SC ruling: disturbing implications | Photo credit: greenleaf123
The question rightly asked is whether this paves the way for all fugitive economic offenders, be it Nirav Modi, Vijay Mallya or Mehul Choksi, to simply buy their way out of cases of fraud and money laundering. The court’s statement that this is a one-off case is not convincing, because there is virtually no reason for it. As for the Sandesara saga, the duo started their business careers by setting up Sterling Biotech in Gujarat in the mid-1980s and over time diversified into oil by setting up a venture in Nigeria 20 years later. In 2017, they fled the country on Albanian passports after taking loans worth around ₹14,500 crore. As a result, they were booked by the CBI, ED, Serious Frauds Investigation Office, under various laws such as the Prevention of Money Laundering Act, the Fugitive Economic Offenders Act and the Income Tax Act. Over time, the banks managed to recover some money while also offering a one-time settlement of around ₹6,700 crore. Reports indicate that banks have recovered around ₹4,700 crore since 2018, meaning they could ultimately recover close to ₹10,000 crore.
In transactional terms, this seems like a win-win situation for both parties, where legal peace has been bought while the banks have walked away with a haircut of 33 to 35 percent. The court has argued that lenders are inclined to pay their debts and should be allowed to do so, while banks will get their money back sooner or later. But a “complete and final settlement” that erases all traces of wrongdoing sends a cynical message: that laws designed to curb economic crime can be circumvented. If the argument is that such cases will never be solved, law enforcement needs to improve. This statement could create a situation of moral hazard.
If economic crimes are indeed to be dealt with monetarily, the price to be paid must be several multiples of the debts in question, with a huge deterrent to criminal acts. Currently, there is no legal or institutional framework for such settlements; Criminal ‘plea bargaining’ is not permitted in the case of serious socio-economic crimes. The apex court could have shed light on the possibilities here. It is unclear why the court says this ruling cannot be a precedent, given the court’s broader role in establishing legal principles.
Published on December 1, 2025
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