The Supreme Court of India on Thursday issued a stern warning to the Securities and Exchange Board of India (SEBI), directing the market regulator to comply with its earlier orders to quash all proceedings against Sterling Biotech Limited (SBL) and its promoters, Nitin and Chetan Sandesara.
A bench comprising Justice J.K. Maheshwari and Justice A.S. Chandurkar expressed dissatisfaction with the regulator’s delay in closing the cases following a ₹5,100 crore settlement. The court remarked that if the regulator fails to act, it will be “compelled to take a serious view of the matter” and pass a detailed order on the issue.
The matter originates from a batch of petitions filed by the Sandesara brothers seeking the quashing of multiple legal actions, including FIRs registered by the Central Bureau of Investigation (CBI), the Enforcement Directorate (ED), and cases under the Fugitive Economic Offenders Act, Companies Act, and Black Money Act.
On November 19 last year, the apex court accepted a full-and-final settlement proposal. Under this agreement, the promoters committed to depositing ₹5,100 crore into the Supreme Court registry to resolve all outstanding claims. The court had explicitly noted that upon this deposit, all proceedings—including those initiated by SEBI—were to be quashed.
The ₹5,100 crore was successfully deposited in December 2025. While other proceedings were effectively halted, SEBI has reportedly continued its probe into allegations that SBL promoters secured foreign bank loans and routed them back into the company as “investments” to potentially mislead investors.
During the hearing, Senior Advocate Mukul Rohatgi, representing the Sandesara brothers, informed the bench that SEBI has thus far refused to close its proceedings despite the clear mandate of the court.
Addressing the counsel for SEBI, the bench noted:
“We have said all proceedings, including that of SEBI, need to be quashed upon deposit of the money. If you are doing it, then it is alright, or we will be compelled to pass a detailed order on the issue.”
In response, the counsel for SEBI stated that Solicitor General Tushar Mehta is currently in deliberations with the regulator regarding the quashing of the cases. The court has now posted the matter for further hearing on April 10, where the Solicitor General is expected to provide a final update.
The court also addressed an application filed by a consortium of 20 secured lenders seeking their share of the ₹5,100 crore deposit. The banks had informed the court that the total outstanding dues from the SBL group entities amounted to ₹19,283.77 crore.
To facilitate an equitable distribution, the lenders adopted a methodology of aggregating domestic and foreign exposures, converting foreign loans at a fixed rate of ₹63 per USD (the average rate in 2015 when the accounts turned into Non-Performing Assets), and applying a 9% annual interest rate.
On March 25, the court ordered the immediate release of funds to the 20 banks that had submitted the necessary documentation and affidavits. For the remaining six lenders—including HDFC Bank and several foreign entities like Krung Thai Bank and Taiwan Co-operative Bank—the court directed that their proportionate shares be kept in auto-renewing fixed deposits until they submit their formal claims.
