Supreme Court Grants Conditional Relief to Sandesara Brothers in ₹5,100 Crore Bank Fraud Case
India's Supreme Court has conditionally quashed all criminal proceedings against the fugitive Sandesara brothers in connection with a multi-crore bank fraud case involving Sterling Biotech. The relief comes with a strict requirement: the brothers must deposit ₹5,100 crore as a 'full and final payment' to lender banks by December 17, 2025, effectively trading criminal prosecution for financial restitution.
Background and Context
The case centers on allegations of massive financial defalcation initially recorded at ₹5,383 crore, with the Sandesara Group's total debt across subsidiaries reportedly exceeding ₹15,000 crore. The group's flagship company, Sterling Biotech Limited, has been undergoing insolvency proceedings under India's Insolvency and Bankruptcy Code (IBC) since 2018. The Supreme Court's decision reflects a judicial philosophy prioritizing recovery of public funds over punitive measures when substantial restitution can be achieved.
Key Figures and Entities
The Sandesara brothers, described as fugitive businessmen in court documents, have been at the center of one of India's significant banking fraud cases. The Supreme Court bench, led by Justice JK Maheshwari, mediated between the brothers and government representatives, including the Solicitor General who presented the final settlement demand. Multiple lender banks stand to recover funds through this arrangement, while the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) have overseen parallel insolvency proceedings against various group entities.
Legal and Financial Mechanisms
The court's order establishes a complex financial arrangement where the ₹5,100 crore will be held in a short-term, interest-bearing fixed deposit with the Supreme Court Registry before proportional disbursement to lenders. This settlement represents a reduction from the original One-Time Settlement (OTS) proposal of ₹6,761 crore (₹3,826 crore for Indian companies and ₹2,935 crore for foreign guarantor companies). Court records indicate the petitioners had previously deposited approximately ₹3,507.63 crore, with the remaining balance forming the basis of the current demand.
Parallel insolvency proceedings have yielded mixed results. Sterling Biotech, despite being ordered into liquidation in October 2019, was eventually sold as a going concern to Perfect Day Inc., a US-based food technology company, for approximately ₹638 crore. Other group entities have faced varying outcomes: Sterling Healthcare Limited achieved a 75% recovery for creditors through a ₹12.80-crore resolution plan, while Sterling Oil Resources Limited entered Corporate Insolvency Resolution Process in May 2023 for defaults exceeding ₹1,656 crore.
International Implications and Policy Response
While primarily a domestic case, the Sandesara settlement highlights ongoing challenges in India's approach to financial crime enforcement, particularly regarding fugitive economic offenders. The decision raises questions about whether financial settlements should replace criminal prosecution in banking fraud cases, potentially creating precedents for similar arrangements. The involvement of foreign guarantor companies and the acquisition of Sterling Biotech by a US firm also demonstrates the international dimensions of India's corporate insolvency and banking crisis resolution mechanisms.
The case underscores tensions between different legal frameworks—the criminal justice system and the IBC—and how courts are navigating these overlapping jurisdictions to maximize recovery for public sector banks. As India continues to grapple with non-performing assets exceeding ₹15 lakh crore across its banking system, such settlements may become increasingly common despite concerns about moral hazard.
Sources
This report draws on Supreme Court orders, National Company Law Tribunal proceedings, and public records regarding the Sterling Biotech insolvency case. Information about related group entities comes from official insolvency filings and auction notices. The total debt figures and settlement amounts are based on court documents and government submissions in the ongoing proceedings.
