*UpHealth moves to US Court against former SEBI Chief Damodaran’s liability in the INR 925 Crores Glocal Healthcare dispute while the Calcutta High Court freezes bank accounts of the Glocal board members*
30th October 2024: American healthcare company 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 INr 200 crs) in the case related to Glocal Healthcare Systems Private Limited (Glocal), where he was a shareholder. Glocal had the involvement of two ex-IAS officers of 1971 batch – Mr. N Damodaran and Dr. Syed Sabahat Azim amongst others. UpHealth had expended approximately 110 million (Rs. 925 crs) USD to acquire approximately 95 percent of Glocal’s shares in mid 2020.
Meanwhile, the Calcutta High Court has restrained two board members of Glocal from operating or transferring any funds in Dubai and Turkey bank accounts. Despite specific directions earlier from the High Court to disclose the list of assets, Ex IAS officer Dr. Syed Sabahat Azim and his wife Richa Azim did not disclose the existence of their accounts in Dubai and Turkey to the High Court. Such suppression of facts and assets in affidavits of assets submitted to the Calcutta High Court earlier this year 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, Ms. Richa Sana Azim, Mr. 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. 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 own 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 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.
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