Why ED fears the Sandesara case may open a can of worms

While the Bench of Justices J K Maheshwari and Vijay Bishnoi underlined that the order could not be treated as precedent, sources in the ED said the agency is bracing for defence lawyers of other bank loan fraud accused using it to plead settling of cases against their clients – particularly as the apex court order underlined a position of law.

The ED’s list of loan fraud accused runs long and includes, prominently, Vijay Mallya, Nirav Modi, Mehul Choksi and Jatin Mehta, among others. Like the Sandesaras, they left the country just before loan fraud charges were registered against them. The Sandesaras have been settled in Nigeria/Albania since 2017; Mallya and Modi are in the UK; Choksi in Belgium, and Mehta in the UAE.

“All the fugitives are actually ready to repay their debts,” a senior ED official pointed out. “The apex court has said its Sandesara order is based on peculiar facts of the case and so cannot be used as a precedent. But defence lawyers will find a way.”

The Sandesara case

The CBI/ED accused the Sandesaras of Sterling Biotech Group of massive bank loan fraud, money laundering and shell-company diversion, alleging a web of benami firms and fake transactions.

In September 2020, they were declared Fugitive Economic Offenders for failure to cooperate with the law. (The Fugitive Economic Offenders Act of 2018 bars those declared so and the companies connected to them from filing or defending any civil claim in any court or tribunal.)

In its November 19 order, the Supreme Court brought to a close the criminal proceedings against the Sandesara Group promoters, holding that once defalcated public money is substantially brought back to banks, the continuation of criminal prosecution would serve no meaningful purpose. The Court added that all proceedings against the Sandesaras under the CBI, ED, PMLA, Fugitive Economic Offenders Act, SFIO, Black Money Act and Income Tax laws stand quashed, subject to full payment of Rs 5,100 crore.

The Court mentioned that the Sandesaras faced FIRs alleging defalcation of Rs 5,383 crore (with accrued interest and other charges, the ED put total fraud at over Rs 16,000 crore and seized assets worth Rs 14,521 crore). And noted that, over time, the petitioners had entered into One Time Settlements with banks for Rs 3,826 crore for Indian companies, and Rs 2,935 crore for foreign guarantor companies, taking the total settlement figure to Rs 6,761 crore.

Out of this, the Court said, the petitioners had already deposited Rs 3,507.63 crore under various heads, including pursuant to interim legal directions. Separately, Rs 1,192 crore had been recovered through insolvency proceedings before the National Company Law Tribunal from Sterling Biotech, Sterling SEZ and PMT Machines. After adjusting these recoveries, the Court computed the residual liability at Rs 2,061.37 crore.

In the final hearing in the Supreme Court, the investigating agencies – represented by Solicitor General Tushar Mehta and Additional Solicitor General S V Raju – placed a higher figure of Rs 5,100 crore as the amount required to bring full closure to all criminal proceedings and bank dues. Mehta said accepting anything less than what banks were entitled to would not be justified, and the Court recorded that the Rs 5,100-crore figure represented the government’s final demand.

Significantly, the Court noted that from the very inception of the proceedings in 2020, it had taken the view that, if the petitioners were willing to deposit the settled amounts and public money was restored to the banking system, keeping criminal prosecution pending would not advance the ends of justice.

It observed that the “tenor of the proceedings” clearly showed the Court’s intention to prioritise recovery of public funds over protracted litigation.

Accepting the Solicitor General’s proposal in toto, it directed that the Rs 5,100 crore be deposited with the Supreme Court registry on or before December 17, 2025, in tranches if necessary, which would be kept in interest-bearing fixed deposits in a nationalised bank.

The Sandesaras are reported to be in Nigeria/Albania for years. The extradition requests against them remain pending, and the Red Corner Notices against them are still active.

After the Supreme Court ordered quashing of the FIRs, the government filed no objections.

The Others

* Vijay Mallya

Case: Accused in 2015 of loan fraud and money-laundering linked to Kingfisher Airlines. A consortium of 17 banks led by the SBI is the complainant party, with both the CBI and ED filing cases. Mallya left for the UK on March 2, 2016.

Amount to be recovered: According to the case under Debt Recovery Tribunal, the total default by Mallya was of Rs 6,848 crore in 2013. With accrued interest over time, it stands at Rs 17,781 crore as of 2025.

Recovery/Attachment: According to the Finance Ministry Annual Report 2024-25, the ED has attached and restored to banks assets worth over Rs 14,000 crore in the case.

Status: Mallya was declared a Fugitive Economic Offender in 2019. UK courts ordered his extradition, but it awaits final UK government action. Mallya remains in the UK pending that.

* Nirav Modi

Case: Prime accused in the Rs 13,000 crore Punjab National Bank loan fraud, involving fraudulent Letters of Undertaking issued through PNB’s Brady House branch in Mumbai. The CBI and ED allege conspiracy with bank officials to siphon funds abroad.

Default: Modi’s companies are accused of defaulting bank loans amounting to Rs 6,498 crore.

