Singh brothers question Daiichi allegations of misrepresentation in HC

Former Ranbaxy promoters say arbitral tribunal overstepped authority while making Rs 2,562 cr award

Lawyer Harish Salve, appearing on behalf of ex-Ranbaxy promoters Malvinder Singh and Shivinder Singh, told Delhi high court on Wednesday that Daiichi Sankyo had full knowledge of all affairs of Ranbaxy at the time of stake purchase in the company in 2008. 

Highlighting e-mails of Daiichi’s top brass during the time of negotiations, Salve told court the Japanese pharmaceutical major’s claims of misrepresentation of critical information about Ranbaxy was a farce to extract unjustified reparations from the Singh brothers. “Even after knowledge of the situation, Daiichi bought the company. Now they (Daiichi) make tall claims of misrepresentation. These (Daiichi’s senior management) are hardened negotiators, not simpletons being misled in any manner,” said Salve.

The lawyer also  showed court that Daiichi chose to retain Ranbaxy shares even after the alleged misrepresentation had come to light, at a time when they could have terminated the contract and returned them. Instead, he said, these shares were later sold to Sun Pharmaceutical for a profit of Rs 2,800 crore, in addition to tax benefits the company received in Japan.

Salve also questioned the validity of the arbitral award, which he said was not a contractual dispute capable of being entertained by the tribunal. “The tribunal could have only awarded contractual damages, not consequential ones.” said Salve.  

Arguing against the amount of the award, the Singh brothers’ lawyer also mentioned that the tribunal determined the damages looking at the time value of money from the date of the purchase and took no notice of the sale to Sun Pharmaceutical at a profit. “How they (the tribunal) have come to this computation of damages is remarkable,” added Salve. 

Daiichi’s enforcement of the April 2016 Singapore arbitral award, along with an additional claim of Rs 1,000 crore in interest and lawyers’ fees comes on the backdrop of actions initiated by the Japanese company against the former Ranbaxy promoters in relation to the purchase of a majority stake in the Indian pharmaceutical enterprise. The Japanese company had alleged that the stake sale was made through the concealment and misrepresentation of critical information regarding US Federal Drug Administration and Department of Justice proceedings, which cost Daiichi $550 million in settlement fees in the year 2013.

On March 6, the court had directed the Singh brothers to inform it before transferring any of un-encumbered assets in a bid to secure the amount of the award. The case is listed for further arguments on April 28.