The long battle fought between the previous owners of #Ranbaxy Laboratories Limited (“RLL Company”) and the Japanese multi-national pharmaceutical company, #Daiichi Sankyo Company Ltd (“DSC”’) has finally being decided by the #Singapore Court of Appeal vide Judgment dated 28.05.2020 in favour of DSC making RLL liable to pay the awarded sum of INR 25 billion to DSC.  

An appeal was preferred by RLL, seeking quashing of the Singapore High Court’s Judgment that upheld the INR 25 billion #Arbitration Award in favour of DSC vide Judgment dated 28.05.2020 (the “Judgment”).


The dispute arose due to the sale and purchase of a controlling 64% stake of the shares (“the Shares”) in the Company, RLL, which was said to be India’s largest manufacturer of generic pharmaceutical products. The buyer was DSC, a Japanese corporation (the “Buyer”). The sellers comprised the family members of RLL’s founder and several companies controlled by them (“the Sellers”). The Sellers were led by Mr Malvinder Singh and Mr Shivinder Singh (the “Singh Brothers”), relatives of RLL’s founder (“the Parties”).

Background to the Proceedings

In and around 2007, DSC approached the Singh Brothers to negotiate the purchase of the #Shares. The Parties signed the Sale and Purchase Agreement (the “SPA”) in 2008. Accordingly, DSC paid around INR 198 billion (about USD 4.6 billion) to the Sellers for the Shares.

The dispute that led to the arbitration arose over an internal report (the “Report”) which DSC alleged that the Sellers had concealed from it. The Report was issued in 2004, detailing how RLL engaged in data falsification to expedite the obtaining of regulatory approval for numerous drug products around the world. Immediately, after signing of SPA, DSC discovered that the Singh Brothers made false representations to them by concealing said Report and severity of pending investigations by the United States Department of Justice (“DOJ”) and the United States Food and Drug Administration (“FDA”), against the RLL. The result of such investigation by the DOJ and FDA, led to a settlement between the parties and RLL made provision for paying a settlement sum of USD 500 Million, in 2013. This resulted in DSC suffering direct and indirect losses as a result of entering into the SPA.

Therefore, the DSC commenced arbitration before the Singapore Arbitration Tribunal, against the Sellers under the SPA alleging misrepresentation and concealment of facts regarding the extent of the investigations by the DOJ and FDA. Resultantly, the Arbitral Tribunal made an award of about INR 25 billion by way of damages in favour of DSC. It was decided that the Sellers were jointly and severally liable for fraudulent misrepresentation under the Indian Contract Act 1872 (the “Award”).

In 2016, DSC initiated simultaneous proceedings for leave to enforce the Award before the Delhi High Court and the Singapore High Court. However, Singapore enforcement proceeding was concluded by an ex parte Order dated 18.05.2016.

During the period, the Sellers also filed Originating Summons (‘OS’) before the Singapore Court to set aside Ex parte Order dated 18.05.2016 and the Award. In 2018, the Singapore High Court dismissed the said OS and upheld the Award.

On the other hand, the enforcement proceedings before the Delhi High Court was concluded vide Judgment dated 31.01.2018. This was the landmark Judgment in the area of commercial contracts as the Court upheld an Award of an Arbitral Tribunal made in Singapore, in the commercial arbitration between the Parties.

Thereafter, the Singh Brothers filed simultaneous Appeals before the Supreme Court of India against the Delhi High Court Judgment dated 31.01.2018 and before the Singapore Court of Appeal against the Judgment of the Singapore High Court (the “Appeals” or the “Appellants”). However, the Supreme Court of India upheld the Delhi High Court Judgment dated 31.01.2018 by dismissing the Special Leave Petitions, in 2018.

The Singapore Court of Appeal also rejected the plea of the Appellants on 28.05.2020 while refusing to accept the stand of the Appellants that an egregious error of law in the making of an Award amounts to a breach of public policy and the finding of joint and several liabilities is such an error. It also said that it is the settled jurisprudence that mere errors of law do not cross the high threshold of making out a breach of Singapore’s public policy. Thus, all the grounds with regards to time bar issues, damages and interest issues, and joint and several liability issues, were rejected by the Court in its entirety. It also imposed costs of USD 1 lakh and USD 90, 000 on the Singh Brothers, respectively.

This Judgment from the Singapore Court of Appeal, brings to an end all appeals and related proceedings against the Arbitration Award. With this, recovery options are opened for Daiichi Sankyo in Singapore as well. This case and the Judgment is a good example of explaining the doctrine of limited liability. As it states that the doctrine does not limit shareholders’ liability in relation to torts committed by their agents in the sale of their shares.  

Lakshmi Vishwakarma


The Indian Lawyer & Allied Services

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