HC rejects JSW Steel’s plea against proceedings in money laundering case

A special court had taken cognisance of offence based on Enforcement Directorate’s probe report

The High Court of Karnataka has rejected the petition filed by JSW Steel Ltd., which had questioned the cognisance of offences taken by a special court against the company in an alleged money laundering case for its transaction with illegal mining scam-tainted Obulapuram Mining Company Pvt. Ltd. (OMC), owned by the former Minister G. Janardhana Reddy.

Justice M. Nagaprasanna said the April 11, 2022 order passed by the special court in taking cognisance of the offence against the company was “in consonance with the principles laid down by the apex court on the application of mind by the trial court while taking cognisance of offences.”

“The special judge observing that he has perused all relevant materials relating to the case before cognisance was taken cannot result in failure of justice. Since cognisance is taken on a police report and not on a private complaint it is not obligatory for the judge to issue a fully reasoned order,” the High Court said while refusing to accept the company’s contention that the order of the special court failed to reflect application of mind while taking cognisance of offence.

The Enforcement Directorate (ED) had taken up the investigation against Mr. Reddy, OMC, and its sister companies in 2012 after the apex court ordered a probe by the Central Bureau of Investigation into illegal mining, transport, and export of iron ore. The ED’s probe also included JSW’s transaction with OMC.

The ED had filed its investigation report, based on which the special court had taken cognisance of the offence against JSW and a few others under the provisions of the Prevention of Money Laundering Act.

The JSW had contended that it had entered into a contract with OMC in 2009 for supply of 1.5 million tonnes of iron ore, fines, and lumps to its Vijayanagar steel plant and had paid ₹130 crore to OMC for this purpose.

However, on and after 2010, OMC had failed to supply materials in breach of contract but on repeated insistence, some quantity of materials was supplied through OMC’s sister companies, the JSW claimed.