The Ultimate Guide: NI Complaint Against a Trustee or Trust Chairman

TABLE OF CONTENTS

1                  Bibliographic Details: The Landmark Judgment on the NI Complaint Against a Trustee or Trust Chairman

This article analyzes a landmark Hon’ble Supreme Court of India Judgment that settles a critical legal question: the maintainability of a NI complaint against a trustee or trust chairman when the Trust itself is not made an accused. This Judgment provides essential clarity for both complainants and accused trustees involved in cheque dishonour cases.

The bibliographic details for the Judgment are as follows:

·      Title of the Judgment: Sankar Padam Thapa v. Vijaykumar Dineshchandra Agarwal

·      Citation Number: 2025 INSC 1210 ; CRIMINAL APPEAL NO. OF 2025 [@ SPECIAL LEAVE TO APPEAL (CRIMINAL) NO.4459/2023]

·      Name of the Hon’ble Judges: Hon’ble Mr. Justice Ahsanuddin Amanullah and Hon’ble Mr. Justice Prashant Kumar Mishra

·      Date of the Judgment: October 09, 2025

2                  Brief Facts: The NI Complaint Against a Trustee or Trust Chairman

The facts leading to this NI complaint against a trustee or trust chairman are straightforward.

2.1            Complainant’s Case: The Initial Step on How to Sue a Trust for a Cheque Dishonour Matter

The Complainant (Appellant, Sankar Padam Thapa) alleged that he was issued a cheque for Rs. 5,00,00,000/- (Rupees Five Crores Only). This cheque was issued for services he rendered in facilitating the transition of management for the William Carey University.

When the Complainant presented this cheque for payment, it was dishonoured with the endorsement ‘insufficient funds’. Following the dishonour, the Complainant sent a legal notice under Section 138 of the NI Act, which the Respondent received. Subsequently, the Complainant filed a complaint (Criminal Case No.44(S)/2019) before the Hon’ble Trial Court.

2.2            Accused’s Defense: Challenging the Vicarious Liability of a Trust Chairman

The cheque in question was drawn on the bank account of the ‘Orion Education Trust’ (Orion). The Accused (Respondent, Vijaykumar Dineshchandra Agarwal) was the Chairman of Orion and had signed the cheque as its authorized signatory.

The Accused’s primary defense was not on the merits of the transaction but on a technical legal ground. He challenged the complaint’s maintainability, arguing that Orion, the Trust, was a "juristic entity" and a "necessary party". He contended that since the Trust itself was not made an accused, no vicarious liability of a Trust Chairman could be established, and the complaint was non-maintainable.

3                  Case Timeline: Key Events in the NI Complaint Against a Trustee

The case progressed through the legal system as follows:

·      October 12, 2017: A Memorandum of Understanding was signed between ACTS Group and Orion Education Trust, of which the Respondent was Chairman.

·      October 13, 2018: The Respondent, as Chairman of Orion, issued the cheque for Rs. 5 Crores to the Appellant.

·      December 07, 2018: The Appellant presented the cheque, and it was dishonoured for "insufficient funds".

·      December 19, 2018: The Appellant (Complainant) sent the mandatory legal notice under Section 138 of the NI Act.

·      December 27, 2018: The Respondent (Accused) received the legal notice.

·      February 11, 2019: The Hon’ble Trial Court issued a Summoning Order against the Respondent.

·      2019 (Date not specified): The Respondent filed Criminal Petition No. 31/2019 before the Hon’ble High Court of Meghalaya, seeking to quash the complaint.

·      November 21, 2022: The Hon’ble High Court allowed the Respondent’s petition and quashed the criminal proceedings.

·      2023 (Date not specified): The Appellant (Complainant) filed a Special Leave Petition before the Hon’ble Supreme Court of India.

·      October 09, 2025: The Hon’ble Supreme Court delivered its final Judgment, allowing the appeal.

