1. In an unprecedented and landmark ruling that is set to redefine the contours of economic offence jurisprudence in India, the Supreme Court, on November 19, 2025, allowed the accused in the massive Sterling Biotech (SBL) bank fraud case to settle all criminal and civil liabilities by depositing a staggering ₹5,100 crores with the court. The order, in the case of Hemant S. Hathi & Chetan Jayantilal vs. Central Bureau of Investigation & Ors., quashes a web of criminal proceedings—including those by the CBI, ED, and SFIO—upon the deposit of this amount, treating it as a "full and final settlement." This decision raises profound questions about the nature of justice, the recovery of public money, and whether financial restitution can effectively purchase absolution from criminal liability.
2. The Sterling Biotech case is one of the most significant bank fraud cases in recent Indian history, involving alleged defalcation of public funds to the tune of ₹5,383 crores from a consortium of banks. The petitioners, promoters of the Sterling Group, were facing a multi-agency onslaught including an FIR by the CBI under the Prevention of Corruption Act and the Indian Penal Code, prosecution by the Enforcement Directorate (ED) under the Prevention of Money Laundering Act (PMLA), attachment of properties, proceedings under the Fugitive Economic Offenders Act, and investigations by the Serious Fraud Investigation Office (SFIO) and the Income Tax Department.
3. The petitioners approached the Supreme Court in 2020 using its extraordinary writ jurisdiction, seeking to quash all these proceedings. From the very beginning, the Court's approach was pragmatic and restitution-centric. In its initial order dated February 7, 2020, the Court took note of the petitioners' submission that they had obtained One-Time Settlements (OTS) from 15 out of 20 banks and that the "sword hanging of criminal prosecution" was hindering a final resolution. This set the tone for the next five years of hearings, where the Court consistently nudged the parties towards a financial settlement.
4. Over multiple hearings, the Court acted as a facilitative mediator rather than a strict adjudicator of criminal law. It repeatedly extended interim protection, staying all proceedings before the trial court and other agencies. The central question before the Court evolved from the legality of the FIRs to a simpler, more transactional one: How much money needed to be returned to the banks to close the chapter? The Court's orders from 2021 onwards reveal a clear inclination: if the defrauded public money is returned, the continuation of criminal proceedings may not serve any "useful purpose."
5. The factual matrix of the financial dealings is complex. The total OTS amount for the Indian and foreign companies of the petitioners was ₹6,761 crores, which was higher than the original defalcation amount of ₹5,383 crores mentioned in the FIR. Over the years, the petitioners had deposited approximately ₹3,507.63 crores under various heads. Meanwhile, the banks had also initiated parallel proceedings under the Insolvency and Bankruptcy Code (IBC) against some of the Sterling companies, through which they recovered about ₹1,192 crores. After accounting for these recoveries, the net outstanding amount, as per the OTS, stood at around ₹2,061 crores.
6. The climax of this legal drama unfolded on November 18-19, 2025. On November 18, the Court, after a detailed calculation, initially directed the petitioners to deposit ₹2,062 crores on an ad-hoc basis. However, it was then revealed that the investigating agencies, in consultation with the banks, had submitted a sealed cover demanding a much higher sum of ₹5,100 crores to settle all dues and proceedings. In a stunning turn of events, the petitioners, through senior counsel Mr. Mukul Rohatgi, agreed to pay this full amount—₹5,100 crores—subject to the quashing of all criminal and civil cases against them.
7. The Court accepted this consensus. Its final order on November 19, 2025, is a study in judicial pragmatism. It allowed the writ petitions, directing the quashing of all proceedings—the CBI FIRs, ED's ECIRs, PMLA attachments, Fugitive Economic Offenders Act proceedings, SFIO prosecution, and Black Money Act cases—upon the deposit of ₹5,100 crores by December 17, 2025. The amount is to be disbursed to the lender banks on a proportionate basis by the Registry of the Supreme Court.
8. The legal and philosophical implications of this order are vast and multifaceted. On one hand, it can be hailed as a monumental victory for public exchequer and the banking sector. The primary victims of the fraud were public sector banks, and ultimately, the Indian taxpayer. The Court's relentless focus on restitution ensured that a substantial portion of the defrauded money is being recovered. In many economic offences, the protracted nature of criminal trials means that banks rarely recover their dues, and the accused often remain enmeshed in litigation for decades. This order provides a swift and certain outcome, pumping over ₹5,000 crores back into the financial system.
9. Furthermore, the Court was careful to label this outcome as a product of the "peculiar facts" of the case, explicitly stating that it "shall not be treated as a precedent." This caveat is crucial. It signals that the Court is aware of the extraordinary nature of its order and does not wish to open the floodgates for every economic offender to buy their way out of criminal liability. The decision is presented as a unique solution to a unique case, driven by the specific consensus between the parties and the Court's desire to protect public money.
10. However, the ruling also opens itself to serious ethical and legal criticisms. The most significant concern is the apparent commodification of criminal justice. Can and should serious allegations of corruption, money laundering, and fraud be settled purely through a monetary transaction? Criminal law is founded on the principle of punishment and deterrence. The state prosecutes crime not merely to compensate the victim, but to uphold public justice and deter potential offenders. By quashing proceedings upon payment, the Court may be seen as creating a two-tiered justice system—one for the ultra-rich who can afford to pay for their freedom, and another for ordinary citizens who cannot.
11. The order also seems to sidestep the distinct nature of different statutes involved. The PMLA, for instance, is not a recovery law but a special statute designed to combat the menace of money laundering, which is considered a crime against the sovereignty and integrity of the nation. Similarly, the Prevention of Corruption Act deals with offences by public servants and those who conspire with them. Settling these through a payment to banks conflates the distinct legal wrongs committed against specific banks with the larger wrongs committed against society and the state.
12. From a procedural standpoint, the use of a "sealed cover" to communicate the settlement amount demanded by the agencies is also contentious. While the Court opened the cover in the courtroom, the practice of sealed cover jurisprudence often lacks transparency and denies other stakeholders, including the public, the opportunity to scrutinize the rationale behind such demands.
13. For the broader landscape of economic offences, this judgment creates a complex precedent, despite the Court's disclaimer. It signals to high-profile economic offenders that a potential exit route exists if they can muster the financial resources to make the state and the banks "whole" again. This could incentivize full restitution but might also dilute the deterrent effect of stringent laws like the PMLA and the Fugitive Economic Offenders Act.
14. In conclusion, the Supreme Court's order in the Sterling Biotech case is a classic example of a pragmatic solution overriding pure legal principle. It prioritizes the recovery of public funds and the closure of protracted litigation over the rigorous pursuit of criminal liability. While the outcome is undoubtedly beneficial for the banks and the financial system, it forces a difficult conversation about the very purpose of criminal law in the context of high-stakes corporate fraud. The Court has, in effect, placed a price tag on justice—one that amounts to ₹5,100 crores. Whether this represents a wise balancing of interests or a dangerous erosion of the criminal justice system will be a subject of intense legal and public debate for years to come.
Citation: Hemant S. Hathi & Chetan Jayantilal vs. Central Bureau of Investigation & Ors., Writ Petition (Criminal) Nos. 37 & 48 of 2020, Supreme Court of India, Order Dated: November 19, 2025.
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