Supreme Court clears probe into alleged siphoning of ₹100-cr Mumbai Parsi estate, rejects Tata Trust appeals

New Delhi: The Supreme Court on Monday upheld the Bombay High Court’s order directing a court-monitored criminal investigation into the conduct of the parties in respect of the estate of Purvez Burjor Dalal, a Parsi Zoroastrian inhabitant of Mumbai, who passed away in 2011.

The deceased was a bachelor and left behind substantial movable and immovable properties, the valuation of which was estimated to be over Rs 100 crore.

A bench of Justices Pankaj Mithal and Prasanna B. Varale dismissed appeals filed by Bai Avabai Hormusji Tata Trust and others against the division bench order dated July 16, 2024, which had rejected their plea against the single judge order.

The court highlighted that the Indian Succession Act governs the administration of estates, but it does not grant immunity to individuals who commit criminal breach of trust, forgery, or conspiracy to siphon off an estate in medio.

“The conduct of the appellants and the associated entities reveals a concerted, deceitful effort to frustrate the administrator’s mandate and dissipate the estate of late Purvez Burjor Dalal. The High Court was perfectly justified in refusing to be a mute spectator to this blatant abuse of process,” the bench said.

The invocation of Article 215 of the Constitution to direct a court-monitored investigation was not only legally sound but absolutely necessary to protect the estate in medio and uphold the majesty of the law, the bench added.

Having heard the counsel, the bench said, “We are in agreement with the observations of the High Court and particularly the division bench in its order that the appellant suffers no actual or substantive prejudice by the mere initiation of an investigation.”

The court emphasised that a criminal investigation operates in an entirely different paradigm.

“If the appellant Trust has genuinely utilised the funds for bona fide charitable purposes, it will have every opportunity to place its accounts and records before the investigating agency,” the bench said.

The court also underscored that it is a settled position of law that an investigation by the police to uncover the truth does not, by itself, infringe upon the personal liberty of a corporate or trust entity.

The High Court has merely set the investigative machinery in motion to assist the testamentary court in tracing the siphoned assets, it noted.

The court rejected the appellant’s contention that the Indian Succession Act is a self-contained code precluding a criminal investigation, terming it fallacious.

It also did not agree with the contention that the single judge as well as the division bench of the High Court exceeded their jurisdiction.

In the case, the court noted that the status of the estate of the deceased was an estate in custodia legis, as the proceedings were pending before the court in rival claims over the estate. Admittedly, an administrator was appointed. The administrator was duty-bound to take all reasonable steps for preservation and maintenance of the estate, it said.

Following the death of the testator, two rival wills surfaced. The first will of November 22, 2010, was propounded by Shernaz Faroukh Lawyer and her mother, the late Villy Pirojsha Avasia. Under this will, the respondents claimed to be the executrices and beneficiaries of the estate.

Conversely, a second will of September 8, 2011, was propounded by Manek Dara Sukhadwalla. This later will purportedly bequeathed the entire estate to charitable purposes and appointed Sukhadwalla as the sole executor.

On June 21, 2012, the High Court granted ad-interim relief, restraining Sukhadwalla and directing him to disclose all movable and immovable assets of the estate.

Jonathan Solomon was subsequently appointed as the administrator pendente lite of the estate.

An enquiry found that Sukhadwalla had opened a bank account and that two substantial sums had been transferred from this account soon after the testator’s death. One such transfer was a sum of Rs 17,08,147 to a private entity, namely M/s Amoha Traders Pvt. Ltd.

The administrator filed a report and, to protect the interest of the estate, sought directions for the return of the money with interest.

“There was also another shocking fact revealed that though it was claimed that the trust was actually a Parsi family trust created in 1943, Sukhadwalla made an attempt to show that the trust was created in 1954 by an individual Shri Naval Tata,” the bench said.