New Delhi, Oct 7 (UNI) The Supreme Court today quashed proceedings initiated against JSW Steel Limited under the Prevention of Money Laundering Act (PMLA), 2002, in the alleged illegal mining operations of former Karnataka minister G. Janardhana Reddy and his company, Obulapuram Mining Company (OMC).
A bench comprising Justice Dipankar Datta and Justice Augustine George Masih delivered the verdict, bringing relief to the steel major. “You are no longer an accused in that,” Justice Masih remarked while pronouncing the judgment.
The case stemmed from Enforcement Directorate (ED) proceedings against JSW Steel, arising out of investigations into illegal mining activities involving OMC and Reddy.
JSW Steel had entered into a commercial contract with OMC on November 16, 2009, for the supply of 1.5 million tonnes of iron ore to its Vijayanagar plant and had paid an advance of Rs 130 crore via bank transfer.
When OMC failed to deliver the agreed quantity, JSW initiated arbitration proceedings and subsequently secured an arbitral award of Rs 35.44 crore in its favour.
The matter escalated after the Supreme Court, in its September 23, 2011, order, directed the CBI to probe illegal mining activities by Associated Mining Company (AMC), a firm linked to Reddy.
The CBI later filed a chargesheet in 2012 under the IPC and the Prevention of Corruption Act, naming Reddy and others, but not JSW Steel.
In 2012, the ED registered an ECIR (Enforcement Case Information Report) against Reddy and others.
A year later, following a supplementary chargesheet filed by the CBI in 2013, the ED also included JSW Steel in its money laundering investigation.
JSW Steel approached the Karnataka High Court, arguing that it had no nexus with the alleged proceeds of crime and that its transactions with OMC were purely commercial and bona fide.
The company maintained that it was a creditor, not a beneficiary, of any illegal funds and that the alleged offences were not “scheduled offences” under PMLA at the time of the 2009 transaction.
A Division Bench of the High Court had earlier quashed the ECIR on these grounds. However, when the State appealed to the Supreme Court, the top court admitted the case but did not stay the High Court’s order.
The ED, opposing JSW’s plea, relied on the Supreme Court’s 2020 ruling in Dyani Antony Paul v. union of India, which held that money laundering is a continuing offence and can be prosecuted independently, even if the predicate offence occurred before its inclusion in the PMLA schedule.
On June 13, 2022, the Karnataka High Court dismissed JSW Steel’s petitions, holding that PMLA proceedings were valid as the offence of money laundering continues until the proceeds of crime are enjoyed or projected as legitimate.
The High Court also clarified that the earlier Division Bench ruling could not benefit JSW since the Supreme Court had directed that it not operate as a precedent.
However, setting aside the High Court’s decision, the Supreme Court today quashed all PMLA proceedings against JSW Steel, effectively exonerating the company from the money laundering charges in the illegal mining case.
