Daiichi subsequently alleged the brothers concealed critical regulatory issues at Ranbaxy. A Singapore arbitration tribunal in 2016 awarded Daiichi approximately ₹2,562 crore in damages. With accrued interest over a decade, this enforcement claim now exceeds ₹5,300 crore.
The enforcement proceedings took a dramatic turn when Daiichi approached Indian courts to recover this award, leading to a Delhi High Court order on August 31, 2026, directing a comprehensive forensic audit. The court appointed S Ramanand Aiyar & Co as forensic auditor with a six-month mandate to reconstruct the complete chain of transactions concerning Fortis shares from May 24, 2016.
This dramatic dilution occurred through multiple mechanisms.
On August 11, 2017, the Supreme Court directed that status quo be maintained regarding FHHPL's shareholding in Fortis. However, on August 31, 2017, the Court clarified this status quo applied to both encumbered and unencumbered shares. Despite these judicial protections, the Singh brothers had pledged substantial Fortis shares to multiple lenders including Indiabulls Housing Finance Limited, Yes Bank, Axis Bank, and HDFC Bank.
When the brothers defaulted on their obligations, these banks attached and liquidated the pledged shares in the free market. Management clarified: "They had pledged their shares to banks, who attached these shares and liquidated them in the free market. As a result, the Singh brothers' holding in the company had come down to negligible levels by February 2018". AnnualReports
Fortis Healthcare's management has consistently maintained that the company had no ability to prevent these share transfers. As a listed entity, Fortis does not control the transfer of dematerialized shares held by shareholders. Share transfers are governed by the Depositories Act, SEBI regulations, and contractual arrangements between shareholders and lenders.
The transfer process for dematerialized shares involves multiple intermediaries—the stock exchange matches buyers and sellers who remain unaware of each other's identity, while depositories and depository participants execute the actual transfers. This automated T+2 settlement system operates independently of the listed company.
"The company has no role in share transfer. We are a publicly listed company. The shares are transferred between the parties and it is done through the registrar and company plays no role," management stated. Information about transactions became available only after they occurred. AnnualReports
The central legal question is how Daiichi's arbitral award against the Singh brothers can create enforceable liabilities for Fortis Healthcare, which was neither a party to the arbitration nor a judgment debtor.
Daiichi is relying on the doctrine of piercing the corporate veil at the execution stage of arbitral awards. Recent Indian jurisprudence has developed the "evasion principle"—where the award-debtor transfers assets to associated companies while retaining control, third-party entities may be proceeded against to prevent frustrating enforcement.
The Delhi High Court observed that Fortis "should have intervened to stop the sale of these shares when they were first liquidated". Justice Subramonium Prasad noted that "because these were FHL's shares, FHL remains ultimately responsible".
Fortis has challenged this approach, arguing that the High Court effectively treated the company as an "alter ego" of the Singh brothers before establishing any legal basis for lifting the corporate veil. The company highlights its approximately 2.5 lakh public shareholders who collectively hold around 69% of Fortis, arguing that treating the listed company as an extension of former promoters could have consequences for shareholders who had no connection with the original dispute.
On September 25, 2026, a Supreme Court bench comprising Chief Justice Surya Kant, Justice Joymalya Bagchi, and Justice V Mohana refused to interfere with the forensic audit order but made a crucial clarification. The Court stated that the Delhi High Court's observations against Fortis were "only tentative and prima facie" and "would not bind the forensic auditor".
"It goes without saying that the forensic audit shall be conducted independently without being influenced by those observations made by the High Court," the Court added. This preserves the auditor's independence and ensures Fortis receives a fair hearing without prejudgment.
In November 2018, Malaysia's IHH Healthcare Berhad, through its subsidiary Northern TK Venture Pte Ltd, completed a transformational investment of ₹4,000 crore, acquiring a 31.1% stake through preferential allotment of newly issued shares at ₹170 per share. This was a fresh capital injection, not a purchase of existing shares from the Singh brothers.
The investment triggered a complete governance overhaul. IHH appointed four nominees to the Fortis board, including Tan See Leng, IHH's Managing Director and CEO. A new MD & CEO and CFO were appointed in the first half of 2019. AnnualReports
The ₹4,000 crore was strategically deployed: acquiring RHT Health Trust assets for ₹4,666 crore, strengthening the balance sheet (credit rating improved 4 notches from BBB- to A), reducing net debt to equity ratio to 0.14x, and enabling annualized savings of approximately ₹270 crore in service fees. AnnualReports
The potential financial exposures for Fortis depend heavily on the forensic audit findings. In the most likely scenario (60% probability) where no irregularities are identified, exposure would be limited to legal expenses of approximately ₹25-30 crore, similar to previous years.
In a moderate scenario (30% probability) with minor irregularities, potential exposure could range from ₹400-1,600 crore, including potential fines, asset write-downs, and provisioning requirements. A severe scenario (10% probability) with significant findings could expose the company to ₹3,100-9,200 crore in liabilities.
However, the Delhi High Court explicitly exempted Fortis from liability, stating the forensic audit is "purely a legal mechanism to trace assets of its erstwhile promoters and has no bearing on Fortis Healthcare's day-to-day operations or cash flows". The audit costs are to be borne by Daiichi Sankyo per court order.
Despite the legal overhang, Fortis continues to demonstrate strong operational performance. Q1 FY27 results showed revenue growing 17.5% year-on-year to ₹2,545 crore, operating EBITDA up 15.8% to ₹568 crore, and profit after tax rising 2.3% to ₹273 crore.
CRISIL Ratings has reaffirmed Fortis at CRISIL AA+/Stable with short-term rating of CRISIL A1+, noting that "the ratings on the debt facilities of FHL remain unaffected by the recent announcement, with business operations continuing as usual".
Management has emphasized that the order "does not impede ongoing or planned investments, CapEx, bed expansion, or M&A initiatives" and that "operations, patient care, and growth plans remain insulated from legal proceedings".
The forensic audit timeline extends approximately nine months from the court order, with the final report expected around May-June 2027. The Supreme Court's clarification that High Court observations are tentative provides Fortis with significant protection against prejudgment.
IHH Healthcare remains committed to Fortis, announcing plans to progressively increase its stake from 31.17% to 51%. The company has projected bed capacity targets of nearly 10,000 beds by 2030, supported by robust internal accruals and parent backing.
For India's corporate landscape, this case will establish critical precedents regarding the extent to which listed companies can be held liable for actions of former promoters, the balance between creditor recovery rights and corporate governance, and the implications for foreign investment in companies with legacy promoter issues. The outcome will be closely watched by investors, legal experts, and corporate governance advocates alike.
