Supreme Court quashes ED, CBI proceedings against Sandesara Brothers post ₹5,111 crore deposit

The Supreme Court has quashed all criminal proceedings against fugitive promoters of Sterling Biotech Ltd, Chetan Jayantilal Sandesara and Nitin Sandesara, after they deposited an additional ₹5,111 crore in pursuance of their assurance to the court to settle the claims of lender banks in a multi-crore bank fraud case.

A bench of Justices JK Maheshwari and Vijay Bishnoi noted that the deposits were made between December 3 and December 6 in the registry of the Supreme Court.

On November 19 court had agreed to quash all criminal proceedings against the Sandesara brothers, subject to them depositing an additional ₹5,100 crore to meet the demands of banks as a one-time settlement.

Solicitor General Tushar Mehta had placed a proposal before Court as per which the Sandesara brothers agreed to deposit ₹5,100 crore as a full and final settlement of all outstanding dues arising from FIRs registered by the CBI, enforcement case information reports (ECIRs) filed by the Enforcement Directorate, attachments under the Prevention of Money Laundering Act, proceedings under the Fugitive Economic Offenders Act, prosecutions by the Serious Fraud Investigation Office, proceedings under the Black Money Act, and income tax complaints.

Earlier, court had observed that once the accused were willing to honour their one-time settlement and public money was flowing back to banks, the continuation of multiple criminal proceedings would serve “no useful purpose”. It had further clarified that this order was being passed in the “peculiar facts” of the case and would not operate as a precedent in any other matter.

"Since inception, this Court was of the view that if the petitioners are ready to deposit the amount as settled in OTS and public money comes back to lender banks, the continuation of the criminal proceedings would not serve any useful purpose. The tenor of the proceedings apparently indicate peculiarity, with intent to protect the public money and interest and to get deposited the defalcated amount," the order had stated. 

Sandesara brothers, promoters of the Vadodara-based Sterling Biotech had fled India in 2017 using Albanian passports after being accused of defaulting on domestic bank loans. They denied any wrongdoing. Investigation revealed the Sandesara Group’s overseas companies had secured loans worth thousands of crores from foreign branches of Indian banks. These loans were sanctioned by a consortium of banks led by Andhra Bank, UCO Bank, State Bank of India, Allahabad Bank, and Bank of India.

It was found that the funds obtained through these loans were diverted for unauthorised purposes, layered, and laundered through a complex network of domestic and offshore entities.  Allegedly the promoters siphoned off the loan amounts not only to finance their Nigerian oil business but also for personal gains. This led to ED attaching properties of the Sandesara Group worth Rs 9,778 crore in the Sterling Biotech case.

CBI had registered the case in October 2017 against Sterling Biotech, its promoters Chetan and Nitin Sandesara, Dipti Sandesara, other directors, chartered accountants and a former Andhra Bank official, alleging a massive bank fraud between 2004 and 2012. The Enforcement Directorate subsequently initiated a money laundering probe based on the CBI case, and look-out circulars were issued against the Sandesara brothers in August 2017.