SC blasts manner of stalling Sun-Ranbaxy merger
21 May 2014
The Supreme Court today criticised the manner in which the Andhra Pradesh High Court stalled the merger between Mumbai-based Sun Pharmaceutical Industries and Ranbaxy Laboratories Ltd and asked the court to decide the case within two days.
A bench of Justices B S Chauhan and A K Sikri asked the high court to decide all the pending petitions before it after hearing all the parties, and fixed the matter for further hearing on 29 May.
The bench felt that the filing of writ petitions in the Andhra Court may signify abuse of the process of law and forum-shopping, considering that petitions on the merger were already pending before high courts of Gujarat and Punjab.
The Andhra Pradesh High Court had, on 25 April, directed the country's stock exchanges not to approve the merger, as it admitted a petition by retail investors alleging insider trading in the $4-billion deal.
The two retail investors - Tammali Shiva Kumar and Undi Venkatasubbaraju - alleged that Silver Street, a limited-liability partnership firm owned by two subsidiaries of Sun Pharma, were involved in the insider trading of Ranbaxy shares.
They alleged that there was heavy trading of the Ranbaxy stock before the 6 April proposal to merger with Sun Pharma.
In their suit, the two investors in the two drug-makers requested the court to direct the Securities & Exchange Board of India not to approve the merger. They also sought a probe by SEBI as well as BSE and NSE regulators in the alleged stock trading.
Sun Pharma has denied the charge and said the arm's share purchase was being annulled. However, Sun Pharma, in its petition before the apex court stated that any delay in the merger would hurt Ranbaxy's 182,721 and its own 139,546 shareholders and that the allegation of insider trading was based on ''mere surmises, conjectures and assumptions''.
Sun Pharama, in its petition, questioned the jurisdiction of the AP high court to entertain the petition as the registered offices of none of the firms are located in Hyderabad. Sun Pharma said allegations of insider trading can be investigated independently by SEBI and there was no bar in initiating such investigation even if the scheme of arrangement would have been approved.