Fortis case: SC disposes of Daiichi's plea, orders forensic audit for IHH Healthcare share sale

The Supreme Court on Thursday ordered a forensic audit of the share sale in Fortis Healthcare in 2018 and refused to allow the open offer from Malaysia’s IHH Healthcare Bhd to proceed, which lead to a rout in Fortis’s stock.

A ruling by three judge-panel, headed by Chief Justice U.U. Lalit sought a probe into sale of shares in Fortis by lenders and transfer of money to RHT Health Trust on a petition filed by Daiichi Sankyo Co. The Japanese drug maker had acquired a pharmaceutical firm in 2008 from Malvinder Singh and Shivinder Singh, who are also ex-owners of Fortis Healthcare.

"We understand that the proceedings before the Hon’ble Supreme Court have concluded with certain directions and the suo-motu contempt has been disposed-off. We will go by the directions of the Hon’ble Supreme Court and will be seeking legal advice regarding our future course of action," Fortis Healthcare said in a statement.


"We remain committed to our core purpose of patient care and will continue to focus on our strategic and operational objectives to further strengthen and expand our healthcare network. We will keep all our stakeholders informed, as required," the company said.

Shares of Fortis Healthcare sank nearly 20% and eyed their biggest slide in nearly 15 years. Fortis' shares dropped by their most since January 2008.

The SC in its order said that the Delhi HC will decide on the open offer, proposed by IHH Healthcare.

The Japanese drug maker had challenged the Fortis-IHH deal to recover the Rs 3,600 crore arbitration award it had won in a Singapore tribunal against Fortis’ erstwhile promoters.




Malaysia's IHH Healthcare had acquired a 31 per cent controlling stake in Fortis in 2018, which triggered a mandatory open offer to acquire another 26 per cent of the hospital chain shares from the market. It acquired the stake in Fortis Healthcare in August 2018 by paying $1.1 billion in a bidding process overseen by an independent board.

The open offer, however, could not move forward due to ongoing legal proceedings with respect to the transaction based on a plea filed by Daiichi Sankyo.



Daiichi Sankyo had moved the plea against the Singh brothers and Indiabulls alleging that the two had pledged 1.7 million shares of Fortis Healthcare held by Fortis Healthcare Holding, despite the apex court forbidding it.