High Court Can Order Criminal Probe In Probate Dispute To Protect Estate From Fraud: Supreme Court Upholds Bombay HC Order In ₹100-Crore Parsi Estate Case
Noting that High Courts retain plenary and constitutional powers even while exercising testamentary jurisdiction, it said an Administrator appointed u/S 247 ISA is the “hand of the Court”.
Justice Pankaj Mithal, Justice Prasanna B. Varale, Supreme Court
The Supreme Court has upheld a court-monitored criminal investigation ordered by the Bombay High Court into the alleged siphoning of assets from a disputed ₹100-crore Parsi estate, holding that a High Court exercising testamentary jurisdiction does not lose its plenary constitutional powers to protect property brought under the court’s custody.
The Bench observed that an Administrator appointed under Section 247 Indian Succession Act, 1925 acts as an officer of the court and remains under its immediate control. Once such an estate is in custodia legis, the Court said, it carries a duty to ensure preservation of the property and may devise appropriate procedures, including directing criminal investigation, where civil remedies prove inadequate.
A Bench of Justice Pankaj Mithal and Justice Prasanna B. Varale dismissed appeals filed by the Bai Avabai Hormusji Tata Trust and connected parties, and observed, “…a primary function of the Probate Court is to adjudicate the execution and genuineness of the Will but while doing so if the High Court notices glaring irregularities or there is an element of mischief played by an executor noticed by the High Court then in that situation the High Court cannot be a silent spectator and will have to exercise its plenary and constitutional power to check the mischief so as to protect the property…”.
Further noting the primary function, observed, “…However, this does not mean that a High Court, while sitting in its testamentary jurisdiction, is denuded of its constitutional powers”.
Senior Advocate Jayant Bhushan appeared for the appellant and Senior Advocates Darius Khambata, C.U. Singh, Rahul Narichania appeared for the respondents.
The dispute arose after two competing wills surfaced following Dalal’s death in 2011, where one will was propounded by private beneficiaries, while a later will claimed to dedicate the estate to charitable purposes.
Thereafter, during the probate proceedings, the High Court had appointed an Administrator pendente lite under Section 247 of the Indian Succession Act, 1925, to preserve the estate.
While examining the estate’s financial records, the Administrator reported that substantial sums had been transferred from the deceased’s estate shortly after his death, including payments to a private company and the appellant trust. The report further flagged common addresses, contact details and financial links among several entities, along with allegations of concealment and non-disclosure despite repeated court directions.
Before the Supreme Court, the appellants argued that a probate court’s jurisdiction is confined to examining the genuineness and due execution of a will and cannot extend to directing a roving criminal investigation. They also contended that the Indian Succession Act is a self-contained code and that the High Court could not bypass the statutory procedure under Section 340 CrPC.
Rejecting the challenge, the Court held that although determining the validity of a will remains the primary function of a probate court, a High Court cannot remain a silent spectator” where material before it discloses apparent misuse of the judicial process or an attempt to dissipate estate assets.
“Considering the scheme of ISA, 1925 and considering the fact that the testator was a Parsi, therefore, the bar contained in Section 269(2) would not be applicable in the present case. ‘District Judge’ is defined under Section 2(bb) of the Indian Succession Act to mean ‘the judge of a Principal Civil Court of original jurisdiction’. Section 300 of the Indian Succession Act viz. ‘Concurrent jurisdiction of High Court’ states that ‘The High Court shall have concurrent jurisdiction with the District Judge in exercise of all the powers hereby conferred upon the District Judge’”, the Bench noted.
“…When an estate is brought under the protective umbrella of the Court through the appointment of an Administrator pendente lite under Section 247, the Court is dutybound to ensure the estate is not plundered. If the Court discovers that parties are employing deceit, suppressing bank accounts, and using shell trusts to siphon funds, it is entirely within its plenary jurisdiction to direct a police investigation to unearth the fraud”, it further noted.
Significantly, the Court clarified that the investigation would operate independently under criminal law and would not by itself prejudice the appellants, who would retain full opportunity to defend themselves if prosecution is launched.
“…we are in agreement with the observations of the High Court that the High Court and particularly, Division Bench in its order that the appellant suffers no actual or substantive prejudice by the mere initiation of an investigation. A criminal investigation operates in an entirely different paradigm. If the appellant Trust genuinely utilized the funds for bona fide charitable purposes, it will have every opportunity to place its accounts and records before the investigating agency. 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 said.
Upholding the Bombay High Court’s reliance on Article 215 of the Constitution of India, the Court concluded that directing a criminal probe in the peculiar facts of the case was “legally sound” and necessary to protect the estate and prevent abuse of process.
The appeals were accordingly dismissed, with the Court directing the investigating authority to proceed expeditiously and continue submitting progress reports in terms of the High Court’s directions.
Cause Title: Bai Avabai Hormusji Tata Trust v. Shernaz Faroukh Lawyer & Ors (Neutral Citation: 2026 INSC 540)
Appearances:
Appellant: Jayant Bhushan, Senior Advocate, Somiran Sharma, AOR, Krishan Kumar, AOR.
Respondents: M/S. Karanjawala & Co., AOR, Darius Khambata, Sr. Adv., C.u. Singh, Sr. Adv, Rahul Narichania, Sr. Adv., Debmalya Banerjee, Kartik Bhatnagar, Ambika, Vipul Pathak, Liza Vohra, Advocates.