The Delhi High Court has recently ordered the auction of the Fortis trademark in relation to a ₹3,500 crore arbitral award granted to Japanese pharmaceutical company Daiichi Sankyo against former Ranbaxy promoters Malvinder and Shivinder Mohan Singh.
Justice Sachin Datta issued the order following an application from Daiichi Sankyo seeking the sale of the Fortis trademark, owned by RHC Healthcare Management Services Pvt Ltd, which is one of the judgment debtors in this case.
The application was part of Daiichi Sankyo’s effort to execute the 2016 Singapore tribunal arbitral award that mandated the Singh brothers to pay damages for concealing critical information during the sale of their shares in Ranbaxy, which they sold to Daiichi in 2008 for ₹9,576.1 crore.
The court noted that the joint liability of the judgment debtors was approximately ₹4,900 crore.
Daiichi’s counsel reported that, despite efforts, only a small portion of the owed amount had been recovered. They estimated that auctioning the Fortis trademark could yield around ₹191.5 crore.
Initially, Fortis Hospitals Ltd raised objections, but later stated they had no issues with the trademark auction and requested the court to make a decision. The judgment debtors also did not oppose the auction, although some expressed concerns about the trademark’s valuation and requested an auditor to assess it prior to the sale.
The court dismissed this request, stating it was unnecessary to appoint an auditor before the auction. It instructed the Joint Registrar (Judicial) to oversee the auction process and report back upon its conclusion, with the sale being confirmed only after the court’s approval.
In April 2016, a tribunal in Singapore awarded ₹3,500 crore to Daiichi Sankyo, citing the Singh brothers’ failure to disclose information regarding a probe by the US Food and Drug Administration and the Department of Justice when selling their shares.
The Delhi High Court upheld this award on January 31, 2018, facilitating its enforcement against the Singh brothers, while also noting that the award could not be enforced against five minor shareholders in Ranbaxy.
Daiichi Sankyo subsequently sought a court directive for the Singh brothers to initiate steps for settling the arbitration award, including asset attachment to recover the amount owed.
On February 16, 2018, the Supreme Court dismissed the brothers’ appeal against the high court ruling that upheld the arbitral award. The Singh brothers argued that the award imposed damages beyond the tribunal’s jurisdiction and claimed that Daiichi was aware of all relevant facts yet chose to retain their Ranbaxy shares rather than terminate the agreement.
This case illustrates ongoing legal complexities surrounding corporate accountability and the enforcement of international arbitration awards in India.
