Chief public prosecutor Sudhir Brahmbhatt informed magistrate S P Vora that it would appoint a special public prosecutor in the case and adjourned the matter for hearing on January 21.
"In accordance with the government's instruction, I moved an application stating that a public prosecutor will be representing the government in the case," Chief Public Prosecutor Sudhir Brahmbhatt said.
Setalvad and her husband Anand were granted anticipatory bail by Bombay High Court for three weeks on January 10.
The complainant had alleged that the accused grabbed photographs and video footage of Gulbarg Society and uploaded them on two websites of the Citizen for Justice and Peace (CJP) and the Sabrang Trust, both run by Teesta Setalvad and Javed Anand.
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As per the complainant, the accused collected several crores of rupees without the consent of Gulbarg Society residents. It also alleged that out of the collected funds, Rs 1.51 crore was used for "personal" purposes between 2007 and 2011.
Tanvir's mother Zakia had lodged a complaint against Gujarat Chief Minister Narendra Modi and others for their alleged involvement in the 2002 riots.
However, last month, the metropolitan court had upheld the clean chit to Modi and others riots.