Shares of JSW Steel will be in focus on Wednesday, October 8, after the Supreme Court refused to quash ongoing money laundering proceedings against the company and its officials in connection with the Obulapuram Mining Company (OMC) case.
The apex court observed that the statutory process must be allowed to reach its logical conclusion and declined to interfere at this stage.
The proceedings pertain to a money laundering case involving OMC, owned by BJP leader G. Janardhana Reddy.
The case arises from the alleged withdrawal of Rs 33.80 crore by JSW Steel from bank accounts attached by the Enforcement Directorate (ED). The Supreme Court noted that the key issue under examination is whether the withdrawn amount qualifies as “proceeds of crime” under Section 2(1)(u) of the Prevention of Money Laundering Act (PMLA), and whether such withdrawal amounts to an offence under Section 3 of the Act.
A bench comprising Justices Dipankar Datta and Augustine George Masih noted that JSW Steel has already approached the appellate tribunal against the attachment of its bank accounts under Section 26 of the Prevention of Money Laundering Act (PMLA).
The court clarified that the present allegations are limited to the recovery of Rs 33.80 crore and do not establish any criminal liability against the company or its officials. It further observed that the Enforcement Directorate (ED) has not named JSW as an accused in the Enforcement Case Information Report (ECIR), and the Central Bureau of Investigation (CBI) had dropped charges against the company in a supplementary chargesheet filed in September 2013.
The matter dates back to 2009, when JSW entered into an agreement with Obulapuram Mining Company (OMC) for the supply of 1.5 million tonnes of iron ore and made advance payments of Rs 130 crore. After OMC halted supplies following partial deliveries, JSW sought recovery of the balance amount.
Subsequently, arbitration proceedings were initiated, and in May 2014, a sole arbitrator directed a refund of Rs 35.44 crore to JSW.
Despite this, the ED attached JSW’s bank accounts in 2015 after registering a money laundering case against G. Janardhana Reddy and his associates in 2012. In 2022, the agency filed a prosecution complaint against JSW for operating its attached accounts and separately alleged that payments made to Reddy’s firm represented proceeds of crime.
The Supreme Court observed that the payments were made through official banking channels and duly reflected in JSW’s books of accounts, casting doubt on the assertion that the entire balance constituted proceeds of crime. However, it stated that the determination of whether the Rs 33.80 crore qualifies as proceeds of crime should be left to the appellate tribunal.
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