Malvinder Mohan Singh and Shivinder Mohan Singh, the former promoters of Ranbaxy Laboratories are mulling a challenge to a Singapore arbitration court ruling asking them to pay damages of Rs 2,562.78 crore (about $386 million) to Daiichi Sankyo for ‘concealing and misrepresenting information’ while selling their stake to the Japanese pharmaceutical firm in 2008.
The awardOscar Investments Ltd., the investment firm of the Singh brothers, through which they had made the sale and now a respondent in the arbitration proceedings, said in a statement, “In an arbitration dispute between Daiichi Sankyo, the claimant, and the sellers of shares of erstwhile Ranbaxy Laboratories, the Arbitration Tribunal has issued an award, where the law governing the dispute was Indian Law, for damages of an amount of Rs.2,562.78 crore.” The award was issued by a majority of 2:1 in favour of Daiichi Sankyo. One of the Tribunal members was Justice A.M. Ahmadi, the former Chief Justice of India, had dissented by dismissing the claims.
The amount to be paid for damages includes interest, costs and expenses of the arbitration till the date of award and interest until date of payment, according to the statement. Oscar said it is exploring legal options to challenge the award. The spokesperson for Daiichi-Sankyo could not be reached immediately. An e-mail sent to Daiichi Sankyo wasn’t immediately answered.
The deal and afterIn 2008, Daiichi Sankyo had bought the entire 35 per cent stake in Ranbaxy from its promoters, Malvinder Mohan Singh and family, for $2.4 billion.
In 2013, Daiichi Sankyo filed an arbitration case in Singapore alleging that Ranbaxy concealed and misrepresented critical information concerning the US Department of Justice and the FDA investigations. The Indian pharmaceutical company had pleaded guilty to charges related to drug safety, agreeing to pay $500 million in civil and criminal fines under the settlement agreement with the U.S. Department of Justice.
Oscar Investments and RHC Holding Pvt Ltd are among the sellers of shares of erstwhile Ranbaxy Laboratories and have been named as respondents in the arbitration suit by Daiichi Sankyo. After buying out the erstwhile promoters, Daiichi spent a total of about Rs 22,000 crore to gain a majority stake in Ranbaxy. This was followed by the $ 4.2 billion merger deal between Sun Pharmaceuticals and Ranbaxy. Last April, Daiichi Sankyo sold its stake of about 9 per cent in the merged entity for more than Rs.20,420 crore, ending seven years of its tumultuous experience in the country. A Sun Pharmaceutical spokesperson declined to comment. Malvinder Mohan Singh is now executive chairman of Fortis Healthcare. His brother, Shivinder Mohan Singh, earlier executive vice-chairman of the hospital chain, had stepped down last year.
