A Trust Is Not a Juristic Person and Cannot Be Prosecuted as an Accused; Criminal Liability May Continue Against Its Trustees: Supreme Court

Case Name: Madasa Masih-UI-Uloom Educational and Charitable Trust v. State of Karnataka & Others

Date of Judgment: September 10, 2026

Citation: Criminal Appeal No. ___ of 2026, arising out of SLP (Crl.) No. 1358 of 2026

Bench: Justice J.B. Pardiwala and Justice K. Vinod Chandran

Held: The Supreme Court held that a trust does not possess a separate legal existence and is, therefore, not a juristic person capable of suing or being sued in its own name. Consequently, a trust cannot be arrayed or prosecuted as an accused in criminal proceedings.

A trust is merely an obligation attached to the ownership of property, arising from confidence reposed in and accepted by its owner for the benefit of another. The responsibility to institute, defend or face legal proceedings rests upon the trustees and not upon the trust as an independent legal entity.

The Court further held that the pendency of a reference before a larger Bench concerning the juristic personality of a trust does not, by itself, suspend the operation of the existing binding precedent. Where conflicting decisions have been rendered by Benches of equal strength, the earlier decision must ordinarily be followed until the issue is authoritatively settled by a larger Bench.

Accordingly, while the criminal proceedings against the appellant trust were stopped, the Court clarified that the prosecution against the managing trustee and the other accused would continue.

Summary: The appellant was an educational and charitable trust arrayed as an accused in a criminal case arising from the activities of I Monetary Advisory Private Limited and its group companies. These entities had allegedly collected investments from members of the public but failed to return the deposited amounts, leading to numerous complaints and FIRs. The investigation was eventually transferred to the Central Bureau of Investigation.

According to the prosecution, one of the trustees of the appellant trust had promoted the activities of the company within the community by representing that its financial operations complied with Islamic principles. It was further alleged that the managing trustee received funds for promoting and expanding the company’s activities and utilised the proceeds for real-estate transactions and construction activities connected with educational institutions run by the trust. Since certain amounts were allegedly received by the trust as donations, the trust itself was also made an accused.

The trust and its managing trustee sought discharge from the criminal case. The Special Court rejected their discharge application in its entirety, and the Karnataka High Court declined to interfere. The trust alone approached the Supreme Court.

The appellant argued that a trust is not a juristic person and, therefore, cannot be prosecuted in its own name. It was pointed out that although the question regarding the legal personality of a trust had been referred to a three-Judge Bench in Administrator, Smt. Tara Bai Desai Charitable Ophthalmic Trust Hospital, Jodhpur v. Managing Director, Supreme Elevators India Pvt. Ltd., a coordinate Bench had subsequently held in Sankar Padam Thapa v. Vijaykumar Dineshchandra Agarwal that a trust cannot sue or be sued.

The State and the CBI contended that the earlier rulings arose in different statutory contexts, whereas the present prosecution involved offences under the Indian Penal Code and the Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004. They also relied upon the alleged money trail leading to the trust.

The Supreme Court followed the ruling in Sankar Padam Thapa, which had relied upon Pratibha Pratisthan v. Manager, Canara Bank. The Court reiterated that a trust has no legal existence independent of its trustees. It also applied the settled rule that where equal-strength Benches have expressed conflicting views, the earlier view must be followed, particularly when the larger Bench reference remains unanswered and no order requires pending matters to await its outcome.

Decision: The Supreme Court allowed the appeal and directed that proceedings in Special Case , pending before the LXXXI Additional City Civil and Sessions Judge, Bengaluru, would not continue against the appellant trust.