New Delhi: Yes Bank moved the Supreme Court challenging a Delhi High Court ruling, which directed a forensic audit of the conduct of it and 16 other banks and financial institutions in selling Fortis Healthcare (FHL) shares in the open market in 2018.
The high court, in a ruling related to Japanese drugmaker Daiichi Sankyo’s petition seeking execution of a Rs 3,500 crore Singapore arbitration award it won against former FHL promoters Malvinder and Shivinder Singh, directed that every person and transaction linked to Fortis’ deal with Malaysia’s IHH Healthcare Berhad be covered in the audit. It also asked the auditor to scrutinise the sale of shares by the banks that occurred around the time when IHH was bidding for a controlling stake in the Indian hospital chain.
Axis Bank and FHL are also likely to file their appeals this week, people in the know said.
Challenging the August 31 judgment to a “limited extent”, Yes Bank said it was neither a party to the 2008 arbitral award nor was made a party to the execution proceedings by Daiichi Sankyo. Hence, no allegations or findings are made against it to mandate a forensic audit, it argued.
However, it does not challenge the forensic examination of the affairs of FHL, the Religare Group of companies and the Singh brothers, Yes Bank said. It would also not resist furnishing information genuinely relevant to tracing their transactions with the bank, to the extent such disclosures were in compliance with existing laws and permissible, the lender said.
The arbitrary, vague and non-reasoned finding necessitates the interference by the top court, the lender said in its appeal filed through counsel Malak Manish Bhatt. According to it, Daiichi had revealed that the transactions undertaken by Yes Bank were lawful and in compliance with Supreme Court orders.
The HC directions were passed on various pleas filed by Daiichi while pursuing enforcement of the arbitration award it won against the Singhs for concealing information when they sold Ranbaxy Laboratories to the Japanese company for $4.6 billion in 2008. Daiichi challenged the Fortis sale, arguing that it caused dissipation of the Singh brothers’ assets which should have been used to pay the arbitral award.
According to Yes Bank, the lender intervened only when it came to know about the SC restraining invocation or creation of pledges on FHL shares in August 2017. It then sought modification of the interim orders of August 11, 2017 and August 31, 2017 whereby the SC had directed a status quo with respect to the handling of the encumbered assets of FHL which were under the exclusive charge of various banks. Hence, no allegations or findings were made against Yes Bank to mandate a forensic audit, the lender said. The judgment dealt exclusively with contempt arising from post status-quo transactions, a fact entirely unrelated to Yes Bank’s pre-existing pledges and invocation post SC clarification order on February 15, 2018, it said.
