Setalvad and her NGO, Citizen for Justice and Peace (CJP), had challenged a Gujarat High Court decision upholding a magisterial court order for a probe against Pathan and others.
The activist was not a party to the plea filed by Pathan before the trial court, but she had moved the apex court as any investigation against her former aide would also bring her into the probe's ambit.
A bench of Justices Arun Mishra and M M Shantanagoudar disposed of their appeal by granting liberty to them to raise their grievances before the appropriate courts below the top court.
With the disposal of Setalvad and CJP's petitions, the stay on the High Court's order stands vacated.
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During the hearing, senior counsel Kapil Sibal, appearing for CJP and Setalvad, questioned the procedure adopted by the trial court in directing the Gujarat Police to investigate the case.
When Sibal claimed that the "whole purpose was to target" Setalvad and CJP, Additional Solicitor General Tushar Mehta, appearing for Gujarat, said "there is no question of targetting".
Sibal said Pathan had moved an application before the court holding trial in the riots cases seeking to be examined as a court or prosecution witness, but that plea was rejected.
"The court says Rais Khan Pathan was not reliable at all but still this order was passed. How can any court, based on an application by this untrustworty fellow (Pathan), launch prosecution against a third person without any evidence," he asked.
Sibal maintained that there was no evidence against CJP or Setalvad in the matter and she was not a party before the trial court.
However, Mehta alleged that the activist and CJP had "stalled" the investigation in the case.
During trial in the riot case, the additional sessions judge had on December 3, 2010 rejected the application of Pathan seeking to be examined as a court or prosecution witness to "prove that some of the witnesses and victims had falsely implicated him in fabricating the evidence".
However, the sessions court had directed and authorised the registrar, City Civil and Sessions Court, Ahmedabad to make a complaint in writing for the offences under the Indian Penal Code (IPC) against Pathan and others.
These relate to false evidence, giving or fabricating false evidence with the intent to procure conviction of capital offence or imprisonment for life or imprisonment for seven years or upwards and using as true such declaration knowing it to be false among others.
The order was challenged before the high court which on July 11, 2011 declined to interfere with the police probe, but clarified that "basically the aforesaid police investigation would be with respect to unnamed accused persons who are yet to be traced and whose names are yet to be disclosed during the course of investigation".
Pathan had not challenged any of the findings and observations made against him that a prima facie case was made out for the various offences under the IPC.