The Delhi High Court on Monday ordered former Ranbaxy promoters Malvinder Singh and Shivinder Singh not to part with any unencumbered (charge-free) assets without first approaching the court in a bid to secure funds for a Rs 2,562 crore Singapore arbitration award in favour of Japanese pharma major Daiichi Sankyo.
Senior advocates C A Sundaram and Arvind Nigam, appearing on behalf of Daiichi, began the day's proceedings by pressing on an application seeking to restrain the Singh brothers from transferring shares in subsidiary companies of RHC Holdings (the holding company for a majority of the former Ranbaxy promoters' assets). The application followed two previous attempts to stop the possible sale of Fortis Healthcare, which the Singh brothers have claimed is only to infuse capital into the enterprise and represents 5-10 per cent of their encumbered asset value.
The Daiichi counsels also informed the court that the Singh brothers had failed to submit all details of their unencumbered assets, as directed by the court on January 23 and highlighted discrepancies between the figures provided and the actual amount of unencumbered shareholding, which they claimed was worth only Rs 1,600 crore. The advocates also showed evidence of charges on all present and future assets of RHC Holdings for previous borrowings made by the company, which they have claimed can threaten the realisation of the Singapore award at a later stage.
Responding to the allegations, senior advocates Abhishek Singhvi and Rajiv Nayyar, representing the former Ranbaxy promoters, stated that Daiichi had itself failed to comply with the January 23 order and had still not filed a confidentiality affidavit with regard to the privacy of the Singh brothers assets, as previously directed by court. Singhvi reiterated that any proposed stake sales were only of encumbered assets and were being contemplated to ensure the well-being of the companies and to enhance value for all stakeholders. He also highlighted that the brothers had at least Rs 5,000 crore in unencumbered assets by conservative estimates, which was more than sufficient to secure the arbitral award if payment became necessary.
After hearing the submissions, Justice Muralidhar sided with the Daiichi counsels and concluded that the affidavits filed by the Singh brothers in line with the January 23 order, had failed to detail the complete list of unencumbered assets and asked them to file all necessary details, not just their investments, loans and advances. Additionally, the court asked the former Ranbaxy promoters to file a list of all borrowings, which are secured by present and future assets and also directed the chartered accountants of RHC Holdings (and other subsidiary companies) to furnish certificates of book and fair market values of all such unencumbered assets.
Referring to the January and February statements made by the Singh brothers, Muralidhar recorded submissions where they had expressed no intention of selling unencumbered assets and to keep the amount of the award secure. As a preventative measure, the also court went on to pass an order requiring the former promoters to first apply to the court if there was to be any change in their unencumbered assets.
Daiichi had approached the Delhi High Court last year seeking the enforcement of the Rs 2,562 crore arbitral 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 2016 arbitral award came 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 company has alleged that the stake sale was made through the concealment and misrepresentation of critical information regarding US Federal Drug Administration (USFDA) and Department of Justice proceedings, which cost Daiichi $500 million in settlement fees in the year 2013.
The next date of hearing in the matter is March 20.
