A Singapore arbitration tribunal has asked former promoters of Ranbaxy Laboratories, Malvinder and Shivinder Mohan Singh, to pay damages of Rs 2,562.78 crore to Daiichi Sankyo for concealing and misrepresenting information during the sale of their stake in 2008 to the Japanese firm.
Daiichi Sankyo, which finally exited the company in April 2014 by selling it to Sun Pharmaceutical Industries, had filed the arbitration case in 2013. It had accused the Singh brothers of “concealment and misrepresentation of facts” and sought compensation. Ranbaxy, under Daiichi management, had in 2013 paid $500 million to the US Department of Justice pleading guilty.
“The arbitration tribunal has issued an award by a majority of 2:1 in favour of the claimant for damages of an amount of Rs 2,562.78 crore, with Justice AM Ahmadi giving a dissenting opinion dismissing all claims of the claimant,” RHC Holding said. RHC Holding is among the sellers of shares of the erstwhile Ranbaxy Laboratories along with Oscar Investments, which have been named as respondents in the arbitration suit by the claimant, Daiichi Sankyo.
On its future course of action, RHC Holding said: “The company is exploring further legal options to challenge the majority award.” It, however, declined to share details, stating that “all the parties to the arbitration are bound by confidentiality obligations as a part of the arbitration proceedings”.
Malvinder Singh declined to comment. Shivinder Mohan Singh has stepped down from the executive role of group companies and joined the Radha Soami Satsang Beas.
When Ranbaxy was acquired in June 2008 by Daiichi, Malvinder Singh continued to be the CEO and MD, a post from which he stepped down in May 2009. The allegations about the wrong practices at Ranbaxy were first noted by the US FDA in 2006 with a final ban of drugs taking place in September 2008. In December 2011 the firm agreed to sign a consent decree with the US authorities to resolve the criminal charges and provisioned $500 million for that. Later, in 2013, it pleaded guilty and paid the amount. In September 2008, the US FDA had banned 30 generic drugs produced by Ranbaxy at its Dewas and Paonta Sahib and Batamandi units, citing gross violation of manufacturing norms. Later, the US DoJ had moved a motion against the company in a local court alleging forgery of documents and fraudulent practice.
After Daiichi’s allegations, Malvinder Singh had hit back at the Japanese firm stating that it failed to manage the company properly, and therefore was levelling “baseless charges” at him.
“Nothing was kept away from them (Daiichi). It was they who approached us to buy the firm, there was a proper due diligence, long dialogue, all documents relating US DoJ and FDA were shown to them. Now after five years to hear from them that we concealed information from them is totally baseless,” Malvinder had said in 2013. FE