The Delhi High Court on Monday asked former Ranbaxy promoters Malvinder and Shivinder Singh to file an affidavit on or before February 8, declaring the value of their unencumbered shareholdings in various group entities of RHC Holdings.
The bench of Judge Muralidhar also allowed Daiichi to access previous asset declarations made by the Singh brothers in sealed envelopes to the court for use in upcoming judicial proceedings in India and abroad, provided an affidavit of confidentiality was submitted by Daiichi in this regard.
Daiichi had approached the Delhi High Court last year, seeking the enforcement of a Rs 2,562-crore Singapore arbitration award against the Singh brothers, as well an additional sum of Rs 1,000 crore in interest payments and lawyers fees, incurred in association with the proceedings. The April 29, 2016, award comes on the backdrop of actions initiated by Daiichi against the former Ranbaxy promoters in relation to their 2008 purchase of a majority stake in the pharmaceutical enterprise. The Japanese firm has alleged the stake sale was made through concealment and misrepresentation of critical information regarding US Food & Drug Administration and Department of Justice proceedings, which cost Daiichi $500 million in settlement fees in the year 2013.
Senior advocates C A Sundaram and Arvind Nigam, representing Daiichi, began Monday’s arguments by highlighting how the attempts by RHC Holdings to infuse capital into the enterprise through the stake sale in Fortis Healthcare, in fact diluted the former promoters’ control in the company. This move, in the opinion of the Daiichi counsels, stood contrary to the Singh brothers’ earlier undertakings, which promised to keep the amount of the dispute secure and available for payment, subject to the final determination in court.
Answering Justice Muralidhar’s question as to how the stake sale affected the former Ranbaxy promoters’ capacity to pay for the award, Sundaram highlighted the Singh brothers had allegedly created encumbrances on shares, as well as pledged present and future assets of Fortis, only days before the Singapore arbitral determination. In his attempt to substantiate Daiichi’s apprehensions, the counsel also mentioned that several stake sales in various group entities had also already taken place before the pronouncement of the award and that the Singh brothers currently owned 63 per cent in Fortis, out of which 80 per cent already stood secured by other lenders.
Senior advocate Harish Salve, appearing on behalf of the Singh brothers, responded by reiterating that the former Ranbaxy promoters had not sold any of their personal shareholdings since the date of the award and that the holding company did not have any plans to sell Religare Finvest, as also alleged by Daiichi. Further, Salve mentioned that the talks for the stake sale in Fortis were to ensure the continued operation of the enterprise and would in all likelihood be made at a premium, which would result in a higher share price for all shareholders, including the Singh Brothers. The counsel also submitted that any developments on the sale would be informed to the court, as and when they took place.
The bench allowed Daiichi to access the previous asset declarations made by the Singh brothers in sealed envelopes before court, for use in judicial proceedings subject to an affidavit of confidentiality being filed by the Japanese company.
The Delhi High Court will hear the matter next on March 14.