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Testamentary Jurisdiction: Direction for criminal investigation into the siphoning off an estate’s funds.

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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)

2026 INSC 540 click here to view full text of judgment

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Admissibility of Deceased Witness Testimony Against Absconding Accused

July 18, 2026 No Comments

Supreme Court allowed the appeals filed by the State of West Bengal, ruling that the deposition of a deceased witness recorded in an earlier trial is admissible in a subsequent trial against an absconding accused, provided the requirements of Section 299 of the Code of Criminal Procedure (CrPC) are met. The Court clarified that the provision serves to preserve evidence when an accused deliberately absconds, preventing them from benefiting from the unavailability of material witnesses due to the passage of time. The Court set aside the High Court’s order, which had denied the admission of the victim’s testimony, confirming that the statutory preconditions—the accused absconding and no immediate prospect of arrest—were satisfied at the time the witness deposed.

  • Background: In a 2012 gang-rape case, the respondent and another accused were absconding while three others were tried and convicted. The victim, a key witness, testified in the first trial but passed away in 2015. After the respondent was arrested in 2016, the prosecution sought to admit the victim’s earlier deposition as evidence under Section 33 of the Indian Evidence Act read with Section 299 of the CrPC.
  • High Court Order: The High Court of Calcutta had rejected the application, observing that the prosecution had a duty to obtain a specific direction from the Trial Court to record evidence against the absconder during the first trial, and thus the earlier deposition could not be used against the respondent.
  • Interpretation of Section 299 CrPC: The Supreme Court held that Section 299 CrPC acts as an exception to the general rule requiring a witness to be examined in the presence of the accused. It does not mandate a formal, prior order from a Magistrate to record that the accused is absconding; rather, what is relevant is whether the conditions—that the accused is absconding and there is no immediate prospect of arrest—were established at the time the evidence was recorded.
  • Preventing Misuse of Process: The Court reasoned that taking a restrictive view of Section 299 would jeopardize the criminal justice system by incentivizing accused persons to wilfully abscond and await the death or unavailability of material witnesses.
  • Application to Facts: The Court noted that the respondent was a declared absconder when the victim’s testimony was recorded (2013), and he remained at large until his arrest in 2016. As the two essential conditions of Section 299(1) were met, the deceased victim’s evidence is admissible in the trial against the respondent.

Legislative Continuity: The Court noted that the legislature has maintained this principle in Section 335 of the recently enacted Bharatiya Nagarik Suraksha Sanhita, 2023, reinforcing the intent to ensure evidence is preserved against those who evade trial.

2026 INSC 718

The State of West Bengal v. Kader Khan – (D.O.J. 17.07.2026)

2026 INSC 718 click here to view full text of judgment

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Insolvency and Bankruptcy: Finality of Resolution Plans and Extinguishment of Sub-judice Claims

July 18, 2026 No Comments

Supreme Court allowed the appeals filed by the Successful Resolution Applicant (Appellant-SRA), ruling that upon the approval of a Resolution Plan under the Insolvency and Bankruptcy Code, 2016 (IBC), all claims—including those pending adjudication (sub-judice)—that are not specifically provided for in the plan stand extinguished. The Court held that the “clean slate” doctrine is fundamental to the IBC, preventing unresolved or contingent claims from resurfacing and undermining the revival of the corporate debtor. Consequently, the Court set aside the High Court orders and dismissed the civil suit and arbitration proceedings initiated by operational creditors, affirming that they are bound by the terms of the approved Resolution Plan.

  • Background: The Appellant-SRA challenged Bombay High Court orders that allowed a civil recovery suit and arbitration proceedings to continue against the corporate debtor (Bhushan Steel Limited) despite the approval of its Resolution Plan. The respondents, operational creditors, sought to pursue claims that were pending at the time of the Corporate Insolvency Resolution Process (CIRP).
  • Treatment of Claims: During the CIRP, the Resolution Professional admitted the respondents’ disputed claims at a notional value of Rupee One (1) each. The approved Resolution Plan stipulated that because the liquidation value was NIL, no amounts were due to operational creditors; however, a settlement fund was provided for those with admitted claims.
  • The “Clean Slate” Doctrine: The Court emphasized that a successful resolution applicant must start on a “clean slate,” free from “hydra-headed” surprise claims. Once a Resolution Plan is approved under Section 31(1) of the IBC, it becomes binding on all stakeholders, and claims not incorporated therein are deemed extinguished, withdrawn, or abated.
  • Finality of the Plan: The Court noted that the Final List of Creditors attained finality, and the respondents could not seek to reopen or question the commercial wisdom of the Committee of Creditors after the plan’s approval. The Court found no merit in the allegations of fraud, noting that no proceedings had been initiated under Rule 11 of the NCLT Rules to challenge the plan’s integrity.
  • No Express Carve-out: Upon a harmonious reading of the Resolution Plan, the Court concluded there was no express “carve-out” protecting sub-judice claims from extinguishment. The plan explicitly mandated that all legal proceedings relating to the period prior to the effective date stand extinguished, except to the extent of the specific settlement amount provided.
  • Observation on MSMEs: In an “Afterword,” the Court observed that the current insolvency framework does not adequately account for the position of small operational creditors and MSMEs, who are often placed at the bottom of the repayment waterfall. The Court suggested that the Legislature and Law Commission examine this to ensure a more balanced repayment mechanism.
  • Outcome: The Court allowed the appeals, set aside the contrary High Court orders, and dismissed the pending civil suit and arbitration proceedings, enforcing the finality of the Resolution Plan.

