NEW DELHI: Supreme Court has questioned why market regulator SEBI has not closed proceedings against the Sandesara brothers, even after a court-approved ₹5,100 crore settlement in a high-profile bank fraud case.
Court Questions Regulatory Delay
The Supreme Court of India has raised concerns over the Securities and Exchange Board of India’s decision to continue proceedings against former directors of Sterling Biotech Ltd., Nitin and Chetan Sandesara, despite earlier judicial directions aimed at closing related criminal cases.
During a recent hearing, a bench comprising Justices J.K. Maheshwari and A.S. Chandurkar agreed to examine a complaint filed by the Sandesara brothers and scheduled the matter for further hearing on March 23. The court specifically questioned why Securities and Exchange Board of India (SEBI) appeared to be “coming in the way” of implementing its earlier order.
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Settlement and Its Legal Implications
The dispute stems from a significant judicial development last year, when the court permitted the Sandesara brothers and their associates to seek closure of criminal proceedings after agreeing to repay ₹5,100 crore as a one-time settlement.
The settlement, accepted with the consent of the Centre and the Directorate of Enforcement, was intended to bring an end to multiple cases arising from an alleged multi-crore bank fraud. These cases had been investigated by agencies including the Central Bureau of Investigation (CBI), the Serious Fraud Investigation Office (SFIO), and the Income Tax Department.
The court had observed that continuing criminal proceedings would not serve a useful purpose, particularly as the recovered funds were being returned to public sector banks.
Dispute Over Pending Proceedings
Despite the settlement and the court’s earlier observations, SEBI has not yet closed its proceedings against the Sandesara brothers, prompting fresh legal questions. The petitioners have argued that the continuation of regulatory action contradicts the intent of the court’s order, which aimed to resolve all pending disputes linked to the alleged fraud.
The bench’s remarks suggest a broader concern over coordination between judicial directives and regulatory enforcement actions, especially in cases involving financial settlements and overlapping jurisdictions.
Lenders Seek Clarity on Fund Distribution
Separately, the Supreme Court is also set to consider an application filed by a group of lenders led by State Bank of India (SBI), seeking directions for the disbursal of funds deposited by the Sandesara brothers with the court registry.
The lenders have submitted a detailed chart outlining their respective claims and proposed shares in the distribution of recovered amounts. The court is expected to examine these claims alongside the broader legal questions surrounding the closure of proceedings.
The case continues to evolve as multiple stakeholders — including regulators, investigative agencies, and financial institutions — await clarity on the scope and finality of the settlement.
