SC has refused to block the Karnataka government's move to seize ₹128 crore in performance bonds from JSW Steel after the company was accused of missing iron ore production targets.
JSW Steel had challenged the action, arguing it was taken without giving the company a proper hearing and was unfair.
The state's mines and geology department directed banks to encash the bonds, and the SC's decision allows Karnataka to retain the amount for now.
SC Upholds Karnataka Govt's Decision to Seize ₹128 Cr from JSW Steel—Here's Why
The dispute began after the state's mines and geology department directed banks to encash the performance bonds, citing the company’s failure to meet the required production levels
Supreme Court Upholds Karnataka Govt's Decision to Seize ₹128 Cr from JSW Steel
Summary
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The Supreme Court on Wednesday upheld the Karnataka government's decision to seize ₹128 crore from JSW Steel, according to a report by Economic Times.
The amount was part of "performance bonds", essentially a security deposit that companies provide to ensure they meet the conditions of a contract. The Karnataka government had said JSW Steel failed to achieve the minimum iron ore production targets at its mine in Chitradurga district.
The dispute began after the state's mines and geology department directed banks to encash the performance bonds, citing the company's failure to meet the required production levels. JSW Steel moved the apex court after it did not receive relief from the Karnataka High Court earlier this week.
The company had argued that the state authorities acted without giving the company a proper opportunity to present its case. The company said it was neither issued a show-cause notice nor granted a hearing before the order was passed. According to the company, this amounted to a violation of the principles of natural justice and breached Article 14 of the Constitution, which guarantees equality before the law, the report added.
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The steelmaker's lawyers also contended that the demand was raised more than four years after the period in question (2020–22). They said that the company had repeatedly informed the authorities about factors beyond its control, including disruptions caused by the Covid-19 pandemic. They also argued that the ore grade and quality were significantly lower than what was indicated in the bid documents, making it difficult to meet the production targets.
After the Karnataka High Court declined to stay the forfeiture, JSW Steel approached the Supreme Court seeking relief. However, the apex court refused to halt the state government's action, effectively allowing Karnataka to retain the ₹128 crore for now, the report said.