Opaque settlement mechanisms raise concerns about consistency and deterrence
The SC verdict suffers from transparency issues | Photo Credit: greenleaf123
The Supreme Court’s order dated November 19, 2025 in Hemant S. Hathi v. CBI represents an unusual culmination of a long and complex cluster of proceedings arising from the affairs of the Sterling group. Acting on what it repeatedly describes as the “peculiar facts” of the case, the Court directed that all criminal, regulatory and attachment proceedings be quashed on deposit of a consolidated sum of ₹5,100 crore.
This belongs to a small category of cases that lie outside the ordinary grammar of criminal law. Its significance is not in any pronouncement on culpability, statutory thresholds or evidentiary standards, but what it reveals about the Court’s approach when confronted with overlapping statutes, multiple agencies and a factual matrix too interwoven to be resolved through conventional adjudication.
What transpired before the Court bore little resemblance to an adversarial adjudication. The proceedings functioned, in effect, as a high-stakes settlement exercise. As the order itself reveals, the petitioners were not asserting legal rights so much as negotiating a financial quantum for a global discharge. The sealed cover proposal placed by the Solicitor General reflected the State’s preferred basis for a consolidated resolution, and the Court ultimately based its directions on that figure. The Court’s role, in the end, was to give legal effect to that resolution.
The statutory canvas
The relief sought by the petitioners spanned an extraordinary range: CBI charge-sheets, ECIRs under the PMLA, attachment and freezing proceedings, a fugitive-economic-offender application, prosecution under section 447 of the Companies Act, and complaints under the Black Money Act. Few matters present this breadth of statutory engagement simultaneously.
The order records that the amount alleged in the primary FIR was ₹5,383 crore. The consolidated one-time settlement (OTS) figures across entities was ₹6,761 crore, of which ₹3,507.63 crore had already been deposited. After accounting for recoveries of ₹1,192 crore through insolvency processes, the remaining unpaid sum stood at ₹2,061.37 crore.
On November 18, 2025, the Solicitor General submitted, in a sealed cover, a proposal that all proceedings be brought to an end on payment of ₹5,100 crore. The petitioners indicated their willingness to make this deposit. The order records this proposal and its acceptance, but does not disclose how the figure was derived, what components it includes, or whether it corresponds to principal, interest or any additional liability. The calculation therefore remains outside the public record.
In matters involving allegations of diversion, money laundering and fugitive conduct, the quantum that extinguishes criminal liability is not a trivial detail. A sealed cover may facilitate negotiation, but once the Court adopted the figure as the legal basis for quashing proceedings across several statutes, it was better to explain the basis. The absence of any disclosed rationale becomes a point of concern. Transparency is a cornerstone of public justice, and the sealed-cover number now operates as a black box that the legal system itself cannot interrogate.
The Court’s expressed rationale
The Court observed that if the petitioners were prepared to deposit the amounts settled in OTS arrangements and thereby return public funds to the lender banks, “the continuation of the criminal proceedings would not serve any useful purpose.” The “peculiarity” of the facts, as described in the order, lay in the scale of the financial exposure and the long trajectory of partial repayments and recoveries.
It is notable that the Court did not enter upon questions of fact or culpability, nor did it interpret the PMLA, the Fugitive Economic Offenders Act, the Black Money Act or the Companies Act. Its directions were confined to the factual conspectus and the restitutionary objective that, in its view, justified closure.
The operative portion directs that all proceedings be quashed upon deposit of ₹5,100 crore. The Registry would hold the amount in short-term fixed deposits and disburse it proportionately to the lender banks after verification. The litigation relating to the original loan would be “put to an end by way of full and final settlement as per consensus.” The order concludes with an express caveat that it is not to be treated as precedent.
What the order effectively displaces
The more serious implications lie not in what the order says, but in what it makes unnecessary. Over the past decade, Parliament has built a dense ecosystem of special statutes designed to address economic crime with heightened rigour: the PMLA, the FEOA, the Black Money Act, and section 447 of the Companies Act. These enactments were intended to override general criminal law and ensure that certain offences could not be compromised through financial settlement.
The present order renders these frameworks otiose. Through a consolidated payment, the entire investigative, attachment and prosecutorial matrix has been brought to an end. The Court’s choice not to interpret the statutes is understandable in a fact-specific proceeding, but the effect is that the statutory architecture, painstakingly constructed to deter high-value economic misconduct, is neutralised for the purposes of this case.
The nature and risks of this model
The repeated reliance on “peculiar facts” and the disclaimer that the order is not to serve as precedent is intended as a legal safeguard. In practice, however, such caveats rarely prevent replication. A pathway has been demonstrated: negotiate an OTS, make partial repayments, endure multiple parallel proceedings, and ultimately seek a global settlement before the Supreme Court. Even if this was not the Court’s intention, the structure of the order will inevitably be read as a viable model for similarly placed individuals.
This raises the unresolved question of deterrence. If allegations involving fraud, diversion of funds, money laundering and flight from jurisdiction can culminate in a financial settlement, the enforcement calculus becomes merely economic, with the consequences of wrongdoing just a negotiable cost rather than a legal prohibition.
For ordinary citizens, criminal liability proceeds along a predictable statutory route. Where proceedings span multiple jurisdictions and agencies, this order highlights a path capable of being reshaped into a single financial end-point by litigants able to marshal substantial resources.
The Sandesara order may represent a pragmatic response to an unusually complex factual situation, but its implications extend far beyond the record. It indicates a shift from adjudication to negotiated closure in cases where statutory routes prove unwieldy. While restoring public funds is unquestionably valuable, the manner of restoration matters equally. If high-value criminal allegations are resolved through opaque settlement mechanisms, confidence in the even-handedness of the legal system will be shaken.
In future, cases involving multiple special statutes and interlocking financial allegations would benefit from a clearer articulation of the considerations that guide the Court’s choice of the course. Such clarity does not constrain judicial discretion; it only strengthens institutional confidence by demonstrating that even in exceptional situations, the law’s capacity to deter, and not merely recover, remains intact.
The writer is a lawyer and former Judicial Member of the National Company Law Tribunal
Published on December 3, 2025
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