4                  Procedural History: Tracking the NI Complaint Against a Trustee or Trust Chairman

The journey of this NI complaint against a trustee or trust chairman highlights a significant conflict in legal interpretation between the Hon’ble High Court and the Hon’ble Supreme Court.

4.1            The Trial Court’s Summons

Following the filing of the complaint by the Appellant (Complainant), the Hon’ble Judicial Magistrate, Shillong (the "Trial Court") took cognizance of the matter. On February 11, 2019, the Hon’ble Trial Court passed a Summoning Order against the Respondent (Accused). In response, the Respondent entered his appearance and challenged the complaint’s maintainability, citing the "non-joinder of necessary parties".

4.2            High Court Judgment: The Effect of Non-Joinder of a Trust in a 138 Complaint

Instead of proceeding with the trial, the Respondent filed a petition (Criminal Petition No.31/2019) under Section 482 of the Code of Criminal Procedure, 1973, before the Hon’ble High Court of Meghalaya.

The Respondent’s main argument was that the complaint was non-maintainable because Orion, the Trust, was a "juristic entity" and a "necessary party" that had not been made an accused. Therefore, he argued, no vicarious liability could be placed on him as its Chairman.

The Hon’ble High Court accepted the Respondent’s argument. By its Final Judgment and Order dated November 21, 2022, the Hon’ble High Court quashed the criminal complaint and the Summoning Order issued by the Hon’ble Trial Court. This decision confirmed the Respondent’s view on the effect of non-joinder of a Trust in a 138 complaint, effectively ending the case in the Respondent’s favour at the High Court level.

5                  The Core Legal Question: Is Trust a Necessary Party in a Cheque Bounce Matter?

The Hon’ble High Court’s decision to quash the complaint brought a fundamental legal question to the forefront. This question formed the basis of the appeal before the Hon’ble Supreme Court of India.

The Hon’ble Supreme Court framed the issue for its consideration as follows:

"The question for consideration in the instant appeal is as to whether in the absence of a Trust being made an accused in a complaint under the Negotiable Instruments Act, 1881 (hereinafter referred to as the ‘NI Act’), when a Cheque has been issued on behalf of a Trust, the said complaint would be maintainable against the Chairman/a Trustee of the said Trust?"

This single question—Is Trust a necessary party in a cheque bounce matter?—was the central issue that the Hon’ble Supreme Court set out to answer, a decision that would directly impact the maintainability of the complaint and the vicarious liability of a Trustee.

Before the Hon’ble Supreme Court, both sides presented starkly contrasting legal arguments regarding the status of a Trust and the requirements of the NI Act.

6                  Complainant’s (Appellant’s) Arguments: Why the NI Complaint Against a Trustee or Trust Chairman is Maintainable

The Complainant’s (Appellant’s) counsel put forth two primary arguments to establish that the complaint was perfectly valid.

6.1            A Trust is Not a ‘Juristic Person’

The core of the Complainant’s argument was that a Trust is not a "legal entity" or "juristic person". The counsel argued that a Trust is merely an "obligation," as defined under the Indian Trusts Act, 1882.

·      It was submitted that a Trust itself is not capable of suing or being sued in a court of law.

·      The Complainant’s counsel relied on several High Court decisions, including those from the Hon’ble Kerala, Delhi, Madras, Gujarat, and Calcutta High Courts, which have held that a Trust is not a juristic person.

·      Relying on the Indian Trusts Act, 1882, it was argued that the law places the obligation to "maintain and defend all such suits" squarely on the shoulders of the Trustee, not the Trust.

·      Therefore, the Complainant argued that the concept of making the Trust a party was legally flawed, as only the Trustees can be impleaded to represent the Trust.

6.2            The Liability of the Signatory is Absolute

The second limb of the Complainant’s argument focused on the vicarious liability of a Trustee, specifically the signatory.

·      It was argued that the Respondent, being the Chairman and the person who signed the cheque, was prima facie responsible for the day-to-day business of the Trust.

