Indian Court Directs Appointment of Forensic Auditor in Fortis-IHH Case

Malaysia-based IHH Healthcare announced on Tuesday that an Indian court has directed the appointment of a forensic auditor to examine certain applications filed by Japan's Daiichi Sankyo against Fortis Healthcare.

The court's order primarily tasks the forensic auditor with undertaking a factual inquiry into the dissipation of shareholding in Fortis by its erstwhile promoters, among others, according to IHH. The healthcare operator clarified that the court did not impose any penalty or fine on IHH or Fortis.

Additionally, the legal order mandates an examination of the transaction concerning IHH's acquisition of a controlling stake in Fortis via Northern TK Venture Pte (NTK), its unit. IHH had previously acquired a 31% interest in Fortis through NTK, but subsequently halted its open offer to purchase an additional 26% stake after Daiichi Sankyo filed a contempt plea against the founders of the Indian company.

The legal battles surrounding the entities have involved multiple claims. NTK filed a claim in October 2023 alleging that the Japanese drugmaker caused losses by preventing NTK from proceeding with open offers to buy a stake in the Indian hospital chain in 2018. Furthermore, in May of last year, NTK sought an additional 2.7 million rupees for losses arising from its defamation claim.

Despite the ongoing legal complexities, India's market regulator cleared IHH's mandatory takeover offer in early October last year for an additional 26% stake in Fortis and its unit, Malar Hospitals.

IHH Healthcare is recognized as one of the world's largest private healthcare groups. Company website data shows that it operates 190 healthcare facilities, which include 89 hospitals, clinics, and ambulatory care centres across 10 countries, including Malaysia, Singapore, Türkiye, and India. Meanwhile, Fortis operates 36 healthcare facilities with a capacity of over 6,000 beds across 12 Indian states, according to its official records.

"This legal development highlights the complexities and long-term regulatory oversight often involved in cross-border acquisitions and corporate restructuring. When previous promoter actions and third-party litigations intersect with major transactions, judicial scrutiny through forensic audits becomes a standard mechanism to establish factual clarity. For businesses navigating the Indian healthcare and M&A ecosystem, this case underscores the importance of addressing historical liabilities and legal contingencies transparently before executing large-scale controlling stake acquisitions." — Dr. Shishir Gupta, Founder & CEO, StartupLanes