While reaffirming that constitutional or appellate jurisdiction should ordinarily not be exercised where an efficacious alternate remedy is available and is actively being pursued, the Supreme Court has refused to interfere with the PMLA proceedings against JSW Steel in a case involving illegal mining.

The matter before the Supreme Court arose from two writ petitions preferred by the Appellant JSW Steel Limited before the Karnataka High Court challenging the proceedings, including the investigation as well as the order passed by the Special Court taking cognizance of the offences against the Company and issuing summons. The Second Appellant Deputy General Manager, Compliance, JSW, was the petitioner in one of the writ petitions.

The Division Bench of Justice Dipankar Datta and Justice Augustine George Masih stated, “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. Reference may be made to Union of India and Another v. Guwahati Carbon Limited, which cautions against bypassing statutory forums except in cases of patent illegality or jurisdictional error.”

“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”, it noted.

Senior Advocate Abhishek Manu Singhvi represented the Appellant while Solicitor General Tushar Mehta represented the Respondent.

Factual Background

The first appellant, a public limited company registered under the Companies Act, 1956, involved in the business of manufacturing steel, entered into an agreement/contract with Obulapuram Mining Company Private Limited (OMC) for the supply of 1.5 Million Metric Tons (MT) of iron ore, fines, and lumps to its plant at Vijayanagar. From November 2009 to December 2009, partial supplies were made by OMC from its mines and thereafter till March 2010 from its group companies/concerns, including Ananthpur Mining Corporation and Associate Mining Company (AMC). As 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 amount of Rs 130 Crore.

Meanwhile, the Apex Court directed an investigation into the matter of illegal mining and export of iron ore by AMC.The Enforcement Directorate (ED) registered a case under the Prevention of Money Laundering Act, 2002 (PMLA) against AMC’s partners G. Janardhan Reddy and G. Lakshmi Aruna. Because of the non-supply of the iron ore and there being an outstanding amount against OMC, arbitration proceedings were initiated by JSW. The Arbitrator directed the refund of the principal outstanding balance after adjusting the sums payable to AMC, along with interest and damage. ED issued Provisional Attachment Orders and JSW challenged the same.

A Writ Petition was preferred by the Appellant JSW, challenging the correctness and legality of the e-mail sent by ED to Bank of Baroda seeking to transfer amounts from the account of the first Appellant to that of the ED. In the meantime, JSW received a fresh summons for appearance of its representatives. JSW filed a Writ Petition challenging the cognisance order on grounds of noncompliance with Sections 202 & 204 CrPC. Both Writ Petitions were dismissed. Aggrieved thereby, the appellants approached the Apex Court.

Reasoning

The Bench noted that the ECIR registered by the ED did not name the appellants as accused persons. The charge-sheet filed by the CBI also did not array them as accused, having dropped them in the supplementary report after finding no material to proceed. The complaint filed by the ED was 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 Rs 33.80 Crore, alleged to be “proceeds of crime.”

As per the Bench, the apprehension that the entire account balance constituted proceeds of crime was misplaced, particularly when the admitted position was that payments were made and received through regular banking channels and were duly reflected in the books of account.

The Bench was of the view that the case for quashing the cognisance order or interdicting proceedings was not made out. The allegations were confined to the recovery of the quantified amount of Rs 33.80 Crore and did not extend to fastening criminal liability upon the appellants beyond that process. Finding the apprehension of arbitrary prosecution to be misplaced, the Bench declined 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, Criminal Appeal uninfluenced by any observations contained herein above”, it directed.

Cause Title: JSW Steel Limited v. Deputy Director, Directorate Of Enforcement (Neutral Citation: 2025 INSC 1194)

Appearance

Appellant: Senior Advocates Abhishek Manu Singhvi, Jaideep Gupta, Advocates Nandini Gore, Sonia Nigam, Ninad Laud, Akhil Abraham Roy, Mohammad Shahyan Khan, Akarsh Sharma, Zubin Dash, Swarnendu Das, M/S. Karanjawala & Co.

Respondent: Solicitor General Tushar Mehta, A.S.G. Suryaprakash V Raju, Advocates Kanu Agrawal, Annam Venkatesh, Zoheb Hussain, AOR Arvind Kumar Sharma

Click here to read/download Judgment


Justice Dipankar DattaJustice Augustine George Masih

Tulip Kanth

Assistant Editor

Tulip Kanth is an Assistant Editor at Verdictum having over 5 years of experience in the field of legal journalism and editing. She extensively covers judgments of the Supreme Court, High Courts as well as Tribunals. She has previously worked with a legal publishing website where she oversaw the work of other editors and has also created updates on notifications of different Government Ministries. She holds an English Honours Degree from SGTB Khalsa College, Delhi University and has completed her LLB course with specialisation in Corporate Law from Amity University.