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Bai Avabai Hormusji Tata Trust v. Shernaz Faroukh Lawyer

Civil Appeal · 2026 INSC 540Decided 25 May 2026
C.A. No.-008163-008163 - 2026
Justice Pankaj Mithal · Justice Prasanna B. Varale · Justice Aravind Kumar

Background

The dispute concerns the estate of Purvez Burjor Dalal, a Parsi bachelor from Mumbai who died in 2011 leaving assets worth over Rs. 100 crores, and over which two rival Wills surfaced. While the Bombay High Court appointed an Administrator pendente lite to trace and safeguard the estate's assets, the Administrator discovered that funds had been transferred out of the estate's bank account shortly after the testator's death, including Rs. 15,00,000 sent to the appellant Trust for purportedly "charitable" purposes, before the Administrator was even appointed. The High Court, exercising its testamentary jurisdiction, directed a court-monitored criminal investigation into these transactions, and the Trust's appeal against that direction was dismissed by the Division Bench, leading to this further appeal to the Supreme Court.

Decision Breakdown

The Supreme Court held that transferring estate funds to the appellant Trust under the garb of "charity" while a probate dispute was pending was a classic hallmark of intermeddling with and siphoning of estate assets. It rejected the argument that the High Court's direction for investigation exceeded the procedural safeguards of Section 340 CrPC, holding that the High Court had instead exercised its broader inherent powers (and powers under Article 215 of the Constitution) to investigate a larger conspiracy of fund diversion, not merely a Section 195 offence. The Court found that a mere criminal investigation does not itself prejudice or infringe upon the rights of a trust entity, which remains free to place its accounts before investigators to prove bona fide use of funds. Finding no infirmity in the High Court's judgment, the Supreme Court dismissed the appeals and directed the investigating authority to proceed expeditiously as per the High Court's directions.

Lesson Learnt

Courts exercising testamentary jurisdiction can order a criminal investigation into suspicious transfers of a deceased person's estate, even before a Will dispute is finally decided, and merely being investigated does not by itself violate a person's or entity's rights; charitable framing of a transaction does not shield it from scrutiny if made during a live succession dispute.

Official source (sci.gov.in)View Judgment (PDF)

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