The bench also chided Daiichi for giving up its plea for forensic audit of the dissipation of shares in the two companies, which was a major window for the banks to argue that HC could not have passed the order for forensic audit when decree holder had given up that plea.

NEW DELHI: The Supreme Court on Tuesday upheld a Delhi HC order directing forensic audit of dissipation of shares of Fortis Healthcare Ltd (FHL) and Fortis Healthcare Holdings Pvt Ltd (FHHPL) through 17 banks and financial institutions allegedly to frustrate execution of a decade-old Rs 5,300 crore foreign decree by Daiichi Sankyo against brothers Malvinder and Shivinder Singh.Brushing aside a challenge to the forensic audit order of the HC by senior advocate Shyam Divan, appearing on behalf of Yes Bank and Axis Bank, a bench of CJI Surya Kant and Justices Joymalya Bagchi and V Mohana clarified the forensic audit would not be a roving inquiry against the banks or FIIs but will focus on the transaction of shares of FHL and FHHPL.The bench also chided Daiichi for giving up its plea for forensic audit of the dissipation of shares in the two companies, which was a major window for the banks to argue that HC could not have passed the order for forensic audit when decree holder had given up that plea.Daiichi counsel Arvind Datar told the court that the foreign decree, upheld by SC, had not been implemented for a decade and the plea giving up forensic audit was made due to frustration over the long lapse of time in executing the decree in India.

In fact, Delhi HC judge Justice Subramonium Prasad started his Aug 31 judgement quoting an 1872 judgement of Fort William HC (Calcutta HC) which stated “the difficulty of a litigant in India begins when he has obtained a decree”.Delhi HC had said in its judgment, “For the loans taken by the downstream entities of the judgment-debtors (Singh brothers and their companies), shares of FHL held by FHHPL were kept as security. This court needs to ascertain whether these loans were part of a legitimate transaction for the genuine business or were they part of the fraud to dissipate the shareholding of FHHPL in FHL to defeat the decree.”While directing the forensic auditor to identify each dealing in shareholdings aimed at frustrating the decree, Justice Prasad had asked it to examine “the role of banks, and identify the loan facilities secured by FHL shares, the creation and variation of security, maintenance of security margins, operation of contractual top-up obligations, invocation and sale of pledged shares, release of security, and the outstanding liability corresponding to each transaction”.