Delhi HC Appoints Forensic Auditor To Examine Fortis-Linked Transactions In Daiichi Case

(MENAFN- Live Mint) A Delhi court ordered a forensic audit into Fortis Healthcare transactions, challenging former billionaire founders Malvinder and Shivinder Singh, as Daiichi Sankyo seeks to enforce a ₹3,500 crore arbitration award.

Justice Subramonium Prasad of the high court granted Daiichi's plea seeking an independent examination of transactions involving Fortis Healthcare Ltd (FHL), Singapore-based RHT Health Trust, Malaysia's IHH Healthcare Berhad and other entities linked to the Singh brothers. The ruling is a significant point in one of India's longest-running legal battles to enforce an international arbitration decision.

The detailed order was not available at the time of publication.

Also Read | HDFC Bank may challenge Subhash Chandra's ₹6.5-crore repayment plan

The investigation will scrutinize how the brothers' stake in Fortis was changed through share pledges and liquidations, as well as a ₹4,666-crore transaction involving RHT and IHH's 2018 acquisition of a controlling stake in Fortis. Independent investigators will also review the conduct of 17 financial institutions that sold pledged shares despite court restrictions.

The decision executes a mandate from the Supreme Court, which found the Singh brothers guilty of contempt for violating asset-freeze orders. Daiichi's recovery efforts are dependent on the findings of the forensic auditor.

The dispute began after Daiichi acquired Ranbaxy Laboratories from the Singh family in 2008 and later alleged that important information about regulatory issues at the drugmaker had not been disclosed.

The enforcement proceedings later expanded beyond the Singh brothers' direct assets. Daiichi raised concerns about transactions involving companies associated with the brothers, including Fortis and entities that held or dealt with Fortis-related assets.

Also Read | Centre moves SC against Madras HC relief to Jio in GST input credit case

The Singh brothers, through group companies, had held a substantial stake in Fortis. Daiichi alleged that the stake was progressively diluted through pledges and sales of Fortis shares, potentially reducing the assets available to satisfy its award.

Daiichi argued that detailed forensic audits were needed to trace the movement of funds and assets and determine what assets remained available to satisfy its arbitration award.

The Singh brothers and the banks, however, maintained that the pledges and subsequent sale of shares were based on existing lending arrangements and commercial considerations.

The Supreme Court in September 2022 held Malvinder and Shivinder Singh guilty of contempt for violating court orders meant to protect assets available for Daiichi's recovery. The court noted that their Fortis shareholding had fallen sharply after shares were pledged and sold.

Also Read | Delhi HC's Telegram ruling and what it means for digital platforms

However, the Supreme Court did not conclude that the Fortis-RHT transactions were fraudulent. Instead, it directed the Delhi High Court to consider appointing forensic auditors to examine transactions involving Fortis, RHT, banks, and financial institutions, and to determine whether they were bona fide and undertaken for genuine commercial reasons.

This led to the current proceedings before the Delhi High Court, where Daiichi sought a forensic examination of the transactions.

MENAFN31082026007365015876ID1111600534