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DAIICHI SANKYO COMPANY LTD V. MALVINDER MOHAN SINGH AND ORS. O.M.P. (EFA) (COMM.) 6/2016
FACTS
The petitioner filed the petition on behalf of the Hon’ble High Court of Delhi under Part II of the Arbitration and Conciliation Act, 1996, seeking enforcement and execution of the Foreign Award passed in its favour on April 26, 2016. The controversy took place between the Petitioner (Daiichi Sankyo Company) and the Respondent (Malvinder Singh and Ors.). The petitioner had agreed to purchase the total stake of the respondents in Ranbaxy Laboratories Limited for a transaction valued at INR 198 billion. According to the arbitration entered between the parties, the place of arbitration was to be Singapore, while International Chamber of Commerce rules were to be followed. The governing law was to be the laws of the Republic of India. The petitioner nominated Ms Karyl Nairn QC, and respondents nominated Justice A.M.Ahmadi (Rtd.), former Chief Justice of India. ICC appointed Professor Lawrence, G.S.Boo, as the President of the Arbitral Tribunal. The dispute arose when Petitioner claimed that an internal Self-Assessment Report (SAR) was concealed. It was claimed that SAR had details regarding data falsification and unlawful practices carried at Ranbaxy by the respondents. The petitioner further claimed that the respondents kept them in the dark about the genesis, nature, and severity of pending investigations against Ranbaxy, thereby fraudulently inducing the petitioner to acquire the shares. Daiichi pleads that they had to suffer substantial, direct, and indirect losses due to such fraud.
Subsequently, in April 2014, Daiichi sold Ranbaxy to Sun Pharma. On November 14, 2008, the arbitration between the parties was invoked by the petitions for compensatory damages on account of such false and misleading representations made by the respondents. The majority gave its Award on 29.4.2016. The minority Award came on 30.4.2016. This petition arose in the Hon’ble court of Delhi by petitioners on behalf of the execution and enforcement of the award against the respondent. The respondents claimed that the petitioner was fully aware of the pending investigations and their ramifications. The respondents also claimed that there was no positive duty to inform the petitioner about the SAR since SAR was not a material document. The respondents, later on, challenged the enforcement of the award because the award was contrary to the fundamental policy of India.
ISSUES
The Arbitral Tribunal framed the following issues:
- Is it possible to deny enforcement of the Award under Section 48 of the Arbitration and Conciliation Act of 1996 ("Act")?
- Would it be possible that the arbitral tribunal went over its authority in imposing consequential damages, rendering the judgment unenforceable?
- Can the Award of Interest on awarded damages be enforced since it amounts to a multiple-damage award?
- Is the award void because the statute of limitations prohibited the claim?
- Is the award against minor respondents unenforceable because it violates Indian public policy?
DECISION
In the decision, the court upheld the enforcement of the award. It held that Section.48 of the act does not allow the court to reassess the correctness of an award on merits or re-appreciation of the evidence. The claim made by respondents that Daiichi sold Ranbaxy at a profit and thus the tribunal was wrong in awarding such consequential damages was refused by the court. The court does not exercise appellate jurisdiction while considering foreign awards, nor does it enquire if any error has been committed while rendering a foreign award. Section 48(2) (b) states that the enforcement of a foreign award can be refused if it is found contrary to (1) fundamental policy of Indian law; or (2) the interests of India; or (3) justice or morality. The objections raised by the appellant were found to not fall under these categories and so cannot be said to be contrary to public policy as under sec. 48 (2) (b). The High Court refused to go into finding the fact of the arbitral tribunal and stated that they don’t seem to be contrary to a fundamental policy of Indian law. The court also held that the consequential damages awarded are enforceable as per Indian Law.
The court relied on the underlying principles from Renusagar Power Company Limited vs General Electric Company 1994 Supplementary 1 SCC 644 in this case. The respondents had challenged the award on the following basis: i) the quantum of damages awarded; (ii) the tribunal’s decision to award consequential damages under the contract; (iii) the tribunal’s decision on limitation; (iv) the tribunal’s award of interest; and (v) the award of damages against respondents who were minors. The court rejected all except one of the challenges. The court decided that the tribunal's judgment was unconstitutional under Indian law since a minor could not be held liable for fraud perpetrated through an agency. It then observed, considering other legislation, that the protection of minors is part of the fundamental policy of Indian law. Therefore the award was not enforceable against the award debtors who were minors. Hence, on 31st January 2018, the Delhi High Court permitted the application of Daiichi Sankyo to enforce an International Arbitration Award to recoup Rs.3500 Crore from the former Ranbaxy Promotors.
CONCLUSION
It can be seen in this case how the courts have managed not to put their hands on the foreign award and recognised the principle of minimum interference in a foreign award. The courts go into the depth of the claims made by the respondents as to the jurisdiction of the tribunal, and after the tribunal’s jurisdiction was established, the court further did not interfere with the same. The only relief that the respondents have received from the claims they made concerns the enforceability of awards against the minor respondents.
LINKS REFERRED:
https://indiankanoon.org/doc/105320746/
This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, or Religion, Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts made to ensure the accuracy and correctness of the information published, White Code VIA Mediation and Arbitration Centre Foundation shall not be responsible for any errors caused due to human error or otherwise.
- FACTS
- ISSUES AND DECISION
- CONCLUSION
