Promoters of Fortis Healthcare Ltd, Malvinder Singh and Shivinder Singh, have resigned from the directorship of the company just over a week after the Delhi High Court allowed the enforcement of a Rs 3,500-crore arbitration award that Japanese drugmaker Daiichi Sankyo had won.
"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," the billionaire promoters of India's second largest hospital chain said in a letter which was published on the stock exchanges. The resignation is "intended to free the organisation from any encumbrances" that may be linked to the promoters, the letter added.
The Board will then be better enabled and empowered to guide the future direction of the organisation without in any way being hampered by the impact of the Daiichi Sankyo judgement and our association at the Board.Malvinder Singh and Shivinder Singh
On 31 January, the Delhi High Court ruled that the Rs 3,500-crore arbitration award that Daiichi Sankyo won against billionaire Singh brothers for concealing information about erstwhile Ranbaxy Laboratories Ltd is enforceable in India. Daiichi Sankyo had filed the petition to enforce the arbitral award it had won in 2016 in the Singapore tribunal.
The Japanese drugmaker had argued that Malvinder Singh and Shivinder Singh concealed important information while selling Ranbaxy in 2008. The generic company in 2013 pleaded guilty in the US to charges of distributing adulterated medicines and falsifying data. It had to pay Rs 3,500 crore. Sun Pharmaceuticals Ltd later acquired the company from Daiichi.
The high court said Daiichi can claim the amount from the Singh brothers and their companies but not from their children, who were also named in the suit filed by Daiichi. Separately, the Supreme Court had also barred the Singh brothers from selling any of their encumbered or unencumbered assets in Fortis Healthcare in another petition filed by Daiichi.
The Daiichi Sankyo case was one of the Singh brothers’ mounting troubles. The brothers have also been accused of “diversion, siphoning and digression of assets” by a New York-based investor in a lawsuit filed in Delhi High Court. The suit, seen by Bloomberg News, alleged that the Singhs diverted their lending arm Religare Enterprises Ltd's funds to aid them with a personal debt load of about $1.6 billion, which is forcing the sale of assets that includes Religare and Fortis. A hearing in the case is scheduled for 20 March.
(This article has been published in an arrangement with BloombergQuint.)
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