By Dilip Bobb
The first-of-a-kind order by the apex court has put the Enforcement Directorate (ED) in a legal quandary. The judgment by the bench of Justices JK Maheshwari and Vijay Bishnoi says: “…this Court was of the view that if the petitioners are ready to deposit the amount as settled in one-time settlement (OTS) and public money comes back to lender banks, the continuation of the criminal proceedings would not serve any useful purpose. The tenor of the proceedings apparently indicate peculiarity, with intent to protect the public money and interest and to get deposited the defalcated amount. In furtherance, the consensus has been arrived at as indicated above. In this view, in the peculiar facts and situation of the present case, discretion as prayed, deserves to be exercised for granting the relief, as prayed and to direct for quashment of all the proceedings.”
By closing all criminal cases against Nitin and Chetan Sandesara, the billionaire promoters of the Sterling Biotech group, which include ED proceedings related to charges of corruption, bank fraud, money laundering, black money, tax violations offences under the Companies Act, and even their designation as fugitive economic offenders, the bench has set an unusual precedent.
What the order says is that by depositing Rs 5100 crore by December 17 as full and final settlement with the lender banks and investigating agencies, the deposited amount shall be disbursed to the respective lender banks. The Court noted that the brothers had accepted a proposal presented by Solicitor General Tushar Mehta on behalf of the government, which offered to settle all pending proceedings.
Though the apex court has clarified that its order is confined to the “peculiar facts” of the case, many lawyers and the ED itself believe it sets a powerful example that others like Vijay Mallya, Nirav Modi and Mehul Choksi may attempt to invoke in their own defence.“The Supreme Court has exercised its extraordinary powers to allow a one-time settlement that could exonerate accused ‘fugitive economic offenders’ from both criminal prosecution and civil liabilities, conditional on a massive payment to lenders,” according to B Shravanth Shanker, advocate-on-record in the Supreme Court.
India has witnessed several high-profile cases where economic offenders and fugitives have fled the country to evade prosecution. The Fugitive Economic Offenders Act (FEOA), 2018, was introduced to confiscate the properties of such offenders and expedite their extradition. However, its implementation has been entangled in legal battles, diplomatic hurdles and controversies. The biggest fugitives include Vijay Mallya, Lalit Modi, Nirav Modi and Mehul Choksi, and Jatin Mehta.
Mallya, for instance, had defaulted on loans worth Rs 9,000 crore borrowed from a consortium of Indian banks. The fallout from this debacle left public-sector banks facing massive losses. At the same time, Mallya continued to live in luxury in the UK, sparking public outrage and raising serious questions about corporate accountability in India. His case became symbolic of India’s challenges in extraditing high-profile economic offenders from foreign jurisdictions. Mallya’s lawyers successfully leveraged concerns over overcrowding and healthcare in Indian prisons to delay proceedings despite assurances from Indian authorities.
This highlights a recurring obstacle in India’s extradition cases: concerns by foreign courts about India’s prison facilities and legal safeguards.
Nirav Modi has been languishing in a prison in the UK since 2019, fighting extradition by using the same arguments given by Mallya’s lawyers; conditions in Indian prisons.
In the Mallya case, the ED estimated his total default to be Rs 17,781 crore, as of 2025, including interest. ED has recovered Rs 14,000 crore in the form of properties and other assets in India. Moreover, for most financial fugitives, the opaque financial web involving shell companies and offshore hol-dings, has complicated efforts to trace and reclaim the defrauded sum. While his extradition order by the UK courts marked a symbolic victory for India, the prolonged battle reflects systemic issues, including delays in legal proceedings, and interpretations of human rights by foreign courts.
Then there is the role of the banking sector, in particular, public-sector banks. Nirav Modi, the diamond magnate, became the face of one of India’s most notorious banking frauds after the Punjab National Bank (PNB) scam worth Rs 14,000 crore came to light in 2018.
Modi allegedly colluded with bank officials to secure fraudulent Letters of Undertaking (LoUs), which were used to obtain massive foreign credit without adequate collateral.
By the time the scam was uncovered, Modi had already fled to the UK, exposing major weaknesses in India’s banking oversight.
His defence team argued that his mental health had deteriorated due to the prolonged legal battle and that he faced a high risk of suicide if extradited. Additionally, they raised concerns about Mumbai’s Arthur Road Jail conditions, claiming they violated human rights standards, the same argument used by Mallya.
While the UK High Court ultimately approved his extradition in 2023, dismissing these claims, Modi has continued to delay the process through appeals. Despite provisions under the FEOA, which allow for the confiscation of a fugitive’s properties, the process has been mired in legal and logistical challenges. Modi’s assets, spread across Hong Kong, the UAE, the UK, and the US, include high-value diamonds, real estate, and bank accounts, but their seizure has been hampered by jurisdictional complexities and legal blockages.
