Sandesara Settlement and Constitutional Perimeter Of Closure Of Criminal Cases

This belongs to a small category of cases that lie outside the ordinary grammar of criminal law. Its significance does not lie in findings on culpability, statutory thresholds or evidentiary standards. Instead, it lies in what it reveals about the Court's institutional role when confronted with overlapping statutes, multiple agencies and a factual matrix too densely interwoven to be untangled through conventional adjudication. It is an order that both uses and tests the boundaries of judicial power in the constitutional scheme.

What transpired before the Court bore little resemblance to an adversarial criminal proceeding. The hearings functioned, in substance, as a settlement exercise. As the order itself reflects, the petitioners were not asserting legal rights so much as negotiating a financial quantum for a global discharge. The sealed-cover proposal placed by the Solicitor General became the State's preferred basis for a consolidated resolution, and the Court ultimately anchored its directions on that figure. In effect, the Court's task was to give legal effect to a negotiated financial closure.

This piece is not a criticism of the Court. It is an acknowledgment that the order marks a threshold moment in our understanding of how constitutional courts respond when the architecture of statutory enforcement is confronted by interlocking proceedings, fragmented factual records, and the sheer scale of financial exposure.

I. The statutory canvas

The petitioners sought relief across an exceptionally wide range of proceedings: CBI FIRs and charge-sheets; ECIRs and prosecution complaints under the PMLA; attachment and freezing actions; a fugitive-economic-offender application; prosecution under section 447 of the Companies Act; and complaints under the Black Money Act. Few matters combine this statutory breadth.

The judgment notes that the amount alleged in the primary FIR was ₹5383 crore. Consolidated one-time settlement (OTS) figures across Indian and overseas entities stood at ₹6761 crore, of which ₹3507.63 crore had already been deposited. After accounting for recoveries under the Insolvency and Bankruptcy Code, the remaining unpaid amount was ₹2061.37 crore.

On 18 November 2025, the Solicitor General submitted, in a sealed cover, a proposal that all proceedings be brought to an end on payment of ₹5100 crore. The petitioners expressed willingness to make this deposit. The judgment records the proposal and its acceptance, but does not disclose how this figure was derived, what it comprises, or whether it corresponds to principal, interest or any penal component. The calculation remains outside the public record.

II. The Extraordinary Breadth of Proceedings

The petitioners sought quashing of:

· CBI FIRs and charge-sheets,

· ECIRs, prosecution complaints and attachment proceedings under the PMLA,

· an application under the FEOA,

· prosecution under section 447 of the Companies Act, and

· complaints under the Black Money Act.

Few matters in recent memory have brought this breadth of regimes together. Parliament had designed each of these statutes as stringent, self-contained instruments meant to override general criminal procedure and ensure rigorous consequences for financial wrongdoing.

III. A Settlement in the Supreme Court

The petitioners were not defending the offences under the Prevention of Money Laundering Act, 2002 (PMLA), the Fugitive Economic Offenders Act, 2018 (FEOA), the Companies Act, 2013 or the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (Black Money Act). They were, instead, negotiating the financial quantum required to bring all proceedings to an end. The figure for this was eventually pegged at ₹5100 crore.

The order notes that if the petitioners were prepared to deposit the amounts settled in OTS arrangements and thereby return public funds to the lender banks, “the continuation of the criminal proceedings would not serve any useful purpose.” The “peculiarity” lay in the scale of the exposure and the long history of repayments and recoveries.

Notably, the Court did not engage with questions of fact, culpability or statutory thresholds. Nor did it interpret the PMLA, FEOA, Black Money Act or Companies Act. Its directions were confined to the factual consensus and the restitutionary objective that, in its view, justified closure.

It is fair to say that the Solicitor General's sealed-cover proposal did not reflect a forensic assessment of criminal liability. It reflected the State's view of an acceptable consolidated figure for closure. The Court, ultimately, gave legal effect to this structure.

IV. The Sealed-Cover Jurisprudence

The order records the ₹5100 crore proposal and the petitioners' willingness to deposit it. It does not disclose:

· how the figure was derived,

· whether it includes principal, accrued interest or penalties,

· whether it reflects an assessment of loss or an assessment of convenience, or

· why it exceeds both the alleged defalcation (₹5383 crore) and the unpaid OTS balance (₹2061.37 crore).

In matters involving allegations of diversion, money laundering and fugitive conduct, the quantum that extinguishes criminal and regulatory liability is not a peripheral detail. It is central. Sealed covers may facilitate negotiation, but once a constitutional court adopts the figure as the legal basis for quashing proceedings under multiple special statutes, transparency becomes indispensable. The Supreme Court itself has deprecated the sealed cover procedure through its judgements

Ours is a system premised on open justice. Transparency is not ornamental to the rule of law. It is constitutive of it. A number arrived at in opacity, once adopted by the Court, cannot remain immune from scrutiny. The absence of clarity regarding the basis of the settlement figure complicates this constitutional balance.

The sealed-cover quantum now functions as a black box at the heart of a constitutional proceeding. In a system premised on open justice, the basis of such a consequential figure ought not to be inaccessible to the very public whose institutions these statutes were enacted to safeguard.

V. Article 142 and the Constitutional Perimeter of Closure

Although not expressly invoked, the judgment is an unmistakable exercise of the Court's constitutional powers. Article 142 allows the Supreme Court to “do complete justice” between the parties. It does not authorise the creation of an alternative criminal justice route in matters Parliament has consciously excluded from compromise.

Parliament has made its intent clear:

– PMLA offences are non-compoundable;

– fugitive conduct carries automatic consequences;

– Black Money prosecutions are mandatory;

– Companies Act fraud provisions are stringent by design.

