The Delhi High Court has allowed Daiichi Sankyo to enforce an international arbitration award here so that it can recover Rs 3,500 crore from former Ranbaxy promoters Malvinder Singh and Shivinder Singh, marking a victory for the Japanese company. A Singapore tribunal had said the brothers needed to pay the money for concealing information related to wrongdoing at Ranbaxy, once India’s largest drug maker, when Daiichi acquired it from the brothers for $4.6 billion in 2008.Daiichi had approached the high court to collect the dues in May 2016 but the Singhs had challenged the petition arguing that “substantive objections” existed under India’s arbitration law to make the award unenforceable.The high court’s 115-page order, which found the award to be enforceable under Indian law, said that it was “clearly” within the domain of the arbitration tribunal to assess damages.While the award is not enforceable against five of the respondents, who are minors, Daiichi can recover its dues from the promoters and other respondents in the case, which include companies controlled by them.Impact on Stake Sale EffortsThe Singapore tribunal had directed the Singhs to pay Rs 2,562 crore in damages. Including interest and legal fees, the award is now valued at Rs 3,500 crore.Experts said the judgment will weaken efforts by the Singh brothers to pare debt through divestment deals in entities such as Religare FinVest and Fortis Healthcare but expect them to appeal the ruling. Investors agreed — Fortis Healthcare dropped 7.1% and Religare Enterprises fell 4% after the verdict was made public.“Daiichi would request (the high court) to commence the execution process and seek recovery of the award amount of Rs 3,500 crore and interest, by various means,” said Amit Mishra of P&A Law Offices, which has been representing Daiichi at the high court. “This would include, but not limited to, attachment and sale of the shares/assets held by the judgment debtors in various companies such as Fortis and Religare.”“Today’s judgment by the honourable Delhi High Court has given partial success to some of the sellers of shares of erstwhile Ranbaxy (respondents),” said a spokesperson of RHC Holding Pvt. Ltd, a holding company for the Singhs and one of the respondents in the case. “However, we are disappointed with the ruling against the rest of the sellers.”While the spokesperson said the future course of action would be decided after studying the order in detail, a person close to the development told ET that the Singh brothers are likely to challenge the decision.Daiichi had taken the Singhs to the Singapore tribunal in 2013 after pleading guilty to felony charges related to Ranbaxy making and distributing adulterated medicines in the US and falsifying data. The Japanese company reached a $500-million settlement with the US Department of Justice over the allegations.The high court order said that Daiichi did not suffer any monetary loss after having sold Ranbaxy to Sun Pharma for around Rs 22,700 crore in 2015. But, citing the arbitration tribunal, the court said the negative effects on Daiichi’s acquisition far outweighed the positives.“It is not for this court to dwell deep into these aspects while considering objections under Section 48 of the Arbitration Act,” stated the order, adding that the method used by the tribunal to quantify the damages “cannot be faulted with.”BUMPS AHEADThe judgment is expected to make it tough for the Singhs to sell their stake in Fortis Healthcare. Daiichi had petitioned the high court and the Supreme Court last year to stop any deals to secure the award amount.“Now that the main judgment has come in Daiichi’s favour, it has a stronger case to say that they (the Singhs) should not divest their stake in Fortis,” an international arbitration specialist told ET.“Unless some clarity emerges on the fate of the assets, Fortis shares will see a tough time on the bourses. However, if Daiichi takes control of the assets, we might see an uptick,” said Surjit Pal, healthcare analyst at Prabhudas Liladhar.Daiichi had also moved the high court against the sale of Religare Health Insurance to a consortium of investors led by private equity firm TrueNorth in February to preserve the value of the assets.The Delhi High Court had in June 2017 allowed the Singhs to enter into corporate transactions if they maintained the value of unencumbered assets that could be used to pay the award if Daiichi won its case. But Daiichi moved the Supreme Court, which directed two companies controlled by the Singhs to maintain their encumbered and unencumbered shareholding in Fortis. This also effectively blocked lenders from selling shares in Fortis pledged to them to recover money owed by the Singhs.The court’s verdict may also make it difficult for Religare Enterprises to use Rs 500 crore from the sale of its health insurance business to repay a loan taken by its capital market subsidiary in Mauritius. Daiichi had approached the high court to block this as well. It told the court that the Singhs were trying to “siphon” off money and that the award amount needed to be secured through, for instance, an escrow account.Bloomberg had reported on January 29 that the Singh brothers were being accused of “diversion, siphoning and digression of assets” by a New York-based investor in a lawsuit filed in Delhi High Court. The lending arm of Malvinder and Shivinder Singh’s publicly traded financial services firm, Religare Enterprises, made 21 loans to a number of seemingly independent companies that routed at least $300million back to privately held Singh firms on the same day, according to a central bank investigation of the company’s fiscal 2016 books filed as part of the 700-page suit in November, the agency reported.