SC Refuses to Quash Money Laundering Case Against JSW Steel in Obulapuram Mining Scam

The Supreme Court on Tuesday declined to quash money laundering proceedings against JSW Steel Ltd. and its officers in connection with the illegal mining case involving Obulapuram Mining Co. Pvt. Ltd., owned by former Karnataka legislator and BJP leader G. Janardhana Reddy. The court said the company could approach the appellate tribunal under the Prevention of Money Laundering Act, 2002, to challenge the attachment of its bank account.

In 2009, JSW Steel had signed an agreement with Obulapuram Mining to procure iron ore, for which it had paid an advance of about ₹1.30 billion. The mining firm supplied ore worth ₹294 million between November 2009 and March 2010, but operations were later suspended, halting further supplies. Between April 2010 and January 2011, Obulapuram Mining requested that part of the advance be adjusted against ore supplied by its sister companies, including Associated Mining Co.

In 2014, an arbitral tribunal ordered Obulapuram Mining to pay ₹354.40 million to JSW Steel for failing to deliver iron ore. Around the same time, the Central Bureau of Investigation filed a case against Reddy and his companies over illegal mining. Although JSW Steel was not named as an accused in the CBI case, the Enforcement Directorate later attached its bank account and, in 2022, filed a prosecution complaint against the company for operating those accounts during the attachment period.

The ED alleged that JSW Steel received iron ore from Associated Mining that was illegally mined and failed to pay for it, making the unpaid amount “proceeds of crime” under the money laundering law.