A former head of the Securities and Exchange Board of India (Sebi), Meleveetil Damodaran, faces a damages claim of around Rs 206 crore ($24.8 million) following a ruling by the International Court of Arbitration (ICA) in America, according to a press release issued by New York Stock Exchange-listed UpHealth.
ICA is run by the International Chamber of Commerce (ICC).
UpHealth, a global digital health company, won a $110.2-million (around Rs 915 crore) damages claim against Glocal Healthcare Systems. Glocal is a platform that seeks to provide primary and secondary healthcare to underserved parts of India through a digital platform.
The dispute arose out of UpHealth's acquisition of Glocal pursuant to a Share Purchase Agreement (SPA) dated October 30, 2020, and the subsequent breach of contractual obligations to relinquish control of Glocal to UpHealth, according to the press release.
In particular, the Tribunal found that the Glocal “failed to give" UpHealth control of Glocal after the closing of the acquisition, despite the payment in full of the acquisition consideration, the press release added. The Respondents were held personally liable.
The claim has been apportioned based on the shareholders percentage of each of the Indian directors and shareholders of Glocal: 34.38 percent to be paid by the founder and CEO Dr. Syed Sabahat Azim, 34.38 percent by Richa Sana Azim, 4.69 percent by Gautam Chowdhury, 22.54 percent by Meleveetil Damodaran, and 4.02 percent by Kimberlite Social India Private Limited.
Market sources close to the development told Moneycontrol that Damodaran was a shareholder in the company at the time when the negotiations were being done between the two companies. He was non-executive director till 2019 and the negotiations between the two companies was done in 2020 when Damodaran was just a shareholder in the company.
He was party to the agreement only in his capacity as a shareholder and to tender shares. The source added that the tribunal noted his status as being a shareholder and added that he failed to influence the other directors and the board to support the resolution to appoint UpHealth's nominees on Glocal's board.
The companies' speak
UpHealth said in its statement, "We remain steadfast in our determination to hold fully accountable the Respondents in the ICA proceeding, who sold us Glocal and then refused to relinquish control of it, using misleading and baseless claims, for their indefensible conduct and the resulting harm caused to UpHealth and its stockholders."
They added, "We appreciate the unanimous decision from the arbitrators and we thank them for a thorough and impartial elaboration and ruling.”
Glocal, in its press release dated March 20, called the tribunal's award "one-sided" and "perverse".
It stated, "This is in the face of criminal fraud perpetrated by UpHealth Holdings Inc, UpHealth Inc and Avi Katz, Raluca Dinu, Martin S. Beck etc which has been accepted prima facie by both relevant courts and the investigating authorities. While finding no evidence of misrepresentation by Glocal or its management / shareholders, the private tribunal proceeded to award damages on the claim of loss of control to UpHealth Holdings Inc, which had never been transferred nor could have legitimately been transferred as the transaction was a part of egregious criminal fraud by UpHealth Holdings Inc (& Others) that has subsequently filed for voluntary bankruptcy and is under investigation by the SEC in US and by investigating authorities in India.
It added, "The sole reason given by the tribunal is that Glocal and others did not present their case and therefore they are responsible for this award."
Glocal said that it has always maintained that the case requires criminal investigation and includes issues that seem "non-arbitrable".
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