.
The Court observed, “the deposit presently held by this Court thus is found to have an indubitable connect to the five assurances and the injunctions granted by the Supreme Court. Those five assurances and the injunction orders of the Supreme Court constitute an unfractured thread forming part of Daiichi’s efforts to enforce the Foreign Award. It must also be noted that the shares in question came to be sequestered in terms of directions and injunctions issued by this Court as well as the Supreme Court in relation to the Foreign Award only. The shareholding of Fortis Healthcare Holdings Private Limited (FHHPL) in Fortis Healthcare Limited (FHL) was directed to be maintained and frozen at levels prevailing on the date of the orders passed for the purposes of satisfaction of the Foreign Award.”
With respect to the attenuation of shareholdings in FHL resulting from the sale of those shares, the Court opined was in apparent violation of the sequestration orders.
The Court noted that in course of that enquiry, SEBI had passed an interim order in 2018 in terms of which, FHL and FHsL were directed to take steps to recover an amount of Rs. 403 crores from the noticees, including Malvinder and Shivinder Mohan Singh.
However, the judge was of the view that said claim of FHsL, based on the directions issued by SEBI, was yet to crystallise into a binding verdict or an authoritative pronouncement based upon an adjudication undertaken by the Court. The Court appositely remarked that in fact, even the SEBI orders did not confer a right upon FHsL to draw proceedings in respect of the said shares.
The Court further emphasized that these assurances and injunctions did not come to be recorded or granted in proceedings broadly initiated for recovery of moneys diverted and defalcate by MMS (Malvinder Mohan Singh), SMS (Shivinder Mohan Singh), RHC (RHC Holdings Private Limited) or any of the other related entities referred above. In fact, these were orders and undertakings recorded in proceedings relating solely to the enforcement of the Foreign Award. Those undertakings were taken on board solely for the purposes of ensuring the liabilities flowing from the Foreign Award being met.
Therefore, the Court was unable to found itself to countenance the prayer made by FHsL.
The Court expressed its dismay as to how IHFL, after having purged itself of the contempt by depositing the amount, could have felt emboldened to seek a reopening of issues which were conclusively settled by the Supreme Court.
“A wholly preposterous submission was addressed on its behalf with it being contended that since IHFL had purged itself of the contempt it must be viewed as being “cleansed” of all wrongdoing. The Court fails to comprehend how IHFL could have felt emboldened to seek a reopening of issues which stood lent a quietus by the orders of the Supreme Court. IHFL clearly appears to have sought to reassert a right which stood quashed by the Supreme Court. The Court also notes that the objections raised by IHFL not only proceeded along lines identical to those which were urged before the Supreme Court, it was also based on the same evidence and material. The Court is thus of the firm view that its objections are in clear abuse of the process of Court,” the judge rebuked.
The Court, thus imposed a cost of Rs. 10 lakhs on IHFL for sheer abuse of the process of the Court and dismissed the objections raised by FHsL and IHFL, allowing Daiichi to withdraw the entire amount deposited with the Court, along with any interest that may have accrued.