Dai­ichi Moves to Block For­tis Stake Sale Again

Moves HC say­ing Singhs, for­mer Ran­baxy pro­mot­ers, haven't fol­lowed court’s or­der on un­en­cum­bered as­sets; broth­ers deny al­le­ga­tions

The Economic Times - - Companies: Pursuit Of Profit - Our Bureau

New Delhi: Ja­panese phar­ma­ceu­ti­cal firm Dai­ichi Sankyo has again asked the Delhi High Court to block any stake sales by for­mer Ran­baxy pro­mot­ers Malvin­der and Shivin­der Singh as it bat­tles to re­cover more than .₹ 2,500 crore from an ar­bi­tra­tion award. It has filed an ap­pli­ca­tion to this ef­fect and the mat­ter is ex­pected to be heard on Tues­day, ac­cord­ing peo­ple with knowl­edge of the mat­ter. ET has re­viewed a copy of the ap­pli­ca­tion. The move by Dai­ichi Sankyo comes as the Singh broth­ers are re­port­edly in talks to sell a large stake in their com­pany For­tis Health­care — a move that Dai­ichi has ar­gued would lead to di­lu­tion in the as­sets it seeks to re­cover as part of the award.

Dai­ichi al­leges that the Singhs haven’t fol­lowed the court’s or­der to dis­close de­tails about un­en­cum­bered as­sets that can be con­sid­ered dur­ing the award’s en­force­ment trial. The broth­ers have de­nied these al­le­ga­tions, ar­gu­ing that they have com­plied with the or­ders. ET re­ported on Fe­bru­ary 16 that global in­vestor TPG Cap­i­tal was at­tempt­ing a pos­si­ble con­sol­i­da­tion of For­tis Health­care and Ma­ni­pal Health En­ter­prises in what would be the big­gest M&A deal in the In­dian health­care in­dus­try.

Jus­tice S Mu­ralid­har is ex­pected to hear the case to­day (Fe­bru­ary 28).

Dai­ichi had first moved an ap­pli­ca­tion for an in­junc­tion on the sale of these as­sets on Jan­uary 17. The court has so far not blocked the Singh broth­ers from sell­ing stakes in For­tis Health­care and Reli­gare Fin­vest.

How­ever, Jus­tice Mu­ralid­har had, dur­ing an ear­lier hear­ing, asked whether the broth­ers and 17 other re­spon­dents in the case had any un­en­cum­bered as­sets that could in­stead be con­sid­ered dur­ing the award’s en­force­ment trial. The judge had fur­ther di­rected the re­spon­dents to file an af­fi­davit de­tail­ing the value of all of their share­hold­ing in such un­en­cum­bered as­sets.


“Not later than 8th Fe­bru­ary, 2017, the par­tic­u­lars and as­sur­ance in the man­ner sought by the court will be fur­nished on an af­fi­davit by any one of the re­spon­dents on be­half of the rest of the Re­spon­dents,” reads a Jan­uary 23 court or­der.

Ac­cord­ing to Dai­ichi’s lat­est ap­pli­ca­tion, the af­fi­davit filed on be­half of the ex-Ran­baxy pro­mot­ers and other re­spon­dents is “not in terms” and “in­con­sis­tent” with the judge’s or­der. The Ja­panese firm al­leges that the re­spon­dents have nei­ther par­tic­u­larised their un­en­cum­bered as­sets nor pro­vided any as­sur­ance that the as­sets, to the ex­tent of the award amount, won’t be en­cum­bered or alien­ated un­til the award is en­forced.

Dai­ichi’s ap­pli­ca­tion states that the re­spon­dents have also not de­tailed the method used to de­ter­mine the fair value of the as­sets — the amount at which they can be bought or sold.

The ap­pli­ca­tion adds that it is im­por­tant for Dai­ichi to know these par­tic­u­lars to de- ter­mine whether the re­spon­dents have ad­e­quate as­sets to pay the award when it’s en­forced.

Apart from seek­ing an in­junc­tion once more on any sale of as­sets by the Singh broth­ers and other re­spon­dents in the case, Dai­ichi has also sought an or­der to se­cure the award amount — .₹ 2,562 crore plus in­ter­est.

It wants this to be de­posited with the Delhi court’s regis­trar or an es­crow ac­count.

“It is sub­mit­ted that, in ab­sence of spe­cific in­for­ma­tion about the na­ture, qual­ity and value of the un­en­cum­bered as­sets held by the re­spon­dents, the re­spon­dents be re­strained from alien­at­ing or dis­pos­ing of any as­sets,” Dai­ichi Sankyo said in its ap­pli­ca­tion.

“All di­rec­tions of the hon­ourable court stand com­plied with,” said a spokesper­son for RHC Hold­ing, the hold­ing com­pany of the Singh broth­ers in re­ply to a query. There was no re­sponse to an email sent to Dai­ichi’s lawyers.

Dai­ichi and the Singh broth­ers have been locked in an ar­bi­tra­tion dis­pute over the sale of Ran­baxy, once In­dia’s largest drug­maker. A Sin­ga­pore tri­bunal had in April 2016 given its or­der in favour of Dai­ichi by a 2-1 ma­jor­ity. It or­dered the Singh broth­ers to pay the Ja­panese drug­maker .₹ 2,562-crore in dam­ages for con­ceal­ing in­for­ma­tion re­gard­ing wrong­do­ing at Ran­baxy while sell­ing it for $4.6 bil­lion in 2008. Along with in­ter­est and le­gal fees, the to­tal li­a­bil­ity was last pegged at .₹ 3,500 crore. The Singh broth­ers have ap­pealed against the or­der in both Delhi and Sin­ga­pore, ar­gu­ing that “sub­stan­tive ob­jec­tions” ex­ist un­der In­dia’s ar­bi­tra­tion law to make the or­der un­en­force­able.

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