Saji Koduvath, Advocate, Kottayam.

Synopsis.

1. Introduction
2. Legal Persons, Arbitrary Creations of the Law
3. Hindu Conception on Legal Personality of Idol
4. Law Attributes, Legal Personality
5. Legally, ‘Trust’ is Not an Institution or Association
6. ‘Trust’ Used to Identify Endowment/Association
7. Hindu Idol and Math are Juristic Persons
8. ‘Trust’: Not a Legal Person
9. Certain Institutions are Identified as ‘Trusts’
10. Juristic Personality of Trusts Under NI Act
11. Trust Cannot be Sued in Its Own Name
12. How Can a Trust Execute Deeds and Enter Contract?
13. Trust Cannot be Sued in Its Own Name
14. Trustee represents beneficiaries   
15. Juristic personality of Gurudwara
16. Juristic personality of Wakfs & Mosques
17. Juristic Personality of Churches

Introduction: What is Trust, in Law?

Sec. 3 of the Indian Trusts Act, 1882 defines trust as under:

• “Trust: A ‘trust’ is an obligation annexed to the ownership of property, and arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another, or of another and the owner:

From the definition it is clear that ‘Trust’, in law, holds the following conceptions:

• Trust is ‘an obligation’ upon the trustee.
• It is to administer the endowed property.
• The administration must be done by the trustee as if he is the owner  of the trust property.
• It must be done by him accepting the intents desired by the author.
• And, the same must be for the benefit of the beneficiaries.

It is clear that the word ‘trust’ is used in law as an ‘abstract countable noun’, similar to ‘a concept’, ‘an idea’ or ‘a duty’.

Charitable and Religious Institutions – Legal Concept

Wealthy and mighty men of all social systems considered it their duty to help the weak and poor. Charitable and religious institutions are founded on this principle. With a view to legally recognise these institutions numerous legal theories have been propounded. One among them is attributing legal personality to those institutions and considering them as legal units.[1] The attributed legal personality, by itself, enabled to ascribe interests, rights and duties to those institutions. It made the courts possible to effectively adjudicate upon the assertions and obligations pertained to them. The conferment of legal personality also facilitated to accomplish the objects and purposes envisioned by the founders, in a pragmatic manner.[2]

All religions and its institutions have the aim of civilising man. They enforce man lead a disciplined life. Thus the religions and its institutions promote public welfare.[3] Though various public institutions are generally referred to as entities having its own identity, our law does not favour all. Our Law on this subject does not lay down a precise and explicit edict. It requires authoritative and cogent judicial dicta, exploring and reconciling divergent views as to the legal personality of various institutions (such as schools, hospitals, universities, libraries, ships[4] etc.).

Endowment and Trust

‘Trust’ is essentially a legal concept; whereas, ‘endowment’ is a corporeal reality to which social concepts are adhered to. Endowment is founded by dedication of property for the purposes of religion or charity having both the subject and object certain and capable of ascertainment.[5]

An ‘endowment’ may be public or private.[6] From the usage of the word ‘endow’ and the connected word ‘endowment’  it is clear that they relate to the idea of giving, bequeathing or dedicating property or other possession, for some specified purpose.[7] According to Chamber’s Twentieth Century Dictionary, the word ‘endowment’ means: ‘that which is settled on any person or institution’.[8] Webster’s International Dictionary gives the following meaning to the word ‘endowment’:

• “(1) The act of bestowing a dower, fund, or permanent provision for support. (2) That which is bestowed or settled on a person or an institution; property, fund, or revenue permanently appropriated to any object; as the endowment of a church, a hospital or a college. (3) That which is given or bestowed upon the person or mind; gift of nature, accomplishment; natural capacity; talents; usually in the plural.”[9]

‘A Trust’ is “An Obligation” and Not a Legal Entity

‘A trust’, according to the definition, being ‘an obligation’, it is clear that ‘a trust’ does not convey the idea that the ‘trust’ is a legal person,[10] association of persons or a tangible or a corporeal property.

As explained above:

• ‘A trust’ is ‘an obligation’ or a fiduciary duty upon the trustee to administer the trust property for the benefit of the beneficiaries.
• ‘Trust’ being an obligation or fiduciary duty upon the trustee to administer the trust property for the benefit of the beneficiaries, it is essentially a legal concept.
• The expression ‘a trust’ in the definition, being followed by the words ‘is an obligation’, it is clear that ‘a trust’ does not convey the idea that it is a tangible matter or a corporeal property.
• Trust differs from an ‘Endowment’ for,the latter is basically a tangible corporeal reality to which social concepts are adhered to.
• The trust-property (or the dedicated-property) vests in the ‘legal ownership’ of the trustee.  
• The term ‘endowment’ stands analogous to ‘trust property’, and not to ‘trust’ as such.

