Mint Explainer | Does SC relief for Sterling Biotech promoters open exit routes for fugitives like Mallya, Nirav Modi?

Mint unpacks what the Supreme Court ordered, and whether similar relief could be sought by high-profile offenders such as Vijay Mallya and Nirav Modi.

What the Supreme Court ordered

In its 19 November order, a bench of justices J.K. Maheshwari and Vijay Bishnoi accepted a settlement proposal presented by the legal team of Sterling promoters and investigative agencies represented by solicitor general Tushar Mehta.

The court was hearing writ petitions filed by Nitin and Chetan Sandesara, seeking to quash criminal and enforcement cases arising from two FIRs by the central bureau of investigation (CBI) and related proceedings by the enforcement directorate (ED), serious fraud investigation office (SFIO), and the income tax department, under the Black Money Act and the Fugitive Economic Offenders Act.

The court stated that all these cases will be closed once the Sandesaras deposit ₹5,100 crore with the Supreme Court registry by 17 December 2025. The money will be placed in a short-term interest-bearing fixed deposit and distributed to banks proportionately after verifying dues.

The bench noted the order was passed due to the “peculiar facts" of this case and should not operate as a precedent.

Lawyers, however, say the judgment still creates a practical opening for other fugitives to attempt similar settlements.

What the Sandesara brothers’ fraud involved

The Sandesara brothers built the Sterling Group into a ₹40,000-crore business spanning pharmaceuticals, machinery, SEZs and oil and gas. They expanded aggressively into Nigeria, where their companies, SEEPCO and Sterling Global Oil Resources, grew to become the country’s largest independent crude producers.

Indian investigative agencies allege this growth was fuelled by a massive bank fraud involving forged documents, inflated financial statements and diversion of public-sector bank loans through a network of shell companies into their overseas ventures.

Over time, multiple CBI charge sheets, ED attachments, SFIO investigations and Income Tax cases were filed.

The brothers fled India in 2017, obtained Albanian passports and were declared fugitive economic offenders. Nigeria refused India’s extradition request, calling the allegations “political."

Several Sterling Group companies later collapsed under insolvency, leading to limited recoveries, after which the brothers moved the Supreme Court seeking full closure through a financial settlement.

How does this compare with other major banking frauds?

The Sandesara case is part of a larger pattern of high-value banking frauds in India. Vijay Mallya owes about ₹9,000 crore to Indian banks following the collapse of Kingfisher Airlines. He fled to the UK in 2016 and continues to fight extradition.

Nirav Modi and Mehul Choksi are accused in the ₹13,600-crore Punjab National Bank (PNB) scam involving fraudulent letters of undertaking. Modi is contesting extradition in London, while Choksi moved to Antigua and later Belgium.

India has also witnessed significant domestic scams, including the ₹22,842-crore ABG Shipyard case and the ₹34,000-crore DHFL scam, the largest financial scandal uncovered by investigators.

Can other fugitives use this ruling to seek settlements?

Even though the Supreme Court has said the order should not be cited as precedent, lawyers believe it opens a practical pathway for fugitives to test similar settlement strategies. It does not automatically help Mallya, Nirav Modi or Choksi, but it gives their lawyers a new argument to place before the courts.

Legal experts warn wealthy offenders may believe they can flee India, fight cases from abroad and later “settle" them by paying a portion of their dues. This weakens the deterrent effect of criminal prosecution and the Fugitive Economic Offenders Act.

Yatharth Rohila, advocate and partner at law firm Aeddhaas Legal LLP, said the ruling “clearly opens the door (at least in theory) for other fugitive economic offenders to push for negotiated financial settlements rather than full-blown criminal prosecutions," especially for those who hold significant overseas assets and may argue that repayment justifies closure.

Alay Razvi, managing partner at law firm Accord Juris, cautioned that such settlements would require strict conditions: repayment must clearly serve the public interest better than prosecution, and both banks and the government must support the proposal.

“There is a possibility that offenders may speculate that repayment can substitute jail time, potentially weakening deterrence," Razvi warned. He also noted that fugitives may try to use this ruling in extradition battles, although “extradition law still requires physical presence or formal assurances."

What the ruling means for public-sector banks

The ruling comes at a time when public-sector banks are heavily exposed to fraud.

The Reserve Bank of India's (RBI) 2024–25 annual report showed losses rising sharply from ₹12,230 crore in 2023-24 to ₹36,014 crore in 2024-25, with PSU banks accounting for over 70% of the total. In this context, the settlement gives banks both an opportunity and a challenge.

Gauhar Mirza, partner at law firm Saraf & Partners, said the ruling could help banks recover large sums stuck in litigation. “This may help banks recover substantive amounts stuck in long proceedings. It fits within the contours of OTS (one-time settlement) schemes and applicable law," he said.

Tushar Kumar, advocate at the Supreme Court, said, “The judgment reinforces that courts are open to practical, outcome-oriented resolutions that secure substantial public funds. It strengthens banks’ negotiation position rather than weakening it."

But experts caution that too many settlements could erode public trust. Rohila noted that offenders may assume they can escape accountability by fleeing and negotiating from abroad, undermining the deterrent value of the system.

What the ruling means for enforcement agencies

In the Sandesara brothers' case, the Supreme Court has directed the CBI, ED, SFIO, and tax department to close all investigations once payment is made.

Lawyers point out that while their statutory powers remain intact regardless of this case outcome, the ruling alters the practical environment in which agencies operate.

Tushar Agarwal, founder of law firm C.L.A.P. Juris, Advocates & Solicitors, said, “Agencies like the CBI, ED, SFIO and Income Tax Department will see this ruling as both a warning signal and a policy cue."

Agarwal said the deterrent effect of criminal prosecution may weaken if offenders believe large repayments can bring them relief. This may encourage more offenders to attempt settlement-based petitions, though courts will likely continue to treat such requests as exceptional, he added.

For now, the Sandesara case stands as a rare exception. The larger question is whether it stays that way.