SC on ED Proceedings Against JSW Steel in Mining Case

New Delhi, Oct 7 (PTI) The Supreme Court on Tuesday refused to interfere with the proceedings against steel major JSW Steel Limited and its officers in connection with a case of alleged money-laundering arising out of an illegal mining "scam" involving Obulapuram Mining Company Private Limited, owned by the former minister G Janardhana Reddy.

A bench of Justices Dipankar Datta and Augustine George Masih said interference at this stage would prejudge issues that are squarely within the domain of the appellate tribunal.

The top court said is undisputed that the Enforcement Case Information Report (ECIR) registered by the ED does not name the petitioners as accused.

It said the core issue before it is not whether the appellants' entire banking operations are tainted, but whether the specific sum of Rs 33.80 crore representing unpaid consideration for iron ore supplied by Associated Mining Company (AMC) can be treated as 'proceeds of crime' and whether its withdrawal constitutes an offence.

"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.

"Viewed thus, the appropriate course would be to permit the statutory process to run its route 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.

The apex court said it is unable to hold that the case for quashing the cognisance order or interdicting proceedings is made out.

"The allegations, at this stage, are confined to the recovery of the quantified amount of Rs 33.80 crore and do not extend to fastening criminal liability upon the appellants beyond that process," the bench said.

The top court said the apprehension of arbitrary prosecution is misplaced

"Accordingly, we decline to interfere with the proceedings at this stage. The appellants shall be at liberty to pursue their statutory appeals before the Appellate Tribunal, which shall decide the same on their own merits and in accordance with law uninfluenced by any observations contained herein above," the bench said.

JSW had entered into a contract with OMC in 2009 for the supply of 1.5 million tonnes of iron ore, fines and lumps to its plant in Vijayanagar.

In 2013, the CBI filed a supplementary charge sheet in the illegal mining case, in which the name of JSW figured and subsequently the ED initiated an investigation under the Prevention of Money Laundering (PML) Act.