SC: JSW Steel Must Pursue PMLA Remedies; No Quashing of ED Case as Statutory Appeal Pending

Headnote:

The Supreme Court dismissed appeals filed by JSW Steel Limited and its compliance officer seeking quashing of PMLA proceedings and cognizance orders issued by the Special Court. The Court held that since statutory appeals under Section 26 of the PMLA were pending before the Appellate Tribunal, interference under Article 136 was unwarranted. It observed that the ED’s allegations were limited to withdrawals from attached bank accounts and not independent acts of money laundering. The judgment reaffirmed that constitutional courts must refrain from intervening where a complete adjudicatory framework exists under the PMLA and where proceedings are at a nascent stage.

Background:

JSW Steel Limited (Appellant No.1), a public limited company engaged in steel manufacturing, had entered into a contract with Obulapuram Mining Company Pvt. Ltd. (OMC) in 2009 for the supply of 1.5 million metric tonnes of iron ore. Following partial supply and OMC’s failure to fulfill its obligations, JSW initiated arbitration and secured an award in 2014 directing OMC to refund ₹130 crore with interest.

In the meantime, pursuant to Supreme Court directions in Govt. of A.P. v. Obulapuram Mining Co. Pvt. Ltd., the CBI registered a case against OMC’s partners, G. Janardhan Reddy and G. Lakshmi Aruna, for illegal mining. Though JSW was initially named, it was later exonerated by a supplementary chargesheet in 2013. Subsequently, the ED registered ECIR/09/BZ/2012 under the PMLA against Reddy and others and issued two Provisional Attachment Orders (PAO Nos. 08/2015 and 11/2016) attaching JSW’s bank accounts totaling ₹33.80 crore, allegedly representing proceeds of crime.

JSW challenged these attachments before the Karnataka High Court, which relegated the company to pursue statutory appeals before the PMLA Appellate Tribunal. During pendency, ED sought to recover attached sums and issued summons to JSW officials. The High Court dismissed JSW’s writ petitions in June 2022, prompting the present appeals.

Court Opinion/Analyses:

Delivering the judgment, Justice Augustine George Masih, with Justice Dipankar Datta concurring, upheld the Karnataka High Court’s decision and dismissed JSW’s appeals.

The Court observed that:

1. Statutory Mechanism Prevails – The PMLA provides a complete framework from provisional attachment (Section 5) to adjudication (Section 8) and appellate remedy (Section 26). Since JSW’s appeal before the Appellate Tribunal was pending, judicial interference was premature.
2. Scope of Judicial Review Limited – Relying on Union of India v. Guwahati Carbon Ltd. (2012) 11 SCC 651, the Court held that constitutional or appellate jurisdiction should not bypass statutory forums except in cases of patent illegality or jurisdictional error.
3. No Active Predicate Offence – The CBI had dropped JSW from its chargesheet, and the ECIR did not name JSW as an accused. The ED’s complaint was confined to alleged withdrawals from attached bank accounts, not to any independent laundering activity.
4. Determination of “Proceeds of Crime” – Whether the ₹33.80 crore represented proceeds of crime and whether its withdrawal violated PMLA provisions are factual issues to be decided by the Appellate Tribunal.

The Court held that the apprehension of arbitrary prosecution was unfounded, as the ongoing proceedings aimed only to recover the quantified sum. Accordingly, it declined to quash the cognizance order, allowing the ED’s process to continue subject to statutory adjudication.

Legal Provision Concerned:

1. Prevention of Money Laundering Act, 2002 – Sections 3, 5, 8, 26, 44, and 45
2. Code of Criminal Procedure, 1973 – Sections 202 and 204

Case Title: JSW Steel Limited & Anr. v. Deputy Director, Directorate of Enforcement & Ors.

Citation: 2025 INSC 1194

Court: Supreme Court of India

Bench: Hon’ble Mr. Justice Dipankar Datta and Hon’ble Mr. Justice Augustine George Masih

Case Type: Criminal Appeal Nos. 4183–4184 of 2025 (arising out of SLP (Crl.) Nos. 7828–7829 of 2022)

Date of Judgment: 07 October 2025

Appellants: JSW Steel Limited & Mr. Pravin John Sequeira, Deputy General Manager (Compliance), JSW

Respondent: Deputy Director, Directorate of Enforcement

Outcome: Appeals dismissed; PMLA prosecution to proceed; Appellants free to pursue statutory appeals before the Appellate Tribunal; no order as to costs.