When judicial power produces an outcome that the statutory framework deliberately forbids, the separation of powers is implicated. This is not judicial interpretation of legislative intent; it is judicial suspension of legislative design.

Supreme Court has underlined that Article 142 can't be invoked to bypass the statuary procedure. It gives the Court the ability to do complete justice where statutory pathways fail or are insufficient. But its use carries constitutional responsibilities:

· to justify why ordinary law is insufficient,

· to ensure that remedies remain consistent with Article 14 principles of fairness and equal treatment, and

· to prevent the appearance or even a notion that the availability of relief turns on financial capacity.

A constitutional court must be acutely conscious of this boundary.

The other concern is under Article 14. Would a similarly placed but less financially capable accused have received such relief? Would a middle-level economic offender prosecuted under PMLA be offered a sealed cover composite settlement?

The constitutional promise of equal protection risks acquiring a financial qualifier. This is an uncomfortable implication, but one that the system must acknowledge.

VI. The Statutory Ecosystem Rendered Redundant

The more serious institutional consequence lies in what the order makes unnecessary.

Over the past decade, Parliament constructed a dense enforcement ecosystem:

· the PMLA for laundering of proceeds of crime,

· the FEOA to ensure that flight from jurisdiction does not frustrate prosecution,

· the Black Money Act for undisclosed foreign income and assets, and

· section 447 of the Companies Act for fraud of significant magnitude.

Each statute was designed to be stringent. Each was intended to make certain wrongs non-negotiable.

A single financial payment has now rendered all these frameworks irrelevant for the purposes of this case.

This also raises an institutional burden: the Supreme Court cannot become the country's final settlement chamber in matters Parliament has made non-negotiable.

VII. The Practical Template for Future Offenders

The Court's caveat that the order rests on “peculiar facts” is a deliberate limitation. Yet, in practice, such disclaimers do not prevent replication.

A model has been demonstrated:

1. negotiate an OTS with lenders,

2. make substantial deposits,

3. endure parallel proceedings across multiple statutes,

4. consolidate the matter before the Supreme Court, and

5. seek a global financial settlement that brings the entire enforcement matrix to an end.

The Court expressly states that the order is not to be treated as precedent. But even without precedential force, there is an unmistakable institutional signal. Every major economic offender will now attempt to cast their circumstances as “peculiar” in the same sense. The Court may well find it increasingly difficult to resist such invitations.

The risk is real, immediate and institutional.

VIII. Deterrence and the Economics of Enforcement

If allegations involving diversion, laundering, mis-representation and flight from jurisdiction can culminate in a single financial settlement, the enforcement calculus changes.

The consequence of misconduct becomes a solvable economic problem.

The question would not be, “What is the legal penalty?” but “What is the settlement number?”

This is not a concern rooted in rhetoric. It is a concern rooted in behavioural economics. When settlements become possible at the constitutional level, deterrence becomes contingent on the offender's liquidity. The system appears to impose two distinct pathways:

· a statutory route for ordinary citizens, and

· a consolidated financial shortcut for those able to marshal deep resources.

It is this asymmetry that tests the perception of even-handedness in criminal justice.

IX. The Institutional Consequences for Regulators and Agencies

The order has an undeniable benefit: it restores a substantial quantum of public funds.

But its institutional implications are more complex.

The Enforcement Directorate, the CBI, the Serious Fraud Investigation Office and income-tax agencies pursued parallel proceedings for years. The FEOA proceedings were instituted after the petitioners left the jurisdiction. Each agency acted under a statute designed to ensure that financial misconduct is addressed through investigation, prosecution and adjudication.

A single consolidated closure displaces all these processes. It raises fundamental questions:

· What becomes of the statutory mandates of these agencies?

· How should they calibrate future investigations if constitutional settlements may override statutory sanctions?

· What message does this send to lenders, auditors and commercial actors assessing systemic risk?

These questions are not criticisms of the outcome. They are institutional queries that arise whenever constitutional jurisdiction overtakes statutory design.

X. The Balance Between Restitution and Accountability

The Court's concern for restitution is legitimate. Returning public money to banks is an important objective. But restitution cannot, by itself, answer the question of accountability.

Certain crimes are designed to have consequences beyond repayment. Fraud, laundering and diversion are offences not because they create loss, but because they corrode trust in economic institutions. The legal system is bound to ensure that restitution does not become a substitute for consequences.

The Sandesara order succeeds in restoring money. The difficulty lies in what it does not address: whether certain forms of misconduct are, in principle, capable of resolution through financial settlement.

The Sandesara order may perhaps be a pragmatic solution to an unusually complex fact situation. However, it is also a seminal constitutional moment that raises broader questions about the future of enforcement in high-value economic cases. Its implications extend well beyond the immediate record. The recovery of public funds is unquestionably valuable, but the manner of recovery matters equally.

It reflects a shift from adjudication to negotiated closure when statutory pathways collide. But when closure is achieved through opaque settlement mechanisms, confidence in the even-handedness of the system is tested.

This recourse to opaque settlement mechanisms for high-value criminal allegations thus raises fundamental questions that strike at the constitutional architecture itself: the proper boundaries of judicial power, the enduring authority of Parliament, the necessity of a visible reasoning process, and the imperative that the legal system remains visibly even-handed.

In future, cases that require the Court to use its constitutional jurisdiction to consolidate multiple proceedings would benefit from a clearer articulation of the considerations that guide the choice of the course. Such clarity will not constrain judicial freedom. It strengthens institutional confidence by ensuring that even in exceptional situations, the principles underlying criminal accountability and deterrence remain transparent, consistent and intelligible.

Rajasekhar V.K., Former Member (Judicial), National Company Law Tribunal. He continues to engage with insolvency and institutional reforms through writing, research, and advisory work too. Views are personal.