The Supreme Court clarified that the forensic audit ordered by the Delhi High Court in the Daiichi Sankyo-Fortis dispute is directed against Fortis Healthcare and its holding company, and not a general audit against the banks involved.

The Supreme Court on Tuesday clarified that the forensic audit ordered by the Delhi High Court in the Daiichi Sankyo dispute involving former Fortis promoters is directed against Fortis Healthcare Limited (FHL) and its holding company Fortis Healthcare Holding Pvt Ltd (FHHPL), and not against the banks involved in the transactions.

SC Clarifies Banks' Role

A bench of Chief Justice of India (CJI) Surya Kant and Justices Joymalya Bagchi and V. Mohana clarified that records of the banks will be examined only insofar as they relate to the specific transactions involving FHL, FHHPL and the judgment debtors covered by the forensic audit. The banks themselves will not be subjected to a general forensic audit.

The clarification came while hearing pleas filed by Yes Bank and Axis Bank against the Delhi High Court’s August 31 order directing the forensic audit of FHL, its holding company over certain transactions. The banks submitted that the language of the High Court order was broad and could give the impression that the forensic audit was also directed against the banks.

The Court said the directions concerning the banks have to be read and construed in the context of the commercial transactions involving the judgment debtors, FHL and FHHPL. Senior Advocate Shyam Divan, along with advocates Malak Bhatt, Samridhi and Tashi Saraf, appeared for Yes Bank and Axis Bank.

Background of the Forensic Audit Order

The Delhi High Court had ordered the forensic audit in proceedings concerning Daiichi Sankyo’s enforcement of an arbitral award against former Fortis promoters Malvinder Mohan Singh and Shivinder Mohan Singh. The audit was directed to examine transactions involving FHL, FHHPL and the judgment debtors, including pledges, sale and transfer of FHL shares, secured loans, consideration received and movement of funds.

The High Court also directed examination of records relating to transactions involving 17 banks and financial institutions, including Yes Bank, Axis Bank, HDFC Bank, RBL Bank, DCB Bank, Indiabulls Housing Finance, Citicorp Finance and Kotak Mahindra Investments, among others.

The enforcement proceedings stem from Daiichi’s arbitral award directing the former Fortis promoters to pay ₹2,562 crore, with interest, following its dispute with them over their sale of Ranbaxy shares. The High Court’s forensic-audit order seeks to trace transactions involving FHL shares and assets that could be relevant to satisfaction of the award.

The Supreme Court has now made clear that the banks’ involvement is limited to providing or having their records examined in relation to the transactions covered by the audit. The clarification follows the Supreme Court’s September 25 order declining to entertain FHL’s challenge to the forensic-audit direction. The Court had also clarified that observations made by the High Court against Fortis were tentative and would not constitute final findings against the company. (ANI)

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