Supreme Court refuses to quash PMLA cognizance; directs statutory appeals to run their course

A bench of Justice Dipankar Datta and Justice Augustine George Masih heard appeals arising from the dismissal of writ petitions by the High Court of Karnataka challenging Enforcement Directorate proceedings under the Prevention of Money Laundering Act (PMLA) and the Special Court's cognizance and issuance of summons. The appeals arose from two writ petitions by JSW Steel Limited and an executive of the company contesting provisional attachment orders, subsequent confirmation, and the filing of a complaint alleging frustration of attachment and possession of "proceeds of crime" to the tune of approximately INR 33.80 crore.

The Court declined to exercise extraordinary constitutional jurisdiction to quash the cognizance order or stay criminal proceedings and held that the appellants must pursue the statutory appellate remedy under the PMLA, which was already pending. The bench noted that the core dispute concerned whether the specific sum of INR 33,80,87,617/- representing unpaid consideration for iron ore could be treated as "proceeds of crime" and whether withdrawals after provisional attachment constituted an offence under Section 3 of PMLA. The Court observed that it was "unable to hold that the case for quashing the cognizance order or interdicting proceedings is made out" and granted liberty to the appellants to prosecute their appeals before the Appellate Tribunal. The Court, in its reasoning, observed: The Court further recorded that "the apprehension that the entire account balance constitutes proceeds of crime is misplaced" and that "the appropriate course would be to permit the statutory process to run its route to reach its logical conclusion."

Background The dispute originated from contracts between JSW Steel Limited and Obulapuram Mining Company (OMC) for supply of iron ore in 2009–2010. Following alleged illegal mining and sales by entities associated with Ananthpur Mining Corporation, the CBI registered RC 18(A)/2011 and later filed a chargesheet that initially named JSW but subsequently dropped it. The ED registered ECIR/09/BZ/2012 under the PMLA and issued Provisional Attachment Orders (PAOs) in 2015 and 2016 attaching specified sums from JSW bank accounts; those PAOs were later confirmed by the Adjudicating Authority. JSW challenged the attachments in multiple writ petitions before the High Court of Karnataka and pursued appeals before the Appellate Tribunal under Section 26 PMLA; the Appellate Tribunal proceedings remained pending.

The High Court dismissed the writ petitions and refused to quash the Special Court's cognizance of the ED complaint. The High Court had earlier restrained arrests of JSW officials pending adjudication and granted interim protection at stages, but ultimately dismissed the petitions. The ED alleged that withdrawals shortly after PAO issuance and the lifting of liens by banks led to dissipation of attached sums, leaving a shortfall of about INR 16.55 crore, and that such conduct amounted to "concealment, possession, acquisition and use" under Section 3 read with Section 8(4) PMLA. JSW countered that withdrawals predated PAOs or were made under stays, that cash‑credit accounts could not be treated as specific attachable property in the manner alleged, and that CBI had exonerated JSW in predicate proceedings.

The Supreme Court emphasised the PMLA's self-contained scheme and the availability of an efficacious statutory remedy; it declined to pre-empt issues that the Adjudicating Authority and Appellate Tribunal should decide on the merits, including whether the attached amounts constituted "proceeds of crime" and whether the withdrawals violated law. The Court dismissed the appeals, left the statutory appeals pending before the Appellate Tribunal to be decided on merits, and imposed no order as to costs. Interim protections previously granted remained without prejudice to the statutory process.

Case Details: Case No.: Criminal Appeal Nos. 4183–4184 of 2025 (Arising out of SLP (Crl.) Nos. 7828–7829 of 2022) Case Title: JSW Steel Limited etc. v. Deputy Director, Directorate of Enforcement etc. Appearances: For the Petitioner(s): Senior Advocate (name not indicated in the reported judgment) For the Respondent(s): Additional Solicitor General / Counsel for Enforcement Directorate (name not indicated in the reported judgment)