Supreme Court Holds Contemnors Guilty of Contempt, Orders Forensic Audit

The Supreme Court found Contemnor Nos. 9 and 10 guilty of contempt for inadequate purging and sentenced them to imprisonment. The Court directed forensic audits for bank transactions, dealings with IHH/NTK, and ordered the transmission of deposited funds for arbitral award enforcement.

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Issues Involved:
1. Enforcement of Foreign Arbitral Award
2. Alleged Contempt of Court Orders
3. Role of Banks and Financial Institutions
4. Transactions with IHH/NTK
5. Purging of Contempt by Contemnors

Detailed Analysis:

1. Enforcement of Foreign Arbitral Award:
The proceedings originated from Daiichi Sankyo Company Limited's (Daiichi) action to enforce a Foreign Arbitral Award dated 29.04.2016, made in Singapore, directing the Respondents to jointly and severally pay approximately INR 2562 crores with interest. The award was challenged in both Singapore and India but became final after objections were dismissed. During enforcement in the High Court of Delhi, an objection under Section 48 of the Arbitration and Conciliation Act, 1996, was dismissed except for certain respondents who were minors. The Special Leave Petition (Civil) No. 4276 of 2018 challenging this was dismissed by the Supreme Court on 16.02.2018.

2. Alleged Contempt of Court Orders:
In enforcement proceedings, Daiichi expressed concerns that the Respondents were moving assets beyond its reach. An undertaking was given by the Respondents' counsel that the value of unencumbered assets disclosed would not be diminished. The Supreme Court recorded multiple assurances given by the Respondents to protect Daiichi's interests, which were allegedly violated. The Court found that the Respondents had diluted their shareholdings in Fortis Healthcare Limited (FHL) in violation of these assurances, leading to contempt proceedings.

3. Role of Banks and Financial Institutions:
The Supreme Court examined whether banks and financial institutions acted within commercial expediency or in connivance with the Respondents to defeat the court's orders. The Court noted that multiple banks had pledged and sold shares of FHL, which were allegedly encumbered before the court's orders. The Court directed the High Court to consider appointing forensic auditors to analyze these transactions to determine if they were bona fide.

4. Transactions with IHH/NTK:
The transactions involving IHH Healthcare Berhad (IHH) and NTK were scrutinized to determine if they were bona fide or intended to defeat the court's processes. It was argued that the acquisition of proprietary interests in hospitals and diagnostic centers by FHL was to streamline its business structure. The Court left it to the executing court to appoint forensic auditors to analyze these transactions.

5. Purging of Contempt by Contemnors:
The Court found that the assets offered by Contemnor Nos. 9 and 10 were inadequate to satisfy the award amount. The Court sentenced them to six months imprisonment and a fine of Rs.5,000/- each for contempt of court. The Court also directed the High Court to consider forensic audits and issue appropriate processes for execution of the award.

Conclusion:
The Supreme Court held Contemnor Nos. 9 and 10 guilty of contempt for failing to purge themselves adequately and sentenced them to imprisonment. The Court directed the High Court to appoint forensic auditors to analyze the transactions by banks and financial institutions and the dealings with IHH/NTK. The Court also ordered the transmission of Rs.17,93,40,000/- deposited in the Registry to the executing court for the enforcement of the arbitral award.

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