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

Most viewed this month

Partition proceedings are vitiated even if single co-sharer is not made party or is not served in accordance with law

Cause Title :  Bhagwant Singh vs  Financial Commissioner (Appeals) Punjab, Chandigarh,  CWP-2132-2018 (O&M), High Court Of Punjab & Haryana At Chandigarh Date of Judgment/Order : 31.08.2022 Corum : Hon’ble Mr. Justice Sudhir Mittal Background A large parcel of land was owned by the Nagar Panchayat. Thereafter, some of the co-sharers sold their shares to third parties including the petitioners herein. On 22.11.1995, respondents No.3 to 5 filed an application for partition of the land. The petitioners were not impleaded as parties.  On completion of proceedings, sanad was issued on 28.08.1996. Vide two separate sale deeds dated 28.05.2008 respondents No.3 and 5 sold some portion in favour of respondent No.6 and 7. These respondents sought implementation of the sanad resulting in issuance of warrants of possession dated 05.06.2008. Allegedly, it was then that the petitioners realized that joint land had been partitioned and that proceedings h...

Power of Attorney holder can also file cheque bounce cases: Supreme Court

The Supreme Court has held that a criminal complaint in a cheque bounce case can be filed and pursued by a person who holds a power of attorney (PoA) on behalf of the complainant. A three-judge bench headed by Chief Justice P Sathasivam gave the "authoritative" pronouncement on the issue, referred to it by a division bench in view of conflicting judgements of some high courts and the apex court. "We are of the view that the power of attorney holder may be allowed to file, appear and depose for the purpose of issue of process for the offence punishable under Section 138 of the Negotiable Instruments Act (which deals with cheque bounce cases)," the bench, also comprising justices Ranjana Prakash Desai and Ranjan Gogoi, said. The bench, in its judgement, said, "...we clarify the position and answer the questions in the following manner: "Filing of complaint petition under Section 138 of Negotiable Instruments Act through PoA holder is perfectly legal...

Christian who reconverts as Hindu SC will get quota benefits

Amid the controversy over “ghar wapsi”, the Supreme Court on Thursday ruled that a person who “reconverts” from Christianity to Hinduism shall be entitled to reservation benefits if his forefathers belonged to a Scheduled Caste and the community accepts him after “reconversion”. Citing articles by B R Ambedkar and James Massey, and reports by Mandal Commission and Chinappa Commission, the court said: “There has been detailed study to indicate the Scheduled Caste persons belonging to Hindu religion, who had embraced Christianity with some kind of hope or aspiration, have remained socially, educationally and economically backward.” The bench of Justices Dipak Misra and V Gopala Gowda held that a person shall not be deprived of reservation benefits if he decides to “reconvert” to Hinduism and adopts the caste that his forefathers originally belonged to just because he was born to Christian parents or has a Christian spouse. Expanding the scope of a previous Constitution benc...