Industry Odisha Bureau, Sep 30: The Supreme Court has upheld the Delhi High Court’s forensic audit direction. But scrutiny of 17 banks must stay tied to Fortis-linked transactions. Their wider affairs remain off limits.
A forensic audit linked to Fortis Healthcare will go ahead. But it will not become an open-ended search through India’s banks.
The Supreme Court on Tuesday upheld the Delhi High Court’s August 31 order. That order directed a forensic audit of banks and financial institutions. It arose from the Daiichi Sankyo arbitration case. The top court, however, spelt out where the scrutiny begins and ends.
What auditors can examine
The audit focuses on a defined set of banking transactions. These involve hospital chain Fortis Healthcare Ltd (FHL). They also involve its holding company, Fortis Healthcare Holding Pvt Ltd (FHHPL). Former promoters Malvinder Singh and Shivinder Singh complete the picture.
The forensic auditor can examine bank records tied to the relevant Fortis share transactions.
The ruling came from a bench led by Chief Justice Surya Kant. Justices Joymalya Bagchi and V Mohana also sat on it. It said the direction mainly targeted dealings between FHL, FHHPL and the judgment debtors. Judgment debtors are parties required to pay under a court decree or award. In simple terms, auditors follow the Fortis-related money, not the banks’ whole business.
What stays outside the audit
The High Court’s directions referred to 17 banks. These include Axis Bank and Yes Bank.
The Supreme Court said there cannot be a “fishing and roving” enquiry. The phrase describes a broad search without a specific target. The banks’ entire affairs, beyond these transactions, therefore fall outside the audit.
The ruling does not cancel the audit. Nor does it block access to relevant bank records. It keeps the scrutiny tied to the banks’ commercial dealings with the Fortis parties.
Why the audit was ordered
The High Court had ordered a comprehensive, court-monitored forensic audit. Its focus is the erosion of the Singh brothers’ shareholding in FHL. Delhi-based chartered accountant firm S Ramanand Aiyar & Co will conduct it.
A forensic audit goes beyond routine accounting checks. It examines records and transactions to trace how value moved.
The IHH backdrop
The High Court had also widened the audit’s reach. It covered every person and transaction linked to Fortis’ deal with Malaysia’s IHH Healthcare Bhd. That direction cast uncertainty over IHH’s acquisition of the hospital chain.
The Supreme Court’s reported clarification centred on the banks’ role. It does not address the IHH deal directly.
Targeted scrutiny, not a blanket probe
The case draws a clear line in corporate forensic audits. Scrutinising specific banking transactions is one thing. Investigating entire institutions is quite another.
The Supreme Court kept the first and ruled out the second. For Fortis Healthcare, its former promoters and the banks, the audit continues. Its boundaries are now far clearer.
