Fortis Healthcare is reviewing a recent decision from the Delhi High Court in the Daiichi Sankyo arbitration case and may approach the Supreme Court, according to people familiar with the matter. The High Court’s Monday ruling has created a significant contingent liability for the company.

In a 213-page judgment, Justice Subramonium Prasad ordered a forensic audit into Fortis’ transactions spanning the period from when the Singh brothers were in control of the company to when IHH Healthcare took over.

Based on a full reading of the judgment, it is clear that the court can grant appropriate remedies against any person found to have violated court orders and frustrated the execution of the arbitration decree.

Scope of the Audit Includes IHH’s Acquisition

The court’s order includes scrutiny of the acquisition of the controlling interest by IHH, as well as “the role of the concerned parties.” According to a lawyer familiar with the case, the court could structure a remedy requiring direct payment to Daiichi Sankyo from “any person” found to meet this threshold. Under paragraph 269 of the judgment, the court has made clear that it can reverse all transactions found to be in violation of its orders.

The order stated: “Should the forensic audit reveal that any bank or financial institution, despite being aware of the subsisting judicial orders, participated in, facilitated or acted in furtherance of transactions having the effect of violating or circumventing these orders, this court would not be powerless to examine the legal consequences flowing therefrom.”

Legal Representation and Court’s Observations

Senior advocate Arvind Nigam and advocate Giriraj Subramaniam represented Daiichi Sankyo in the case. The High Court held that Fortis, now under new management, cannot claim ignorance of wrongdoing committed under the earlier management.