Supreme Court directs SEBI to end case against Sterling Biotech and Sandesara brothers

Supreme Court directs SEBI to end case against Sterling Biotech and Sandesara brothers

It signalled that any deviation could invite stricter directives

The Supreme Court has ordered the Securities and Exchange Board of India to conclude proceedings against Sterling Biotech Limited and its promoters, Chetan Sandesara and Nitin Sandesara, warning of further action in case of non-compliance.

A bench comprising Justice J K Maheshwari and Justice A S Chandurkar reiterated that its earlier order required all proceedings to be quashed upon the deposit of Rs.5,100 crore by the brothers.

The judges told the counsel, "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.”

SEBI’s counsel sought additional time, stating that Solicitor General Tushar Mehta was in discussions with SEBI and sought more time.

However, representing the Sandesara brothers, Senior Advocate Mukul Rohatgi argued that the regulator must act in line with the apex court’s directive.

The matter has been scheduled for further hearing on 10 April, with the court expecting clarity on SEBI’s position.

The case centres on allegations of financial irregularities involving overseas loans and fund routing. SEBI was investigating the company as purported investments could mislead investors and distort the company’s exact financial position.

In November 2025, the top court had accepted a settlement proposal under which the promoters agreed to deposit Rs.5,100 crore. The amount was subsequently deposited in December, triggering directions for the closure of proceedings.

Recently, a consortium of lenders, including banks of Sterling Biotech’s promoters, sought disbursal of funds, citing total dues exceeding Rs.19,000 crore.

The 20 banks of the 26 secured creditors of Sterling Biotech recorded a consolidated computation of claims across multiple group entities. It settled the methodology adopted for the distribution of the amount.

The consortium’s submission indicated that while dues have been calculated uniformly, a few lenders are still in the process of formally confirming their acceptance.

During the recent proceedings, the Supreme Court observed that there were 26 lender banks, of which those listed from serial numbers one to 20 have already filed their claims along with the necessary documentation in proportion to their respective shares outlined in the chart. The court recorded this position while reviewing the status of submissions.

It further pointed out that six lenders, including Krung Thai Bank Public Company Limited (Singapore), Hua Nan Commercial Bank (Singapore), Taiwan Co-operative Bank, The Shanghai Commercial and Savings Bank Limited, HDFC Bank and Aviral Maritime Infra, were yet to submit the required affidavits and supporting documents.

The judges held, "Thus, retaining the share with respect to their claims, the amount of the banks at Serial Nos. 1 to 20 be released immediately in terms of column 5 of Annexure A-4.

The court added that the interest accrued on the deposit lying with the bank with respect to the sum of the lender banks at serial numbers 1 to 20 should be also proportionately distributed to them in accordance with the share of their claims.

In addition, the court clarified that the portion attributable to banks listed from serial numbers 21 to 26 should remain set aside and be placed in fixed deposits with an auto-renewal facility. It would be released once their claims were submitted. This was done to safeguard their pending entitlements.

The bench said, "The interest accrued on the sum of the remaining six banks should be also kept in fixed deposit, in addition to the amount of their proportionate share.”

In relation to the market regulator’s case involving the Sandesara brothers, on 23 March, the apex court indicated that the solicitor general could obtain further instructions, including on the closure of outstanding issues. The matter was briefly addressed during the hearing.

Earlier, banks informed the court of a consensus approach under which both domestic and overseas exposures were consolidated. The foreign currency loans were converted into rupees at a fixed exchange rate of Rs.63 per US dollar. This reflected the 2015 average when many accounts became non-performing and a uniform interest rate of 9 percent per annum was applied from the NPA date, calculated with annual rests. This framework was presented as a standardised method.

The dispute stems from multiple petitions filed by the Sandesara brothers, who sought to quash various proceedings, including FIRs lodged by investigative agencies, including the Central Bureau of Investigation and Enforcement Directorate, as well as cases initiated under statutes like the Fugitive Economic Offenders Act, the Companies Act and the Black Money Act. These petitions form the core of the ongoing legal battle.