The Supreme Court, in its order dated 7th April 2021, addressed a petition involving the freezing of accounts linked to an organization under investigation by the Telangana State CID for alleged violations of the Foreign Contribution (Regulation) Act (FCRA). The Court granted the petitioners permission to utilize their frozen accounts for salary and institutional expenses, provided they maintain proper and complete statements of accounts. These statements must be audited by a Chartered Accountant and submitted quarterly to the Investigating Officer or Trial Court.

The petitioners, who manage 103 educational institutions and more than a dozen primary health centers across 18 states, are to continue defending their case in other courts on its own merits. The Court emphasized that the order aims to ensure the smooth functioning of the institutions and does not prejudice the ongoing legal proceedings. The Court also clarified that no findings were made on the merits of the contempt allegations raised during the proceedings.

1. Background and Previous Orders:

• Initial FIR and Investigation: An FIR was lodged by Respondent No. 3 on 29th September 2016 under Sections 409, 420, 477(A), and Section 37 of the FCRA, leading to an investigation by the Economic Offences Wing (CID), Telangana State.
• Legal Challenges: Various legal challenges arose, including the rejection of an FIR challenge in 2017 and subsequent proceedings in the High Court and Supreme Court, leading to the freezing of the petitioners' accounts on 21st November 2020.
• Respondent-State’s Admission: Telangana State CID admitted that the CBI is the competent authority for investigations involving amounts exceeding ₹1 crore, as per a notification by the Ministry of Home Affairs.

2. Supreme Court’s Interim Order (7th April 2021):

• The Court allowed the petitioners to use their frozen accounts specifically for salary and institutional expenses.
• The petitioners were directed to maintain proper and complete statements of accounts, audited by a Chartered Accountant, and to submit quarterly reports to the Investigating Officer or Trial Court.

3. Submissions by Counsel:

• Petitioners' Counsel: Mr. Shyam Divan argued for making the interim order absolute, allowing the petitioners to utilize their accounts while contesting pending proceedings on their merits.
• Respondents' Counsel: The State and complainant acknowledged the petitioners’ need to operate their institutions but insisted on regular audits and proper maintenance of accounts.

4. Court’s Final Orders:

• The Court made the interim order of 7th April 2021 absolute, permitting account utilization with strict compliance to financial reporting and auditing requirements.
• The Court left the ongoing proceedings at other forums to continue as per law, without commenting on the merits of the case.

5. Conclusion:

• The Court disposed of all pending applications, including the contempt petition, stressing the need for the smooth functioning of the petitioners' institutions while allowing the legal process to proceed without prejudice.