Case Note & Summary
The Supreme Court disposed of a Special Leave Petition and a Contempt Petition arising from an FIR registered in 2016 under Sections 409, 420, 477A IPC and Section 37 of the Foreign Contribution (Regulation) Act, 2010. The Economic Offences Wing (CID), Telangana State, investigated the matter. On 21st November 2020, the CID froze the petitioners' accounts, prompting the petitioners to challenge the freezing before the High Court, which rejected their challenge. The petitioners then approached the Supreme Court. On 7th April 2021, the Court passed an interim order staying the attachment order in respect of salary and institutional expenses, directing the petitioners to maintain proper accounts. During the pendency of the matter, the State of Telangana filed an I.A. enclosing a letter to the Ministry of Home Affairs acknowledging that the CID might not be authorized to investigate FCRA cases involving amounts over one crore, and sought directions either to permit CID to continue or entrust investigation to CBI. The petitioners, through Senior Counsel Shyam Divan, submitted that they would be satisfied if the interim order was made absolute, allowing continued use of accounts for salary and institutional expenses, and would contest other proceedings on merits. The respondents, including the complainant and the State, admitted that the petitioners run 103 educational institutions and over a dozen primary health centres across 18 states and did not seek their closure, but insisted on proper audited accounts. The Court made the interim order absolute with the additional condition that the accounts be audited by a Chartered Accountant and quarterly statements provided to the Investigating Officer or Trial Court. The Court declined to adjudicate the contempt petition, leaving it open for the investigating agency or trial court to monitor compliance. All pending applications were disposed of, and the Court clarified that no observations on merits were made.
Headnote
A) Criminal Procedure - Freezing of Accounts - Interim Relief - Foreign Contribution (Regulation) Act, 2010, Sections 409, 420, 477A IPC - The Supreme Court made absolute its interim order dated 7th April 2021, allowing the petitioners to use their frozen accounts for salary and institutional expenses, subject to maintaining audited accounts and providing quarterly statements to the investigating officer or trial court. The Court noted the petitioners run 103 educational institutions and over a dozen primary health centres across 18 states, and the respondents did not seek closure of these institutions. (Paras 1-7)
B) Contempt of Court - Alleged Violation of Court Order - Not Adjudicated - The Court declined to adjudicate the contempt petition, leaving it open for the investigating agency or trial court to monitor compliance with the liberty granted. (Paras 4-6)
Issue of Consideration
Whether the petitioners should be allowed to continue using their frozen accounts for salary and institutional expenses pending investigation under the Foreign Contribution (Regulation) Act, 2010.
Final Decision
The Supreme Court disposed of the petitions making the interim order dated 7th April 2021 absolute, with the additional condition that the petitioners get their accounts audited by a Chartered Accountant and provide quarterly statements to the Investigating Officer or Trial Court. The contempt petition was disposed of without adjudication, leaving it open for the investigating agency or trial court to monitor compliance. All pending applications disposed of. No observations on merits.
Law Points
- Interim relief
- freezing of accounts
- Foreign Contribution (Regulation) Act
- 2010
- investigation jurisdiction
- contempt
- audit requirement
Case Details
SLP (Crl.) No. …………………. of 2024 (Diary No. 4235 of 2021) with Contempt Petition (Civil) No. 105 of 2024
Vikram Nath, Prashant Kumar Mishra
Shyam Divan (Senior Counsel for petitioners), Not mentioned for others
Operation Mobilization India & Ors.
State of Telangana & Ors.
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Nature of Litigation
Criminal appeal against High Court order rejecting challenge to freezing of accounts under FCRA investigation.
Remedy Sought
Petitioners sought to continue using frozen accounts for salary and institutional expenses.
Filing Reason
Freezing of accounts by CID Telangana on 21st November 2020 during investigation of FIR No. 22 of 2016.
Previous Decisions
High Court rejected challenge to freezing of accounts; earlier SLP(Crl.) No. 3888 of 2017 dismissed directing expeditious investigation; another SLP(Crl.) D. No. 27899 of 2018 dismissed with liberty to move appropriate forum.
Issues
Whether the petitioners should be allowed to use frozen accounts for salary and institutional expenses pending investigation.
Whether the contempt petition alleging violation of interim order should be adjudicated.
Submissions/Arguments
Petitioners submitted they would be satisfied if interim order dated 7th April 2021 was made absolute, allowing continued use of accounts for salary and institutional expenses, and would contest other proceedings on merits.
Respondents (complainant and State) admitted petitioners run 103 educational institutions and over a dozen primary health centres across 18 states and did not seek closure, but insisted on proper audited accounts.
Ratio Decidendi
Where an organization runs numerous educational and health institutions across multiple states, and the respondents do not seek their closure, the court may permit continued use of frozen accounts for salary and institutional expenses subject to maintaining audited accounts and providing quarterly statements to the investigating agency or trial court, balancing the interests of investigation and public welfare.
Judgment Excerpts
We are, therefore, satisfied on the own showing of the respondent-State of Telangana that the order of attachment dated 21st November, 2020 needs to be stayed in so far as salary and institutional expenses are concerned.
We dispose of the petitions making the interim order dated 7th April, 2021 absolute, however, with a rider that the petitioners would not only maintain proper and complete statement of accounts but would also get the same audited by a Chartered Accountant and provide quarterly statements of the same to the Investigating Officer or to the Trial Court on regular basis.
Procedural History
FIR No. 22 of 2016 lodged on 29.9.2016 under Sections 409, 420, 477A IPC and Section 37 FCRA. Investigation by CID Telangana. Challenge to FIR dismissed by Supreme Court in SLP(Crl.) No. 3888 of 2017 on 12.9.2017 directing expeditious investigation. Another SLP(Crl.) D. No. 27899 of 2018 by informant dismissed on 17.8.2018 with liberty to move appropriate forum. W.P. No. 13044 of 2019 filed by respondent no. 3 seeking CBI investigation; CID filed counter affidavit. On 21.11.2020, CID froze petitioners' accounts. Petitioners challenged freezing in High Court via W.P. No. 22547 of 2020, which was dismissed on 27.1.2021. Petitioners then filed SLP (Crl.) Diary No. 4235 of 2021 before Supreme Court. On 22.2.2021, notice issued. On 7.4.2021, interim order staying attachment for salary and institutional expenses passed. Subsequently, I.A. No. 48029 of 2021 filed by State enclosing letter to MHA. Contempt Petition (Civil) No. 105 of 2024 also filed. Final judgment on 5.4.2024.
Acts & Sections
- Indian Penal Code, 1860 (IPC): 409, 420, 477A
- Foreign Contribution (Regulation) Act, 2010 (FCRA): 37
