SC clears Sandesara brothers with ₹5,100-cr settlement

SC clears Sandesara brothers with ₹5,100-crore settlement

In a landmark decision with far-reaching implications for India’s financial system and enforcement landscape, the Supreme Court has approved a ₹5,100-crore settlement that will result in the quashing of all criminal proceedings against Nitin and Chetan Sandesara, the fugitive promoters of the Sterling Group. The ruling closes a major chapter in the long-running ₹5,383-crore bank fraud case linked to Sterling Biotech, one of the country's most widely scrutinized instances of corporate misconduct.

A high-stakes case spanning nearly a decade

The Sandesara brothers fled India in 2017, shortly after multiple investigative agencies accused them of orchestrating a complex scheme involving fabricated financial statements, shell companies across jurisdictions, and diversion of large-scale bank funds. Their alleged wrongdoing was estimated at over $1.7 billion, placing them among the 14 individuals declared fugitives under the Fugitive Economic Offenders Act (FEOA).

Originally tea traders, the brothers built the Sterling Group into a diversified conglomerate spanning pharmaceuticals, healthcare, infrastructure, oil and gas, and other sectors. Sterling Biotech, the group's flagship, became one of the world’s leading gelatin producers. At its height, the group claimed a valuation approaching $7 billion. But behind the rapid growth, investigators say, was a financial maze carefully calibrated to inflate turnover, secure fresh credit lines, and divert capital through external entities—some of which existed only on paper.

The Supreme Court’s approval and its conditions

On 19 November 2025, a bench of Justices J.K. Maheshwari and Vijay Bishnoi gave formal approval to the ₹5,100-crore settlement after the Solicitor General confirmed that all lender banks had agreed to accept the amount as full and final recovery. The court emphasized that its decision was based strictly on the unique circumstances of this case.

• The settlement directs the Sandesara brothers to deposit ₹5,100 crore with the court registry by 17 December 2025.
• Funds will be placed in short-term, interest-bearing instruments until verification procedures are completed.
• Upon completion of due diligence, the money will be distributed to banks proportionately.
• Proceedings under multiple statutes, including the Money Laundering Act, Black Money Act, FEOA, offences investigated by the CBI, ED and SFIO, will stand quashed.

While the FIR pegged the loss at ₹5,383 crore, an earlier settlement figure of ₹6,761 crore—based on asset availability and recovery assessments—was negotiated downward to ₹5,100 crore after accounting for earlier recoveries and adjusted valuations. The court noted that the case’s “peculiar facts” warranted an exceptional route, cautioning that its order should not be construed as a general precedent.

A possible template—or a legal anomaly?

The decision has already sparked debate within legal and financial circles. Some experts view it as a potentially transformative path for resolving economic offences: a mechanism where full monetary recovery could substitute years of complex litigation, extradition efforts, and cross-border asset tracing. Others caution that such settlements, if widely adopted, could inadvertently weaken deterrence against financial crime.

For instance, observers are questioning whether the Sandesara settlement could influence ongoing cases involving high-profile fugitives such as Vijay Mallya or Nirav Modi. Most analysts agree the Supreme Court’s cautionary note will limit broad applicability—but the possibility of negotiated resolution may still be explored by defendants.

A senior counsel appearing in the matter noted that outcomes in such settlements hinge heavily on three factors: negotiation leverage, verifiable assets available for liquidation, and the court’s assessment of public interest and systemic integrity. In the Sandesara case, banks were strongly inclined toward recovery, especially after years of stalled efforts and litigation complexity spanning multiple countries.

Impact on financial institutions and enforcement agencies

From the perspective of lenders, the settlement offers much-needed recovery in a case that has been pending for years. For state-owned banks in particular, reducing non-performing assets (NPAs) remains a policy and balance-sheet priority. Recovering ₹5,100 crore in a single settlement represents a significant boost—especially in a case where asset tracing had been hampered by offshore structures, international legal hurdles and the absence of extradition agreements with certain jurisdictions where the brothers resided.

For agencies such as the ED, CBI and SFIO, the outcome presents a mixed picture. While recovery is substantial, longstanding investigations involving allegations of complex laundering channels, politically influenced loan sanctions and the broader ecosystem of shell entities now conclude abruptly. Questions of accountability—especially for individuals who may have facilitated or benefited from the fraud—remain largely unaddressed.

A turning point for India’s fraud-resolution ecosystem

The broader significance of the case lies in the emergence of settlement-led closures as an alternative to prolonged criminal prosecution in large-scale financial fraud. Until now, the predominant pathways involved insolvency processes, asset seizures, and extradition attempts. This decision hints at a hybrid approach—one that could potentially deliver quicker recoveries but requires careful guardrails to avoid moral hazard.

The coming months will reveal the long-term impact of this settlement. Lenders, enforcement agencies, policymakers and international observers will all be watching to see whether such court-approved resolutions become an exception or an evolving norm in India's financial governance framework.

Shunyatax Global’s perspective

At Shunyatax Global, we continue to examine the evolving landscape of financial crime enforcement, cross-border asset recovery, corporate governance failures and judicial innovation in economic-offence cases. The Sandesara settlement underscores a critical truth: resolution strategies must balance public interest, systemic stability and legal accountability. As India’s financial and regulatory ecosystem matures, nuanced approaches—supported by data, forensic insights and decisive policymaking—will be essential.

For expert advisory on risk management, forensic audits, compliance strategy and financial crime prevention, visit Shunyatax Global.