Supreme Court settles SBI loan dispute, orders borrower to pay ARC Rs 125 crore more
The Supreme Court directed Atibir Industries to pay an asset reconstruction company Rs 125 crore over the Rs 250 crore already paid, as full and final settlement of a loan SBI had assigned.
Key points
- The Supreme Court on 26 October 2026 disposed of Atibir Industries' appeals over an SBI loan that was classified as an NPA and assigned to an asset reconstruction company.
- The court directed the company to pay a further Rs 125 crore within 12 weeks, over the Rs 250 crore already paid, as full and final settlement.
- On payment, the lenders must return title deeds and release securities within four weeks; the NCLT and DRT cases stand disposed of.
The Supreme Court on 26 October 2026 ordered Atibir Industries Co. Ltd., a maker of sponge iron and pig iron, to pay an asset reconstruction company (ARC) a further Rs 125 crore within 12 weeks, over the Rs 250 crore it has already paid. The court held that the sum will be full and final settlement of a loan that State Bank of India (SBI) had assigned to the ARC.
What Happened
The company borrowed from a consortium of banks led by SBI. According to the judgment, SBI classified the account as a non-performing asset (NPA), a loan treated as bad after repayment stops, on 31 March 2021 with effect from 16 October 2020. The company argued that the classification was premature under the RBI's Covid-19 moratorium circulars. SBI rejected the company's one-time settlement offers, which rose from Rs 227 crore to Rs 238 crore, and on 24 March 2023 assigned the loan to the ARC for Rs 250 crore.
A single judge of the Calcutta High Court set aside the NPA classification and the assignment. A division bench reversed that on 25 July 2024, and the company appealed. Under the Supreme Court's orders, the company has since paid the ARC Rs 250 crore.
The court said it fixed the further Rs 125 crore keeping in mind the highest rate of 15% a year in a report by a retired judge it had appointed, the time since that report, and the ARC's costs. It noted that the assignment followed in quick succession after SBI rejected the settlement offer. It kept open whether the NPA classification and the assignment were valid.
What It Means
Once the Rs 125 crore is received, the lenders must return the title deeds and release all securities and guarantees within four weeks. Insolvency proceedings before the NCLT, Kolkata, and the recovery case before the Debts Recovery Tribunal-I, Kolkata, stand disposed of. If the company misses the 12-week deadline, the court said, the lenders may revive those proceedings and the company loses the benefit of the judgment.
The court said it passed the order on the case's particular facts, to balance both sides' interests, including those of the company's employees.
Source: Supreme Court order
Sources & Citations
- Supreme Court order — Supreme Court of India