UpHealth Pleads Appeals Court To Cap Former SEBI Chair's Liability At $25M In Dispute With Glocal Healthcare

The bench upheld damages against the company but remanded Damodaran's liability to the arbitral tribunal

By: :  Linda John
Update: 2024-10-30 17:30 GMT


UpHealth Pleads Appeals Court To Cap Former SEBI Chair's Liability At $25M In Dispute With Glocal Healthcare

The bench upheld damages against the company but remanded Damodaran's liability to the arbitral tribunal

American healthcare company, UpHealth Holdings Inc has pleaded before the US Court of Appeals for the Seventh Circuit to fix the liability of former Securities and Exchange Board of India (SEBI) Chairman M. Damodaran at USD 25 million, plus fees and expenses.

The case pertains to a Share Purchase Agreement (SPA) involving UpHealth, Glocal Healthcare Systems Pvt Ltd (India), and its shareholders, including Damodaran.

On 21 May 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, a wholly-owned direct subsidiary of UpHealth, to enforce the final award.

The high court dismissed the pleas of Glocal Healthcare and its several officers and shareholders to submit their affidavits of assets, liabilities, encumbrances, and pending litigations in a 'sealed cover'.

It restrained two board members ex-IAS officer Dr. Syed Sabahat Azim and his wife Richa Azim, from operating or transferring any funds from their bank accounts in Dubai and Turkey due to non-disclosure of assets.

Recently, the US District Court for the Northern District of Illinois denied Glocal and its directors’ motion to annul an ICC award and affirmed it by issuing an enforceable US court judgment against Dr. Sabahat Azim, Richa Sana Azim, Gautam Choudhury, and Kimberlite Global.

The award was connected to an SPA involving UpHealth and Glocal and its shareholders, including Damodaran.

However, the award's liability against Damodaran was remanded to the arbitral tribunal for further consideration, indicating that the matter was not yet resolved.

The District Court stated, "The court grants Damodaran's motion to vacate. But his case is not over.”

The court relied on the precedent set by the Major League Baseball Players Association case, wherein the remedy was to remand the case for further arbitration. Thus, the court directed the tribunal to determine whether Damodaran violated his duties at the extraordinary general meeting (EGM).

The UpHealth appeal concerned Damodaran’s remand.

UpHealth acquired a 94.81 percent stake in Glocal Healthcare to gain the company’s control by appointing its designees to the Board.

However, before UpHealth could complete the 100 percent acquisition of Glocal shares, the existing shareholders and directors, violated the contractual obligations by holding an EGM and voting against appointing UpHealth's proposed designees to Glocal’s Board.

Thus, due to the alleged breaches, UpHealth initiated arbitration proceedings in Chicago, Illinois under the SPA terms.

The arbitral tribunal ruled in favor of UpHealth, awarding it approximately $115 million in damages, fees and expenses of which approximately $25 million (Rs.200 crores) plus fees and expenses were to be paid by Damodaran based on his 1.01 percent shareholding of the company at the time of the dispute.

The tribunal held the respondents liable for violating the obligations of share acquisition and board appointments.

Damodaran and Glocal challenged the award before the Illinois court, which dismissed Glocal's plea but the award against Damodaran was remanded to the arbitral tribunal.

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By: - Linda John

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