The Supreme Court has brought a years-long dispute over the assignment of Atibir Industries Co. Ltd.’s debt by the State Bank of India (SBI) to an asset reconstruction company to an end. It directed the company to pay ₹125 crore over and above the ₹250 crore it has already paid, as full and final settlement.
A Bench of Chief Justice Surya Kant, Justice Joymalya Bagchi and Justice V. Mohana said it was not deciding whether the classification of the loan account as a Non-Performing Asset (NPA) or the assignment of the debt was valid. Those issues are left open.
Background
Atibir Industries, which makes sponge iron and pig iron, had taken credit facilities from a consortium of banks led by SBI. SBI classified the account as an NPA on 31.03.2021, with retrospective effect from 16.10.2020. It then started proceedings before the DRT, the NCLT and under the SARFAESI Act.
The company made several one-time settlement offers, ending with ₹238 crore on 07.02.2023. Three days later, SBI issued a web notice putting the loan up for transfer through e-auction. On 24.03.2023, during the pendency of the company’s writ petition, SBI assigned the loan to the asset reconstruction company (Respondent No. 2) for ₹250 crore.
A Single Judge of the Calcutta High Court held that the NPA classification was premature and contrary to the RBI Master Circular dated 01.07.2015 read with the COVID-19 moratorium circulars. The judge set aside the classification and the assignment. A Division Bench reversed this on 25.07.2024, leading to the appeals before the Supreme Court.
Proceedings Before the Supreme Court
On a suggestion by Senior Advocate Abhishek Manu Singhvi, who appeared along with Senior Advocate Shyam Divan for the asset reconstruction company, the Court appointed former Supreme Court judge Justice Anil R. Dave to decide liability beyond ₹250 crore. The company paid the full ₹250 crore during the pendency of the appeals.
In his report dated 09.07.2025, Justice Dave held that the asset reconstruction company was entitled to a reasonable return on its ₹250 crore investment, not on the pre-assignment dues of ₹453.83 crore. He worked out returns at 13%, 14% and 15% per annum and suggested ₹50 lakh towards costs.
Arguments
Atibir Industries argued that the ₹250 crore was not paid from the asset reconstruction company’s own funds. It said the money came from an entity controlled by persons who also controlled a competitor in the same business, and raised the apprehension that the assignment was aimed at taking over its business. It asked that any return be limited to 7.5% per annum.
The asset reconstruction company called Atibir a habitual defaulter. It argued that the report went beyond its terms of reference and erased the distinction between the debt value and the acquisition value. In the alternative, it sought a remand to determine the total liability under the contractual documents.
Court’s Findings
The Court noted that the e-auction notice issued after the settlement talks “came as a bolt out of the blue for the Appellant.”
It also recorded that “there has been no denial about the allegations made by the Appellant as against the Respondent No.2 that the funds which have been advanced for taking over the asset from the Respondent No.1 were advanced by a competitor in business.” The Court noted that the asset reconstruction company did not produce its financial statements or the interest rate on its borrowing, despite Justice Dave’s request.
Keeping in mind that the company is a running concern and its employees’ livelihoods are at stake, the Court said it was passing the order in the interest of justice and equity. The ₹125 crore figure was arrived at by taking the highest rate of 15% from the report, the more than 18 months that had passed since it, and the costs incurred by the asset reconstruction company. The Bench said the amount was fixed “without going into the issue whether it is a return on investment or otherwise so as to bring an end to the dispute which is continued between the parties for years.”
The Court added, “This Court is not only the Court of law but also a Court of equity and the relief has been granted after balancing the interests of both parties and to do complete justice between the parties.”
Outcome
The Supreme Court directed Atibir Industries to pay ₹125 crore within 12 weeks as full and final settlement. On receipt, the respondents must return the title deeds and release all securities and guarantees within four weeks. The NCLT Section 7 proceedings and the DRT-I Kolkata proceedings were disposed of.
If the company misses the deadline, the respondents will be at liberty to revive the proceedings, and the benefit of the judgment will not be available to it. The Court accepted Justice Dave’s report with this modification and disposed of the appeals.
Case Title: Atibir Industries Co. Ltd. vs. State Bank of India & Anr.
Case No.: Civil Appeals arising out of SLP (C) Nos. 21029-30 of 2024
Bench: Chief Justice Surya Kant, Justice Joymalya Bagchi and Justice V. Mohana
Date: October 26, 2026