Mehul Choksi, another fugitive diamantaire and key accused in the PNB scam, symbolizes the legal and diplomatic hurdles India faces in extraditing high-profile economic offenders. After allegedly defrauding Indian banks of over Rs 13,000 crore, Choksi secured Antiguan citizenship in 2017 under the Caribbean nation’s Citizenship by Investment Programme (CIP), effectively shielding himself from immediate extradition to India. This strategic move complicated India’s legal efforts, as Antigua does not extradite its own citizens without exhaustive due process. Choksi’s case underscores how wealthy fugitives exploit “golden passport” schemes to evade justice, forcing India into prolonged legal battles in foreign jurisdictions with differing extradition standards.
The controversy took a dramatic turn in May 2021 when Choksi was
mysteriously abducted from Antigua and transported to Dominica under suspicious circumstances. The incident sparked international scrutiny, with Choksi’s legal team alleging torture and state-sponsored abduction, while Indian authorities denied any official involvement. The Dominica High Court ultimately blocked his extradition, citing procedural irregularities and lack of due process.
This failed to secure Choksi’s return and raised legal concerns about extraterritorial enforcement actions. Antigua has yet to approve Choksi’s extradition, prolonging a legal stalemate highlighting the problems in international judicial cooperation. Antiguan authorities have cited ongoing legal reviews and the need for conclusive evidence that meets their domestic standards. Like his co-accused Nirav Modi, Choksi has leveraged legal loopholes, including claims of political persecution and health issues, to delay proceedings. He was later arrested in Belgium.
On October 17, a Belgium court upheld India’s request for his extradition. He has challenged the order in the country’s Supreme Court. Choksi and his nephew Nirav Modi are prime accused in the multi-crore scam being probed by both the Central Bureau of Investigation (CBI) and the ED. They are accused of allegedly siphoning off over Rs 13,000 crore of public money from the PNB using LoUs and foreign letters of credit (FLCs) by bribing officials of the bank’s Brady House branch in Mumbai.
The Supreme Court judgment involving the Sandesara brothers has now created a legal loophole that could be used by other economic fugitives. Mallya, in a post on December 2, claimed the money recovered through sale of his assets was more than the amount the ED/CBI says he owes. Clearly, the Sandesara judgment has given them hope.
In the Sandesara case, their petition, filed in 2020, had sought quashing of first information reports (FIRs), charge sheets, prosecution complaints, attachment orders under the Prevention of Money Laundering Act, and proceedings under the Fugitive Economic Offenders Act. The figure of Rs 5,100 crore emerged after years of litigation, negotiations with lender banks, interim protections, and stalled enforcement proceedings.
Senior counsel Mukul Rohatgi, appearing for the Sandesaras, informed the bench that his clients would pay the entire sum in exchange for the complete quashing of all criminal and civil proceedings. The Court, recording the consent of both sides, accepted this proposal.
The brothers own a Gujarat-based Sandesara group company called Sterling Biotech Ltd which was founded in 1985. They own another company called Sterling Oil Exploration and Energy Production which was established in 2003, headquartered in Nigeria. The brothers left India in 2017 using Albanian passports after being accused of defaulting on large sums of loans from domestic banks. In February 2020, November 2021, January 2022 and May 2022, the Supreme Court noted that payments were being made and encouraged resolution with the banks.
The Sandesara brothers had built the largest independent oil company in Nigeria, even as India pursues them as criminals, accusing them of perpetrating “one of the largest economic scams in the country”. Nigeria had declined New Delhi’s request for their extradition, saying the Indian allegations “appeared to be political in nature,” according to a letter published by the Organized Crime and Corruption Reporting Project, accessed by Bloomberg. The ED said it sought to seize the brothers’ overseas assets, including a Nigerian oil field, four drilling rigs, and a Gulfstream jet.
When the case was heard on November 18, 2025, the Court reviewed the financial record. It noted that the alleged misappropriation in the FIR was Rs 5,383 crore, and the one-time settlement amount was Rs 6,761 crore.
The apex court’s unprecedented order is likely to ignite fresh debate on the relationship between criminal prosecution and financial settlements in cases involving economic fugitives, despite the top court saying it is not applicable in other cases. Once the total amount is deposited on December 17, all criminal, civil, insolvency-linked and economic offender proceedings that have dogged the brothers for nearly a decade, will be cancelled. The verdict has been hotly debated in legal circles.
The Court seems to go by its conviction that if the banks recover all their money, the prime objective is met. Others believe that it sends a message that financial crimes in India can be settled with money rather than accountability in the form of a jail sentence. As the order also stated, such a judgment avoids lengthy drawn-out prosecution trials.
The key factor is that the apex court’s decision came after the government backed it unreservedly. Getting money repaid to the banks seems to have been a more desirable option than chasing endless cases in foreign courts where the condition of India’s jails is a more legally viable argument than the nature and seriousness of the crime.
—The writer is former Senior Managing Editor, India Legal magazine
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