The Karnataka High Court has turned down JSW Steel’s appeal against Enforcement Directorate actions, upholding the provisional freeze on the company’s bank accounts tied to accusations of receiving illegally mined iron ore.
A Bench comprising Justices DK Singh and TM Nadaf said it would not interfere with the matter after noting that both the Supreme Court and the Appellate Tribunal under the Prevention of Money Laundering Act (PMLA) had declined to provide the relief sought by the steelmaker.
Background of the Case
This conflict originated from a 2011 complaint filed by the CBI against Associated Mining Company’s partners, including G Janardhana Reddy and G Lakshmi Aruna.
The FIR alleged offences including criminal conspiracy, theft, fraud, mischief causing damage to property, dishonestly receiving stolen property and forgery for the purpose of cheating under the Indian Penal Code, 1860.
The accused also faced allegations under laws governing forests and mining, including the Indian Forest Act, 1927 and the Mines and Mineral (Development and Regulation) Act, 1957, as well as an allegation of criminal misconduct under the Prevention of Corruption Act, 1988.
ED Proceedings and Attachment Order
The allegations claimed that Associated Mining Company illegally extracted iron ore between 2009 and 2012 from areas where it lacked legal mining rights.
The company reportedly delivered 1,84,992 metric tons of this ore to JSW Steel, while the ED case also highlighted an unpaid debt of ₹33.80 crore owed to Associated Mining Company for the supplied material.
During the proceedings, the ED provisionally attached its bank accounts containing ₹24.37 crore.
The provisional attachment was reviewed by the PMLA Adjudicating Authority, which upheld the freeze after determining that the ED’s deputy director had reasonable grounds to suspect the ₹33.80 crore debt existed.
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High Court Ruling
JSW Steel then took the dispute to the PMLA Appellate Tribunal in 2024, seeking to overturn the decision.
The company argued that the matter should be sent back to the Adjudicating Authority because, according to JSW Steel, the authority had failed to consider its written submissions.
The High Court did not accept that argument as a basis for intervention.
The Bench noted that the Appellate Tribunal had already considered the issue and had declined to remand the matter to the Adjudicating Authority.
The Court also observed that the steelmaker had placed its factual and legal submissions before the Appellate Tribunal.
The High Court held that the Tribunal’s refusal to remand the case on the alleged violation of natural justice did not, by itself, justify intervention under Articles 226 and 227 of the Constitution or Section 482 of the Code of Criminal Procedure.
The ruling leaves the attachment proceedings in place, following the earlier decisions of the PMLA authorities and the Supreme Court in the matter.
Advocates appearing in the case included Senior Advocate Gopal Jain and Advocate Aditya Narayan for the steelmaker, and Advocates Anuparna Bordoloi, Dhanush M, and Ajaypal Singh for the Enforcement Directorate.
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