Supreme Court today quashed PMLA proceedings against JSW Steel Limited in relation to alleged illegal mining by mining companies owned by former Karnataka minister G. Janardhana Reddy.
The Supreme Court today quashed PMLA proceedings against JSW Steel Limited in relation to alleged illegal mining by mining companies owned by former Karnataka minister G. Janardhana Reddy.
A bench of Justice Dipankar Datta and Justice Augustine George Masih pronounced the judgment. “You are no more an accused in that“, Justice Masih said.
The case arises from proceedings initiated by the Directorate of Enforcement (ED) against JSW Steel under the Prevention of Money Laundering Act, 2002 (PMLA), in connection with the illegal mining case involving Obulapuram Mining Company (OMC) and Reddy, its owner.
Background
JSW Steel had entered into a contract with OMC on November 16, 2009, for supply of 1.5 million tonnes of iron ore to its Vijayanagar plant. The company paid ₹130 crore as advance by bank transfer. When OMC failed to supply the agreed quantity, JSW initiated arbitration proceedings and obtained an arbitral award for ₹35.44 crore in its favour.
Following the Supreme Court’s order of September 23, 2011, directing a CBI probe into illegal mining by Associated Mining Company (AMC), a partnership firm of Reddy, the CBI filed a charge sheet in 2012 against Reddy and others under the IPC and Prevention of Corruption Act. JSW Steel was not named at that stage.
The Enforcement Directorate registered an ECIR (Enforcement Case Information Report) against Reddy and others in 2012 and subsequently included JSW in its investigation, after the CBI in 2013 filed a supplementary charge sheet in which JSW Steel was named.
JSW Steel challenged the ECIR and related proceedings before the Karnataka High Court, arguing that it had no connection with the alleged “proceeds of crime,” and its transaction with OMC was a bona fide commercial contract. It asserted that it was a creditor of Reddy, OMC and its sister concerns, not a beneficiary of any illegal mining proceeds.
JSW contended that the offences alleged were not “scheduled offences” under PMLA at the time of the 2009 transaction and that the Division Bench of the High Court had already quashed the ECIR on this ground. Since the Supreme Court, while admitting the State’s appeal, had not stayed that judgment, JSW contended that the entire PMLA case lacked legal foundation.
The ED opposed the plea, citing a subsequent coordinate bench ruling in Dyani Antony Paul v. Union of India (2020), which held that money laundering is a standalone, continuing offence independent of the scheduled offence and can be pursued even if the predicate offence predates its inclusion in the PMLA schedule.
The Karnataka High Court on June 13, 2022, dismissed JSW Steel’s petitions. The court held that the offence of money laundering is a continuing one and that initiation of proceedings under PMLA does not depend on the date of commission of the predicate offence. The court also noted that the Division Bench’s earlier judgment quashing the ECIR could not aid JSW Steel since the Supreme Court had directed that it should not operate as a precedent.
Case no. – Crl. A. No. 4183-4184/2025
Case Title – JSW Steel Limited v. Deputy Director, Directorate of Enforcement
