Supreme Court quashes CBI, ED cases against Sterling Biotech after ₹5,100 crore settlement

The Supreme Court recently quashed all criminal proceedings in the multi-crore Sterling Group loan default case after they agreed to deposit ₹5,100 crore as full and final settlement with the lender banks by December 17 [Hemant S Hathi v. Central Bureau of Investigation & Ors].

A Bench of Justices JK Maheshwari and Vijay Bishnoi said that continuing prosecution was unnecessary once the company had paid the entire amount owed to public sector banks. The discretion of the Court should be used to protect public interest and secure repayment of public money, it added.

The Court was hearing petitions filed by businessmen Hemant Hathi and Chetan Jayantilal, who sought quashing of multiple criminal cases registered by the CBI, the Enforcement Directorate (ED), the Serious Fraud Investigation Office (SFIO) and the Income Tax Department. The cases arose from allegations of financial irregularities involving Sterling Biotech Limited and its group entities.

The FIRs were registered in 2017 under provisions of the Prevention of Corruption Act, the Indian Penal Code and the Prevention of Money Laundering Act (PMLA). Parallel proceedings were also initiated under the Fugitive Economic Offenders Act, the Companies Act and the Black Money Act, besides attachment of assets and freezing of accounts.

When the petitions first came up in 2020, the Court noted that the banks were open to settlement and that further repayment would help resolve the dispute. It recorded that “the sword of criminal prosecution” was hampering efforts to make full payment.

Over the next several years, the Court closely monitored the settlement process. In 2021, the Bench observed that the petitioners had repaid over ₹600 crore and had undertaken to clear the remaining amount within three months. The Court then deferred ongoing criminal proceedings before trial courts and extended interim protection.

By early 2024, the petitioners had transferred substantial sums - including two tranches of 50 million USD each (approximately ₹415 crore per tranche) into the bank recovery account and undertook to deposit another 100 million USD within eight weeks.

In November 2025, the Bench took note of a detailed calculation presented by both sides. It recorded that while the total defalcation alleged in the FIR was ₹5,383 crore, the OTS amount across Indian and foreign entities totalled ₹6,761 crore. The petitioners had already paid ₹3,507.63 crore, and recoveries worth ₹1,192 crore had been made through insolvency proceedings before the National Company Law Tribunal (NCLT).

The Court noted that after these recoveries, the outstanding amount stood at around ₹2,061 crore, but the petitioners volunteered to pay a higher figure of ₹5,100 crore “to bring finality to all pending proceedings.”

The Bench recorded that the petitioners intend to put a quietus to all criminal and civil proceedings and had agreed to pay the amount demanded by the investigating agencies after consultations with the banks.

The Court then quashed all proceedings listed in the petitions, including cases filed by CBI, ED, SFIO, IT Department and proceedings under the Fugitive Economic Offenders Act upon deposit of the full amount by December 17, 2025.

The judges underscored that their decision was taken in the “peculiar facts and circumstances” of this case and should not be treated as a precedent for future matters.

The Court observed that since the petitioners had deposited the full amount and the banks’ claims were secured, continuation of criminal proceedings would not serve any useful purpose.

It directed that the amount be deposited in its Registry and kept in an interest-bearing account until disbursed proportionately to the lender banks.

The judges also empowered the Registrar (Judicial-Administration) to verify claims, determine each bank’s entitlement and disburse the funds accordingly, with liberty to seek the Bench’s clarification if required.

The petitioners were represented by Senior Advocates Mukul Rohatgi and Vikram Chaudhri, along with Advocates Hemant Shah, Apoorva Agarwal, Sanjay Aabot, Devanshi Singh, Vishal Mann, Shambhavi Singh, Nikilesh Ramachandran, Rishi Sehgal, Keshavam Chaudhri, Hargun Sandhu, Nikita Gill, Muskaan Khurana and Avadh Bihari Kaushik.

The respondents were represented by Additional Solicitor General SV Raju and Senior Advocate Atmaram NS Nadkarni, along with Advocates Mukesh Kumar Maroria, Rajan Kumar Chourasia, Kanu Agarwal, Annam Venkatesh, Zoheb Hussain, Samrat Goswami, Arvind Kumar Sharma, Malvika Kapila, Shreeyash Uday Lalit, Ishaan George, Anuradha Dutt, Haaris Fazili, Kunal Dutt, Saurabh Singh, Yash Mittal, Prachi Pandey, Avinash Singh, Deepti Arya and B Vijayalakshmi Menon.

[Read Order]