O.M.P (E)(COMM.)--6/2016. Case: DAIICHI SANKYO COMPANY LIMITED Vs. MALVINDER MOHAN SINGH AND ORS. High Court of Delhi (India)
| Case Number | O.M.P (E)(COMM.)--6/2016 |
| Citation | NA |
| Judgement Date | January 31, 2018 |
| Court | High Court of Delhi (India) |
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 06.09.2017 % Pronounced on: 31.01.2018
+ O.M.P.(EFA)(COMM.) 6/2016
DAIICHI SANKYO COMPANY LIMITED ..... Petitioner Through Mr.Gopal Subramanium, Sr. Mr.Arvind Nigam, Sr.Adv. and Kathpalia, Sr. Adv. with Mr.Amit Mr.Mohit Singh, Ms.Hima Lawrence,
Puri, Mr.Abhijeet Sinha, Raychaudhuri, Mr.Rohan Jaitley, Shankar, Mr.Mikhil Sharda, Mr.Jayvardhan Mr.Shivam Pandey, Ms.Samridhi Hota Mr.Samaksh Goyal, Advs.
versus
MALVINDER MOHAN SINGH AND ORS. .... Respondents Through Mr.Harish N.Salve, Sr.Advocate Ms.Anuradha Dutt, Ms.Fereshte Ms.Vijaylakshmi Menon, Ms.Ekta Ms.Neeharika Aggarwal, Ms.Akanshsa Mr.Anirudh Bakhru & Mr.Chaitanya Advs. for R-1 to 4 & R-13.
Mr.Sandeep Sethi, Sr.Adv. with Aggarwal, Advocates for R-5 and 9 to 12.
Mr.Rohit Chaudhary and Ms.Preeti Kohli,
for R-6 to R-8.
Mr.Neeraj Kishan Kaul, Sr.Adv. with Mishra, Adv. for R-14.
Mr.Rajeev Nayyar, Sr. Advocate with Mr.Varun Misra, Adv. for R-15 to 19
CORAM:
HON'BLE MR. JUSTICE JAYANT NATH
JAYANT NATH, J.
1. This petition has been filed under Part II of The Arbitration Conciliation Act,1996 by the petitioner M/s.Daiichi Sankyo Limited seeking enforcement and execution of the Foreign Award dated 29 April 2016 passed by the Majority Arbitral Tribunal comprising of Mr.Karyl Nairn QC and Professor Lawrence G.Boo ( a dissenting award being by Justice (Retd.) A.M.Ahmadi). By the present judgment, I will decide objections under section 48 of The Arbitration and Conciliation Act,
filed by the respective respondents to enforcement of the Award. objections have been filed by Respondents No.1 to 3, Respondent Respondents No.6 and 7, Respondent No.8, Respondents No.5 and 9 (minors) and by Respondents No.14 to 19 and Respondent respectively.
2. The controversy revolves around a Share Purchase and Subscription Agreement (hereinafter referred to as SPSSA) dated whereby the petitioner agreed to purchase from the respondents their stake in Ranbaxy Laboratories Limited (hereinafter referred to as „Ranbaxy‟) for a transaction valued at INR 198 billion (approximately 4.6 billion dollars).
3. Disputes having arisen between the parties, in terms of SPSSA, petitioner invoked the arbitration clause. In terms of the said agreement the disputes were to be resolved by Arbitration to be administered by the International Chamber of Commerce (hereinafter referred to as
The place of arbitration was to be Singapore. Each disputing side appoint one Arbitrator and the two Arbitrators so appointed were to and appoint a third Arbitrator. In case of failure to appoint Arbitrators or two party Arbitrators or even to appoint the Chairperson, ICC was to appoint such Arbitrator or Chairperson, as the case may be. arbitration proceedings were to be conducted in English.
4. The petitioner nominated Ms.Karyl Nairn QC. nominated Justice A.M.Ahmadi (Rtd.), former Chief Justice of India. appointed Professor Lawrence, G.S.Boo of The Arbitration Singapore as the President of the Arbitral Tribunal. The procedural law of arbitration was to be the International Arbitration Singapore. The governing law was to be the laws of Republic of India.
5. Some of the brief facts as urged by the claimant/petitioner follows:-
6. The petitioner by a Share Purchase and Share Subscription Agreement dated 11.6.2008 purchased the respondent‟s total stake in the Ranbaxy Laboratories Limited (Ranbaxy) for a value of over INR billion (approximately US Dollar 4.6 billion at the relevant exchange In terms of the SPSSA the respondents received total amount of crores. In discharge of statutory duty under Security and Exchange India Act the petitioner had to purchase shares from the public.
spent a total amount of Rs19,804/- crores approximately to complete transaction. The first installment of the payment was received respondents on 20.10.2008 and the final payment was received on 7.11.2008. On 19.12.2008 Dr.Une and Mr.Takshi Shoda were nominated on the on behalf of the petitioners. Mr.Malvinder Singh/respondent No.1
to be the CEO of Ranbaxy. Subsequently, on account of differences resigned on 24.5.2009. The claim of the petitioner arises out of the SPSSA. It is the case of the petitioner that during the acquisition process the respondent‟s shares in Ranbaxy Mr. Malvinder (respondent No.1) business associates Mr. Vinay Kaul and Mr.Jay Deshmukh made representations to the petitioner by concealing a document known as Assessment Report (hereinafter referred to as SAR) and also about genesis, nature and severity of pending investigations by the US Foo Drug Administration (hereinafter referred to as FDA) and Department Justice (hereinafter referred to as DOJ) against Ranbaxy thereby fraudulently inducing the petitioner to acquire the shares.
