Cheque bounce: SC says Trust need not be arraigned; trustee-signatory can be prosecuted under NI Act
Case name: Sankar Padam Thapa v. Vijaykumar Dineshchandra Agarwal
Date of Order: 09 October 2025
Citation: 2025 INSC 1210; Criminal Appeal (arising out of SLP (Crl.) No. 4459 of 2023)
Bench: Ahsanuddin Amanullah, J.; Prashant Kumar Mishra, J.
Held: A complaint under Sections 138/141 of the Negotiable Instruments Act, 1881 is maintainable against a trustee who signed the cheque even if the Trust is not arrayed as an accused. A Trust is not a separate juristic person capable of being prosecuted in its own name; it acts through its trustees. The signatory of the dishonoured cheque is squarely liable under Section 141(2), and specific averments of day-to-day control are unnecessary for such a signatory. High Court approaches that equate a Trust with a “company” or treat it as an “association of individuals” for the purposes of Section 141 are incorrect.
Summary: The dispute arose from a ₹5-crore cheque drawn on behalf of “Orion Education Trust,” signed by its Chairman toward consideration for services related to transition of a university’s management. On dishonour for insufficiency of funds, the complainant issued statutory notice and filed proceedings against the trustee-signatory alone. The High Court quashed the complaint for non-joinder of the Trust. Allowing the appeal, the Supreme Court held that under Indian trust law, a trust is an obligation and not a separate legal entity; trustees are the proper parties in whom the estate vests and who “maintain and defend” proceedings. Importing company-law constructs into the trust context is a category error: a company has distinct corporate personality, a trust does not. Within Section 141 NI Act, liability can attach through trustees and, at the very least, to the cheque signatory under sub-section (2). Reiterating the line of cases on vicarious liability under the NI Act, the Court clarified that while complaints should broadly aver responsibility, a managing-head type office bearer or the cheque signatory bears presumptive responsibility subject to rebuttal. On these principles, the High Court’s quash order was unsustainable.
Decision: Appeal allowed. The quashing order is set aside; the criminal case is restored to the Trial Court for expeditious proceedings in accordance with law. All merits are left open.