Supreme Court settles Atibir Industries loan dispute with SBI and an ARC for Rs 375 crore

The Supreme Court on 26 October 2026 directed Atibir Industries Co. Ltd., a maker of sponge iron and pig iron, to pay Rs 125 crore to an asset reconstruction company within 12 weeks. The court said this sum, over and above Rs 250 crore the company has already paid, will be full and final settlement of a loan that the State Bank of India assigned to the asset reconstruction company in March 2023.

What Happened

The company had borrowed from a consortium of banks led by SBI. According to the judgment, SBI classified its account as a non-performing asset (a loan in default) with effect from 16 October 2020, and in March 2023 assigned the loan to the asset reconstruction company for Rs 250 crore. The company challenged the classification, arguing it ignored RBI's COVID-19 moratorium circulars. A single judge of the Calcutta High Court set aside the classification and the assignment, but a Division Bench reversed that ruling on 25 July 2024.

During the appeal, the company paid Rs 250 crore under the Supreme Court's orders. A former judge appointed by the court had suggested a return of 13% to 15% a year. The court fixed Rs 125 crore more, keeping in mind the highest rate of 15% a year, the time that had passed and the costs incurred. It said it was not deciding whether the NPA classification or the assignment was valid; those questions were kept open.

What It Means

Once the money is received, the lender side must return the title deeds and release all other securities and guarantees within four weeks. The insolvency petition before the National Company Law Tribunal, Kolkata, and the recovery case before the Debts Recovery Tribunal-I, Kolkata, stand disposed of.

The court warned that if the company misses the 12-week deadline, the lenders may revive their proceedings and the company will lose the benefit of this judgment. The court said the order was passed in the peculiar facts of the case, as a court of equity, partly because the company is a running concern whose employees' livelihoods were at stake. It is not a ruling on how banks must classify loans.

Source: Supreme Court judgment