This Supreme Court judgment holds that under the Negotiable Instruments Act, 1881, a Trust is not a juristic person capable of being sued. A complaint for a dishonored cheque issued on behalf of a Trust is maintainable against the Trustee who signed it, without needing to array the Trust itself as an accused. The ruling clarifies that vicarious liability attaches directly to the responsible Trustee.
Facts Of The Case:
The dispute arose from a financial arrangement concerning William Carey University. Facing a crisis, its sponsoring body, ACTS Group, entered an MoU with Orion Education Trust on 12.10.2017 to hand over the university’s management. The Respondent, Vijaykumar Agarwal, was Orion’s Chairman. In this capacity, he authorized the Appellant, Sankar Padam Thapa, to liaise with authorities for a smooth transition. Following the completed transition, the Respondent, as Orion’s authorized signatory, issued a cheque dated 13.10.2018 for Rs. 5 crores in favour of the Appellant for his services. Upon presentation on 07.12.2018, the cheque was dishonoured due to “insufficient funds.” After statutory notice, the Appellant filed a complaint before the Judicial Magistrate, Shillong, against the Respondent for offences under Sections 138/142 of the NI Act and Section 420 IPC. The Respondent challenged the complaint’s maintainability, arguing that Orion Trust, as a necessary juristic entity, was not made an accused. The Meghalaya High Court accepted this argument and quashed the proceedings. The Appellant then appealed to the Supreme Court, leading to the present judgment on whether a complaint is maintainable against a Trustee alone when the Trust is not arrayed as an accused.
Procedural History:
The legal proceedings commenced when the Appellant, Sankar Padam Thapa, filed a complaint case (Criminal Case No. 44(S)/2019) before the Judicial Magistrate, Shillong, against the Respondent, Vijaykumar Agarwal, following the dishonour of a cheque. The Trial Court issued a summoning order against the Respondent on 11.02.2019. The Respondent then challenged this order by filing Criminal Petition No. 31/2019 under Section 482 of the Code of Criminal Procedure, 1973, before the High Court of Meghalaya. The High Court, in its Impugned Judgment dated 21.11.2022, allowed the petition and quashed the complaint and the summoning order, holding it was not maintainable without making the Trust an accused. Aggrieved by this, the Appellant filed a Special Leave Petition (Criminal) No. 4459/2023 before the Supreme Court of India. The Supreme Court granted leave, registered the matter as Criminal Appeal No. ____ of 2025, heard the arguments, and delivered the present judgment, setting aside the High Court’s order and restoring the criminal case.
READ ALSO:Supreme Court: Right to Cross-Examine Survives Even If Written Statement Is Not Filed
Court Observation:
The Supreme Court observed that a Trust, as defined under the Indian Trusts Act, 1882, is an obligation annexed to property and not a separate legal entity or juristic person capable of suing or being sued. The obligation to “maintain and defend” suits rests solely on the Trustees. Applying this principle to the Negotiable Instruments Act, the Court held that a complaint for a dishonoured cheque is maintainable against the Trustee who signed it, without the need to array the Trust as a co-accused. The Court reaffirmed the principle from SMS Pharmaceuticals Ltd. that a person holding a position akin to a Managing Director, or the signatory of the cheque, is prima facie responsible for the day-to-day affairs and the incriminating act. Consequently, the vicarious liability under Section 141 of the NI Act can be fastened directly on such a Trustee. The Bench overruled contrary views from several High Courts that had erroneously equated a Trust with a ‘company’ possessing independent legal personality.
Final Decision & Judgement:
The Supreme Court allowed the appeal and set aside the Impugned Judgment of the Meghalaya High Court. The Court held that the complaint under Section 138 of the Negotiable Instruments Act, 1881, was maintainable against the Respondent in his capacity as the Chairman and authorized signatory of Orion Education Trust, even though the Trust itself was not made an accused. It ruled that a Trust is not a juristic person and the obligation to defend suits lies with the Trustees. Consequently, the criminal proceedings in Criminal Case No. 44(S)/2019 before the Judicial Magistrate, Shillong, were restored and directed to proceed expeditiously in accordance with the law.
Case Details:
Case Title:Sankar Padam Thapa vs. Vijaykumar Dineshchandra Agarwal Citation: 2025 INSC 1210. Criminal Appeal No.:(arising from Special Leave to Appeal (Criminal) No. 4459/2023) Date of Judgment:October 09, 2025 Judges/Justice Name: Justice Ahsanuddin Amanullah & Justice Prashant Kumar Mishra
Download The Judgement Here