Authority: Supreme Court of India, Civil Appellate Jurisdiction

Order Date: 26 October 2026

Case Overview

  • Parties: Appellant – Atibir Industries Co. Ltd (borrower); Respondent No.1 – State Bank of India (SBI); Respondent No.2 – unnamed assignee (funded by CFMARC Vinimay Private Limited). Senior counsel for SBI were Dr. Abhishek Manu Singhvi and Shyam Divan; former Supreme Court Judge Justice Anil R. Dave acted as a special commissioner.
  • Background: Atibir, a manufacturer of sponge iron, pig iron and allied products, obtained cash credit, term loans and letters of credit from a consortium led by SBI, secured by hypothecation of current assets, plant & machinery, equitable mortgages on land/buildings, and personal/corporate guarantees of promoters.
  • Loan Performance: By 31‑03‑2020 the cash‑credit limit of Rs.155 crore was exceeded with an outstanding of Rs.278.56 crore, rising to Rs.302 crore on 06‑06‑2020. The borrower cited COVID‑19 impacts and relied on RBI circulars dated 27‑03‑2020, 17‑04‑2020 and 23‑05‑2020 that extended repayment moratorium to 31‑08‑2020.
  • SBI Notices: SBI sent letters on 18‑01‑2019 and 17‑03‑2020 demanding regularisation, followed by a recall notice on 17‑01‑2022 demanding Rs.341 crore principal plus interest/charges. A SARFAESI notice under Sec. 13(2) was issued on 08‑07‑2022 classifying the account as NPA as of 16‑10‑2020 and demanding Rs.410.26 crore.
  • Legal Proceedings: SBI instituted recovery proceedings before the Debts Recovery Tribunal‑I, Kolkata (OA No.260 of 2022) and filed a petition under Sec. 7 IBC before NCLT, Kolkata. The borrower made several One‑Time Settlement (OTS) offers ranging from Rs.227 crore to Rs.238 crore (letters dated Jan‑Feb‑2022, May‑2022, Feb‑2023) which were rejected.
  • Assignment: On 24‑03‑2023 SBI assigned the loan to Respondent No.2 for consideration of Rs.250 crore. The assignment was challenged by Atibir in WPO No.428 of 2023 and later in WPO No.722 of 2023, arguing that the NPA classification was premature because the RBI moratorium shifted the default date to 01‑09‑2020, requiring a 90‑day overdue period before NPA status could arise.
  • High Court: A Single Judge set aside the NPA classification and the e‑auction notice (10‑02‑2023). The Division Bench reversed this on 25‑07‑2024, holding that borrower‑wise classification permits the term‑loan to be deemed NPA once the cash‑credit turned stressed, and that SBI could proceed under Sec. 5 SARFAESI for sale of the asset.
  • Supreme Court Proceedings: The matter was taken up on 17‑09‑2024. The Court allowed a payment schedule totalling Rs.250 crore (installments from Sep 2024 to Jan 2025). Subsequent hearings recorded partial compliance and defaults on later instalments. The Court appointed former Judge Justice Anil R. Dave to determine any additional amount payable over Rs.250 crore.
  • Justice Dave’s Report: He noted that the pre‑assignment debt stood at approx. Rs.453.83 crore (principal Rs.341.95 crore, interest Rs.111.88 crore). Since the assignee had paid Rs.250 crore to SBI, the Court should award a reasonable return on that investment. Using guessed rates, he calculated returns of Rs.57.74 crore (13% p.a.), Rs.62.18 crore (14% p.a.) and Rs.66.66 crore (15% p.a.) on the Rs.250 crore, plus Rs.0.5 crore costs.
  • Submissions: Atibir argued the Rs.250 crore came from a competitor (Patwari family) and should not attract high returns; it sought a ceiling of 7.5% interest. Respondent No.2 argued it was entitled to market‑rate returns and that the debt owed exceeded Rs.250 crore (principal Rs.341 crore + interest Rs.112 crore).
  • Court’s Final Determination: Accepting Justice Dave’s calculations but applying the highest rate (15% p.a.) and accounting for elapsed time, the Supreme Court fixed an additional payment of Rs.125 crore over the already paid Rs.250 crore, making the total settlement Rs.375 crore. It also ordered release of title deeds and securities, and the disposal of pending NCLT and DRT proceedings.

Final Outcome

  • The appellant must pay a further Rs.125 crore to Respondent No.2 within 12 weeks, completing a full and final settlement of Rs.375 crore.
  • Upon receipt, Respondent No.2 and SBI shall return all title deeds and release all securities and guarantees.
  • All pending insolvency (NCLT) and debt‑recovery (DRT) proceedings are deemed disposed of.
  • Non‑compliance will permit Respondent No.2 to revive enforcement actions.

Topics: NPA Classification, Debt Assignment, Banking Regulation