NCLT Delhi Clears Merger Of Fortis Subsidiaries Into Fortis Hospitals Despite SFIO Probe Concerns

The National Company Law Tribunal (NCLT) at New Delhi has approved the merger of four Fortis group subsidiaries into Fortis Hospitals Limited, overruling objections linked to an ongoing investigation into the group's former promoters.

The approval was granted on January 5, 2026, nearly two years after the tribunal passed its first order in the matter. The merger will take effect from April 1, 2022.

A coram of Judicial Member Ashok Kumar Bhardwaj and Technical Member Ravindra Chaturvedi accepted Fortis' submission that pending criminal proceedings, including SFIO proceedings, cannot constitute a hindrance to a scheme of arrangement.

It, however, observed that "pending proceedings concerning SFIO shall remain unaffected by the approved scheme of merger by absorption and shall continue without prejudice."

The subsidiaries being absorbed are Fortis Emergency Services Limited, Birdie & Birdie Realtors Private Limited, Fortis Health Management (East) Limited, and Fortis Cancer Care Limited. Three of them are non-operational and are unable to meet basic expenses on their own.Fortis Cancer Care, which is registered in Haryana, was covered through a parallel proceeding before the Chandigarh bench.

Fortis said the merger would reduce costs, ease compliance requirements and simplify operations within the group. After considering the scheme and the replies on record, the tribunal approved the consolidation, finding no legal or regulatory impediment to it.

The Regional Director had objected to the merger, referring to an ongoing investigation by the Serious Fraud Investigation Office into financial irregularities at Fortis Healthcare Limited, the group's ultimate parent.

The probe concerns alleged improper transactions by former promoters Malvinder Mohan Singh and Shivinder Mohan Singh. Both resigned from the Fortis board in 2018, and the company has since filed complaints against them with the Economic Offences Wing.

The tribunal rejected the objection. It accepted Fortis' submission that the investigation began in 2018 and that no charges have been filed so far. It noted that the probe concerns the conduct of erstwhile promoters and held that, in the circumstances, the investigation would not come in the way of the merger.

At the same time, the tribunal made it clear that the investigation will continue independently. It said that if required for the purpose of the probe, the merged subsidiaries can be treated as continuing to exist. Any liability that arises in the future will be borne by Fortis Hospitals Limited, which has undertaken to cooperate with the SFIO and provide records as required.

All shareholders of the four subsidiaries, which are wholly owned by Fortis Hospitals, approved the merger. A substantial majority of creditors by value also gave their consent in writing, allowing the tribunal to dispense with formal meetings. The Official Liquidator and the Income Tax Department raised no objections after reviewing the scheme.

The tribunal approved the merger subject to conditions. Fortis Hospitals will not be allowed to carry forward the losses of the merged subsidiaries, and tax implications will be examined independently by the Income Tax Department. The order also makes clear that approval of the scheme does not shield the company from action under company law or other statutes.

Under the merger, all assets, contracts, and liabilities of the subsidiaries will transfer to Fortis Hospitals Limited. Employees will continue in service on the same pay and benefits, with no break in employment. Since the subsidiaries are wholly owned, no new shares will be issued, and their existing share capital will stand cancelled.

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