UpHealth Holdings, Inc. (UpHealth) has appealed to a United States Court to fix the liability of former SEBI Chairman M. Damodaran to USD 25 million, plus fees and expenses (approximately ₹200 Crore) in the case related to a Share Purchase Agreement (SPA) involving UpHealth, Glocal Healthcare Systems Private Limited (India), and its shareholders, including M. Damodaran.
On May 21, 2024, The Calcutta High Court upheld the $110 million award issued by the International Court of Arbitration of the International Chamber of Commerce paving the way for UpHealth Holdings, Inc., a wholly-owned direct subsidiary of UpHealth, to enforce the Final Award.
The High Court dismissed the pleas from Glocal Healthcare Systems and several of Glocal’s officers and shareholders to submit their affidavits of assets, liabilities, encumbrances, and pending litigations in a ‘sealed cover’ restraining two board members of Glocal from operating or transferring any funds in Dubai and Turkey bank accounts.
The non-disclosure of assets of Ex IAS officer Dr. Syed Sabahat Azim and his wife Richa Azim regarding the existence of their accounts in Dubai and Turkey to the High Court was condemned by the High Court.
Last month, the United States District Court for the Northern District of Illinois denied Glocal and its directors motion to annul an ICC Award and affirmed that Award through the issuance of an enforceable U.S. court judgment against Dr. Sabahat Azim, Richa Sana Azim, Gautam Choudhury, and Kimberlite Global.
The Award was connected to a Share Purchase Agreement (SPA) involving UpHealth and Glocal and its shareholders, including former SEBI Chairman Damodaran.
However, the Award’s finding of liability against former SEBI Chairman M. Damodaran was remanded to the Arbitral Tribunal for further consideration, indicating that this matter is not yet resolved for him. “The Court grants Damodaran’s motion to vacate. But Damodaran’s case is not over,” the District Court said while granting former SEBI chief’s motion to vacate.
The court relied on the precedent set by the Major League Baseball Players Association, stating that the appropriate remedy is to remand the case for further arbitration proceedings.” The court directed the Tribunal to determine, after further proceedings, whether Damodaran violated his duties at the EGM.
The UpHealth’s appeal concerns only this remand determination with respect to Damodaran.
UpHealth acquired a 94.81% stake in Glocal Healthcare Systems with the intent to gain full control of the company by appointing its designees to the Glocal Board.
However, before UpHealth could complete the acquisition of 100% of Glocal shares, the existing shareholders and directors, in violation of their contractual obligations, held an extraordinary general meeting. At the meeting, they voted against appointing UpHealth’s proposed designees to the Glocal Board.
As a result of these alleged breaches, UpHealth initiated arbitration proceedings in Chicago, Illinois under the terms of the SPA.
The Arbitral Tribunal has ruled in favor of UpHealth, awarding it approximately $115 million in damages, fees and expenses of which approximately $25 million (INR 200 crores approximately) plus fees and expenses were to be paid by Damodaran personally based on his 1.01% shareholding of the company at the time of the dispute.
This Award came after finding the respondents liable for violating their obligations in connection with the share acquisition and board appointments.
Damodaran and Glocal challenged the Award before the United States District Court for the Northern District of Illinois.
The District Court dismissed Glocal’s plea but the Award against Damodaran was remanded to the Arbitral Tribunal for further consideration.
The American Healthcare Company has appealed to the United States Court of Appeals for the Seventh Circuit.
