Supreme Court Rejects Plea Against Forensic Audit Into Transactions Of Fortis In Daiichi Sankyo Case

On August 31, the Delhi High Court had ordered the forensic audit of Fortis and its former promoters Malvinder Mohan Singh and Shivinder Mohan Singh.

A bench comprising Chief Justice Surya Kant, Justice Joymalya Bagchi and Justice V Mohana was hearing a plea filed by Fortis Healthcare and refused to interfere with the High Court order.

"We see no reason to interfere with the impugned judgment of the Delhi High Court," the bench said.

The Apex Court also observed that the Delhi High Court's observations against Fortis, justifying the forensic audit are only tentative and prima facie.

The Court passed the order after hearing submissions made by Senior Advocate Abhishek Manu Singhvi, appearing for Fortis and Senior Advocate Mukul Rohatgi, who appeared for Daiichi Sankyo.

Senior Advocate Singhvi submitted before the Court that his client was never made party or an arbitrator in the case but is being treated as a judgment debtor.

"I have given a list of parties. Nowhere this company is a party, your lordship is treating me like a judgment debtor. This Singh brothers exited in 2018... the world's largest medical group IHH, Malaysian company entered with Rs 4000 crores," Singhvi told the bench.

The petition challenged the August 31 order delivered by the Delhi High Court in the case titled 'Daiichi Sankyo Company, Limited vs. Malvinder Mohan Singh And Ors'.

The Delhi High Court appointed a forensic auditor to examine the transactions of former Fortis promoters in connivance with Fortis Healthcare.

It has said the forensic audit aims to identify and reconstruct the entire chain of events, enabling the court to identify the persons and companies involved in the dissipation of shares.

The High Court appointed S Ramanand Aiyar and Co as the forensic auditor to conduct the audit and complete the exercise within six months.

In its 213-page judgment, the Delhi High Court allowed the applications of Daiichi seeking the appointment of a forensic auditor to unearth the transactions between Fortis Healthcare Ltd (FHL), Singh brothers and others leading to dissipation of assets which would have otherwise been sufficient to pay the decree amount passed in favour of Daiichi and against Singh brothers.

The case arises from an arbitral awarded passed by a tribunal in Singapore of Rs 3,500 crore in 2016 in favour of Daiichi, ordering the Singh brothers to pay the damages for concealing information that their company was facing a probe by the US Food and Drug Administration and the Department of Justice while selling its shares.

On January 31, 2018, the High Court upheld the international arbitral award passed in favour of Daiichi Sankyo and paved the way for enforcement of the 2016 tribunal award against the Singh brothers who had sold their shares in Ranbaxy to Daiichi in 2008 for Rs 9,576.1 crore.

Sun Pharmaceutical Industries Ltd had later acquired the company from Daiichi Sankyo.

The Singh brothers had disclosed their assets to the court in sealed covers in December 2016 and March 2017 during the pendency of Daiichi's plea seeking enforcement of the 2016 arbitral award passed by the Singapore tribunal against them.

On February 16, 2018, the Supreme Court had dismissed Singh brothers' appeal against the High Court verdict upholding the international arbitral award.