BENGALURU: In a move that has triggered sharp debate, the Congress-led Karnataka government has effectively closed a case in which the Lokayukta Special Investigation Team (SIT) had concluded that Mysore Minerals Limited (MML) suffered a loss of Rs 62.62 lakh due to collusion with private companies, while Kalyani Steels Limited and Mukand Steels Limited allegedly gained illegal benefits.
The case pertains to alleged abuse of official position and criminal conspiracy by senior IAS officer I R Perumal, a former Managing Director of MML. Despite the Lokayukta SIT finding clear lapses and recommending action, the state government has rejected the proposal to initiate prosecution against Perumal. The Personnel and Administrative Reforms Department (DPAR) issued an order to this effect on December 12, 2025, which is understood to have been approved by Chief Minister Siddaramaiah.
This decision comes at a time when the government has publicly stated its commitment to recovering penalties in illegal mining cases. Recently, a Cabinet subcommittee chaired by Law Minister H K Patil made several recommendations on the recovery of penalties in mining-related cases, after which a committee led by retired senior IAS officer G V K Rao was constituted. However, soon after the committee became active, cases involving alleged irregularities amounting to over Rs 612 crore in MML were reportedly closed one after another, raising serious questions about intent and consistency.
The Lokayukta SIT investigated allegations against IR Perumal regarding his role during his tenure as MML Managing Director from 2001 to 2002. The SIT concluded that Perumal misused his administrative powers by failing to revise iron ore sale prices as mandated by contractual terms, thereby causing financial loss to the public sector undertaking and conferring illegal benefits on private companies. Despite this, the Industries and Commerce Department rejected the SIT report in 2024.
Based on the SIT findings, the department had established a high-level committee of senior officials to determine whether to grant a sanction to prosecute Perumal. However, the committee disagreed with the SIT’s conclusions and gave Perumal a clean chit, stating that he was neither responsible for the loss nor directly involved in the alleged irregularities.
The case dates back to 1999 agreements between MML and Kalyani Ferrous Industries Limited for iron ore production at the Subbarayanahalli mines, and to separate marketing agreements with Kalyani Steels Limited and Mukand Steels Limited for the sale of iron ore. These agreements fixed the sale price at Rs 250 per tonne for Mukand Steels and Rs 150 per tonne for BHQ ore, with a provision allowing MML to revise prices after three years, starting October 2002, and annually thereafter.
In 2001, the private companies sought interchange of marketing and raising contractors without altering financial terms. Although the MML Board approved this arrangement without changing prices, subsequent developments proved controversial. During Perumal’s tenure, a new marketing agreement was drafted and signed in 2002 at Kalyani Steels’ request, deferring the first price revision to 2005 rather than October 2002.
As a result, between 2002 and March 2003, around 2.31 lakh metric tonnes of iron ore were sold at Rs 253 per tonne. According to the SIT, considering the prevailing NMTC benchmark price and after deducting transportation costs, the effective price should have been around ₹280 per tonne. This resulted in a calculated loss of Rs 62.62 lakh for MML.
The Lokayukta SIT categorically stated that Perumal’s failure to revise prices amounted to abuse of authority and criminal conspiracy, attracting offences under Sections 406, 409 and 120B of the IPC, along with Sections 13(1) and 13(2) of the Prevention of Corruption Act, 1988.
