A U.S. Court has overturned an arbitration award against Meleveetil Damodaran, former Chairperson of SEBI, which had previously found him liable for $25 million in damages to UpHealth Holdings Inc., a U.S.-based healthcare entity. The award was connected to a Share Purchase Agreement (SPA) involving UpHealth, Glocal Healthcare Systems Private Limited (India), and its shareholders, including former Chairperson of SEBI.
UpHealth Holdings Inc. 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 Glocal’s board. However, before UpHealth could complete the acquisition of 100% of Glocal’s 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 under the terms of the purchase agreement.
The arbitration tribunal ruled in favor of UpHealth, awarding them $115 million in damages of which $25 million was to be paid by Damodaran personally who held 1.01% 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 ruling before the United States District Court, Northern District of Illinois, arguing that the arbitration tribunal had no evidence for imposing such liability on Damodaran.
Damodaran contested the $25 million arbitration award rendered against him by an arbitral tribunal in Chicago, arguing that the decision was based on a “non-fact” or a clear mistake of historical fact. Damodaran asserts that his liability was wrongly premised on the notion that he voted against UpHealth’s designees’ appointment to Glocal Healthcare Systems’ board during an extraordinary general meeting. He maintains that the tribunal did not make a specific finding of him having voted, no evidence supported such a finding, and that he was not even present at the EGM.
Damodaran believed his responsibilities ended once he tendered his shares to UpHealth. Despite this, Damodaran did not participate fully in the ICC rules. While the Tribunal erred in holding him liable, the U.S. Court noted his situation was, however, more understandable given the complexity of the foreign arbitration and his self-representation.
The U.S. Court set aside the award against Damodaran, citing lack of evidence supporting his liability, and remanded the case back to the tribunal for further consideration. However, challenges by other respondents were rejected, and the tribunal’s ruling against them remains intact.
The U.S. Court stated that, “Damodaran’s case is not over.” The Court made no ruling on the veracity of his evidence. Instead, it remanded the case back to the Tribunal for further proceedings to determine whether Damodaran violated his duties at the extraordinary general meeting.
The Tribunal will reexamine the facts to establish any potential misconduct on Damodaran’s part after additional arbitration proceedings.
