Fortis Healthcare Ltd. has approached the Supreme Court challenging the Delhi High Court’s August 31 order directing a forensic audit into a series of transactions involving the hospital company, its former promoters Malvinder Singh and Shivinder Singh, IHH Healthcare Berhad and RHT Health Trust.
Fortis filed a Special Leave Petition (SLP) before the Supreme Court on September 16, according to a stock exchange filing. The challenge arises from proceedings in the case Daiichi Sankyo Company Ltd. vs Malvinder Mohan Singh and Others and covers three applications considered in the High Court’s August 31 judgment.
The Delhi High Court had directed that a forensic audit be undertaken to reconstruct transactions involving Fortis Healthcare and related entities. The court appointed S Ramanand Aiyar & Co., Chartered Accountants, as the forensic auditor and directed that the exercise be completed within six months. The audit is intended to trace the movement of Fortis shares, including pledges, encumbrances, transfers, sales and related transactions.
The court also directed that transactions involving 17 banks and financial institutions be examined. The institutions named in the proceedings include YES Bank, Axis Bank, HDFC Bank and others. The audit is intended to examine whether the transactions were bona fide commercial dealings and reconstruct the chain of events surrounding the movement of assets and shares.
YES Bank also challenges order
Fortis’ move follows YES Bank, which approached the Supreme Court on September 15 challenging the same Delhi High Court direction for a forensic audit of financial institutions involved in the transactions.
Axis Bank is also expected to approach the Supreme Court, according to reports, challenging its inclusion in the forensic audit exercise.
Dispute linked to Daiichi Sankyo award
The proceedings stem from Daiichi Sankyo’s efforts to enforce an arbitral award of around ₹3,500 crore against the Singh brothers following their dispute with the Japanese pharmaceutical company over the sale of Ranbaxy.
Daiichi Sankyo had sought scrutiny of transactions involving companies associated with the Singh brothers, including dealings connected with Fortis, IHH Healthcare and RHT Health Trust. The company had alleged that certain transactions contributed to the dissipation of assets that could otherwise have been available for enforcement of the award.
The Delhi High Court, however, clarified that ordering a forensic audit is an investigative exercise and does not itself establish civil liability. The court said the audit would help reconstruct transactions and provide factual material for further proceedings.
Background to the Fortis-IHH transaction
IHH Healthcare acquired a 31% stake in Fortis Healthcare in 2018. Its proposed open offer for an additional 26% stake became subject to legal proceedings after the Supreme Court ordered maintenance of status quo concerning Fortis’ shareholding.
The long-running dispute has continued to involve the former promoters, Fortis, IHH, financial institutions and Daiichi Sankyo.
The Supreme Court will now consider the challenges filed against the Delhi High Court’s forensic-audit directions.