Daiichi is seeking enforcement of an arbitration award in favour of it against former Fortis promoters Malvinder and Shivinder Mohan Singh for alleged fraud in the 2008 sale of their pharma company Ranbaxy Laboratories to the Japanese firm. Including interest, the amount that a Singapore tribunal awarded a decade ago has now swelled to ₹5,200 crore.
To secure the payment, Daiichi wanted to prevent Singh brothers from diluting their Fortis stake, but lenders invoked and sold off the brothers’ pledged shares to recover debt. The case has effectively become a three-way contest among Singh brothers, lenders and Fortis over who bears responsibility for shrinking assets of Singh brothers.
Daiichi, represented by senior advocate Arvind Nigam and advocate Giriraj Subramanium, questioned transactions involving Fortis’ stake, including sale of 186 million encumbered shares, terming them deliberate asset dissipation.
“The nub of the matter is we are talking of two aspects of FHL’s transactions-one is the dissipation of an unencumbered, the other is the formation of the new avatar (with IHH taking over the hospital chain). These are two separate things. The dissipation happened at a point of time when the Singh brothers were the controlling entity,” Nigam argued before the bench of Justice Subramonium Prasad. “There is a regulatory framework, which casts obligations on listed company’s compliance officer and casts eclipse on promoter shares. Promoter shares could never have gone out without okay of compliance officer under regulatory framework of Sebi,” he said.
“18.6 crore (186 million) shares were encumbered by financial institutions and banks-disclosures made, uploaded by the company and sold, leaving 13.99 crore shares, which were unencumbered and sold in transactions with the approval of the compliance officer at a point of time when the FHL was an entity of the judgment debtors,” he said.
Fortis pushed back against Daiichi’s attempt to hold it liable for the dissipation of the promoter stake, arguing that the Japanese pharma giant had every legal tool available to protect its interests for nearly a decade and simply chose not to use them.
“I have instructions to confirm to you that FHL and its compliance officer never gave any approval to any of these transfers,” Fortis’ counsel told the court.