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UpHealth Inc, a NYSE-listed company, has filed a legal case against the founder of Glocal Healthcare Systems, Sabahat Sayed Azim. Azim, also a former IAS officer from Tripura cadre, has faced a criminal complaint from for alleged cheating and a criminal breach of trust, the media reports revealed.
It is alleged that UpHealth Inc. has paid approximately Rs.2100 crores to Glocal Healthcare Systems in terms of the sales and purchase agreement (SPA), the Calcutta High Court observed in its order. Such amounts have been paid both in cash and stocks of UPH, it added. In consideration, UpHealth Inc has acquired 94.81 per cent of shares in the Glocal, said the statement. However, the former promoters of the company are preventing the impending appointments in management roles and board nominees, the company added.
UpHealth has filed the case in several legal forums such as the National Company Law Tribunal (NCLT), the High Court of Calcutta, and ICC Arbitration against the founder of Glocal Healthcare Systems.
At the time of UpHealth acquiring Glocal in 2020, Azim and his family had 31.16 per cent stake directly in Glocal. Apparently, UpHealth also reimburse USD 35 million (approximately ₹280 crore) debt with purchasing a majority stake in Glocal, stated the media reports.
“In particular, the petitioner contends that the respondent is in breach of its obligations under Clause 5.2.1 of the SPA, which inter alia includes the non-transfer of shares of the Glocal, non-filing of statutory compliance with different authorities, failure to provide financial results of Uphealth, and refusal to furnish duly stamped transfer forms in favour of the petitioner,” the Calcutta High Court observed in its order.
This came after UpHealth acquired a 94.81 per cent stake, and its day-to-day operations from the erstwhile management.
Despite having a 94.81 per cent stake in Glocal, the Delaware-based company claimed that it was withheld from taking over the management. The UpHealth complains of breach of diverse obligations by the respondent under the SPA, as per the court’s statement.
“Prima facie, two crucial facts which are unassailable are that (a) the petitioner in
terms of the SHA has invested a substantial sum of money aggregating to
approximately to Rs. 2100 crores and (b) The petitioner is the single largest majority
shareholder of the respondent no.1 holding approximately 94.5 per cent shares in the
respondent no. 1, whereas respondent nos. 2 to 4 are the erstwhile promoters
of the respondent no. 1 hold a miniscule shareholding in the company,” Calcutta High Court observed in its order.
UpHealth says that Glocal’s erstwhile shareholders have also said this in the NCLT. UpHealth says Azim claimed that the Glocal stake they sold to UpHealth was only as a security for the funds infused and not meant to be acted upon and that he was ready to return the money with ‘reasonable’ interest.
UpHealth has denied Azim’s claim of an ‘oral’ agreement and said that they are trying to frame that UpHealth violated India’s Foreign Exchange Management laws.
“In view of the aforesaid, the petitioner has a prima facie case on merits. The balance of convenience is also in favour of orders being passed as prayed for herein. I am also satisfied that the petitioner will suffer irreparable prejudice if orders as prayed for herein are not passed,” the Calcutta High Court observed in its order.
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