SC Allows Forensic Audit of Fortis in Daiichi-Sankyo Dispute

SC Allows Forensic Audit of Fortis in Daiichi-Sankyo Dispute

The Supreme Court has declined to stay a Delhi High Court order directing a forensic audit of Fortis Healthcare in connection with the long-standing dispute between Daiichi Sankyo and the Singh brothers. A Bench comprising Chief Justice of India Surya Kant and Justices Joymalya Bagchi and V Mohana upheld the procedural validity of the audit while clarifying that previous judicial observations against Fortis are tentative.

The forensic audit pertains to allegations of financial misrepresentation and fund diversion during the sale of Fortis to Malaysian company IHH Healthcare. The Delhi High Court had appointed a forensic auditor to trace transactions and assess valuation losses suffered by Daiichi Sankyo post-acquisition. Fortis challenged the order, citing executive privilege and potential reputational harm.

The observations made by the High Court are prima facie and tentative in nature and shall not bind the forensic auditor in the discharge of his independent duties.

The Supreme Court emphasized the auditor’s independence and the need for transparency in corporate transactions involving public interest entities. The audit will be conducted in accordance with the Companies Act, 2013, and under the oversight of the High Court to ensure procedural fairness.

For practitioners, this ruling reinforces the judiciary’s willingness to order forensic audits in complex corporate disputes, provided safeguards against bias are in place. It also clarifies that interim judicial remarks cannot prejudice the final findings of statutory or court-appointed investigators.