Children of ex-Ranbaxy promoters say not liable to Singapore tribunal fine
Children of former Ranbaxy promoters — brothers Malvinder and Shivinder Singh — moved Delhi high court on Friday against Singapore tribunal order holding them also liable to pay ~3,562 crore to Japanese firm Daiichi Sankyo.
Lawyer Sandeep Sethi said the decision of the tribunal to hold the children liable was out of step with Indian law that made minors immune from liability.
The Singapore arbitral penalty of ~2,562 crore, along with claims of ~1,000 crore for lawyers' fees and interest, bringing the total to ~3,562 crore, applies to brothers Malvinder and Shivinder Singh and their children. The order came in April 2016 after Daiichi Sankyo initiated action against the former Ranbaxy promoters in relation to the Japanese firm's purchase of a majority stake in the Indian pharma company. The Japanese firm had alleged concealment and misrepresentation of critical information regarding US proceedings before stake sale, which cost Daiichi $550 million in settlement fees in 2013.
Claiming that the protection of young people and their estates was part of the fundamental policy of India and an obligation of the court in enforcement proceedings relating to international arbitration, Sethi said the amount could not be imposed on the children as the tribunal had failed to appoint a guardian on their behalf. According to the lawyer, even if the tribunal had appointed a guardian, it could only have been for the benefit of the interests of such minors and not against their detriment, according to Indian law.
Sethi also highlighted that the amount, which was for alleged misrepresentations by Malvinder Singh, who had acted as an agent for other parties during negotiations for Ranbaxy sale, could not apply to the children as they being young were in no capacity to appoint an agent. "However, the tribunal wrongly concluded that the minors were liable for these (alleged) misrepresentations since Malvinder Singh had the authority to execute the share-purchase agreement on their behalf," said the lawyer for the children of the former Ranbaxy promoters.
Showing the total shareholding value of the children amounted to a mere ~14.7 lakh during the time of Ranbaxy sale, Sethi said the liability on them was a severe penalty by a tribunal which had proceeded without any authority of law.