Singapore Court of Appeal dismisses Singh brothers’ plea against High Court order refusing to set aside 3,500 crore arbitral award

The Court of Appeal of Singapore on Thursday dismissed the appeal filed by former Ranbaxy promoters Malvinder and Shivinder Singh (Singh brothers) against the Singapore High Court judgment refusing to set aside a 2016 arbitral award. (Singh brothers Singapore Court of Appeal)

In December 2018, the High Court of Singapore upheld the Rs. 3,500 crore arbitral award passed in 2016 against the Singh brothers, in favour of Daiichi Sankyo Limited. The arbitral tribunal had found the ex-promoters guilty of fraudulent misrepresentation and active concealment of material facts in relation to a 2008 deal with Japanese drugmaker Daiichi.

Before the Court of Appeal, Daiichi Sankyo was represented by Senior Advocate Gopal Subramanium. He was briefed by a team from P&A Law Offices comprising Anand Pathak, Amit Mishra, Mohit Singh, Samridhi Hota, Kanika Singhal. Shivam Pandey, and Turab Ali Kazmi. Pavan Bhushan, Hima Lawrence and Jayavrdhan Singh along with Singapore-based law firm Oon & Bazul LLP also briefed Subramanium.

Malvinder Singh was represented by Senior Counsel Alvin Yeo, who was briefed by WongPartnership LLP and DMD Advocates. Shivinder Singh was represented by Senior Counsel Narayanan Sreenivasan, briefed by K&L Gates Straits Law LLC.

Among the arguments raised by the Singh brothers before the Court of Appeal was that it was disproportionate to hold each seller jointly and severally liable for the full quantum of the award, in light of their distinct and separate shareholding and bearing in mind a shareholder’s limited liability. Arguments that principles of natural justice were not followed, and that the award was opposed to the public policy of Singapore, were also made.

However, Judge Quentin Loh dismissed all of the claims, holding,

“…Broad and general arguments based on unconscionability or potential repercussions of general fairness before a court will be given short shrift.”

The dispute arose when Daiichi purchased the entire shareholding of the Singh Brothers in Ranbaxy, which was worth Rs. 19,800 crore under a Share Purchase and Share Subscription Agreement (SPSSA) in June 2008. Immediately after the deal, in 2009, Daiichi discovered that the Singh Brothers made false representations to them by concealing a document known as the Self-Assessment Report (SAR) and also about the genesis, nature, and severity of pending investigations by the the United States Food and Drug Administration and Department of Justice against Ranbaxy.

Ranbaxy had represented the ongoing investigations as a routine regulatory exercise to Daiichi. Daiichi suffered direct and indirect losses as a result of entering into the SPSSA and therefore, claimed damages under Section 17 of the Indian Contract Act, 1872.

Enforcement proceedings subsequently commenced in India, with the Delhi High Court dismissing objections under Section 48 of the Arbitration and Conciliation Act, 1996, in an order passed in January 2018. The Supreme Court of India upheld the High Court decision by dismissing the Special Leave Petitions filed by the Singh brothers back in February 2018.In 2016, an arbitral tribunal constituted under the International Chamber of Commerce had ordered the Singh Brothers to pay Rs. 3500 crore to Daiichi in damages on grounds of fraudulent misrepresentation and concealment of material facts while selling their shareholding in Ranbaxy to Daiichi.

The tribunal had found the Singh brothers and others guilty of several counts of misconduct when Daiichi bought their 34.82% stake for $2.4 billion in 2008. The Singh brothers and twelve others were found to have made false claims in the SAR, along with misrepresenting the genesis, nature, and severity of the US regulatory investigations.

Enforcement proceedings subsequently commenced in India, with the Delhi High Court dismissing objections under Section 48 of the Arbitration and Conciliation Act, 1996, in an order passed in January 2018. The Supreme Court of India upheld the High Court decision by dismissing the Special Leave Petitions filed by the Singh brothers back in February 2018. This prompted the Singh brothers to approach the Singapore High Court.

Subramanium and Senior Counsel Harish Salve, who had appeared for the Singh brothers before the High Court, had been granted leave by the High Court of Singapore to appear and argue on certain aspects of Indian Law that were essential for the adjudication of the case. This was the first time that two senior counsel from India were granted leave to appear and argue in the High Court of Singapore.

[Read the judgment]