Supreme Court Upholds Forensic Audit of Fortis Healthcare Ltd

The Supreme Court of India refused to overturn a Delhi High Court order mandating a forensic audit of transactions involving Fortis Healthcare Ltd and its former promoters, Malvinder Mohan Singh and Shivinder Mohan Singh. The audit is part of a legal effort by Japanese pharmaceutical company Daiichi Sankyo to enforce a 2016 arbitral award of approximately ₹3,500 crore against the Singh brothers. Daiichi Sankyo alleges the brothers concealed U.S. regulatory investigations during the 2008 sale of Ranbaxy Laboratories and subsequently dissipated assets to avoid payment.

Fortis Healthcare Ltd challenged the audit, arguing it was a complete stranger to the arbitration and had no authority to prevent shareholders from transferring dematerialized shares. The company noted that its current promoter, Northern TK Venture Pte. Ltd., invested via a fresh equity issue in November 2018, after the Singh brothers had resigned from the board.

While the Supreme Court disposed of the petition and allowed the audit to proceed, it clarified that previous observations made by the Delhi High Court were tentative and prima facie. The court instructed the appointed auditor, S Ramanand Aiyar and Co, to conduct the examination independently and without influence from those prior observations.