From the above, it is clear that, legally, the ‘trust’:

• (i)   cannot be a juristic person;
• (ii) cannot be an association of persons; and
• (iii) cannot be a tangible endowment or a corporeal property.

In Surya Kant Chunilal Vs. Mahesh Chand, AIR 1972 Del. 72 it is held as under:

• “Further defendant No. 2 (Trust) is not a registered body or a juristic person. The properties of the Trust vest in the trustees.”

In Kansara Abdulrehman Sadruddin Vs. Trustees of the Maniar Jamat Ahmadabad[11] it is observed by the Gujarat High Court as under:

• “The ‘trust property’ is nothing but the subject matter of the trust; that is, a property which is impressed with the obligation giving rise to a trust. When we speak of a trust, we speak merely of the requisite obligation which is annexed to the ownership of a property. This obligation is not a legal entity in any sense; as for example, the trust cannot own any property the property is owned by the trustee who is an entity by himself different from the trust, a trust cannot sue and a trust cannot be sued; it is only a trustee who can sue and who can be sued. It is only a trustee who can hold properties. A ‘trust’ cannot be a landlord since the trust properties vest in the legal ownership of the trustees. It is the trustee alone who can be a landlord. Since the trust is not a legal entity, no question of hardship suffered by the trust or accommodation required by the trust can arise for consideration.”[12

Order 31 rule 1 CPC

Order 31 rule 1 of the Code of Civil Procedure spells out – a trust is not a legal person. It enables to file a suit by (or be sued) a trustee concerning ‘property vested in trustees’.

• In Government of the Province of Bombay Vs. Pestonji Ardeshir Wadia[13] the Privy Council held as under:
• “The trust is not the plaintiff, and there is no power under the Code for trustees to sue in the name of their trust, as members of a firm may sue in the name of the firm. The plaintiffs were, and were bound to be, the three trustees, and, as no notice was given specifying their names and addresses, the condition precedent to the filing of the suit was not fulfilled”.

The view taken by the Privy Council was accepted by our Apex Court in Ghanshyam Dass Vs. Dominion of India.[14]Penner JE, the Professor of Law at King’s College, London, in his book, The Law of Trusts, has commented as under:

• “The trust itself has no legal personality like a company, on behalf of which agents of the company make contracts which bind the company as a legal person itself. Having no legal personality, one cannot sue the trust itself for breach of contract; one sues the trustee for his own breach of contract, even though the breach was of contractual obligation he undertook to benefit the trust.”

Relying the Privy Council and Penner J Ethe Kerala High Court held in KR Rajan Vs. Cherian K. Cherian[15]   as under:

• “Trust not being a legal person, and the Code of Civil Procedure not providing any enabling provision for the Trust to sue or for being sued in its name, there is no merit in the contention that the Trust is to be arrayed as an eo-nominee party. The arraying of the trust in its own name is otiose or redundant. It is the trustees who are to be impleaded to represent the trust.”

In M. V. Muthuramalingam Vs. D. Narayanaswamy, 1995-83 CC 77 it is held by the Madras High Court as under:

• “Unlike a company registered under the Indian Companies Act, the trust is not a juristic person having a separate legal entity. It can act only through its trustees. So, when the petitioner came to issue the impugned cheques and that has resulted in his committing an offence under section 138 Of the Negotiable Instruments Act, he is liable to be proceeded against.”

The Madras High Court has held in Kishorelal Asera Vs. Haji Essa Abba Sait Endowments[16]and in Thiagesar Dharma Vanikam Vs.  CIT[17]that a trust not being a legal person is not entitled to sue in its own name.[18]

The Gujarat High Court has also held in Kansara Abdulrehman Sadruddin Vs. Trustees of the Maniar Jamat Ahmedabad[19]  that ‘the trust is not a legal entity’.[20]

Following decisions do not present correct law (It is clear from the above)

(i) Pratheesh V v. State of Kerala, 2017-2 Ker HC 977. It is observed as under:

• “It is the settled position of law that a registered trust is a legal entity and juristic person entitled to hold property by itself.”

(ii) Lal Chandra Jain v. Suparasdas Jain, 2016-11 All DJ 615. It is observed –

• “It is also not in dispute that a registered Trust is a legal person/juristic person and can be sued or can sue in its own name, through the person responsible to manage it.”