·      The counsel relied on the Hon’ble Supreme Court’s own precedent in SMS Pharmaceuticals Ltd. v Neeta Bhalla.

·      It was highlighted that the Hon’ble Court in that case held that while a mere Director might need specific averments, the signatory of a cheque that is dishonoured "…is clearly responsible for the incriminating act and will be covered under sub-section (2) of Section 141.".

·      Thus, the Complainant argued that as the signatory, the Respondent’s liability was direct and did not depend on the Trust being made an accused.

7                  Accused’s (Respondent’s) Arguments: Why the Effect of Non-Joinder of a Trust in a 138 Complaint is Fatal

The Accused’s (Respondent’s) counsel argued that the Hon’ble High Court’s decision to quash the complaint was correct and that the effect of non-joinder of a Trust in a 138 complaint was fatal to the Complainant’s case.

7.1            A Trust is a ‘Juristic Person’

Contrary to the Appellant’s claims, the Respondent argued that a Trust is a juristic person, fully capable of suing and being sued.

·      The counsel relied on several High Court decisions, including from the Hon’ble Kerala, Bombay, and Madras High Courts, which had held that a Trust is a juristic person liable to be prosecuted for an offence under Section 138 of the NI Act.

7.2            The Trust is the ‘Principal Offender’

The Respondent’s main argument was built on the interpretation of Section 141 of the NI Act.

·      It was argued that the expression "company" in Section 141, which includes "any body corporate" or "other association of individuals," should be interpreted broadly to include a Trust.

·      Relying on this interpretation, the Respondent argued that the Trust (Orion) was the "principal offender".

·      Therefore, the Respondent’s counsel argued that in the absence of the "principal offender" (the Trust) being made an accused in the complaint, the prosecution against the Respondent, who was only vicariously liable, was vitiated and could not be maintained. This argument mirrors the established principle for companies, as laid down in cases like Aneeta Hada.

8                  Hon’ble Supreme Court’s Analysis and Final Judgment

The Hon’ble Supreme Court conducted a thorough analysis of both arguments and the conflicting legal precedents.

8.1            Clarifying the Vicarious Liability of a Trustee and Signatory

The Hon’ble Court first affirmed the law on the liability of a signatory. It reiterated the principles laid down in SMS Pharmaceuticals Ltd. and K K Ahuja v V K Vora.

·      The Hon’ble Court confirmed that a Managing Director, Joint Managing Director, or a signatory of a cheque is covered under Section 141 of the NI Act by virtue of their position and act.

·      It specifically endorsed the view from K K Ahuja that for a signatory of a cheque, there is no need to make a specific averment that they were in charge of the company’s business.

·      The Hon’ble Court stated: "The very fact that the dishonoured cheque was signed by him on behalf of the company, would give rise to responsibility under sub-section (2) of Section 141.". This principle was extended to the Respondent as the signatory Chairman of the Trust.

8.2            The Legal Status of a Trust: Not a ‘Legal Entity’

The Hon’ble Supreme Court then decisively settled the question of the Trust’s legal status in the context of the NI Act.

·      The Hon’ble Court found "substance in the reasoning" of the High Courts that held a Trust is not a ‘legal entity’ or ‘juristic person’.

·      It relied on the definition in the Indian Trusts Act, 1882, which defines a "trust" as an "obligation" , not an entity.

·      The Hon’ble Court pointed to Section 13 of the Trusts Act, which states that a "trustee is bound to maintain and defend all such suits". This, the Hon’ble Court reasoned, clearly "placed on the shoulders of a Trustee and not the Trust itself".

·      Therefore, the Hon’ble Court concluded, "a Trust does not have a separate legal existence of its own, making it incapable of suing or being sued".

8.3            Why a Trust is Different from a ‘Company’

The Hon’ble Court directly addressed the Respondent’s argument that a Trust should be treated as a "company" under Section 141.

