2023 (10) TMI 585 - HC - Indian Laws

Trust as Juristic Person Liable Under Section 138 N.I. Act

Prana Educational And Charitable Trust, Sheeba Kochoth, Versus State Of Kerala, Lincy,

The court held that a Trust can be prosecuted under Section 138 of the N.I. Act, recognizing it as a juristic person liable for punishment. It also ... Dishonour of Cheque - insufficient funds - vicarious liability - prosecution against the Trust and the Managing Trustee - private or public charitable Trust - juristic person for the purpose of the N.I. Act or not - whether Trust, either private or public, is a company in terms of Section 141 of the N.I. Act? - HELD THAT:- On scrutiny of the case put up by the accused before the trial court and the Appellate Court, it appears that the accused raised contentions before the trial court by filing a statement under Section 313(5) of Cr.P.C. that the accused have not committed any offence. The accused have not issued cheque for Rs. 9,50,000/- to the complainant. The 2nd accused was one of the Managing Trustees of Prana Educational and Charitable Trust which is a non profitable charitable institution. That trust is not conducting real estate business. Rameshan, husband of the 2nd accused, was having close friendship with the husband of the complainant, and during that time, the accused and her husband deposited amount in Prana Charitable Trust - The complainant filed the case misusing the cheque issued as a security by writing the amount and date in that cheque. The complainant is not entitled to get any amount from the accused. The accused are not liable to pay compensation or interest to the complainant. The conviction imposed by the trial court and confirmed by the Appellate Court does not require any interference. Coming to the sentence, the same also is very reasonable and the same also does not require any interference - Revision petition dismissed. Issues Involved:1. Can a Trust be prosecuted for an offence punishable under Section 138 of the N.I. ActRs.2. Is a charitable Trust recognized as a juristic person under the N.I. ActRs.3. Is a Trust considered a company under Section 141 of the N.I. ActRs.Summary:Issue 1: Prosecution of Trust under Section 138 of the N.I. ActThe main contention raised by the accused was that the prosecution against the Trust and its Managing Trustee was not legally sustainable since a Trust is not a juristic person as defined under Section 141 of the N.I. Act. The court analyzed various judgments, including the Madras High Court's decision, which held that a Trust could be prosecuted under Section 138 of the N.I. Act, though it can only be imposed with fine or compensation. The court concluded that a Trust, being a drawer of a cheque, is liable for punishment under the N.I. Act.Issue 2: Recognition of Charitable Trust as a Juristic PersonThe court referred to the definition of 'drawer' and other related terms under Section 7 of the N.I. Act and concluded that a public charitable Trust, being a drawer, is liable for punishment under the N.I. Act. The Madras High Court's judgment was cited, which held that a Trust, either private or public, is a juristic person who is liable for punishment for the offence under Section 138 of the N.I. Act.Issue 3: Trust as a Company under Section 141 of the N.I. ActThe court discussed whether a Trust is a company in terms of Section 141 of the N.I. Act. The Madras High Court, after considering various statutory provisions, held that a Trust, either private or public, having either a single trustee or multiple trustees, is a company under Section 141 of the N.I. Act. The court also referred to judgments from the Bombay and Gujarat High Courts, which interpreted the term 'association of individuals' to include clubs, trusts, and Hindu Undivided Family businesses, applying the principle of ejusdem generis.Concurrent Verdicts and Presumptions under Sections 118 and 139 of the N.I. ActThe court upheld the concurrent verdicts of conviction and sentence imposed by the trial court and the Appellate Court. It reiterated the well-settled law regarding the presumptions under Sections 118 and 139 of the N.I. Act, citing the Supreme Court's decisions in Rangappa v. Sri. Mohan and Bir Singh v. Mukesh Kumar. The court emphasized that the accused must rebut the presumption of a legally enforceable debt or liability by a preponderance of probabilities.Revisional Jurisdiction and Evidence ReappreciationThe court highlighted the limited scope of revisional jurisdiction under Sections 397 and 401 of Cr.P.C., stating that it cannot reappreciate evidence unless there is a glaring feature amounting to a gross miscarriage of justice. The court found no such feature in this case and concluded that the evidence supported the complainant's case.ConclusionThe revision petition was dismissed, and the court directed the accused to pay the fine/compensation imposed by the trial court within two weeks, failing which the trial court was instructed to execute the sentence as per law.