(See Notes under the Head: Is Trust  a ‘Living Person’ under S. 5 of the TP Act) 

Legal Persons, Arbitrary Creations of the Law

Salmond on Jurisprudence[21] reads:

• “A legal person is any subject-matter other than a human being to which the law attributes personality. This extension, for good and sufficient reasons, of the conception of personality beyond the class of human beings is one of the most noteworthy feats of the legal imagination.”

Salmond reads further:

• “Legal persons, being the arbitrary creations of the law, may be of as many kinds as the law pleases. Those which are actually recognised by our own system, however, are of comparatively few types. Corporations are undoubtedly legal persons, and the better view is that registered trade unions and friendly societies are also legal persons though not verbally regarded as corporations. If, however, we take account of other systems than our own, we find that the conception of legal personality is not so limited in its application, and that there are several distinct varieties, of which three may be selected for special mention.
• 1. The first class of legal persons consists of corporations, as already defined, namely, those which are constituted by the personification of groups or series of individuals. The individuals who thus form the corpus of the legal person are termed its members.
• 2. The second class is that in which the corpus, or object selected for personification, is not a group or series of persons, but an institution. The law may, if it pleases, regard a church or a hospital, or a university, or a library, as a person. That is to say, it may attribute personality, not to any group of persons connected with the institution, but to the institution itself.
• 3. The third kind of legal person is that in which the corpus is some fund or estate devoted to special uses a charitable fund, for example or a trust estate.”[22]

In Manohar Ganesh Vs. Lakshmiram (1888),[23]the Division Bench of the Bombay High Court set out the rationale for and the process by which legal personality is conferred on a Hindu idol. Justice West observed:

• “The Hindu law, like the Roman law and those derived from it, recognizes, not only corporate bodies with rights of property vested in the corporation apart from its individual members, but also juridical persons or subjects called foundations. A Hindu, who wishes to establish a religious or charitable institution, may, according to his law, express his purpose and endow it, and the ruler will give effect to the bounty … A trust is not required for this purpose: the necessity of a trust in such a case is indeed a peculiarity and a modern peculiarity of the English law. In early times a gift placed, as it was expressed, “on the altar of God sufficed to convey to the church the lands thus dedicated.”[24]

Law Attributes Legal Personality

Roscoe Pound,[25] on “Jurisprudence”, reads as under:

• “In civilised lands even in the modern world it has happened that all human beings were not legal persons. In Roman law down to the constitution of Antonius Pius the slave was not a person. He enjoyed neither rights of family nor rights of patrimony. He was a thing, and as such like animals, could be the object of rights of property. … In French colonies, before slavery was there abolished, slaves were put in the class of legal persons by the statute of April 23, 1833 and obtained a ‘somewhat extended juridical capacity’ by a statute of 1845. In the United States down to the Civil War, the free Negroes in many of the States were free human beings with no legal rights.”[26]

The Supreme Court in Som Prakash Rekhi Vs.  Union of India[27]held that ‘a legal person is any entity other than human being to which law attributes personality’. It held further as under: 

• “Let us be clear that the jurisprudence bearing on corporations is not myth but reality. What we mean is that corporate personality is a reality and not an illusion or fictitious construction of the law. It is a legal person. Indeed, a legal person is any subject-matter other than a human being to which the law attributes personality. This extension, for good and sufficient reasons, of the conception of personality is one of the most noteworthy feats of the legal imagination. Corporations are one species of legal persons invented by the law and invested with a variety of attributes so as to achieve certain purposes sanctioned by the law.”[28]

In SGPC Vs. Som Nath Dass[29] the Supreme Court held:

• “The very words ‘Juristic Person’ connote recognition of an entity to be in law a person which otherwise it is not. In other words, it is not an individual natural person but an artificially created person which is to be recognized in law as such.”

It held further that Guru Granth Sahib revered in Gurudwara had all the qualities to be recognized as juristic person. Holding otherwise would mean giving too restrictive a meaning to a ‘juristic person’ and that would erase the very jurisprudence which gave birth to it.It is observed (obiter) in this case that ‘it is really the religious faith that leads to the installation of an idol in a temple. Once installed, it is recognised as a Juristic Person. The idol may be revered in homes but its Juristic Personality is only when it is installed in a public temple’. Nevertheless, Dr. BK Mukherjea, J. in his treatise ‘On Hindu Law of Religious & Charitable Trusts’ the principles as to legal personality, rights emanating therefrom, etc. with respect to a family temple, are presented in the same manner[30] as that of a public temple.[31]

Public Trust and Endowment: Different Concepts

Jurisprudentially, trust and endowment are not synonyms.[32]‘Trust’ being an obligation upon the trustee to administer the trust propertyfor the benefit of the beneficiaries, it is essentially an idea or a legal concept. ‘Endowment’ is basically a corporeal reality to which social concepts are adhered to.

