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Atibir Industries Co. Ltd. v. State Bank of India & Anr.

Civil Appeal · 2026 INSC 1156Decided 26 Oct 2026
Civil Appeal arising out of SLP (C) Nos. 21029-30 of 2024
Chief Justice Surya Kant · Justice Joymalya Bagchi · Justice V. Mohana

Background

A steel manufacturer's loan was classified as a Non-Performing Asset during the COVID-19 moratorium period and later assigned by the bank to an asset reconstruction company for a fraction of the claimed outstanding debt, while settlement talks were ongoing. The company challenged both the NPA classification and the assignment; the High Court's Division Bench ultimately upheld the assignment.

Decision Breakdown

Rather than ruling on the underlying legal disputes, the Supreme Court, noting troubling facts about the ARC's funding and its failure to justify its claimed returns, acted as "a court of equity" to preserve the company as a running business and protect employee jobs. Following a court-appointed mediator's recommendation, it fixed a lump-sum further payment as full and final settlement, with securities to be released on payment and parallel recovery proceedings disposed of.

Lesson Learnt

Courts can resolve long-running, legally contested debt disputes equitably without deciding every underlying question, where a negotiated settlement better preserves a functioning business than a protracted legal battle; assignments of stressed loans at a steep discount can attract close judicial scrutiny.

Official source (sci.gov.in)View Judgment (PDF)

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Atibir Industries Co. Ltd. v. State Bank of India & Anr.