Days after the Delhi High Court verdict dealt a body blow to Fortis Healthcare promoters – Malvinder Mohan Singh and Shivinder Mohan Singh – by upholding the Rs 3,500 crore arbitral award in favour of Daiichi Sankyo, the duo have quit as directors from the company’s board
The Singh brothers, erstwhile promoters of Ranbaxy pharmaceuticals, have jointly resigned from the Board of Fortis Healthcare. The Board will discuss their resignation in a meeting on February 13, the company said in a filing to the BSE. “Malvinder Mohan Singh, Executive Chairman and Shivinder Mohan Singh, Non-Executive Vice Chairman have tendered their resignation from the directorships of the company,” Fortis Healthcare said.
A single judge bench of Justice Jayant Nath of the Delhi High Court directed Singh Brothers to pay Rs 3,500 crore to Japanese drug maker Daiichi Sankyo.
The resignation is intended to free the organisation from any encumbrances that may be linked to the promoters, the letter said. “In light of the recent High Court judgement upholding the plea of Daiichi Sankyo to enforce the arbitration award, we believe this is in the interest of propriety and good governance,” it added.
Daiichi had been allowed by the court to enforce the award. However, the court said the company can’t enforce the Rs 3,500-crore award against the children of the Singhs. In a petition filed in the Delhi HC, Daiichi had sought to enforce collection of Rs 3,500 crore arbitration award it won at a Singapore tribunal in 2016 against Singhs’ former company, Ranbaxy Laboratories.
In 2013, Daiichi had pleaded guilty in a US court after it was accused of selling adulterated medicines. Daiichi later settled the case for $500 million with the US government, but accused the Singh brothers of hiding information about manufacturing and selling adulterated drugs in the United States and producing false data, during the sale of the company in 2008.
Daiichi then sold its stake in Ranbaxy to Sun Pharmaceuticals for Rs 22,679 crore in 2015.
Appealing against the award in India as well as in Singapore’s Court of Appeal, the Singh brothers had argued the award money was not enforceable under the laws of India.
With the resignation of the promoters, the board will be “better enabled and empowered to guide the future direction of the organisation without anyway being hampered by the Daiichi Sankyo judgement and our association at the Board,” the letter said.
“The members of the board are also requested to look into all inter-group transactions and distance the promoter group from Fortis Healthcare Ltd in a manner that enables continuity of the operations of the organisation and deliver on its mission of enriching and saving lives,” the Singh brothers wrote in the letter.
Daiichi had approached the high court in 2016 to seek the enforcement of a Rs 2,562 crore Singapore arbitral award passed in April 2016, along with an additional claim of interest and lawyers’ fees incurred in connection with the proceedings.