New Delhi: The Supreme Court ordered an end to criminal proceedings against fugitive billionaire brothers Nitin and Chetan Sandesara in an alleged bank fraud involving their erstwhile flagship company, Sterling Biotech, if they paid a “full and final settlement” of `5,100 crore.
The bench said its decision was based on orders passed by previous benches dealing with the case. “The perusal of the orders passed in the proceedings of this case as noted hereinabove, 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 (one-time settlement) and public money comes back to lender banks, the continuation of criminal proceedings would not serve any useful purpose,” the apex court said in its unprecedented order last week.
The top court specified that the ruling couldn’t be used as a precedent. It said the directions have been issued keeping in view “peculiar facts of this case. Therefore, they shall not be treated as precedent.”
Vijay Mallya, Nirav Modi and Mehul Choksi are among businessmen accused of defrauding banks and fighting extradition to India. The Sandesara brothers are based in Nigeria, having left India in 2017, with the law enforcement agencies on their heels. They and their co-accused are facing criminal cases filed by the Central Bureau of Investigation (CBI), Directorate of Enforcement (ED), Serious Fraud Investigation Office (SFIO) and income tax authorities under the black money, fugitive economic offenders and other laws.
The division bench, comprising justices JK Maheshwari and Vijay Bishnoi, ordered that “the litigation with respect to the loan amount of the petitioners, for which the FIR was registered and the one-time settlement (OTS) was sanctioned and approved, shall be put to an end by way of full and final settlement, as per consensus, and this litigation shall be put to quietus.
The Sandesaras have been given till December 17 to deposit the money. However, highly placed people in government agencies told ET they fear the ruling will allow fugitive economic offenders (FEOs) such as Mallya, Modi, Choksi and others to claim similar relief.
“This (the order) may embolden offenders in future, sending a wrong message that they can evade criminal proceedings by simply paying dues,” said one of them. “While it is appreciable that the lost monies will be returned to the lending banks, the criminal liability of such offenders stands extinguished vide such settlement.”
ED had provisionally attached movable and immovable properties worth `14,550 crore in India and abroad belonging to the brothers and their co-accused.
On February 7, 2020, the apex court passed an order that cited the petitioner’s counsel saying that “banks are willing to close the issue and he has obtained OTS from about 15 out of 20 banks. It is his (counsel for accused) submission that if notice is issued to the respondents, he can resolve the issue with the banks and, in the meantime, would pay further substantive amounts to the banks. It is his (counsel’s) further submission that the hanging sword of criminal prosecution is creating some difficulty.”
The court said the fraud amount according to the FIR is `5,383 crore. The bench further ruled that the one-time settlement with respect to the Indian companies of the petitioners with the banks was for `3,826 crore and for the overseas ones was for `2,935 crore, bringing the total sum to `6,761 crore.
“Of the said amount, the petitioners have voluntarily deposited a fraction of total amount under various heads, including as per orders of this court, which comes to around `3,507.63 crore, leaving the remaining dues to `3,253.37 crore,” said the order passed last week.
Lending banks have initiated proceedings under the Insolvency and Bankruptcy Code before the National Company Law Tribunal, leading to recoveries worth `1,192 crore.
However, of the total amount specified in the OTS, which was higher than the amount in the FIR, the remaining unpaid amount comes to `2,061.37 crore, the ruling said.
“After consultation with banks, the investigating agencies, through the solicitor general, in a sealed cover demanded `5,100 crore against the dues/recoveries which are the subject matter of the FIR and other criminal proceedings,” the bench said.
“Upon submitting the claims (by December 17), the deposited amount shall be disbursed to the lender banks on proportionate basis in reference to the amount due towards them.”
CBI had registered an FIR in the Sterling Biotech fraud case on August 30, 2017. Three income tax commissioners were also booked by the agency.
A local court in Delhi in September 2020 declared four directors of pharmaceutical firm Sterling Biotech – Nitin and Chetan Sandesara, the latter’s wife Dipti, and the Sandesaras’ brother-in-law Hitesh Patel – as FEOs.
