SC Refuses to Quash Money Laundering Case Against JSW Steel Over Dealings with G Janardhana Reddy’s Mining Firm

The Supreme Court, on October 7, 2025, refused to quash criminal proceedings initiated against JSW Steel Limited in a money laundering case in respect of its dealings with Obulapuram Mining Company (OMC), owned by Karnataka's mining baron G Janardhana Reddy.

A bench of Justices Dipankar Datta and Augustine George Masih pointed out that the allegations, at the present stage, were confined to the recovery of the quantified amount of Rs 33.80 Crore and did not extend to fastening criminal liability upon JSW beyond that process. 

"We are unable to hold that the case for quashing the cognizance order or interdicting proceedings is made out," the bench said.

Court held that the apprehension of arbitrary prosecution was misplaced.

JSW Steel Limited was aggrieved with the Karnataka High Court's orders refusing to quash fresh summons issued against it in 2022. The bench, however, noted that the appellants had already invoked their statutory remedy before the Appellate Tribunal under Section 26 of the Prevention of Money Laundering Act (PMLA), which remained pending.

The bench observed, "This court has consistently held that constitutional or appellate jurisdiction should ordinarily not be exercised where an efficacious alternate remedy is available and is actively being pursued".

Court also noted that it was undisputed that the ECIR registered by the ED did not name JSW Steel Ltd as accused person. The charge-sheet filed by the CBI also did not array the company as accused, having dropped it in the supplementary report after finding no material to proceed. 

"The complaint filed by the ED is predicated not on any independent act of laundering but on the allegation that the appellants withdrew certain sums from the attached bank accounts in violation of the PAOs, thereby frustrating the recovery of INR 33.80 Crore, alleged to be 'proceeds of crime'," the bench pointed out.

The bench further noted the core issue was not whether the appellants’ entire banking operations were tainted, but whether the specific sum of Rs 33,80,87,617, representing unpaid consideration for iron ore supplied by AMC, could be treated as “proceeds of crime” and whether its withdrawal post PAO constituted an offence under Section 3 PMLA. 

"The 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," the bench said.

Court held the appropriate course would be to permit the statutory process to run its course to reach its logical conclusion. 

"Interference at this stage would prejudge issues that are squarely within the domain of the Appellate Tribunal, including whether the attached property represents 'proceeds of crime' within the meaning of Section 2(1)(u) PMLA and whether the withdrawals were in violation of law," the bench said.

As per facts of the matter, JSW Steel Limited had in 2009 entered into an agreement with OMC for supply of 1.5 MT of iron ore, fines, and lumps to its plant at Vijayanagar. It had made advance payments of about Rs 130 crore to OMC.

Between November 2009 to December 2009, partial supplies were made by OMC from its mines and thereafter till March 2010 from its group companies, including Ananthpur Mining Corporation and Associate Mining Company (AMC). Since OMC thereafter failed to supply iron ore despite assurances that supply would recommence upon reopening of the mines, JSW sought adjustment of the remaining amount from the advance paid.

Court had directed an investigation into the matter of illegal mining and export of iron ore by AMC, a partnership firm of Reddy. The CBI had registered a case against AMC, its partners Reddy and G Lakshmi Aruna along with others, and filed a chargesheet in May 2012.

JSW Steel Limited was named as an accused, but subsequently, in September 2013, a supplementary final report was filed dropping charges, thereby exonerating it in the CBI case.

In view of the non-supply of the iron ore and there being an outstanding amount against OMC, arbitration proceedings were initiated by JSW. The sole arbitrator in May 2014 directed a refund of the principal outstanding balance of Rs 35.44 crore to JSW after adjusting the sums payable to AMC along with interest and damages.

The ED later attached the company's bank accounts in 2015 pursuant to registering a money laundering case against Reddy and Aruna in 2012.

In 2022, the ED filed a prosecution complaint against JSW for having operated its bank accounts, while those were attached by the agency. It registered a case against JSW alleging that the company had received supplies of illegally mined ore from AMC and had not paid for it, therefore, the money owed by JSW to the Reddy firm qualified as proceeds of crime.

Case Title: JSW Steel Limited Etc Vs Deputy Director, Directorate of Enforcement Etc

Judgment Date: October 7, 2025

Bench: Justices Dipankar Datta and Augustine George Masih