Hyderabad, Dec. 16: Andhra Pradesh High Court today allowed the CBI to probe allegations of illegal iron-ore mining by the Obulapuram Mining Company, owned by Karnataka minister Gali Janardhan Reddy, one of the Reddy brothers of Bellary.

A two-judge bench set aside an earlier stay on the agency probe by a single judge of the same court.

The case has political implications not only because the Reddy brothers are BJP ministers and lawmakers but also because of their proximity to late Andhra chief minister Y.S. Rajasekhar Reddy and his son Jaganmohan Reddy. The Reddy brothers are said to be former business partners of Jagan, who recently left the Congress.

The CBI can now investigate not only the alleged mining by the Obulapuram Mining Company (OMC) in areas outside its leasehold but also charges that it cost the Andhra exchequer over Rs 3,200 crore in unpaid royalty, road tax and other revenues.

An empowered committee set up by the apex court too is to visit the mining belt — located on the border between Bellary in Karnataka and Anantapur in Andhra — on December 21. It will inspect the operations of the OMC and five other companies.

The empowered committee was set up in response to a public interest litigation on illegal mining, and its probe will go on parallel to the CBI’s.

The earlier stay on the CBI probe was granted on the ground that the Supreme Court was looking into the matter, a point stressed by OMC counsel Mukul Rohatgi. But additional solicitor-general Vivek Tanka, representing the CBI, told the two-judge bench that the apex court was mainly looking into the border dispute between Karnataka and Andhra and not the illegal mining.

One of the charges against the OMC is that it had removed border posts near its mines so it could transport ore from one state to another without paying cess.

Tanka said the OMC carried out illegal mining elsewhere and showed the mineral as having been extracted from its leasehold area, the Anthara-Gangamma-Konda (AGK) mines. He alleged that several officials of the forest, transport and industries departments in both Karnataka and Andhra were in collusion with the company and had been issuing it illegal transport permits.

Following YSR’s death, the K. Rosaiah government in Andhra had got the high court to stay mining by the OMC in early 2010. But another bench later vacated the stay.

Rohatgi said: “The CBI wants the high court to hear the illegal mining aspect and the apex court to decide the border dispute. This is not correct when the Supreme Court is comprehensively dealing with the whole issue,” he said.

However, advocate-general D.V. Sitarama Murthy, representing the Andhra government, told the court there was no bar on the state undertaking an investigation if it got a hint of any wrongdoing.