A one-off or a turning point? Key takeaways from the Supreme Court of India’s approach to the Sterling Biotech settlement

Tanya Ganguli,

TG Law Offices, Noida

In November 2025, the Supreme Court of India brought to a close one of India’s most complex and long-running bank fraud matters involving the Sterling Biotech group. The Court directed that all the criminal, enforcement and regulatory proceedings be quashed, subject to the deposit of INR 5,100 crore as a full and final settlement payment, arrived at, by consensus, with the relevant lender banks and investigating agencies. 

Just as important as the relief granted was the Court’s words of caution: the order was passed in response to the peculiar facts of the case and will not be treated as a precedent. If read carefully, the decision is less about the settlement doctrine and more about how courts may, very rarely, prioritise recovery and finality in cases marked by quantified exposure, prolonged litigation and institutional alignment.

This article focuses on what the judgment means practically for boards and senior management when dealing with large, multi-agency financial disputes.

The enforcement landscape that Sterling Biotech navigated

The Sterling Biotech group and its promoters were facing proceedings across multiple forums, arising from alleged loan defaults and the diversion of funds involving a consortium of public sector banks. These proceedings included:

• first information reports (FIRs) and charge sheets issued by the Central Bureau of Investigation (CBI);
• investigations and attachments instigated by the Directorate of Enforcement (ED) pursuant to the Prevention of Money Laundering Act (PMLA);
• prosecution proceedings carried out by the Serious Fraud Investigation Office (SFIO) pursuant to the Companies Act 2013;
• proceedings pursuant to the Fugitive Economic Offenders Act; and
• parallel proceedings initiated pursuant to the Black Money Act (Undisclosed Foreign Income and Assets), the Imposition of Tax Act and India’s income tax laws.

In parallel, the lender banks involved initiated insolvency proceedings pursuant to the Insolvency and Bankruptcy Code 2016. Certain group entities were liquidated, resulting in the partial recovery of funds.

Despite insolvency recoveries and one-time settlements (OTSs) being secured with banks, criminal and enforcement proceedings continued involving several enforcement agencies and the courts; a familiar reality when dealing with large Indian financial disputes, where the exposure rarely remains confined to a single forum.

What the Supreme Court focused on

When the petitioners approached the Supreme Court of India seeking to quash all of the proceedings, the Court’s focus was notably pragmatic. Across multiple hearings, the Court returned to four questions:

1. What was the quantified amount of defalcation alleged in the FIRs?
2. What amounts had been agreed under OTSs with the lender banks?
3. What sums had already been deposited pursuant to court directions?
4. What recoveries had the banks made through insolvency proceedings?

Following consultations with the lender banks, the Solicitor General on Behalf of the Government placed before the Court a proposal requiring the deposit of INR 5,100 crore, representing the amount necessary to bring finality to the disputes. The petitioners agreed to deposit the amount requested.

The judgment

The Court judged that, upon the deposit of INR 5,100 crore as a full and final payment, all of the proceedings arising from the Sterling Biotech matter, including those instigated by the CBI, ED and SFIO, and the proceedings being pursued under the country’s income tax and black money laws, would be quashed. The amount was to be disbursed to the lender banks involved on a proportionate basis and the litigation relating to the loan amounts was to be brought to an end by way of full and final settlement, agreed on the basis of consensus.

Interestingly, the Court made clear what it was not doing. It was not examining the merits of the allegations or determining guilt or innocence. From the outset, the Court stated that once the public money at issue is returned to the lender banks, the continuation of criminal proceedings would not serve any useful purpose. The directions were, therefore, expressly confined to the peculiar facts of the case and not intended to operate as a precedent.

In practical terms, this was a recovery-driven closure of the case, not the recognition of a settlement or the compounding of criminal offences as a general principle.

Why engagement and disclosure matter in practice

What makes the Sterling Biotech judgment instructive is not only how the case ended, but what made such an ending possible. The Court’s emphasis on quantified exposure, documented recoveries, prior deposits and alignment with the lender banks’ position highlights a broader point: in large, multi-agency matters, the credibility of an entity’s engagement over time may shape the range of outcomes available at the very end of such proceedings.

Notably, the Court did not rely on any early self-reporting or voluntary confession(s). The outcome turned on recovery, consensus and finality, and not on any admissions. That distinction matters for company boards evaluating disclosure and cooperation strategies.

Cooperation and disclosure: knowing the limits

In India, companies are not legally required to formally engage with law enforcement authorities before commencing an internal investigation. Once an entity becomes aware that it is the subject or target of a government investigation, measured cooperation may still be advisable, particularly as such an approach can demonstrate intent and may be relevant at sentencing if a conviction follows.

The position is clearer on the regulatory side. Certain Indian regulatory regimes explicitly recognise cooperation. For example, securities law violations may be resolved under the Securities and Exchange Board of India’s SEBI (Settlement Proceedings) Regulations 2018, and cartel participants may seek leniency under the Competition Act 2002 and associated regulations. In these contexts, company engagement can deliver tangible benefits.

That position, however, does not extend cleanly in regard to criminal enforcement in India.

Self-reporting: why caution is warranted

Indian criminal law does not provide a general framework that grants formal credit for self-reporting. The Sterling Biotech outcome itself appears to be a one-off, with the Court expressly stating that its judgement was driven by the peculiar facts of the case. Apart from such exceptional circumstances, there is no statutory mechanism for the negotiated closure of the kinds of criminal proceedings that are typically brought against companies.

Material disclosed during self-reporting may, therefore, be used as prosecutable evidence. While disclosure may offer informal benefits, such as signalling cooperation, the absence of assured legal credit means that any decision to self-report must be carefully calibrated, particularly given the likelihood of prolonged, parallel enforcement action.

The calculus becomes even more complex when the conduct has cross-border implications. Self-reporting in one jurisdiction may necessitate disclosures in others, especially as Indian regulators increasingly cooperate with their foreign counterparts. In such situations, consistency and control over the narrative are as important as the disclosure decision itself.

Key takeaways

Disclosure should be treated as a strategic decision, not a reflex.

The current situation highlights that Indian courts may, in exceptional cases, prioritise recovery and finality, but this recent case also reinforces that Indian criminal law offers no guaranteed benefit for early self-reporting. Boards should assess disclosure decisions holistically, factoring in the company’s regulatory exposure, any parallel investigations, insolvency dynamics, cross-border risks and the reputational impact. The goal should be to establish credibility and control, not just speed.

The current judgment reflects a narrow, carefully calibrated intervention by the Supreme Court in an exceptional case. It does not dilute India’s enforcement framework, nor does it introduce a general settlement regime for economic offences.