Ahmedabad city sessions court judge H C Vora also rejected anticipatory bail plea of two others who were members of the Gulbarg Society association.
The court observed in its order that prima facie documentary evidence exists against the accused persons.
"There is a prima facie documentary evidence against the accused persons which needs a thorough investigation," the judge said in the order.
The prosecution had earlier argued that Setalwad and others have usurped funds meant for riot victims and collected donations from India and abroad in the name of making a museum at the Gulburg Society, but later they used those funds for other purposes.
The court accepted the prosecution's arguments as facts, sayin,g "Police investigation is needed to be conducted in the presence of the accused."
"The court prima facie believes that the fund collected for the riot survivor victims was not used for them," the court said.
"The fund was used for the other purpose by using different credit cards and the donation amount was not even used for making a mausoleum," the order said.
On the issue of suppression of facts as alleged by the prosecution, the judge observed, "The applicants (Setalwad) and others had suppressed the facts in the Supreme Court on February 24 when they already had filed an anticipatory bail plea in sessions court on February 21, they did not put that factual detail there in apex court."
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