Succession Law Does Not Shield Forgery or Estate Siphoning: Supreme Court

The Supreme Court has held that while the Indian Succession Act governs the administration of estates, it does not protect individuals from criminal prosecution if they commit offences such as criminal breach of trust, forgery or conspiracy to siphon off an estate under the guise of succession proceedings.

A Bench of Justices Pankaj Mithal and Prasanna B Varale upheld a court-monitored criminal investigation into the conduct of parties concerning the estate of Purvez Burjor Dalal, a Parsi Zoroastrian resident of Mumbai who died in 2011.

Dalal, a bachelor, left behind substantial movable and immovable assets valued at over Rs 100 crore.

The Supreme Court rejected the contention of Bai Avabai Hormusji Tata Trust and others that the Indian Succession Act is a self-contained code which bars any criminal investigation. Court termed the argument "fallacious".

It also rejected the appellants' contention that the Bombay High Court's single judge and division bench had exceeded their jurisdiction by directing a criminal investigation.

Court further held that the argument that the high court had bypassed the procedure under Section 340 of the Code of Criminal Procedure (CrPC)[corresponding to Section 379 of the Bharatiya Nagarik Suraksha Sanhita (BNSS)] was equally untenable.

"A holistic reading of the single judge's order makes it abundantly clear that the direction for a criminal investigation was not passed strictly under Section 340 of the CrPC for an offence affecting the administration of justice (like perjury in court documents alone)," the Bench observed.

Instead, it said the high court exercised its broader inherent powers to investigate a larger conspiracy involving fraudulent banking transactions and shell entities allegedly used to siphon funds from the estate.

"Therefore, the procedural bars or appellate restrictions under Section 341 of the CrPC are inapplicable here," Court held.

Dismissing the appeals filed by Bai Avabai Hormusji Tata Trust and others, the Bench upheld the Bombay High Court's division bench judgment dated July 16, 2024, which had affirmed the single judge's order dated December 21, 2018.

"The conduct of the appellants and the associated entities reveal 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," Court said.

The Bench emphasised that a criminal investigation operates independently of succession proceedings.

"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," Court observed.

It further noted that a police investigation to uncover the truth does not, by itself, infringe the personal liberty of a corporate body or trust.

According to the Court, the high court had merely set the investigative machinery in motion to help the testamentary court trace the assets allegedly siphoned from the estate.

The Bench also found it significant that the appellant Trust had remained inactive since 1943 but was allegedly revived in 2011, around the same time the rival Will was said to have been executed.

"Transferring large sums of money to such an entity under the garb of 'charity' while a probate dispute is looming is a classic hallmark of intermeddling and siphoning," Court observed.

Court held that the high court was justified in invoking its powers under Article 215 of the Constitution to order a court-monitored investigation, describing the step as legally sound and necessary to protect the estate in medio and uphold the rule of law.

It also agreed with the high court's finding that the appellants suffered no actual prejudice merely because an investigation had been initiated.

Why did the Supreme Court uphold the criminal investigation?

The Bench noted that the estate was in custodia legis (under the custody of the court) because rival probate proceedings were pending and an administrator had already been appointed to preserve and protect the estate.

The dispute arose after two rival Wills surfaced following Dalal's death.

The first Will, dated November 22, 2010, was propounded by Shernaz Faroukh Lawyer and her mother, late Villy Pirojsha Avasia, who claimed to be the executrices and beneficiaries of the estate.

The second Will, dated September 8, 2011, was propounded by Manek Dara Sukhadwalla. Under this Will, the entire estate was allegedly bequeathed to charitable purposes, with Sukhadwalla appointed as the sole executor.

On June 21, 2012, the Bombay High Court restrained Sukhadwalla through an ad-interim order and directed him to disclose all movable and immovable assets belonging to the estate. Jonathan Solomon was later appointed as administrator pendente lite.

During the inquiry, the administrator found that Sukhadwalla had opened a bank account after Dalal's death and that two substantial transfers had been made from it. One such transfer involved Rs 17,08,147 being transferred to M/s Amoha Traders Pvt Ltd.

The administrator sought directions for recovery of the money along with interest.

The inquiry also revealed what the Supreme Court described as another "shocking" fact. While it was claimed that the appellant Trust was a Parsi family trust created in 1943, Sukhadwalla allegedly attempted to project that it had instead been created in 1954 by Naval Tata.

According to the administrator's report, the inquiry revealed a conspiracy involving Sukhadwalla and another individual, Jimmy Panday. The report alleged fabrication of documents, diversion of estate funds and repeated non-cooperation by Sukhadwalla despite several court orders directing disclosure of bank accounts, property transactions and other material information.

Based on these findings, the single judge concluded that the conduct of Sukhadwalla and the other noticees was obstructive and deceitful, and that civil remedies alone would not sufficiently protect the estate. The high court therefore exercised its inherent jurisdiction under Article 215 of the Constitution and directed the administrator to initiate criminal proceedings.

The division bench later upheld that decision, and the Supreme Court found no reason to interfere.

"In our opinion, the division bench assigned concrete and justifiable reasons for upholding the order passed by the single judge," the Bench held.

Court finally directed that once the Prothonotary submits the report in terms of the high court's directions, the competent investigating agency shall carry out the investigation expeditiously and submit periodic progress reports before the high court.

Case Title: Bai Avabai Hormusji Tata Trust Vs Shernaj Faroukh Lawyer & Ors

Bench: Justices Pankaj Mithal and Prasanna B Varale

Date of Judgment: May 25, 2026