Yes Bank has moved the Supreme Court against a Delhi High Court direction for a forensic audit into the conduct of 17 banks and financial institutions involved in the sale of Fortis Healthcare shares to Malaysia-based IHH Healthcare Berhad, while making clear that it does not oppose scrutiny of Fortis and its former promoters.
The bank has challenged the High Court’s August 31 judgment to a limited extent, arguing that it was neither a party to a 2008 arbitral award nor included in the execution proceedings initiated by Japanese pharmaceutical company Daiichi Sankyo. On that basis, Yes Bank has said that no allegations or findings were made against it that would justify including it in the forensic audit.
At the same time, Yes Bank said it would provide information genuinely relevant to tracing transactions involving the bank, subject to existing laws and the limits on permissible disclosure. The bank’s position separates its objection to being covered by the audit from the broader examination of the affairs of Fortis Healthcare, its former promoters Malvinder Singh and Shivinder Singh, and companies associated with the Religare Group.
The Delhi High Court had ordered the forensic examination of transactions involving Fortis Healthcare, IHH Healthcare and RHT Health Trust, which was floated by Fortis’s former promoters. The audit will also examine dealings between Fortis, the Singh brothers and several companies of the Religare Group, according to the report.
The proceedings were initiated through pleas filed by Daiichi Sankyo, which is pursuing enforcement of a Rs 3,500-crore Singapore arbitration award against the Singh brothers. The award followed allegations that information was concealed when the brothers sold Ranbaxy Laboratories to Daiichi Sankyo in 2008 for $4.6 billion.
Chartered accountants firm S Ramanand Aiyar & Co has been appointed to conduct the forensic audit. The examination is expected to focus on the transaction trail connecting Fortis Healthcare, its former promoters, the Religare-linked companies, IHH Healthcare and participating financial institutions.
IHH Healthcare currently holds a controlling stake in Fortis Healthcare. The legal challenge by Yes Bank does not seek to stop the forensic examination of Fortis or its former promoters, but contests the bank’s inclusion and the extent to which information can be sought from it. The Supreme Court will now consider Yes Bank’s limited challenge to the High Court’s directions.
