Whether a High Court exercising civil testamentary jurisdiction has the authority to invoke its inherent and plenary powers (under Article 215 of the Constitution) to direct a court-monitored criminal investigation into the siphoning off/intermeddling of an estate’s funds.
The Supreme Court dismissed the appeals and upheld the orders of the Bombay High Court. It ruled that when a massive fraud or deceptive conduct threatens an estate in medio (under court custody), the High Court is not a silent spectator and can legitimately order a police investigation using its plenary powers to protect the property and prevent abuse of process.
1. Factual Matrix & Background
- The Dispute: The litigation stems from competing claims over the substantial estate (valued over ₹100 Crores) of Purvez Burjor Dalal, a Parsi Zoroastrian bachelor who died on December 7, 2011.
- Rival Wills: Two Wills emerged. The first (dated 22.11.2010) was propounded by respondents Shernaz Lawyer and Villy Avasia. The second (dated 08.09.2011) was propounded by Manek Dara Sukhadwalla, who claimed the estate was bequeathed for charitable purposes. Both sides filed probate suits.
- Appointment of Administrator: Due to allegations of intermeddling by Mr. Sukhadwalla, the Single Judge of the Bombay High Court appointed Mr. Jonathan Solomon as the Administrator pendente lite under Section 247 of the Indian Succession Act (ISA), 1925, to secure the estate.
- Discovery of Siphoned Funds: The Administrator discovered that prior to his appointment, Mr. Sukhadwalla opened an estate bank account and unauthorizedly transferred large sums: ₹17,08,147 to M/s Amoha Traders Pvt. Ltd. and ₹15,00,000 to the appellant, Bai Avabai Hormusji Tata Trust.
2. Suspicious Circumstances & Single Judge’s Order
- The respondents alleged a deep-rooted conspiracy between Mr. Sukhadwalla and a private individual, Jamsheed (Jimmy) Panday, to siphon funds using shell/inactive entities.
- Investigations revealed that the appellant Trust, Amoha Traders, and other entities shared identical addresses, emails, and phone numbers traced back to Jimmy Panday. Furthermore, the appellant Trust had been long-inactive since 1943 and was suspiciously revived in 2011, aligning with the disputed Will’s timeline.
- Citing continuous non-cooperation, suppression of bank accounts, and “deceitful” conduct by the propounders of the second Will, the Single Judge (on 21.12.2018) invoked Article 215 of the Constitution. He directed the Administrator to frame a criminal complaint, to be forwarded via the Prothonotary & Senior Master to the Mumbai Police Commissioner for a court-monitored investigation.
3. Decisions of the Lower Courts
- Division Bench of Bombay High Court: The appellants challenged the Single Judge’s order, arguing that a testamentary court cannot order a roving criminal investigation and must adhere strictly to Section 340 of the CrPC. The Division Bench dismissed the appeals on July 16, 2024, holding that the investigation was a necessary, innovative exercise of plenary jurisdiction to protect the estate from being depleted, and caused no actual prejudice to the appellants.
4. Key Legal Contentions Before the Supreme Court
- Appellants’ Arguments:
- A testamentary court’s jurisdiction is strictly limited to evaluating the genuineness and due execution of a Will; it cannot act as a recovery agent or launch criminal fishing expeditions.
- The ISA, 1925 is a self-contained code. Under Sections 211 and 307, an executor has the authority to deal with the estate even prior to probate, making the transfers lawful.
- The High Court bypassed the mandatory procedural preliminary inquiry mandated under Section 340 of the CrPC.
- Respondents’ Arguments:
- The High Court, even when sitting in testamentary jurisdiction, remains a Constitutional Court of Record possessing undiminished plenary powers under Article 215 to prevent abuse of process.
- When an estate is in custodia legis (via an appointed Administrator), no individual or self-styled executor has the right to unilaterally siphon funds to dormant trusts.
- Standard civil remedies were failing due to the structural stonewalling and non-cooperation of the appellants.
5. Supreme Court’s Observations & Analysis
Status of the Administrator & Estate: The Supreme Court noted that an Administrator appointed under Section 247 of the ISA is an officer and the “hand of the court,” akin to a Court Receiver. The estate becomes in custodia legis. Relying on Anthony C. Leo, the Court emphasized that the officer is legally obligated to take all necessary steps—including seeking civil or criminal court intervention—to preserve the property.
- Plenary and Inherent Powers of the High Court: The Court rejected the argument that the testamentary court’s hands are tied. Citing V. Elisabeth, it reiterated that High Courts are superior Courts of Record possessing unlimited inherent jurisdictions to devise procedural rules to check mischief and prevent the plundering of an estate.
- The “Self-Contained Code” and Executor’s Limits: The apex court forcefully rejected the idea that an executor has an absolute license to dissipate contested assets. When rival Wills are fiercely contested, an executor of a disputed Will cannot unilaterally distribute cash assets to dormant, closely-linked family trusts under the guise of “charity”.
- Inapplicability of Section 340/341 CrPC Procedural Bars: The Court held that the Single Judge’s directive was not an order limited strictly to perjury or offenses affecting the administration of justice inside a courtroom (which trigger Section 340 CrPC). Instead, it was an exercise of broader inherent powers to investigate a larger, multi-layered financial fraud and conspiracy involving shell structures. Even under Section 340(3)(a), a High Court is fully competent to authorize its officer to lodge a formal complaint.
- No Prejudiced Personal Liberty: The Supreme Court agreed with the Division Bench that a criminal investigation merely sets the machinery of law into motion to assist the court in tracing assets. If the appellant Trust genuinely used the funds for bona fide charity, it could present its clean books to the police; hence, no actual legal prejudice is caused.
6. Conclusion & Final Order
The Supreme Court found the conduct of the appellants to be a concerted, deceitful effort to frustrate the Administrator’s mandate. Finding no illegality or jurisdictional infirmity in the judgments of the Single Judge or the Division Bench of the Bombay High Court, the Supreme Court dismissed all the civil appeals. It directed the competent investigating authorities to proceed with the criminal investigation expeditiously and submit progress reports as ordered by the High Court.
2026 INSC 540
Bai Avabai Hormusji Tata Trust vs. Shernaz Faroukh Lawyer (D.O.J. 25.05.2026)
