Skip to main content

Sec.138 NI Act - Complaint Not Maintainable Against Trustees For Dishonour Of Cheque

In Crl. M. C. No. 3799, 3801, 3804, 3827, 3832, 3843, 3844, 3847, 3852 of 2018, in the appeal before the Kerala High Court, the petitioners, who were the trustees of a trust along with the trust, were arraigned as the accused persons in a complaint filed by a person before the Magistrate Court for offence under Section 138 of the NI Act. The petitioners approached the High Court seeking to quash the complaint filed against them.

The primary question before the High Court was whether a trust and its trustees fall within the definition of 'company' under the explanation to section 141.

As per the definition of 'company' under explanation to section 141, "company" means any body corporate and includes a firm or other association of individuals. Therefore, in order to answer whether section 141 can be invoked in case of a trust and its trustees, it became necessary for the Court to find out whether a trust means a 'body corporate', 'a firm' or an 'association of individuals'. The findings of the Court are given below.

The Court observed that as per S.3 of the Trusts Act, a "Trust" is an obligation annexed to the ownership of property, and arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another, or of another and the owner. Looking into the definition of trust and other provisions of the Indian Trust Act, 1882, Court observed that 'Trust' is not capable of suing and being sued in a court of law, even though the trustees can maintain and defend suits for the preservation and protection of the trust property. Hence the Court held that a "'Trust' is not like a juristic person or a legal entity, as a juristic person has a legal existence of its own and hence it is capable of suing and being sued in a court of law. Hence a 'Trust' is not like a body corporate, which has a legal existence of its own and therefore can appoint an agent.

The Court categorically observed that a trust is not a firm.

On going through various precedents, Court observed that an association of persons/ body of individuals are a combination of persons coming together for a common action with a common understanding and a purpose to achieve some common benefit. As trustees are not beneficiaries and not have any common benefit, court held that trustees are not association of persons/ body of individuals. Further, Court also relied on the ratio in Pratibha Pratisthan & Ors. v. Manager, Canara Bank & Ors (2017 (3) SCC 712) where it was held that Trust is not a 'person' as defined in Consumer Protection Act, 1986 based on the reasoning that Trust is not an 'association of persons'.

Thus, the Court concluded that as a trust is not a body corporate or association or individuals and that it does not fall within the meaning of 'company' under section 141 of the NI Act, no prosecution is possible against the petitioner trust and trustees invoking section 141 and quashed the complaint invoking powers under section 482 of CrPC.

Article referred: https://www.livelaw.in/news-updates/sec138-ni-act-complaint-not-maintainable-against-trustees-for-dishonour-of-cheque-kerala-hc-145533

Comments

Post a Comment

Most viewed this month

How to know if a temple/mandir is Public or Private?

In Shri Ram Mandir Indore v. State of Madhya Pradesh, the appellant had contended before the Supreme Court that the Ram Mandir in question is a private temple established by predecessor Gurus and that the properties had been given to the suit temple as Inam and Ram Das was not a mere pujari but the Mahant of the said temple entitled to manage and administer the temple and the suit properties. The appeal was against the judgment of the Madhya Pradesh High Court which had declared the temple as public and the suit property vested in the Deity; and Ram Das and then Bajrang Das are only pujaris and not Mahant-Manager of the temple. The Supreme Court agreeing with the High Court noted the following points :- 1) In 2013, Madhya Pradesh Government published a Directory containing names of all public temples in District Ujjain updating till 31.12.2012, wherein the said temple has been shown as a public temple and Bajrang Das and Ram Das are only shown to be the pujaris. 2)...
Post a Comment
Read more

Dishonour of cheques - Jurisdiction and cause of action explained

In a landmark judgment, Hon'ble Supreme Court went to some length to define the cause of action and jurisdiction of cases under Section 138 of the Negotiable Instruments Act. While deciding in 2014 STPL(Web) 499 SC 1, Dashrath Rupsingh Rathod Vs. State of Maharashtra & Anr., the Hon'ble court said, one of the main issues faced by the court (a) from which stage do we consider a offence under Section 138 to have been caused (b) Where would the jurisdiction of the court lie if the cheque was drawn in city A and presented dishonored in City B ? After discussion on various past decisions, the Hon'ble court finally affirmed, " To sum up: (i) An offence under Section 138 of the Negotiable Instruments Act, 1881 is committed no sooner a cheque drawn by the accused on an account being maintained by him in a bank for discharge of debt/liability is returned unpaid for insufficiency of funds or for the reason that the amount exceeds the arrangement made with the bank. (...
Post a Comment
Read more

The recovery of vehicles by the financier not an offence - SC

Special Leave Petition (Crl.) No. 8907  of 2009 Anup Sarmah (Petitioner) Vs Bhola Nath Sharma & Ors.(Respondents) The petitioner submitted that  respondents-financer had forcibly taken away the vehicle financed by them and  illegally deprived the petitioner from its lawful possession  and  thus,  committed  a crime. The complaint filed by the petitioner had been  entertained  by  the Judicial Magistrate (Ist Class), Gauhati (Assam) in Complaint Case  No.  608 of 2009, even directing the interim custody of the vehicle (Maruti  Zen)  be given to the petitioner vide order dated  17.3.2009.  The respondent on approaching the Guwahati High  Court against this order, the hon'ble court squashed the criminal  proceedings  pending   before  the  learned Magistrate. After hearing both sides, the Hon'ble Supreme Court decided on 30th...
7 comments
Read more