Indian court orders probe in Fortis asset diversion case, Malaysia's IHH says

India’s Delhi High Court has ordered a forensic audit into alleged asset dissipation by former promoters of Fortis Healthcare, Malaysia’s IHH Healthcare said on Tuesday.

The fact-finding enquiry would investigate the alleged disposal of the former promoters’ Fortis shareholding, subsequent change in the control of the Indian hospital operator, and the role of the relevant stakeholders, IHH Healthcare said.

Asset dissipation is the depletion or diversion of assets that reduces the pool available to creditors, shareholders, or other claimants. Promoters are large shareholders with management control.

At the heart of the decade-long dispute is Daiichi Sankyo’s claim that former Fortis promoters, Malvinder Mohan Singh and Shivinder Mohan Singh, moved or disposed of assets that could have been used to satisfy an arbitration award the Japanese drugmaker won in 2016.

The arbitral award, issued by a Singapore tribunal in 2016, directed the Singh brothers and related parties to pay 25.62 billion rupees ($269 million) to Daiichi.

Daiichi has told the Delhi court the amount outstanding has since risen to 53 billion rupees.

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Malaysia’s IHH bought about a third of Fortis Healthcare in 2018, which triggered a mandatory takeover offer for an additional 26% stake. IHH had to halt the takeover offer after Daiichi Sankyo filed a contempt plea against Fortis’ promoters.

IHH said on Tuesday that it was not a party to the execution proceedings against the former Fortis promoters. The Delhi court order on Monday has directed an examination of IHH’s stake acquisition in Fortis via Northern TK Venture Pte.

Fortis said it has taken note of the court judgement, which it said does not impose any monetary liability on the company, nor does it “in any way, by itself, result in fastening of liability on Fortis”.

IHH is one of the world’s largest private healthcare groups which operates 190 healthcare facilities across 10 countries, including Malaysia, Singapore, Türkiye and India. Fortis runs 36 healthcare facilities with over 6,000 beds across India.