Delhi High Court: Orders Daiichi Sankyo Singh Brothers Fortis Forensic Audit

• On August 31, 2026, the Delhi High Court ordered a forensic audit in the Daiichi Sankyo vs. Singh brothers enforcement proceedings.
• The audit will reconstruct all dealings in Fortis Healthcare Limited (FHL) shares from May 24, 2016, onwards, and includes 17 banks and financial institutions.
• FHL was not a party to the arbitration agreement, award, or a judgment debtor, yet is subject to the audit.
• The court justified the audit as "purely investigative," but acknowledged it could pave the way for future liability for non-parties.
• This ruling significantly expands the scope of asset tracing and the treatment of non-parties in Indian arbitral award enforcement.

This ruling effectively expands the scope of asset tracing, requiring a re-evaluation of potential exposure for entities connected to judgment debtors, even if they were not direct participants in the initial arbitration.

In a significant development on August 31, 2026, the Delhi High Court issued a ruling that could redefine the scope of asset tracing in India, particularly concerning entities not directly involved in an original arbitration. The court allowed three applications in the ongoing enforcement proceedings between pharmaceutical giant Daiichi Sankyo and the Singh brothers, who are the judgment debtors in this case. This decision has been noted for its potential to drastically alter the treatment of parties considered 'strangers' to an arbitral award under Indian law.

The core of the court's order involves the appointment of a forensic auditor. This auditor is tasked with reconstructing the complete history of dealings related to shares of Fortis Healthcare Limited (FHL), specifically from May 24, 2016, onwards. The directive for this extensive audit marks a pivotal moment in the enforcement of arbitral awards, expanding the investigative reach beyond the immediate judgment debtors.

What makes this Delhi High Court arbitral award enforcement ruling particularly noteworthy is the inclusion of entities that were not direct parties to the original arbitration. Fortis Healthcare Limited (FHL) itself was not a signatory to the arbitration agreement, nor was it a party to the subsequent arbitral award. Furthermore, FHL was not designated as a judgment debtor, nor did it provide any assurances to the court alongside the Singh brothers and their holding companies. Despite this, FHL is now a central subject of the court-ordered forensic audit into its share dealings.

Beyond FHL, the audit extends its reach to 17 banks and financial institutions, all of which are now subject to scrutiny in the effort to trace assets. This broad directive underscores an increased judicial willingness to investigate entities indirectly connected to judgment debtors, even if they are strangers to arbitration award India proceedings. The court's rationale for this expansive inquiry is that the forensic audit is "purely investigative in nature" and does not, at this stage, aim to "fasten liability upon the entity whose affairs are directed to be examined."

The court's characterization of the audit as a mere inquiry suggests that, from a legal standpoint, no immediate rights are being affected, thus leaving non-parties with little grounds for complaint. However, the order's implications extend beyond a simple investigation. The court acknowledges that while the audit is investigative, it may well lay the groundwork for future liability. This approach effectively defers the question of liability for non-parties to a later stage, creating a pathway for potential future legal action against entities initially deemed outside the scope of the original dispute.

The Delhi High Court's decision in the Daiichi Sankyo Singh brothers Fortis forensic audit case marks a pivotal moment for corporate certainty asset tracing India. By subjecting non-parties like FHL and numerous financial institutions to a forensic audit, the court has signaled a more aggressive stance on asset recovery in arbitral award enforcement. This ruling challenges conventional understandings of who can be impacted by enforcement proceedings, suggesting that connections, even indirect ones, to judgment debtors could trigger extensive investigations.

This development has profound implications for businesses and legal practitioners. It suggests that the Indian legal framework is evolving to provide more robust mechanisms for enforcing arbitral awards, potentially making it harder for judgment debtors to shield assets through complex corporate arrangements. The ruling effectively expands the scope of asset tracing, requiring a re-evaluation of potential exposure for entities connected to judgment debtors, even if they were not direct participants in the initial arbitration.

This ruling significantly expands the scope of asset tracing in arbitration award enforcement, requiring lawyers to advise clients on potential exposure for entities connected to judgment debtors, even if not direct parties to the arbitration, due to increased judicial willingness to order forensic audits on non-parties. Compliance officers should review corporate structures for indirect liabilities.

Source: Original reporting via legal news outlet