·      The Hon’ble Court held that equating a Trust with a "company" is a "fallacy".

·      It referenced the landmark case of Salomon v A Salomon and Co. Ltd. and other cases to highlight that a company, by statute, is a "different person altogether" with a "legal entity of its own".

·      It concluded that this separate legal status "cannot be imported to a Trust". A Trust, it held, "operates through its Trustees, who are legal entities".

8.4            Overruling Conflicting High Court Judgments

The Hon’ble Supreme Court explicitly overruled the High Court judgments that were relied upon by the Respondent.

·      The Hon’ble Court declared that the views expressed in Prana Educational and Charitable Trust (supra) , Dadasaheb Rawal Co-op. Bank (supra) , Abraham Memorial Educational Trust (supra) , Mukund (supra) , and Bijaya Manjari Satpathy (supra) "run counter to what we have held".

·      It ruled that these judgments "do not lay down the correct position of law" and are "overruled in law".

8.5            Direction to Registry Regarding Pending Reference to Hon’ble Chief Justice

The Hon’ble Court’s direction regarding a pending reference is as follows:

9                  Conclusion: The Final Verdict on the NI Complaint Against a Trustee or Trust Chairman

The Hon’ble Supreme Court, after this comprehensive analysis, answered the core legal question in the affirmative. It held that a complaint under the NI Act is maintainable against a Trustee who has signed the cheque, without the requirement of making the Trust itself an accused party.

9.1            Operative Portion: Complaint Restored

Based on this finding, the Hon’ble Supreme Court delivered its final order:

·      The Hon’ble Court found the Impugned Judgment of the Hon’ble High Court to be "unsustainable".

·      It quashed and set aside the Hon’ble High Court’s Judgment.

·      As a result, the original complaint, Criminal Case No.44(S)/2019, was restored to its file before the Hon’ble Trial Court.

·      The Hon’ble Supreme Court allowed the appeal and directed the Hon’ble Trial Court to proceed with the case "in accordance with law" and with "due expedition," as the matter originated in 2019.

9.2            Key Takeaways for Complainants: How to Sue a Trust for a Cheque Dishonour Matter

For a complainant figuring out how to sue a Trust for a cheque dishonour matter, this Judgment provides critical and favourable clarity:

·      You can file the complaint directly against the Trustee(s). A complainant is not required to implead the Trust as an accused.

·      The signatory of the cheque is directly liable under Section 141(2) of the NI Act. A complainant does not need to separately aver that the signatory was in charge of the Trust’s affairs.

·      If your complaint has been quashed or is challenged on the ground of "non-joinder of the Trust," this Judgment is a direct authority to support the maintainability of your case.

9.3            Key Implications for Accused Trustees: Understanding the Vicarious Liability of a Trust Chairman

For an accused person, such as a Trustee or Trust Chairman, this Judgment narrows a potential line of defense:

·      The "Trust not accused" defense is no longer valid. An accused person cannot seek to have a complaint quashed merely because the Trust itself was not made a party.

·      The vicarious liability of a Trustee, especially a Trust Chairman who has also signed the cheque, is established by the act of signing.

·      The defense that a Trust is a "principal offender" like a company and must be impleaded first has been definitively rejected by the Hon’ble Supreme Court in the context of the NI Act.

·      Accused trustees must now defend the complaint on its merits, for instance, by demonstrating under the proviso to Section 141 that the offence was committed without their knowledge or that they had exercised all due diligence.

10              Frequently Asked Questions

Q: What is the main takeaway from the SC judgment on an NI complaint against a trustee or trust chairman?

The main takeaway is that an NI complaint against a trustee or trust chairman is perfectly maintainable even if the Trust itself is not made an accused party. The Hon’ble Supreme Court held that a Trust is not a "juristic person," and therefore, the complaint can be filed directly against the Trustee who signed the cheque.

Q: Is a Trust a necessary party in a cheque bounce matter?

