Supreme Court clears Sandesara promoters after ₹5,100 crore payout; banks flag ₹19,000 crore dues

The Supreme Court has allowed the Sandesara promoters of Sterling Biotech to walk free of criminal proceedings after a ₹5,100 crore deposit, even as lender banks have told the court that their total outstanding dues from the group stand at a staggering ₹19,283.77 crore.

The top court, in its November 19 order last year, permitted quashing of cases against promoters Nitin and Chetan Sandesara—facing allegations of large-scale bank fraud—subject to the payment being treated as a “full and final settlement.” The amount was arrived at after consultations between probe agencies and a consortium of lenders and was accepted by the group.

However, a fresh application jointly filed by secured lender banks has laid bare the sharp gap between the settlement amount and actual dues. The lenders have now sought directions from the court for disbursal of their respective shares from the ₹5,100 crore deposited with the Supreme Court Registry.

According to the application, banks have mutually agreed upon a formula to distribute the funds, with the methodology finalized through consensus among secured lenders. Five foreign entities, with total dues of ₹463.12 crore, are expected to receive ₹120.8 crore under this arrangement.

A bench of Justices J K Maheswari and A S Chandurkar heard the matter on March 16 and is scheduled to take it up again on March 23. During the hearing, the Sandesara counsel raised concerns over continuing proceedings by SEBI despite the Supreme Court’s order. The bench questioned why regulatory action was persisting post-settlement.

The Sandesara brothers had approached the court in 2020 seeking quashing of cases registered by the CBI and Enforcement Directorate (ED), arguing that the defaults stemmed from genuine business losses rather than fraud. They pointed to a one-time settlement (OTS) of ₹6,761 crore agreed with lenders, covering both domestic and foreign liabilities.

They informed the court that ₹3,507.63 crore had already been deposited under various heads, while banks had recovered another ₹1,192 crore through proceedings under the Insolvency and Bankruptcy Code (IBC), 2016. This, they claimed, left an outstanding liability of ₹2,061.37 crore. The ED had also attached assets worth ₹27,757 crore.

Probe agencies, however, contested the proposed figures, leading to a revised settlement amount of ₹5,100 crore after consultations with banks. The court accepted this figure, making it a condition for quashing the proceedings.

The November 19 order made it clear that the relief would take effect only upon deposit of the full ₹5,100 crore by December 17, 2025. This amount was over and above the ₹3,507.63 crore already paid and ₹1,192 crore recovered through IBC mechanisms.

The CBI and ED have accused the Sandesaras of orchestrating a complex fraud involving bank loan defaults, money laundering, and diversion of funds through shell companies and benami entities. The promoters are currently reported to be in Nigeria and Albania, with extradition requests pending and Red Corner Notices still active.