Sandesara–Sterling Group Loan Fraud | Supreme Court Quashes Criminal Cases After Accused Agree To Pay Rs 5,100 Crore To Banks

The Supreme Court recently quashed all criminal and civil proceedings against Hemant S. Hathi and Chetan Jayantilal, accused in the Sandesara–Sterling Group bank fraud case, after they agreed to deposit Rs 5,100 crore as full and final settlement with lender banks.A bench of Justice JK Maheshwari and Justice Vijay Bishnoi, however, clarified that the directions were issued in the peculiar facts of the case with the purpose of protecting public money, and will not operate as a precedent.“it is apparent that 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. In furtherance, the consensus has been arrived at as indicated above. In this view, in the peculiar facts and situation of the present case, discretion as prayed, deserves to be exercised for granting the relief, as prayed and to direct for quashment of all the proceedings”, the Court observed. The proceedings arose from investigations into the alleged financial fraud involving the Sterling Group, promoted by fugitive Sandesara brothers - Nitin Sandesara and Chetan Sandesara. The group was accused of obtaining large bank loans using falsified documents and diverting the funds through a network of companies in India and abroad. Investigations by the CBI, ED, SFIO and the Income Tax Department had alleged corruption, cheating, forgery, money-laundering, corporate fraud and undisclosed foreign assets.The petitions sought quashing of FIRs, chargesheets, and ECIRs alleging offences under Sections 13(2) and 13(1)(d) of the Prevention of Corruption Act, Sections 120-B, 420, 467, 468 and 471 of the IPC and Section 3 of the PMLA along with attachment, seizure and freezing orders; proceedings under the Fugitive Economic Offenders Act and complaints under Section 447 of the Companies Act and the Black Money Act. On February 7, 2020 the Court issued notice after the petitioners informed the Bench that they had obtained one-time settlements with several banks. Interim protection remained in place. On January 18, 2022, the Court noted the petitioners' willingness to pay the entire amount forming the subject matter of the charge sheet and directed that all proceedings remain in abeyance.On March 4, 2024, the petitioners informed the Court that they had transferred USD 50 million (around Rs 415 crore) to a bank recovery account and would transfer another USD 50 million within three days. They further stated that they would transfer USD 100 million within eight weeks.On November 18, 2025, the Court noted that the amount alleged in the FIR was Rs 5,383 crore. It recorded that the one-time settlement amount for the petitioners' Indian companies was Rs 3,826 crore and for the foreign guarantor companies was Rs 2,935 crore, taking the total OTS amount to Rs 6,761 crore. The petitioners had deposited Rs 3,507.63 crore under various heads, leaving dues of Rs 3,253.37 crore. Banks had recovered Rs 1,192 crore in IBC proceedings, reducing the remaining due amount to Rs 2,061.37 crore, the Court noted. The Court also recorded the OTS amounts of several group entities: Rs 2,109 crore for Sterling Biotech Ltd (SBL), Rs 759.04 crore for Sterling SEZ Ltd (SSEZ), Rs 70.18 crore for PMT Machines Ltd, Rs 134.7 crore for Sterling Port Ltd, and Rs 185 crore for Sterling Oil Resources Ltd. CIRP proceedings for Sterling Oil Resources Ltd are ongoing.Solicitor General Tushar Mehta placed before the Court a sealed-cover proposal seeking Rs 5,100 crore to close all issues. The petitioners agreed to deposit the amount to end all proceedings listed in their writ petitions. The Court accepted the consensus and held that continuation of the criminal cases would not serve any purpose in the facts of the case.The Court held that all the aforementioned proceedings against the accused will stand quashed once the petitioners deposit Rs 5,100 crore with the Registry on or before December 17, 2025. The amount may be deposited in tranches and will remain in a short-term interest-bearing fixed deposit until disbursed, the Court said.The Court directed the Registrar (Judicial-Administration) to verify the dues of each lender bank, determine proportionate entitlement and disburse the amount.Case no. – Writ Petition (Criminal) No. 37 of 2020 with connected caseCase Title – Hemant S. Hathi v. Central Bureau Of Investigation & Ors. with connected caseCitation : 2025 LiveLaw (SC) 1139Click Here To Read/Download Order Click Here To Read /Download Previous Orders

Sandesara–Sterling Group Loan Fraud | Supreme Court Quashes Criminal Cases After Accused Agree To Pay Rs 5,100 Crore To Banks

Amisha Shrivastava

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