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Informist, Wednesday, Feb. 18, 2026

 

--SC refuses to stay INR-1.28-bln demand against JSW Steel in iron ore case 

--CONTEXT: JSW Steel in SC vs Karnataka mines, geology director demand order 

 

NEW DELHI – The Supreme Court Wednesday refused to stay Karnataka mines and geology director's demand for payment of INR 1.28 billion by JSW Steel Ltd. for not meeting the minimum production requirement of iron ore from the mine in Chitradurga district of the state. The bench led by Chief Justice of India Surya Kant upheld the Karnataka High Court's Monday order that had dismissed JSW Steel's petition for interim relief.

 

JSW Steel argued that the Karnataka mines and geology director's order was issued without affording the company a single opportunity of hearing or even without a notice to show cause as to why the action should not be taken. It, therefore, constitutes a classic case of violation of fundamental principles of natural justice and was violative of Article 14 of the Indian Constitution, the company said. 

 

The demand was made after more than four years for the period 2020 to 2022, ignoring several representations by the company in which it had pointed out that circumstances caused by the authorities themselves had disabled it from achieving the production requirement, said JSW Steel. In those representations, the company had requested the authorities to remove the impediments and, in the meanwhile, to relax the mandate of minimum production and despatch requirement.

 

JSW Steel said that the mines and geology director had, despite having auctioned and being under an obligation to hand over the leasehold area free of all impediments to the petitioner, totally failed to resolve their several disputes with the erstwhile lessee. This resulted in accumulation of over 650,000 metric tonnes of ore which had been produced by the erstwhile lessee and stacked in various parts of the lease area handed over to the petitioner, said JSW Steel.

 

The continued stocking of those huge quantities of iron ore across the lease area had severely impacted the petitioner's ability to carry on its production activities in accordance with its production plans, which had been approved by the Indian Bureau of Mines, said JSW Steel. The company discovered that the quality of the iron ore deposits in the subject-lease area were far lower than as depicted in the tender documents, JSW Steel said.

 

In 2019, JSW Steel had emerged as the successful bidder in an auction for the lease of iron ore mining in Chitradurga district of Karnataka. After completion of all processes and the lease deed being executed in July 2020, various delays on part of the state government, especially its forest department, operations commenced only in December 2020, the company said. Immediately upon commencement of operations, the company faced various impediments beyond its control and principally attributable to the state government and other parties, which hampered the production of ore, it said.

 

Thereafter, the state's mines and geology director issued a letter to JSW Steel raising a notice of forfeiture wherein they computed the total shortfall against the minimum production requirement for the years between 2020 and 2022 and valued the same at INR 1.28 billion. The director simultaneously issued a communication to the concerned bank, invoking the performance security in the form of bank guarantee furnished by JSW Steel. Challenging the same, the company moved the high court, which refused the company any interim relief. Consequently, JSW Steel moved the top court.

 

At 1401 IST, shares of JSW Steel were up 0.6% at INR 1,252.30 on the National Stock Exchange.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Surya Tripathi

Edited by Ashish Shirke

 

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