The Supreme Court on Tuesday refused to interfere with the money-laundering proceedings initiated against JSW Steel Limited and its officers in connection with an alleged illegal mining scam involving Obulapuram Mining Company Private Limited (OMC), owned by former Karnataka minister G. Janardhana Reddy.
A bench of Justices Dipankar Datta and Augustine George Masih observed that judicial intervention at this stage would amount to pre-judging issues that properly fall within the jurisdiction of the Appellate Tribunal under the Prevention of Money Laundering Act (PMLA).
The court noted that the Enforcement Case Information Report (ECIR) registered by the Enforcement Directorate (ED) does not name JSW Steel or its officers as accused. The central question before the bench was whether a specific amount of โน33.80 crore โ representing unpaid consideration for iron ore supplied by Associated Mining Company (AMC) โ could be classified as โproceeds of crimeโ and whether its withdrawal amounted to an offence under PMLA.
โThe apprehension that the entire account balance constitutes proceeds of crime is misplaced, particularly when the admitted position is that payments were made and received through regular banking channels and are duly reflected in the books of account,โ the bench observed.
It added that the proper course is to allow the statutory process to โrun its route to reach its logical conclusion,โ rather than intervene prematurely. Questions like whether the attached property represents proceeds of crime under Section 2(1)(u) of the PMLA or whether the withdrawals violated the law fall squarely within the Appellate Tribunalโs domain, the court clarified.
The bench held that the appellants had not made out a case for quashing the cognisance order or halting the proceedings. โThe allegations, at this stage, are confined to the recovery of the quantified amount of โน33.80 crore and do not extend to fastening criminal liability upon the appellants beyond that process,โ it said, adding that fears of arbitrary prosecution were unfounded.
Consequently, the court declined to interfere. It granted liberty to JSW Steel and others to pursue their statutory appeals before the Appellate Tribunal, which would decide the matter independently and on merits.
In 2009, JSW Steel entered into a contract with OMC for the supply of 1.5 million tonnes of iron ore to its Vijayanagar plant. In 2013, the Central Bureau of Investigation filed a supplementary chargesheet in the illegal mining case, in which JSWโs name appeared. The Enforcement Directorate then initiated proceedings under the PMLA based on this chargesheet.
