SC upholds HC order, clarifies scope of Fortis forensic audit

New Delhi: Upholding the August 31 Delhi HC order that directed a forensic audit of banks and financial institutions in the Daiichi Sankyo arbitration case, the Supreme Court on Tuesday clarified that the forensic audit related only to the transactions among hospital chain Fortis Healthcare Ltd (FHL), its holding company Fortis Healthcare Holding Pvt Ltd (FHHPL) and former promoters Malvinder Singh and Shivinder Singh.

There cannot be a "fishing and roving" enquiry into the entire affairs of 17 banks, including Axis Bank and Yes Bank, other than these transactions, the apex court said, adding that the forensic auditor will examine only the bank records related to the Fortis share transactions in question. A bench comprising chief justice Surya Kant and justices Joymalya Bagchi and V Mohana said that the high court's direction to conduct the forensic audit was "primarily directed with respect to the transactions between FHL, FHHPL and the judgment debtors".

The directions issued by the HC regarding the forensic audit of 17 banks, therefore, ought to be read and construed in that context, it said, adding that "these directions pertain to the commercial transactions/relationships between the judgment debtors, FHL, FHHPL and the banks...the impugned judgment need not be misconstrued as if there is a direction for a fishing and roving enquiry into the entire affairs of the banks other than their transactions with FHL, FHHPL and the judgment debtors".


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The HC had ordered a comprehensive court-monitored forensic audit by Delhi-based chartered accountant firm S Ramanand Aiyar & Co into the erosion of the Singh brothers' shareholding in FHL and also directed that every person and transaction linked to the Fortis deal with Malaysia's IHH Healthcare Bhd be covered in the audit, casting a cloud over global healthcare firm IHH's acquisition of the hospital chain.