The Supreme Court has questioned Securities and Exchange Board of India (SEBI) over its decision to continue proceedings against former Sterling Biotech Ltd promoters Nitin and Chetan Sandesara, despite an earlier apex court order quashing all criminal cases following a ₹5,100 crore one-time settlement.
A bench comprising justice JK Maheshwari and justice Atul S Chandurkar sought an explanation from the market regulator, asking why it is 'coming in the way' after the apex court had already ordered closure of proceedings in November 2025.
The Court observed that once all criminal cases are quashed and the settlement amount paid, proceedings are expected to come to an end, raising concerns over SEBI’s continued probe into the affairs of the Sandesara brothers.
The matter relates to allegations that the promoters of Sterling Biotech had secured loans from foreign banks and routed funds into the company as purported investments, a structure investigators suspected could mislead investors and distort the true financial position of the company.
Counsel appearing for the Sandesara brothers submitted that despite compliance with the Supreme Court’s earlier directions, including payment of the agreed settlement amount, SEBI had refused to close its investigation.
The 19 November 2025 order of the apex court had granted sweeping relief to the promoters, agreeing to quash a wide range of criminal proceedings, including cases related to bank fraud, money laundering, corruption and violations under multiple laws, subject to payment of ₹5,100 crore as part of a mutually agreed one-time settlement.
The Court had then noted that recovery of public money was a key consideration and that continuation of criminal proceedings would not serve a useful purpose once the settlement was honoured. The order covered cases initiated by multiple agencies, including central bureau of investigation (CBI), directorate of enforcement (ED) and the Serious Fraud Investigation Office (SFIO), as well as proceedings under the Fugitive Economic Offenders Act.
The Sterling Biotech case is among India’s most significant bank fraud matters, involving allegations of siphoning thousands of crores from a consortium of public sector banks led by the State Bank of India (SBI).
During the latest hearing, the Court also took up an application filed by lenders, led by SBI, seeking directions for disbursal of their respective shares from the funds deposited by the Sandesara brothers. The lenders submitted details of their claims and proportional entitlements.
The bench directed that the deposited amount be transferred to the lender banks and listed the matter for further hearing next week.
The case has brought into focus the tension between judicially approved settlements aimed at recovery of public funds and the independent mandate of regulators like SEBI to pursue alleged violations affecting market integrity.
While the Supreme Court’s earlier order emphasised closure of criminal proceedings in view of the settlement, SEBI’s continued scrutiny suggests concerns that financial settlement alone may not address potential misconduct in the securities market.
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