Delhi High Court Orders Forensic Audit in Daiichi–Fortis Dispute to Trace Dissipation of Shares and Assets

Legal News | New Delhi | 1 September 2026

The Delhi High Court has ordered a comprehensive forensic audit in the long-running enforcement proceedings arising from Daiichi Sankyo’s arbitral award against former Ranbaxy promoters Malvinder Mohan Singh and Shivinder Mohan Singh. The direction is significant for arbitration enforcement, corporate structures and asset-tracing because the Court has required an independent reconstruction of transactions involving Fortis Healthcare Limited shares, related entities, banks and financial institutions.

What did the Delhi High Court order?

The High Court held that a forensic audit was warranted to reconstruct the movement of shares and funds and identify the persons and entities involved at different stages of the transactions. The auditor has been tasked with examining the evolution of the shareholding of Fortis Healthcare Holding Private Limited in Fortis Healthcare Limited from 24 May 2016, including changes in encumbered and unencumbered shares, pledges, invocation of security, top-up mechanisms, transfers and sales.

The judgment also requires a transaction-wise chronology and examination of whether relevant transactions occurred after judicial orders and undertakings that had been passed or recorded during the dispute.

Why the ruling matters for arbitration enforcement

Winning an arbitral award is only one part of commercial dispute resolution. The decree-holder must ultimately be able to enforce the award against assets. Complex corporate structures, pledges, transfers and dealings through connected entities can make enforcement difficult where the asset position changes during prolonged litigation.

The judgment is therefore important beyond the Daiichi–Ranbaxy dispute. It illustrates the tools an executing court may use to establish the factual trail before deciding whether further coercive, restorative or consequential orders are justified.

Forensic audit is investigative, not a final finding of liability

A particularly important part of the judgment is the distinction drawn between ordering a forensic audit and adjudicating civil liability. The Court explained that the audit is intended to reconstruct facts. Liability of particular companies, officers, banks or other persons is to be determined on the basis of law and evidence after the factual picture emerges.

This distinction protects procedural fairness while ensuring that execution proceedings are not frustrated merely because the relevant transactions are complex.

Corporate veil and connected entities

The judgment discusses the possibility that corporate structures cannot be permitted to become instruments for frustrating judicial orders or enforcement of a decree. It records that, depending on what the forensic examination establishes, questions concerning lifting or piercing the corporate veil may arise.

For companies, directors and lenders, this underscores the importance of documenting the commercial basis, approvals and timing of transactions involving assets that are already subject to court proceedings, undertakings or status-quo orders.

What will the forensic auditor examine?

1. Evolution of Fortis shareholding

The auditor must examine changes in the relevant Fortis shareholding after 24 May 2016 and reconstruct movements between encumbered and unencumbered shares.

2. Pledges, security and sale transactions

The audit extends to fresh pledges, invocation of existing pledges, top-up mechanisms, release of securities and sales of pledged shares.

3. Transaction chronology

A transaction-wise chronology is to identify dates, quantities of shares, transferors and transferees, consideration, approvals, supporting documents and the judicial orders operating at the relevant time.

4. Role of corporate officers and financial institutions

The Court has indicated that contemporaneous corporate and financial records may be necessary to determine who participated in or approved particular transactions. Any ultimate legal consequence remains a matter for judicial determination.

Practical implications for companies and award-holders

For decree-holders: the decision demonstrates why early asset mapping, preservation of corporate records and close monitoring of encumbrances can be crucial in high-value award enforcement.

For companies: transactions affecting assets that are the subject of undertakings or court orders should be reviewed not only for ordinary corporate compliance but also for their potential effect on pending enforcement proceedings.

For banks and financial institutions: enforcement of security interests may require careful assessment where shares or other assets are simultaneously affected by judicial directions.

Primary source

The judgment is Daiichi Sankyo Company, Limited v. Malvinder Mohan Singh & Ors., O.M.P.(EFA)(COMM.) 6/2016 and connected applications, decided by the Delhi High Court on 31 August 2026. The judgment was independently reviewed for this report. The development was identified through current legal-news coverage, including Bar & Bench.

Read the Delhi High Court judgment.

Frequently Asked Questions

Did the Delhi High Court hold Fortis or the banks liable?

No final liability is created merely by the direction for a forensic audit. The Court expressly treated the audit as a fact-finding exercise that will assist subsequent judicial determination.

Who has been appointed as forensic auditor?

S Ramanand Aiyar & Co., Chartered Accountants, has been appointed to conduct the forensic audit.

Why is this important for arbitration cases?

It concerns the practical enforcement of a major arbitral award and demonstrates how courts may investigate the movement or depletion of assets where execution is alleged to have been frustrated.

Can courts look through corporate structures during execution?

Where the evidence justifies it, courts may examine whether corporate structures or transactions were used in a manner affecting enforcement. Whether the corporate veil should ultimately be pierced depends on the facts and applicable law.

This report is for legal information and analysis. It is not legal advice and does not constitute solicitation.