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Sterling Biotech: NCLT raps Andhra Bank over OTS

IANS  |  Mumbai 

NCLT Mumbai has pulled up the for accepting a 'One Time Settelement' (OTS) offer from fugitive promoters of the Gujarat-based group, which is embroiled in a Rs 8,100-crore

THE NCLT rap on the OTS has come at a time when two such proposals by and -- offering to settle 100 percent dues of the lenders -- were rejected by their committees of creditors.

The (NCLT) bench of V.P. Singh and R.Duraiswamy has taken strong exception, and wondered how the lenders and creditors of the could accept an offer from Sterling Biotech's absconding and Joint Managing Chetan J. Sandesara, when the and were on the lookout for them.

"How the proposal submitted by the is accepted by the financial creditors creates suspicion when the promoter/is absconder and ED/is searching for them," the bench noted.

Posting the matter for further hearing on March 26, the bench said it would also issue notices asking all the central agencies -- (MCA), (ED), (IT), (CBI), (SEBI), (RBI), and others -- whether they wanted to make any representations in the matter.

"It is pertinent to mention that the promoters of are absconders and we often get news from the newspapers that various government agencies like ED, and others are unable to track them," the NCLT bench observed on Monday.

The Sterling Biotech matter came before the NCLT in June 2018 and during pendency of the matter, last week, the committee of creditors comprising banks, suddenly voted to withdraw the proceedings against it in return for a OTS from the Sandesara brothers.

According to unconfirmed estimates, the OTS plan -- under Section 12A of the Insolvency and Bankruptcy Code, 2016 -- could entail a loss of around two-thirds to the creditors-lenders, and probably help the fugitives emerge unscathed by the scam.

The company confirmed the development in regulatory filings, stating that "the committee of creditors had approved withdrawal of the Process (CIRP) with requisite majority".

Despite attempts by IANS, the Resolution Professional for the company was not available for comments nor has the company made any disclosure on the NCLT's stern observations to the stock exchanges so far.

According to the company's last Annual Report as on March 31, 2018, it had loans, borrowings, external commercial borrowings of Rs 7,564 crore, and financial creditors have made claims worth Rs 14,938 crore.

Of this Rs 14,938 crore, the RP has admitted claims of Rs 8,967 crore till November 21, 2018.

The company admitted that its premises were sealed by the and it is under the scrutiny of multiple agencies including CBI and (SFIO).

In October 2018, the CBI had registered a case against Sterling Biotech and its CMD, MD and others for obtaining fraudulent loans worth a total of Rs 8,100 crore from Indian banks and their overseas branches between 2004-2012.

The had named 184 group companies in and abroad, besides 181 accused, and charged the Sandesari brothers of hatching a criminal conspiracy to cheat the banks by manipulating the balance sheets of their companies and lured banks to sanction higher amounts in loans.

They were also accused of setting up a web of around 250 shell companies in India and the US, UK, UAE, West Indies, Nigeria, Virgin Islands, Mauritius, among others, in the names of their employees, diverting the funds from the intended purposes to create personal assets and indulging in money-laundering.

Taking action on a CBI complaint, in January, the ED nabbed former Director in connection with the fraud, accusing him of money-laundering and other charges.

On February 14, the fugitive Sandesara brothers moved a seeking cancellation of the non-bailable arrest warrants against them, which will come up for hearing on April 2.



(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, March 14 2019. 15:54 IST