 Life is bestowed upon endowment when trustee is appointed. A public ‘endowment’ is created by dedication of property for the purpose of religion or charity having both the subject and object certain and capable of ascertainment.[33] A legal recognition and status is acquired by the endowment by the appointment of a trustee. An endowment, sans trustee, remains static.

But, Dr. BK Mukherjea, J. in his erudite treatise ‘On Hindu Law of Religious & Charitable Trusts’points out that under Hindu law, if an endowment is made for a religious or charitable institution, without the instrumentality of a trust, and the object of the endowment is one which is recognised as pious, being either religious or charitable under the accepted notions of Hindu law, the institution will be treated as a juristic person capable of holding property.[34]

Legally, the term ‘endowment’ stands analogous to ‘trust property’; and not to trust. Sections 5 of the Indian Trusts Acts peaks as to ‘trust of’ movable and immovable (corporeal) properties. Salmond’s Jurisprudence, while describing property, refers to corporeal property as ‘the right of ownership in a material object or that object itself’.[35]The imperative characteristics of ‘trust’ that differ from an ‘endowment’ are the following:

• (a)  trustee, for administration,
• (b)  entrustment/transfer of trust property to the trustee,  and
• (c)  vesting of ‘legal ownership’ in trustee.              

As the managers of religious ‘endowments’ are not ‘trustees’ in its full sense, deeming provision was inserted in Sec. 10 of the (old) Limitation Act to bring-in such managers also under this section.[36]

‘Trust’ is Used as Synonym to Endowment/Association

However, inasmuch as the ‘trust’ has no existence without its trust property, and it is an ‘obligation’ ‘annexed to’ the trust property, the endowment/institution, upon which the obligation of ‘trust’ is pervaded, is personified as a ‘trust’. Certain public institutions established or dedicated with philanthropic view are also generally described as ‘trusts’.

Similarly, when a ‘trust’ is created/managed under the auspices of an association, the term ‘trust’ is generally used to denote the ‘association of persons’, in view of the underlying significant nexus between the members of the association and the ‘trust’.

The term ‘trust’ is also used as a compendious expression taking-in the trustees, the beneficiaries and the subject-matter of the trust.It is observed in Thiagesar Dharma Vanikam Vs.  CIT[37] as under:

• “The word ‘trust’ is a convenient and a compendious description of the trustees, the beneficiaries and the subject-matter of the trust. ….”[38]

It is interesting to note that the word ‘trust’ is used an ‘entity’ even in Illustration (b) of Sec. 15 of the Trusts Act – and it is the only one place in this Act where the term ‘trust’ is used in this manner. The Illustration (b) of Sec. 15 reads: 

• “(b) A, trustee of lease-hold property, directs the tenant to pay the rents on account of the trust to a banker, B, ….”

In Public Trusts Acts enacted by various States and in several Tax-Laws, wider import is given to ‘trust’.  Various Town Improvement Acts refer to vesting of land ‘in the trust’. [39] In the inclusive definition of Public Trusts Acts, ‘trust’ embraces a temple, a math, wakf, a dharmada or any other religious or charitable endowment and even a society. For example, Section 2(13) of the Bombay Public Trusts Act reads:

• ” ‘Public trust’ means an express or constructive trust for either a public religious or charitable purpose or both and includes a temple, a math, wakf, a dharmada or any other religious or charitable endowment and a society formed either for a religious or charitable purpose or for both and registered under the Societies Registration Act. 1860.”

The trust cannot sue or be sued in its own name. Trustee being the legal owner of the trust property he has to sue or be sued for and on behalf of the Trust.[40]There is no provision under the CPC for the trustees to sue in the name of their trust, as allowed in the case of firms.[41]Order XXXI, Rule 1 CPC deals with the representation of beneficiaries in suits concerning property vested in the trustee.  It lays down that the trustee shall represent the persons so interested.[42]

It is observed by Madras High Court in Thiagesar Dharma Vanikam Vs.  CIT:[43]

• “Sometimes, the expression ‘trust’ is used to denote the trustees. For example, when the trustees carry on a business, we generally say that the trust is doing so”.

The Supreme Court quoted with approval, in Commissioner of Income-Tax Vs. Krishna Warriar[44] the following passage of Madras High Court in Thiagesar Dharma Vanikam Vs.  CIT:[45]

• “When the trustee acts, it is only the trust that acts, as the trustee fully represents the trust. A business carried on, on behalf of a trust rather indicates a business which is not held in trust, than a business of the trust run by the trustees.” 

