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Informist, Friday, Sept. 25, 2026

 

--SC rejects Fortis Health plea on forensic audit in Religare group case 

--CONTEXT: HC ordered forensic audit of Fortis, Religare Group transaction 

--SC: To hear YES Bank, Axis Bank plea in forensic audit case Tue 

--CONTEXT: HC also ordered bks' audit in Fortis, Religare Group transaction 

 

NEW DELHI – The Supreme Court Friday rejected an appeal by Fortis Healthcare Ltd. against a Delhi High Court order on Aug. 31 to appoint a forensic auditor to investigate the transactions between the company's former promoters Malvinder Singh and Shivinder Singh, their companies, and Religare group. The forensic audit was to examine the role of Fortis Healthcare, its officers, directors, key managerial personnel, and any other intermediary involved in processing, approving, recording, or giving effect to the transactions involving the Singh brothers. In its order, the bench led by Chief Justice of India Surya Kant said that the forensic audit against Fortis Healthcare will be conducted independently, uninfluenced by the high court's order, as the same were prima facie to justify the audit.

 

The apex court said that it will hear appeals from YES Bank and Axis Bank against the high court's order to audit the banks in the case on Tuesday. The forensic auditor was also directed by the high court to examine the role of banks, and identify the loan facilities secured by Fortis Healthcare, the creation and variation of security, maintenance of security margins, operation of contractual top-up obligations, invocation and sale of pledged shares, release of security, and the outstanding liability corresponding to each transaction. 

 

At 1318 IST, shares of Fortis Healthcare traded 4.4% lower at INR 839.05 on the National Stock Exchange, and those of Religare Enterprises were 0.7% higher at INR 242.07. Shares of YES Bank were unchanged at INR 22.45 and the shares of Axis Bank were up 2.0% at INR 1,210.70.  End

 

The top court said that it needs to be examined where there was a connivance of the former personnel involved with Fortis Healthcare in the Singh brothers diluting their shareholding in the company. On the argument that Malaysia-based IHH Healthcare Berhad was the largest promoter shareholder of Fortis Healthcare, holding a 31.17% stake now, and not the Singh brothers, the top court questioned how the say of management of a company decreases by adding a foreign player. Was the foreign player hand-in-glove with the Singh brothers, asked the court. 

 

The court said that it will take judicial notice of its order directing the status quo on Fortis Healthcare shareholding. The top court said Fortis Healthcare was not an ordinary ignorant citizen having transnational presence. Fortis Healthcare knew that Singh brothers were holding shares in the company and there was a new promoter coming in, said the court. In this, it is necessary to examine what were the roles of other personnels of Fortis Healthcare when the shareholding of Singh brothers was diluted. The forensic audit should go on, the investigation will certify if Fortis Healthcare comes out clean, said the court, adding it will be shown whether the company was in the knowledge of these transactions. 

 

The apex court said that forensic audit will see what was the role played by the extended management of Fortis Healthcare in the activities of diluting shareholding. IHH Healthcare is an experienced entity, does it not inquire into the affairs of Fortis Healthcare or it just makes blind investments in the company, said the top court. IHH Healthcare suddenly woke up in the morning and invested in Fortis Healthcare, did they not make any prior enquiry regarding Singh brothers, asked the court. Fortis Healthcare should welcome this type of investigation, as everyone will get to know if the company was involved in the activities of Singh brothers diluting their shareholding, said the court.

 

Fortis Healthcare said that it was a publicly listed company and running one of India's largest hospital chains. The company has nothing to do with Singh brothers and nowhere is the company party to the arbitration proceedings by Daiichi Sankyo Co. Ltd. The arbitral award was not against the company and Daiichi Sankyo deliberately did not choose to execute the award before, said the petitioner. The forensic orders saddled the entity of personal debt of Singh brothers, the erstwhile promoters of the company, who were rogue, on the company, said Fortis Healthcare. It said that citing the forensic audit order, no investor will put in money in the company. The order of forensic audit will be used in every corporate proceedings against the company, said Fortis Healthcare. 

 

Japanese pharma major Daiichi Sankyo Co. Ltd. had filed an application in the high court seeking forensic audit on transactions in a case where the company sought execution of an INR-35-billion arbitral award to be paid by the Singh brothers. Daiichi Sankyo had also urged the appointment of a forensic auditor to probe transactions between Fortis Healthcare, Malaysia's IHH Healthcare Berhad, and RHT Health Trust of Singapore. It wanted a forensic audit into the conduct of 17 banks and financial institutions, including HDFC Bank Ltd., YES Bank, Axis Bank Ltd., and others.

 

Daiichi Sankyo had said Religare group, which now claims itself as having an independent existence, was party to the fraudulent transactions in which it pushed the companies of Malvinder Singh and Shivinder Singh to insolvency. The Japanese company said it was all done to hinder the execution of the arbitral award that was passed in its favour and not with a view to resolve the companies of the Singh brothers through the corporate insolvency resolution process. 

 

In 2018, IHH Healthcare Berhad acquired a 31% stake in Fortis Healthcare. However, before it could make an open offer to acquire another 26% stake, the Supreme Court that same year imposed status quo on Fortis Healthcare's shareholding.

 

Daiichi Sankyo had been opposing the stake sale, saying it should not be allowed until Malvinder Singh and Shivinder Singh pay INR 35 billion they owe to the company. The Japanese company had said the brothers managed to create encumbrances on their stake in Fortis Healthcare despite repeated undertakings before the Delhi High Court that they would not dilute their shareholding in Fortis group.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Surya Tripathi

Edited by Akul Nishant Akhoury

 

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