Supreme Court Questions SEBI Over Non-Compliance in Sterling Biotech Fraud Case
The Supreme Court of India has raised strong objections to the Securities and Exchange Board of India (SEBI) for not closing proceedings against former directors of Sterling Biotech Limited (SBL), Nitin and Chetan Sandesara. This defiance comes despite the court's explicit directions to quash all pending criminal cases related to a massive bank fraud, following the brothers' payment of Rs 5,100 crore as part of a settlement.
Court's Directive and SEBI's Defiance
A bench comprising Justices J K Maheshwari and A S Chandurkar has agreed to hear the complaint filed by the Sandesara brothers and has scheduled the hearing for March 23. During the proceedings, the bench pointedly asked why SEBI was "coming in the way" of the court's order to close all cases against the accused. This marks a significant judicial rebuke, highlighting SEBI's apparent non-compliance with a landmark Supreme Court ruling.
Landmark Settlement and Quashing of Proceedings
In a first-of-its-kind decision, the Supreme Court last year ordered the dropping of criminal proceedings in the multi-crore bank fraud case after the accused agreed to repay the money. The court permitted Nitin and Chetan Sandesara, along with their associates, to be let off following a proposal approved by the Centre and the Enforcement Directorate (ED). This proposal involved a one-time settlement of Rs 5,100 crore to conclude litigations with various agencies, including the Central Bureau of Investigation (CBI), ED, Serious Fraud Investigation Office (SFIO), and Income Tax Department.
The Sandesara brothers subsequently deposited the agreed amount with the court. The Supreme Court had emphasized that continuing criminal proceedings would serve no useful purpose, especially since public money was being returned to the lender banks. This rationale underscored the court's focus on restitution over prolonged legal battles.
Upcoming Hearing on Disbursement of Funds
In addition to addressing SEBI's non-compliance, the Supreme Court is set to decide on an application filed by local lenders, led by the State Bank of India (SBI). These lenders are seeking directions for the disbursal of their respective claim amounts from the Rs 5,100 crore deposited by the Sandesara brothers with the court's registry. The lenders have submitted a detailed chart outlining the dues owed to each bank and their respective shares to be distributed.
This development highlights the ongoing complexities in high-profile financial fraud cases, where judicial orders intersect with regulatory actions. The Supreme Court's scrutiny of SEBI's actions underscores the importance of adherence to court directives, even in cases involving substantial financial settlements and multiple investigating agencies.
