2024 (4) TMI 332 - SC - Indian Laws

Freezing of Bank Accounts - investigation under the FCRA - Seeking to continue utilising their accounts for payment of salary and institutional expenses - Section 37 of the Foreign Contribution (Regulation) Act 2010 - Contempt petition - HELD THAT - The petitioner had taken the Court through various documents to show that actually there was no contempt and whatever amount had been withdrawn was within the permissible limits depending upon the expenses incurred in the previous years and the allegations of any withdrawal from the accounts for purposes other than the salary and institutional expenses, is not correct. The petitions disposed off 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. The pending proceedings before all other forums to continue in accordance with law where it would be open for all the parties concerned to raise all such contentions as may be available under law. The contempt petition stand disposed of.

Summary

Issues Involved:
The issues involved in this case include challenge to FIR under various sections, freezing of accounts, jurisdiction of investigating agencies, and compliance with court orders regarding maintenance of accounts and audit reports.

Challenge to FIR:
The respondent lodged FIR under Sections 409, 420, 477(A) and Section 37 of the Foreign Contribution (Regulation) Act 2010. The challenge to the FIR was rejected earlier, directing for expeditious investigation and further legal action. Subsequent appeals and petitions were made to different forums seeking changes in investigating agencies, which led to freezing of the petitioners' accounts by CID Telangana State. The High Court rejected the challenge to the freezing of accounts, leading to the present appeal before the Supreme Court.

Jurisdiction of Investigating Agencies:
A letter from the State of Telangana raised concerns about the jurisdiction of the State CID Unit in conducting the investigation related to the Foreign Contribution (Regulation) Act when the amount involved exceeded one crore. It was contended that the CBI is the competent authority for such cases. The Court acknowledged this concern and stayed the order of attachment dated November 21, 2020, specifically in relation to salary and institutional expenses. The petitioners were directed to maintain proper accounts for these expenses until the matter was further reviewed.

Compliance with Court Orders:
The petitioners expressed their willingness to comply with the court's orders regarding the utilization of their accounts for salary and institutional expenses. They committed to maintaining proper accounts and participating in the legal proceedings against them. The State of Telangana and complainants emphasized the importance of maintaining audited accounts for transparency and availability to investigating agencies as required. The Court disposed of the petitions, making the interim order absolute, with the condition that the petitioners maintain proper accounts audited by a Chartered Accountant and provide quarterly statements to the Investigating Officer or Trial Court regularly. The Court clarified that the order was passed to ensure the smooth functioning of the educational and health institutions run by the petitioners without making any observations on the merits of the case.

Contempt Petition:
Despite attempts to press a Contempt Petition, the Court refrained from delving into that issue, leaving it open for the investigating agency or the Trial Court monitoring the utilization of the petitioners' accounts for specific expenses. The Court did not make any findings on the allegations of improper withdrawals from the accounts and focused on ensuring compliance with the orders regarding maintaining proper accounts and audit reports.

Conclusion:
The Supreme Court disposed of the petitions by making the interim order absolute, with a requirement for the petitioners to maintain proper and audited accounts, provide quarterly statements, and continue participating in legal proceedings. The Court emphasized the importance of transparency and compliance with legal directives for the smooth functioning of the institutions run by the petitioners. All pending applications, including the Contempt Petition, were also disposed of in the judgment.