SC Refuses To Interfere With HC Orders Involving Law Firm In Chennai Metro Compensation Contempt Case

Observing that the case involved allegations of a "complete fraud played upon the judicial system," the Supreme Court on Tuesday declined to interfere with Madras High Court orders that brought law firm The Legal Attorneys and Barristers into contempt proceedings stemming from allegations that Samarpana Charitable Trust secured ₹13.18 crore in Chennai Metro Land acqusition compensation after concealing an existing mortgage and ongoing recovery proceedings from the Court.

A bench comprising Chief Justice Surya Kant and Justice V. Mohana refused to stay the Madras High Court's June 3 and June 5 orders. The bench, however, granted the firm liberty to approach the High Court for appropriate relief in relation to police summons and related directions.

The law firm was not originally a party to the contempt proceedings. Its involvement arose after bank statements produced before the High Court showed that ₹6.81 crore out of the ₹13.18 crore compensation amount received by the Trust from CMRL had been transferred to The Legal Attorneys and Barristers.

Taking note of the transactions, the High Court impleaded the firm as a party to the proceedings. It also directed further tracing of the funds, froze accounts linked to the Trust, one of its trustees, and the law firm; and ordered investigators to examine the flow of money to the firm.

Senior Advocate Meenakshi Arora, appearing for the firm, submitted that the payments represented professional fees received under a valid engagement agreement. She said the firm had appeared in 69 matters involving the Trust and related parties. Arora argued that the firm's impleadment and the issuance of police summons raised concerns relating to attorney-client privilege.

She also sought protection against coercive action and undertook that the firm would place all relevant agreements, billing records, payment details and appearance records before the High Court.

The Supreme Court, however, found no ground to interfere with the High Court's orders.

"We do not find any ground to intervene with the notices/orders passed by the High Court. Liberty is granted to the petitioners to appear and submit their explanation. As regards the notices issued by the police authorities, they shall be at liberty to approach the High Court for grant of necessary protection. We have not expressed any opinion on merits," the bench said.

The dispute stems from a wider battle between Phoenix ARC and Samarpana Charitable Trust over property acquired by CMRL.

In an October 2025 judgment, the Madras High Court found prima facie merit in allegations that the Trust had obtained a 2022 order permitting the transfer of property to CMRL without disclosing an existing mortgage, pending SARFAESI proceedings, and debt recovery litigation. The court recorded prima facie findings of suppression of material facts, collusion, and possible diversion of public funds.

During subsequent contempt proceedings, the High Court examined bank records relating to the compensation amount received by the Trust from CMRL. The records showed that substantial portions of the money had been transferred to various accounts, including ₹6.81 crore to The Legal Attorneys and Barristers.

By its June 3 order, the High Court impleaded the law firm after noting that a significant portion of the compensation amount had been transferred to it and directed further tracing of the funds.

Two days later, the Court froze accounts linked to the Trust, one of its trustees, and the law firm. It also directed that the police investigation specifically examine the flow of funds to the firm.

The matter remains pending before the Madras High Court.