New Delhi [India], August 31 (ANI): Fortis Healthcare Limited on Monday said the Delhi High Court's judgment ordering a forensic audit into the alleged dissipation of Fortis shares in the long-running Rs 5,300-crore Daiichi Sankyo award case does not impose any monetary liability on the company.
In a statement, Fortis said it had taken note of the judgment and clarified that it was "neither a party to the original dispute nor a judgment debtor in the execution proceedings." It said the court's direction to appoint a forensic auditor was primarily aimed at conducting a factual enquiry and reconstructing the circumstances surrounding the dissipation of Fortis shares by its erstwhile promoters, Malvinder Mohan Singh and Shivinder Mohan Singh.
Fortis emphasised that the forensic audit order "does not in any way, by itself, result in fastening of liability on Fortis." The company said it was reviewing the judgment in detail in consultation with its legal counsel and would determine the appropriate course of action in accordance with applicable law.
"Fortis remains committed to the highest standards of corporate governance, transparency and regulatory compliance and continues to remain focused on its operations and the interest of all its stakeholders," the company said.
The statement came after Justice Subramonium Prasad ordered a detailed forensic audit into the alleged dissipation of shares and assets linked to the erstwhile Fortis promoters in execution proceedings arising from an arbitration award in favour of Japanese drug major Daiichi Sankyo.
The court appointed S Ramanand Aiyar & Co., Chartered Accountants, as the forensic auditor and directed it to reconstruct the chain of transactions involving Fortis shares, the judgment debtors, banks and financial institutions that had financed transactions against the shares.
The court said the exercise would ascertain how assets available for satisfying the arbitral award were reduced and identify the persons and entities involved in the transactions.
The dispute stems from a Singapore arbitration award dated April 29, 2016, directing the judgment debtors to pay around ₹2,562 crore, along with interest. Daiichi has claimed that the amount due has now risen to approximately ₹5,300 crore. The award was challenged before the Delhi High Court, but the challenge was rejected in 2018, after which the Supreme Court declined to interfere.
The High Court took note of the sharp decline in Fortis Healthcare's shareholding held through Fortis Healthcare Holding Pvt Ltd, which was controlled by the judgment debtors. The holding fell from 32.50 crore shares in September 2016 to about 17.80 crore shares by September 2017, while unencumbered shares declined sharply from 5.29 crore to 26.31 lakh.
The court said the reduction in unencumbered shares after the Supreme Court's status quo order raised questions requiring detailed forensic examination.
The auditor has been directed to examine pledges, invocation and release of securities, sale or transfer of shares, loans secured against the shares and the flow of funds received from such transactions. It will also examine relevant financial, banking, demat, corporate and statutory records.
The audit will cover the role of banks and financial institutions, Fortis and its officials, depositories, the Registrar and Transfer Agent and other intermediaries. Transactions relating to the IHH-NTK deal and the acquisition of assets from RHT Health Trust, Singapore, will also be examined.
The court also considered the principle of reverse piercing of the corporate veil and said the forensic exercise would help determine whether corporate structures were used to defeat Daiichi's rights or evade court orders.
The High Court, however, clarified that the forensic audit is an investigative exercise and does not, by itself, establish civil liability against any person or entity.
The auditor has been given six months to complete the exercise. Daiichi will initially bear the auditor's fees, while all concerned parties have been directed to cooperate. The auditor will issue its first requisition within four weeks, and the concerned parties will have two weeks to provide the required documents. (ANI)
Fortis says Delhi HC forensic audit order does not impose monetary liability on company in Daiichi award case