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It is stated that in 2004 Ranbaxy recruited Dr.Rajinder the President of the R&D department. Just a few months into the job the Dr.Kumar reported to the Company‟s Science Committee that Ranbaxy engaged in data falsification to obtain regulatory approvals more quickly hundreds of drug products in dozens of countries around the world.
said to have prepared this document termed as SAR which had details of the stated falsification. Dr.Kumar is later said to have resigned from company having complained that the matters addressed in SAR were being given sufficient attention. It transpired that a former colleague Dr.Kumar, Shri Dinesh Thakur provided a copy of the SAR to authorities, probably around 2005-06. Regulatory investigation is have commenced sometimes in February 2006 into the Ranbaxy‟s Warning letter is said to have been issued to Ranbaxy on 15.6.2006 which is said to have identified various violations of Good Manufacturing and FDA Regulations. Various other steps are said to have been
DOJ and FDA. It is the case of the petitioner that Mr.Malvinder (Respondent No.1) and his close business and family associates were aware that SAR evidenced widespread fraudulent practices at Ranbaxy. company and its senior management being aware of its practices address its problems for years. It is further the case of the petitioner Mr.Malvinder Singh acting for himself and agent for other misrepresented and concealed from the petitioner the existence of any document of that nature reporting that Ranbaxy had fabricated data for regulatory submissions to various regulators or the that the US Government was in possession of such documents. It is that the respondents kept the SAR as a secret. The misrepresented the ongoing investigation by the US Regulatory as routine regulatory exercise and a meritless fishing expedition launched the behest of a competitor. It is the case of the petitioner that but fraud it would not have acquired Ranbaxy shares at all and has suffered loss and damages.
(b) It is further stated by the petitioner that it first learnt in 2009 that SAR was the true source of the US authorities concerns. coming to know about this aspect the petitioner is said to have towards addressing the issues and an Agreement was entered into US Regulatory Authority. A consent decree was entered into with December 2011. The cost of complying with the terms of the consent decree was estimated to be US$35-50 million per year. It further entered Settlement Agreement with the Department of Justice, agreeing to pay a sum USD$500 million penalty to resolve all potential, civil and criminal liability.
(c) The petitioner claims to have suffered direct and indirect losses result of having entered into the SPSSA relying upon the false painted by the misrepresentation and active concealment of material facts Mr.Malvinder Singh/his agents in the course of negotiations.
(d) The petitioners invoked arbitration clause on 14.11.2008 compensatory damages equivalent to US$ 1.4 billion or equivalent in other currency, pre-Award interest of 10% annually running from November 2008, post-Award interest of 18% annually running from Award till the amount is paid and costs.
(e) In April 2014 the petitioner entered into a market transaction with Sun Pharma in which the petitioner agreed to sell all its Ranbaxy shares means of an arrangement by which Sun Pharma and Ranbaxy would on a stock for stock basis with Sun Pharma as the surviving entity. transaction was finally closed on 25.3.2015 with Sun Pharma.
is said to have received consideration of Rs.22,679 crores. The majority gave its Award on 29.4.2016. The minority Award came on 30.4.2016.
(f) The respondent raised number of defences before the Tribunal. It was the case of the respondent that the petitioner was demonstrate any active concealment. It was the petitioner who had negotiations and was keen to acquire majority stake in Ranbaxy despite petitioner having knowledge of the ongoing FDA and DOJ investigations Ranbaxy. While negotiations were going on, a warning letter
15.6.2006 was published by FDA on its website.
(g) A DOJ search in the office of Ranbaxy in New Jersey took which Ranbaxy issued a Press Statement which was reported online and publically available. The petitioner had raised queries on the ongoing
and DOJ investigation during February 2008 to May 2008. It is pleaded that it is manifest that the petitioner was fully aware about pending investigations and its ramifications. Further, it is stated respondent that the petitioner and his representatives were given access “data room” during the negotiations which contained all correspondence and other documents relating to the stated investigation by US Authorities. claimants/petitioner also had access to publically available information as announcements by Ranbaxy, relevant stock exchanges, press releases other announcement made by FDA from time to time which was available on FDA‟s website. Despite knowledge of all these facts, the petitioner the shareholding of the respondent in Ranbaxy on „as is where is basis fact the petitioner had specifically asked for representations, warranties indemnities from the respondent relating to the investigation and...
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