How SC brought down curtains on Sterling Group bank fraud case

Here’s what the court order said.

Background of the case

The Sterling group began with pharmaceutical operations in Gujarat before expanding into energy projects, exploration, and a major venture in Nigeria through Sterling Oil Resources. Loans from a consortium of public-sector and overseas lenders fuelled this growth.

By the mid-2010s, questions arose about loan utilisation and financial disclosures. In 2017, the CBI registered FIRs alleging diversion of loan proceeds through related entities. Around this time, the promoters left India on Albanian passports and did not return, triggering proceedings across multiple forums.

Lender exposure stood at around Rs 15,000 crore. Over the years, recoveries through insolvency proceedings, Enforcement Directorate attachments and earlier deposits before the Supreme Court reduced the outstanding amount. As the gap narrowed, the Centre, agencies and banks resumed negotiations, producing the Rs 5,100 crore figure anchoring the settlement.

The brothers are currently in Nigeria, where they run an oil corporation, the Sterling Oil Exploration & Energy Production Co. Ltd.

Legal framework

The Sandesara matter shows how a single set of transactions can move through nearly every major economic offence law in India.
It began with CBI FIRs invoking cheating, forgery and conspiracy under the IPC. The agency also invoked the Prevention of Corruption Act to examine whether bank officials who sanctioned and monitored credit facilities had failed in their duties. These predicate offences triggered the Enforcement Directorate’s jurisdiction under the Prevention of Money Laundering Act (PMLA).

Under the PMLA, the ED registered ECIRs — its equivalent of an FIR — and attached properties it believed represented the value of the alleged proceeds of crime. These attachments ran independently of the CBI case. Meanwhile, lenders pursued recovery through insolvency proceedings.

The Serious Fraud Investigation Office stepped in under the Companies Act, 2013, examining the internal affairs of Sterling group companies — how decisions were made, finances reported, and whether disclosures matched business realities. Its complaint under Section 447 (fraud) opened another criminal track.

The Income Tax Department invoked the Black Money (Undisclosed Foreign Income and Assets) Act, 2015, which creates an offence for failing to disclose overseas assets and income. Given the group’s Nigeria-based operations and web of foreign entities, these proceedings added another dispute.

Proceedings under the Fugitive Economic Offenders Act (FEOA) were initiated after the promoters did not return to India despite repeated notices. An FEOA declaration allows the state to confiscate properties if a person is found to have left India to avoid prosecution.

What the Supreme Court order says

The Bench grounded its reasoning in Article 142 of the Constitution, which empowers the Court to issue orders necessary “for doing complete justice”. It noted that since the start of the litigation, the court’s primary objective was the return of public money.

It recorded that the petitioners had already deposited substantial amounts and that insolvency proceedings had yielded recoveries, concluding that continuing criminal and enforcement proceedings would not serve any further public purpose.

It observed that the “tenor of the proceedings apparently indicate peculiarity, with intent to protect the public money and interest and to get deposited the defalcated amount”. Consensus among the parties, recoveries already made, and the petitioners’ unconditional willingness to deposit the full amount shaped the conclusion.

The order sets out a detailed process: the Rs 5,100 crore must be deposited by 17 December 2025 and placed in a short-term interest-bearing fixed deposit with the Court registry. Lender banks must file verified claims.

The registrar will then disburse the amount proportionately based on dues. Only after this exercise is complete will all proceedings — including FIRs, ECIRs, charge sheets, attachments, prosecutions under the Companies Act, and action under the Fugitive Economic Offenders Act — stand quashed.

The Bench also addressed broader implications, stating that the ruling is confined to the facts before it and does not establish a general rule on whether restitution can substitute for criminal prosecution in financial-offence matters. “These directions… shall not be treated as precedent.”