Supreme Court refuses to stay HC order on $4 bn Sun Pharma-Ranbaxy merger

The Supreme Court on Wednesday censured the way in which the merger process of Mumbai-based Sun Pharmaceutical Industries with Ranbaxy Laboratories Limited was stalled and asked the and hra Pradesh High 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 before the Supreme Court on May 29 for hearing. The bench observed that the filing of writ petitions in the and hra Court may signify the abuse of the process of the court and forum shopping in view of the fact that petitions on merger were already pending before high courts of Gujarat and Punjab. The court wondered whether the and hra High Court would have jurisdiction to deal with the case In writ jurisdiction when substantive petitions on amalgamations were already pending before the other high courts. The bench therefore decided to send the matter back to and hra High Court first to decide the petitions and said it would finally hear the matter on May 29 against the High Court order. The and hra Pradesh High Court on April 25 had directed the BSE and NSE not to approve the merger while admitting 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, was involved in the insider trading of Ranbaxy shares. They alleged that there was heavy trading of the Ranbaxy stock before the merger with Sun Pharma on April 6. In their suit, the two investors in the two drug makers, requested the court to direct the Securities and Exchange Board of India not to approve in principle the merger. They also sought a probe by Sebi, BSE and the National Stock Exchange in the alleged stock trading. Sun Pharma has denied the charge and said the arm’s share purchase was being annulled. However, stating that any delay in the merger would hurt Ranbaxy’s 182,721 and its 139,546 shareholders, Sun Pharma in its petition before the apex court said the allegation of insider trading was based on “mere surmises, conjectures and assumptions”. Questioning the jurisdiction of the AP HC 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.