No. The Hon’ble Supreme Court’s Judgment clarifies that a Trust is not a necessary party. The complaint is maintainable against the Trustee (like the Chairman) who signed the cheque, without the need to implead the Trust.

Q: How do I sue a Trust for a cheque dishonour matter? Who should I name in the complaint?

Based on this Judgment, the correct procedure is to file the complaint directly against the Trustee or Trustees who are responsible for the Trust’s affairs, especially the one who signed the cheque. The Hon’ble Supreme Court confirmed that a Trust is not a legal entity that can be sued, so you must sue the Trustees who act on its behalf.

Q: What is the vicarious liability of a Trustee in a cheque bounce case?

A Trustee’s vicarious liability, especially if they are the signatory of the cheque, is direct. The Hon’ble Supreme Court affirmed that the "…signatory of a cheque which is dishonoured is… clearly responsible for the incriminating act…" under Section 141(2) of the NI Act.

Q: What is the vicarious liability of a Trust Chairman in a cheque bounce case?

A Trust Chairman’s liability is direct, especially when they are the authorized signatory of the dishonoured cheque. The Hon’ble Court held that, like a Managing Director, a signatory Chairman is liable by virtue of their act of signing, and no specific averment of their day-to-day role is needed.

Q: What is the effect of non-joinder of a Trust in a 138 complaint? Will the case be quashed?

The effect of non-joinder of a Trust is not fatal to the complaint. This Judgment rules that a complaint cannot be quashed merely because the Trust was not made an accused. The complaint remains maintainable against the Trustee.

Q: Can I file a case against a trustee if the trust’s cheque bounced?

Yes. The Hon’ble Supreme Court’s ruling explicitly confirms that a complaint is maintainable against the Trustee (who signed the cheque) even if the Trust itself is not made an accused.

Q: Do I have to make the trust an accused in a 138 case? No. This Judgment establishes that there is no legal requirement to make the Trust an accused party in a complaint filed under Section 138 of the NI Act.

Q: The trust’s cheque bounced, who do I sue – the trust or the trustee? You should sue the Trustee.

The Hon’ble Supreme Court clarified that a Trust is just an "obligation" and not a "legal entity" capable of being sued. The legal responsibility to defend suits lies with the Trustee.

Q: Is a complaint maintainable if I only sue the signatory of the trust’s cheque?

Yes. The complaint is perfectly maintainable. The Hon’ble Supreme Court reiterated that the signatory of a dishonoured cheque is directly responsible under Section 141(2) of the NI Act.

Q: Can a 138 complaint against me (a trustee) be quashed if the trust is not an accused?

No. Following this Judgment, this defense is no longer valid. The Hon’ble Supreme Court has ruled that the complaint is maintainable against the Trustee even if the Trust is not impleaded.

Q: Is a cheque bounce case maintainable without impleading the trust?

Yes. The Hon’ble Supreme Court answered this exact question in the affirmative, restoring a complaint that had been quashed by the Hon’ble High Court on this very ground.

Q: Is a trust a ‘company’ under Section 141 of the NI Act?

No. The Hon’ble Supreme Court called this argument a "fallacy." It held that a company has a separate legal entity by statute, a status that "cannot be imported to a Trust."

Q: What is the legal status of a Trust according to this Judgment? Is it a "juristic person"?

According to the Judgment, a Trust is not a "legal entity" or "juristic person." It is an "obligation" annexed to the ownership of property, as defined by the Indian Trusts Act, 1882. It is incapable of suing or being sued in its own name.

Q: What did the Hon’ble Supreme Court say about the liability of the signatory of a cheque?

The Hon’ble Court affirmed that the signatory of a cheque is directly responsible. It cited a previous decision stating, "…In the case of a Director or an officer of the company who signed the cheque on behalf of the company, there is no need to make a specific averment that he was in charge of and was responsible to the company…". This same principle was applied to the Trust Chairman who signed the cheque.