The CBI had registered a case against Grover and the NGO over alleged violation of the Foreign Contribution (Regulation) Act (FCRA) in use of foreign funds received by Lawyers Collective.
The petitioners approached the high court Thursday seeking that the FIR registered by the CBI against the NGO and Grover in June be quashed.
Senior Advocate Aspi Chinoy, their lawyer, denied all charges of FCRA violation, and alleged that the FIR and the Ministry of Home Affairs complaint preceding it were "ex facie (on the face of it) examples of abuse of power".
The CBI registered the FIR following a complaint by the MHA in May alleging violation of FCRA provisions. While the FIR did not name Jaising as an accused, the MHA complaint, which is part of the FIR, mentioned her name and made specific allegations against her.
The CBI alleged that the NGO received foreign funds between 2009 and 2015, but failed to disclose a major part of it.
CBI counsel and Additional Solicitor General Anil Singh said that Grover and Jaising used foreign funds for "personal benefits".
He also said that according to the MHA complaint, during her tenure as additional solicitor general, Jaising continued to draw remuneration from the NGO. This remuneration money came out of foreign contributions received by the NGO, he said.
Advocate Chinoy, however, argued that the alleged undisclosed foreign funds had been received by the NGO not as a "donation or grant", but as "remuneration for a specific task". Therefore, he argued, the said money was not covered under the FCRA.
He also told the bench that Jaising had taken the Law Ministry's permission for drawing remuneration from Lawyers Collective while she was ASG.
The CBI, however, argued that the permission should have come from the MHA and not the Law ministry. Besides, Singh said, the Union government did not know at the time that the remuneration was coming out of foreign funds.
The petitioners also pointed out that the MHA complaint was based on an inspection report from 2016 that had pointed out a single violation of non-disclosure under the FCRA. At the time, following the inspection report, the MHA had issued an order cancelling the registration of Lawyers Collective for receiving foreign funds.
This cancellation order was challenged in the high court by the NGO in 2017, and is currently pending before a single judge, the petitioners said.
While granting interim relief, the division bench led by Justice More took note of the petitioners' submission that the CBI's act of filing an FIR on the basis of a two-and-half years old report, when the matter had reached the court, was questionable.
"We find that the allegations against the petitioners are already sub-judice before a single bench of this court. It is pertinent to note that there has been no change in circumstances or on the material on record," the bench said.
"The respondent number one (MHA) waited for over two years and in May this year, issued directions for investigations. The investigation is being carried out on the basis of an inspection report from 2016, but the cancellation order issued later...is sub-judice," the bench said.
The bench directed the CBI to file a reply by August 19 and granted the prayer of interim protection till then.