The Sandesaras have repeatedly denied wrongdoing. As first reported by ET in February 2021, lawyers for the four had appeared before a Delhi High Court judge and claimed in their affidavits that they were currently in Lagos, Nigeria
The bench said its decision was based on orders passed by previous benches dealing with the case. “The perusal of the orders passed in the proceedings of this case as noted hereinabove, 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 (one-time settlement) and public money comes back to lender banks, the continuation of criminal proceedings would not serve any useful purpose,” the apex court said in its unprecedented order last week.
The top court specified that the ruling couldn’t be used as a precedent. It said the directions have been issued keeping in view “peculiar facts of this case. Therefore, they shall not be treated as precedent.”
Vijay Mallya, Nirav Modi and Mehul Choksi are among businessmen accused of defrauding banks and fighting extradition to India. The Sandesara brothers are based in Nigeria, having left India in 2017, with the law enforcement agencies on their heels. They and their co-accused are facing criminal cases filed by the Central Bureau of Investigation (CBI), Directorate of Enforcement (ED), Serious Fraud Investigation Office (SFIO) and income tax authorities under the black money, fugitive economic offenders and other laws.
The division bench, comprising justices JK Maheshwari and Vijay Bishnoi, ordered that “the litigation with respect to the loan amount of the petitioners, for which the FIR was registered and the one-time settlement (OTS) was sanctioned and approved, shall be put to an end by way of full and final settlement, as per consensus, and this litigation shall be put to quietus.
The Sandesaras have been given till December 17 to deposit the money. However, highly placed people in government agencies told ET they fear the ruling will allow fugitive economic offenders (FEOs) such as Mallya, Modi, Choksi and others to claim similar relief.
“This (the order) may embolden offenders in future, sending a wrong message that they can evade criminal proceedings by simply paying dues,” said one of them. “While it is appreciable that the lost monies will be returned to the lending banks, the criminal liability of such offenders stands extinguished vide such settlement.”
ED had provisionally attached movable and immovable properties worth `14,550 crore in India and abroad belonging to the brothers and their co-accused.
On February 7, 2020, the apex court passed an order that cited the petitioner’s counsel saying that “banks are willing to close the issue and he has obtained OTS from about 15 out of 20 banks. It is his (counsel for accused) submission that if notice is issued to the respondents, he can resolve the issue with the banks and, in the meantime, would pay further substantive amounts to the banks. It is his (counsel’s) further submission that the hanging sword of criminal prosecution is creating some difficulty.”
The court said the fraud amount according to the FIR is `5,383 crore. The bench further ruled that the one-time settlement with respect to the Indian companies of the petitioners with the banks was for `3,826 crore and for the overseas ones was for `2,935 crore, bringing the total sum to `6,761 crore.
“Of the said amount, the petitioners have voluntarily deposited a fraction of total amount under various heads, including as per orders of this court, which comes to around `3,507.63 crore, leaving the remaining dues to `3,253.37 crore,” said the order passed last week.
Lending banks have initiated proceedings under the Insolvency and Bankruptcy Code before the National Company Law Tribunal, leading to recoveries worth `1,192 crore.
However, of the total amount specified in the OTS, which was higher than the amount in the FIR, the remaining unpaid amount comes to `2,061.37 crore, the ruling said.
“After consultation with banks, the investigating agencies, through the solicitor general, in a sealed cover demanded `5,100 crore against the dues/recoveries which are the subject matter of the FIR and other criminal proceedings,” the bench said.
“Upon submitting the claims (by December 17), the deposited amount shall be disbursed to the lender banks on proportionate basis in reference to the amount due towards them.”
CBI had registered an FIR in the Sterling Biotech fraud case on August 30, 2017. Three income tax commissioners were also booked by the agency.
A local court in Delhi in September 2020 declared four directors of pharmaceutical firm Sterling Biotech – Nitin and Chetan Sandesara, the latter’s wife Dipti, and the Sandesaras’ brother-in-law Hitesh Patel – as FEOs.
The Sandesaras have repeatedly denied wrongdoing. As first reported by ET in February 2021, lawyers for the four had appeared before a Delhi High Court judge and claimed in their affidavits that they were currently in Lagos, Nigeria