2026 INSC 717

M/S Tata Steel Ltd. v. Varsha & Anr. (D.O.J. 17.07.2026)

2026 INSC 717 click here to view full text of judgment

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Excluding Nominated Members from Local Authority Elections

July 18, 2026 No Comments

The Supreme Court upheld the High Court of Karnataka’s decision to exclude nominated members of Town Panchayats from participating in Legislative Council elections for Local Authorities’ Constituencies. The Court ruled that under the constitutional framework established by the 74th Amendment (Part IX-A), nominated members, who serve only in an advisory capacity, lack the democratic mandate of elected representatives. Consequently, their inclusion in the electoral roll was declared unconstitutional, and the Court affirmed the direction to conduct a recount of votes after segregating the invalid votes cast by these nominated members.

  • Background: The election to the Karnataka Legislative Council (Chikkamagaluru Local Authorities Constituency) was challenged because 12 nominated members from four Town Panchayats were included in the electoral roll and participated in the voting. The appellant, who won by a narrow margin of 6 votes, contended that the electoral roll’s finality should be respected.
  • Constitutional Interpretation: The Court held that while Article 171(3)(a) mentions “members” of local authorities, this must be interpreted through the lens of the 74th Constitutional Amendment. Article 243-R establishes that while nominated members may be appointed for their expertise, they are expressly barred from voting in municipal meetings, underscoring their advisory rather than representative role.
  • Democratic Representation: The Supreme Court emphasized that allowing nominated members to vote in Legislative Council elections would undermine the democratic nature of the electoral process, as they are not democratically elected. The Court affirmed that “members” in the context of electoral colleges refers to democratically elected representatives.
  • Finality of Electoral Rolls: While acknowledging the principle that electoral rolls typically attain finality, the Court distinguished this case by noting that the inclusion of the nominated members was void ab initio and unconstitutional. Therefore, the finality of the roll could not be used to validate an illegality that strikes at the core of the electoral college’s composition.
  • Secrecy of the Ballot: The Court rejected the argument that segregating these votes would violate the secrecy of the ballot. It maintained that the higher constitutional goal of preserving free and fair elections and ensuring the purity of the electoral process outweighs the requirement for absolute secrecy in this specific context.
  • Outcome: The Supreme Court dismissed the appeals and affirmed the High Court’s orders. The Court directed the authorities to proceed with the consequential actions based on the recount results already obtained, ensuring that the election outcome reflects only the valid votes cast by elected representatives.

2026 INSC 716

Pranesh M.K. v. Shanthegowda & Ors. – (D.O.J. 16.07.2026)

2026 INSC 716 click here to view full text of judgment

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Railway: Establishing Liability in Untoward Railway Incidents

July 18, 2026 No Comments

The Supreme Court set aside the concurrent dismissal of a compensation claim by the Railway Claims Tribunal and the High Court of Madhya Pradesh. The Court held that when a passenger dies in an “untoward incident” (falling from a running train), the absence of a recovered ticket does not automatically negate the status of a bona fide passenger. Emphasizing the “no-fault liability” principle under Section 124A of the Railways Act, 1989, the Court ruled that once the claimant establishes the foundational facts through an affidavit, the burden shifts to the Railways. Technical lapses and the inability to recover personal belongings should not defeat the humanitarian and welfare objectives of the legislation.

  • Background: The appellant filed a claim for compensation following the death of her husband, who fell from a running train while traveling from Raipur to Ahmedabad. The Railway Claims Tribunal and the High Court previously rejected the claim, citing a lack of proof regarding the deceased being a bona fide passenger (specifically due to the missing ticket).
  • Legal Principle (No-Fault Liability): The Court reiterated that Section 124A of the 1989 Act is a beneficial, “no-fault” provision. It is designed to provide expeditious relief to victims of untoward incidents without requiring proof of negligence by the Railway Administration.
  • Burden of Proof: Relying on Union of India v. Rina Devi and Doli Rani Saha v. Union of India, the Court clarified that:
    • The mere absence of a ticket does not disprove that a person was a bona fide
    • The initial burden is on the claimant, which is sufficiently discharged by filing an affidavit stating the facts.
    • Once this is done, the burden shifts to the Railways to disprove the claim based on attending circumstances.
  • Operational Concerns: The Court highlighted the critical issue of chronic overcrowding in Indian Railways. It noted that while the Railway Manuals contain detailed safety and ticketing protocols, the execution often fails. The Court suggested that Railways should increase manpower to better manage safety and ticketing, which could simultaneously reduce such tragedies and provide employment.
  • Constitutional Perspective: The Court observed that using terms like “second class passenger” is outdated and potentially offensive to the spirit of the Constitution of India; it suggested that class designations should refer to the “coach” rather than the “passenger.”

Decision: The Supreme Court allowed the appeal and set aside the lower court judgments. It ordered the Railways to pay compensation of ₹8,00,000 to the appellant within four weeks, failing which the amount would attract interest at 8% from the date of the original claim filing.

2026 INSC 715

Lata v. Union of India & Anr. – (D.O.J. 17.07.2026)

2026 INSC 715 click here to view full text of judgment

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