The Delhi High Court has appointed S Ramanand Aiyar and Co as a forensic auditor to examine and reconstruct transactions involving Fortis Healthcare Ltd (FHL), former promoters Malvinder Mohan Singh and Shivinder Mohan Singh, and other entities in connection with the enforcement of a ₹3,500 crore arbitral award in favour of Daiichi Sankyo.
Justice Subramonium Prasad directed the forensic audit to be completed within six months. The exercise is intended to trace the movement and disposal of Fortis-related shares and establish the sequence of transactions that allegedly resulted in the dissipation of assets relevant to the decree.
The court allowed Daiichi Sankyo’s applications seeking forensic examination of transactions involving the Singh brothers, FHL and other parties. The court observed that an independent expert would be better placed than the court to reconstruct the transactions and examine the circumstances surrounding the decline in the shareholding of Fortis Healthcare Holdings Private Limited (FHHPL), which was controlled by the Singh brothers.
The auditor has been directed to examine the evolution of FHHPL’s shareholding in FHL after May 24, 2016, including changes in its holding, transfers of encumbered and unencumbered shares, creation of subsequent pledges and other transactions affecting the shareholding structure.
The court also indicated that the forensic review could assist in determining whether there was any involvement of FHL or potential violations of applicable SEBI regulations by the companies, judgment debtors or banks. The appointment was made amid differing positions taken by Daiichi Sankyo, banks, the judgment debtors and FHL regarding the disputed transactions.
FHL had opposed the application, arguing that execution proceedings should remain confined to enforcement of the existing decree and should not become a forum for determining fresh liabilities against a third party. The court, however, considered forensic assistance appropriate given the competing claims and the complexity of the transactions.
The underlying dispute relates to a 2016 Singapore arbitral award of around ₹3,500 crore in favour of Daiichi Sankyo against the Singh brothers. The award arose from allegations concerning the concealment of information relating to regulatory investigations involving their pharmaceutical business at the time of the 2008 Ranbaxy share sale to Daiichi Sankyo.
The Delhi High Court had upheld the international arbitral award on January 31, 2018, allowing its enforcement in India. The Supreme Court subsequently dismissed the Singh brothers’ appeal against that decision on February 16, 2018.
The latest order places emphasis on tracing the disputed Fortis share transactions and determining the complete chain of events relevant to the execution of the award. CASansaar