TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Join Channel
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether a complaint under the Negotiable Instruments Act, 1881 for dishonour of a cheque issued on behalf of a trust is maintainable against the Chairman or trustee without impleading the trust as an accused; (ii) Whether a trust is a juristic person or legal entity capable of suing or being sued in its own name for the purposes of such prosecution.
Issue (i): Whether a complaint under the Negotiable Instruments Act, 1881 for dishonour of a cheque issued on behalf of a trust is maintainable against the Chairman or trustee without impleading the trust as an accused.
Analysis: The liability under Sections 138 and 141 of the Negotiable Instruments Act, 1881 was examined on the footing that the cheque had been signed and issued by the respondent as authorised signatory. The established principle that a cheque signatory can be proceeded against where the offence is otherwise made out was applied. The Court also considered that the question was not merely one of vicarious liability in the abstract, but whether the trust itself had to be arraigned as a principal accused before the trustee could be prosecuted.
Conclusion: The complaint was held to be maintainable against the trustee who signed the cheque, even though the trust was not impleaded as an accused.
Issue (ii): Whether a trust is a juristic person or legal entity capable of suing or being sued in its own name for the purposes of such prosecution.
Analysis: Referring to the Indian Trusts Act, 1882, the Court held that a trust is an obligation attached to property and that the duty to maintain and defend suits lies on the trustee. On that basis, and for the purpose of prosecution under the Negotiable Instruments Act, 1881, the trust was treated as lacking independent legal personality. The Court rejected contrary views that equated a trust with a company or treated it as a juristic person for this purpose.
Conclusion: A trust was held not to be a separate juristic person or legal entity required to be arraigned as an accused in the present context.
Final Conclusion: The impugned quashing order was set aside and the complaint proceedings were restored for continuation in accordance with law.
Ratio Decidendi: In a prosecution under the Negotiable Instruments Act, 1881 based on a cheque issued on behalf of a trust, the trustee or authorised signatory may be proceeded against without impleading the trust as an accused because the trust is not treated as a separate legal entity for this purpose.
TaxTMI 
