Former Ranbaxy promoters Malvinder Singh and Shivinder Singh have been fined $400 million by an arbitration court in Singapore for concealing and misrepresenting information from Japanese pharma company Daiichi Sankyo.
In a hearing this week, the court said the brothers had hidden important information while selling their controlling stake in Ranbaxy Lab to the Japanese company in 2008.
The facts relate to an investigation done by the US Food and Drug Administration (FDA) into Ranbaxy's processes.
The Ranbaxy promoters will challenge the Singapore court's order and appeal to the arbitration tribunal and also in one of the Indian courts.
"It is going to be a long drawn legal dispute, and will be challenged," sources close to the Singh family told The Times of India. He also informed that the Singh family is exploring "further legal options to challenge" court verdict.
"All the parties to the arbitration are bound by confidentiality obligations as a part of the arbitration proceedings," RHC Holding said in a release.
In 2013, the Japanese company had asked for compensation for losses as they had to pay the US Department of Justice. Soon after the company was taken over by Daiichi, the problems started. The US drugs regulator started warning them on their manufacturing facilities at Paonta Sahib (Himachal Pradesh) and Dewas (Madhya Pradesh) and this was followed by a ban on the import of medicines due to manufacturing lapses next year.
As a result of this, Ranbaxy, then under the management control of Daiichi, had to agree to pay $500 million to the US Department of Justice in order to settle criminal and legal suits. The same year in November, the Japanese company accused the Singh brothers and filed a case against them.
The Times of India reports that Daiichi had spent over $4 billion to acquire nearly 60 percent in Ranbaxy but after all these issues they finally decided to exit from the company.
In April 2014, Indian multinational Sun Pharmaceutical Industries agreed to buy the company from Daiichi in a deal which was valued at $4 billion, including the debt. The merger was completed in March 2015.
The Live Mint reports that a partner with a leading Indian audit firm who asked not to be identified said: "The verdict will bring back confidence in investors in the Indian pharma space after Japanese investors burnt their hands with the Ranbaxy deal. The outcome through the ongoing legal process, which Indian legal system also allows, will give transparency over the investment scenario in India."
