The Supreme Court of India, on Tuesday, opted not to interfere with the orders issued by the Madras High Court concerning a law firm implicated in an alleged fraudulent land transaction. The firm, Legal Attorneys and Barristers, reportedly received approximately ₹7 crore through its bank account from the proceeds of this controversial land sale [Legal Attorneys and Barristers v. Phoenix ARC]. The Supreme Court’s Bench, comprising Chief Justice of India Surya Kant and Justice V Mohana, declined to annul the police summons directed at the firm. However, the Court did extend a two-week protection from any coercive actions against Hussain Mueen Farooq, a lawyer linked to the firm.
This legal case revolves around land originally owned by a charitable trust, which was sold to the Chennai Metro Rail Limited (CMRL). Allegations have surfaced suggesting that the transaction was fraught with fraud, purportedly aiming to bypass a lien established on the property by Phoenix ARC Limited, an asset reconstruction company. Earlier in the year, Phoenix ARC lodged a contempt of court case with the Madras High Court, citing willful non-compliance with its previous rulings. These orders had determined that the land sale was designed to nullify Phoenix ARC’s secured debt.
During the contempt proceedings, a Division Bench of the Madras High Court observed that out of the ₹13.18 crore credited to the Samarpana Charitable Trust’s account, ₹6.81 crore was subsequently transferred to Legal Attorneys and Barristers. Consequently, on June 3, the High Court added the law firm as a party in the contempt case against Phoenix. Furthermore, on June 5, an order was issued to freeze the bank account that received the ₹6.81 crore, along with two other accounts belonging to the charitable trust. The Central Crime Branch was instructed to investigate the movement of funds into the law firm’s account. The law firm contested these actions at the Supreme Court.
The firm’s counsel argued that the funds were payments for professional services rendered to the charitable trust, having represented it in 69 cases with 627 appearances. Nevertheless, the Supreme Court advised that these arguments should be presented before the Madras High Court. “Go and explain this thing to the High Court. High Court has merely issued a notice to you (in the contempt of court case),” the Supreme Court stated.
Concerns were also raised by the firm regarding the police summons, citing attorney-client privilege over potentially sought information. The Supreme Court, however, questioned the firm’s reluctance to cooperate with the police, emphasizing that they could still uphold the confidentiality of client information and refuse to divulge privileged details.
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The Court further remarked on the serious allegations against the law firm, noting the High Court’s finding of the land transaction being fraudulent and the significant portion of the proceeds being channeled into various accounts, including that of the law firm. “In fact, your conduct is under scanner before the High Court. There are very doubtful transactions, ₹7 crore almost you have taken,” the Court noted.
While the Supreme Court refrained from overturning the High Court’s orders dated June 3 and June 5, it extended limited protection to the firm’s representative. “We do not find any ground to interfere with the orders passed by the High Court,” the Court declared. The firm is given the liberty to present its defense in the contempt proceedings before the High Court.
Regarding the police summons, the Court instructed that if Farooq appears before the authorities and provides an explanation, no coercive measures shall be taken against him for a fortnight. Senior Advocate Meenakshi Arora represented the law firm during these proceedings.
