Malvinder Mohan Singh and Shivinder Mohan Singh, the former promoters of Ranbaxy Laboratories Ltd, have been slapped with a Rs 2,600-crore fine by an arbitration court in Singapore for ‘suppressing and misrepresenting’ facts from Daiichi Sankyo, when the Japanese company bought the brothers’ 35% stake in Ranbaxy for $2.4 bllion in 2008.
However, in 2013, the Japanese pharmaceutical major filed an arbitration case in Singapore accusing the Indian promoters of concealment and misrepresentation of facts, after Ranbaxy paid $500 million to the US Department of Justice as settlement for misrepresenting facts.
The arbitration tribunal has issued an award by a majority of 2:1 in favour of the claimant for damages of an amount of Rs 2,562.78 crore, RHC Holding Pvt Ltd said in a statement.
RHC Holding Pvt Ltd is among the sellers of shares of erstwhile Ranbaxy Laboratories along with Oscar Investments, which have been named as respondents in the arbitration suit by the claimant, Daiichi Sankyo.
In a statement issued on Thursday, RHC Holdings, which held 27% stake in erstwhile Ranbaxy, said they will explore legal options to challenge the fine.
It, however, declined to share details, saying, “All the parties to the arbitration are bound by confidentiality obligations as a part of the arbitration proceedings.”
The statement added that the damage amount to be paid include “quantified interest, costs and expenses of the arbitration till the date of award and interest on above until date of payment, against all the respondents jointly and severally”.
Pranav Mago, head of South Asia for Singapore International Arbitration Centre, declined to comment citing confidentiality agreements.
After buying out the erstwhile promoters, Daiichi spent around Rs 22,000 crore to gain a majority stake in Ranbaxy. Later on, the Japanese firm exited Ranbaxy following a $4.2-billion merger deal between Sun Pharmaceuticals and Ranbaxy. in March 2015. It sold out its entire stake for over Rs 20,420 crore, after facing a series of import alerts and warning letters by the US Food and Drug Administration (FDA) over concerns about manufacturing processes at its plants.
Malvinder is currently the chairman of Fortis Laboratories. Younger brother Shivinder stepped down from the executive role of group companies last year to join the Radha Soami Satsang Beas, a spiritual organisation headquartered near Amritsar.
With inputs from agencies