New Delhi: The Supreme Court rejected a plea by Fortis Healthcare (FHL), clearing the way for the forensic auditor appointed by the Delhi High Court to probe transactions among the company, Malaysia’s IHH Healthcare Bhd and RHT Health Trust, floated by brothers Malvinder and Shivinder Singh and their Religare group of entities. The Singhs are the erstwhile promoters of FHL and Religare.
The high court had ordered a comprehensive court-monitored forensic audit into the erosion of the Singh brothers‘ shareholding in FHL and also directed that every person and transaction linked to the Fortis deal with IHH Healthcare be covered in the audit.
The August 31 ruling related to Japanese drugmaker Daiichi Sankyo‘s petition seeking execution of a ₹3,500 crore Singapore arbitration award it won against the Singh brothers in 2016.
Concealment of Information
While dismissing FHL’s appeal, the Supreme Court bench of chief justice Surya Kant and justices Joymalya Bagchi and V Mohana clarified that the high court’s observations against the healthcare chain were only “tentative” and “prima facie made for a limited purpose of justifying the audit,” and would not bind the forensic auditor.”
The forensic audit will be conducted independently without being influenced by those observations, the apex court said. The audit is aimed at tracing assets linked to the Singhs.
However, the top court said that it will hear appeals by Yes Bank and Axis Bank against the high court ruling separately on Tuesday.
The high court had said the audit should cover the sale of pledged FHL shares by 17 lenders in the open market in 2018, around the time IHH was bidding for a stake.
The high court’s directions were passed on pleas filed by Daiichi while pursuing enforcement of the arbitration award it won against the Singhs, whom it accused of concealing information when they sold Ranbaxy Laboratories to the Japanese company for $4.6 billion in 2008.
Daiichi challenged the Fortis deal with IHH, arguing that it caused erosion of the Singh brothers’ assets, which should have been used to pay the arbitral award.
Malaysia-based IHH holds a stake of about 31% in FHL, having completed the acquisition in 2018.
Questioning the Fortis management about how it was unaware of its status quo orders concerning the Singh brothers’ shareholding and the role of those managing the company during the relevant period, the Supreme Court said that it needs to be seen whether there former FHL personnel conspired in the dilution by the Singh brothers of their shareholding in the company.
While ordering the forensic audit, the high court had held that the new management would have been aware of ongoing litigation and its likely adverse impact.
The top court said that the healthcare chain would have known that the Singh brothers were holding shares in the company and there was a new promoter coming in.
