Appeal Filed Against Ex-SEBI Chief in US State Court Over Rs. 925 Crore Dispute By Uphealth Holdings

The former Chairperson of Securities and Exchange Board of India, Meleveetil Damodaran, is facing a lawsuit filed by the American healthcare company UpHealth Holdings Inc. in a US state court. 

M. Damodaran held the top job at SEBI between 2005 and 2008. The lawsuit covers financial liabilities related to Glocal Healthcare Systems Pvt. and claims damages amounting to Rs 925 crore.

The case at hand stems from allegations of financial mismanagement within Glocal Healthcare. While the proceedings in the USA are going on, the Calcutta High Court has frozen the bank accounts of Glocal's board members, including Damodaran.

The Calcutta High Court has ordered two board members of Glocal Healthcare, Dr. Syed Sabahat Azim and his wife Richa Azim, to stop using or transferring any money from their bank accounts in Dubai and Turkey. Earlier this year, the court had asked them to reveal all their assets, but they failed to mention their accounts in those countries.

The court found this failure to disclose important information concerning their finances unacceptable.

Previously, a U.S. district court overturned a $25 million arbitral award against Damodaran, which had been issued by an Arbitral Tribunal in Chicago. This award was part of a larger damages ruling exceeding $110 million in favour of UpHealth, arising from a dispute linked to a share purchase agreement involving UpHealth, Glocal, and several shareholders, including Damodaran.

The issue began when UpHealth acquired shares of Glocal from Damodaran and other shareholders. Subsequent conflicts over control of Glocal led UpHealth to initiate arbitration proceedings in 2022, alleging breaches of contract by Glocal’s directors and shareholders.

The Arbitral Tribunal held Glocal and its board, including Damodaran, liable for the claims and awarded UpHealth a total of $110 million, with $25 million specifically attributed to Damodaran. The former SEBI chief has challenged this ruling.

He had submitted that there is insufficient evidence connecting him to the key allegations, particularly regarding his participation in a crucial Extraordinary General Meeting that relates to the alleged breach.