Recovery/Attachment: The ED has attached assets to the tune of Rs 2,626 belonging to Modi, including jewellery, properties, and companies. According to the Ministry of Finance, Rs 1,052 crore worth of the attached assets have already been restituted to the banks.

Status: Modi is a declared Fugitive Economic Offender. Arrested in the UK in 2019, he is fighting extradition with hearings continuing in UK courts. India is pursuing his return under its extradition treaty with the UK.

* Mehul Choksi

Case: Co-accused with Nirav Modi in the PNB loan fraud case. Agencies allege he structured supply-chain frauds through shell companies and siphoned funds abroad, and that he sold fake diamonds.

Default: His companies defaulted on loans to the tune of Rs 6,097 crore.

Recovery/Attachment: The ED has attached assets to the tune of Rs 2,565 crore belonging to Choksi. According to the Finance Ministry, Rs 310 crore has been restored to the liquidator of Choksi’s company. Restitution of other assets to banks is under process.

Status: Obtained citizenship of Antigua & Barbuda and left India in 2018. An attempt in 2021 by Indian agencies to get Choksi back through Dominica had ended in a fiasco. Earlier this year, he was arrested in Belgium, and extradition proceedings are on.

* Jatin Mehta, Winsome Diamonds

Case: Accused in one of India’s biggest diamond-sector loan frauds, involving alleged circular trading and diversion of bullion-backed credit. Investigations involve the ED, CBI, and banks.

Default: Winsome Diamonds and Forever Precious Jewellery are accused of defaulting on loans amounting to Rs 6,800 crore in 2013. This ballooned to over Rs 10,000 in subsequent years.

Recovery/Attachment: The ED has attached assets to the tune of around Rs 1,000 crore in the case. According to proceedings in a UK court, banks have been able to recover only Rs 157 crore.

Status: Left India in 2013 and obtained citizenship of Saint Kitts and Nevis, a Caribbean nation. Agencies have sought his return and issued notices, while Mehta has been declared a wilful defaulter by banks. Investigations in the cases continue.

* Anil Ambani

Case: Multiple companies associated with Anil Ambani face investigations for alleged diversion of bank loans, irregularities, and financial misrepresentation. Recent ED actions relate to alleged kickbacks and loan misuse involving YES Bank.

Default: Various group companies (RCom, Reliance Home Finance, Reliance Commercial Finance, etc.) have combined exposures running into tens of thousands of crores, with several accounts declared “fraud” by lenders. According to the ED, “Reliance Communications and its group companies availed loans from domestic and foreign lenders from the period of 2010-2012 onwards, of which a total amount of Rs 40,185 crore is outstanding.”

Recovery/Attachment: The ED has provisionally attached assets of Ambani-linked entities to the tune of about Rs 9,000 crore. Banks have proceeded with insolvency actions; recoveries are partial and vary by company.

Status: Investigation is on.

* Kapil & Dheeraj Wadhawan, DHFL Promoters

Case: Accused in one of India’s biggest financial frauds involving fake loan accounts (“Bandra Book”), diversion of funds, bribery with YES Bank, and alleged links to underworld-connected borrowers.

Default: DHFL has total liabilities of over Rs 85,000 crore, including around Rs 38,000-Rs 40,000 crore owed to a consortium of banks.

Recovery/Attachment: The ED has attached assets, properties, and accounts amounting to around Rs 250 crore. Through DHFL’s insolvency, lenders have recovered around Rs 38,000 crore via an insolvency resolution plan. The bid was won by Piramal Group for over Rs 34,000 crore.

Status: Arrested, the Wadhawans have been repeatedly denied bail. Facing several trials for corruption, diversion, and financial fraud.

* IL&FS Executives

Case: Accused of financial mismanagement, falsification of accounts, and diversion of funds across IL&FS subsidiaries, leading to the 2018 infrastructure financing collapse.

Default: IL&FS Group owes over Rs 99,000 crore across banks and institutions.

Recovery/Attachment: As of September 2025, IL&FS had paid over Rs 48,000 crore to its creditors against a debt recovery resolution target of Rs 61,000 crore. The ED has attached assets worth over Rs 1,000 crore in the case.

Status: Several arrests by the SFIO and ED. Cases ongoing in NCLT, special courts, and appellate benches. Resolution and prosecutions continue simultaneously.

* The late Subrata Roy, Sahara Group

Case: Accused of illegally raising money from investors through Optionally Fully Convertible Debenture schemes not compliant with SEBI regulations. Huge dispute over refunds and documentation.

Default: Initial liability estimated at around Rs 25,000 crore to investors. With accrued interest, it is over Rs 60,000 crore.

Recovery/Attachment: Sahara has so far been able to deposit only Rs 16,000 crore in the SEBI-Sahara refund account. It is looking to sell its assets to Adani to service the rest of the debts.

Status: Faced custody, parole, and continued Supreme Court supervision. Proceedings remain active concerning refund obligations even after his death in 2023.