Juristic Personality of Public Charitable Trusts Under NI Act 

To the question whether a Public Charitable Trust has been recognised as a juristic person for the purpose of Negotiable Instrument Act , it is held in Abraham Memorial Vs C. Suresh Babu[46] that a Public Charitable Trust being capable of contracting, and capable of making and issuing a cheque or Bill (Sec. 26), it is a juristic person for the purpose of the said Act; and that a Trust, either private or public/charitable or otherwise, is a juristic person liable for punishment for the offence punishable under Sec. 138 of the N I Act.

Public Trust Depends on Charity and Donations

Referring Sec. 14 of the Bombay Public Trust Act, 1950, it is observed in Khasgi (Devi Ahilyabai Holkar Charities) Trust, Indore v. Vipin Dhanaitkar,  2022-11 SCALE 1,  2022-17 SCR 173, as under:

• “A Public Trust invariably depends on charity done by individuals by donating immovable property or by making cash donations.”

Eventhough the above observation is made invoking Sec. 14 of the BPT Act, it is clear that it is a common law principle applicable to all Public Trusts.

Legal Obligations of Trustees to Administer and Give Effect to Objects of Trust

It is held further in Khasgi (Devi Ahilyabai Holkar Charities) Trust, Indore v. Vipin Dhanaitkar,  2022-11 SCALE 1,  as under:

• “Though in law, the assets and properties of a Public Trust vest in its Trustees, they hold the Trust property in a fiduciary capacity for the benefit of the beneficiaries of the Trust. They hold the property for giving effect to the objects of the Public Trust. A Trust property cannot be alienated unless it is for the benefit of the Trust and/or its beneficiaries. The Trustees are not expected to deal with the Trust property, as if it is their private property. It is the legal obligation of the Trustees to administer the Trust and to give effect to the objects of the Trust. …. There are statutory constraints on the power of the Trustees to alienate the property of a Public Charitable Trust. …. The Trustees are the custodians of Trust properties. The Trustees have a duty to safeguard the interests of the beneficiaries of the Public Trust. That is how, a provision in Public Trust Law, like Sec.  14 of the Public Trusts Act, is of importance. This provision seeks to protect the Trust property in the hands of the Trustees from unwarranted alienations.”

Is Trust  a ‘Living Person’ under S. 5 of the TP Act 

Can transfer of property be made to or by Trusts/Associations

Sec. 5 of the TP Act reads as under:

• 5. “Transfer of property” defined:  In the following sections “transfer of property” means an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself and one or more other living persons; and “to transfer property” is to perform such act.
• In this section “living person” includes a company or association or body of individuals, whether incorporated or not, but nothing herein contained shall affect any law for the time being in force relating to transfer of property to or by companies, associations or bodies of individuals.

Existing Laws as to Transfer of Property will Remain in Force

Two points are emphasised in the 2^nd paragraph of Sec. 5 –

• First, all unregistered associations, whether incorporated or not, are ‘living persons’, so that transfer of property can be made.
• Second, the qualifying second limb – ‘nothing herein contained shall affect any law for the time being in force relating to transfer of property to or by companies, associations or bodies of individuals‘ – made it clear:
  • if any law regulates transfer of property to (or by) companies, associations or bodies of individuals, it will remain in force.

“Bodies of individuals” in Sec. 5, TP Act

It may also be pointed out that, “bodies of individuals” in Sec. 5, TP Act is wide in meaning; and it stands independent. It is broad enough to take-in Beneficiaries/ Trustees of a Trust.

Accordingly, the registration and revenue authorities, without objection, register deeds relating to such properties in the names of such institutions, associations etc.

• Note: Order 31 rule 1 CPC spells out – a trust is not a legal person. It enables to file a suit by (or be sued) a trustee concerning ‘property vested in trustees’.

Can ‘Law for the Time Being in Force’ Include ‘Common Law’

‘Law for the time being in force’ in Sec. 5 TP Act includes “common law”.

It is a reality – the common law of our country accepts as valid the ‘transfer of property’ made to or effected by well-known institutions, organisations, and associations attached to reputed trusts, institutions etc., though they are not juristic-persons in its strict sense. Our courts sumptuously refer to such deeds as documents executed by or in favour of such entities, when they are referred to as exhibits. For example:

• Settlement deed by Ashramam–Swayam  Prakash  Ashramam Vs. G Anandavally  Amma : AIR  2010 SC 622;
• Settlement to trust – S N Mathur  Vs. Board of Revenue: 2009-13  SCC 301;
• Sale deed by unregistered society – Suresh s/o. Bhagwanrao  Puri Vs. State of Maharashtra: 2016-3 AIR Bom R (Cri.) 603;
• Gift to unregistered Association – Pullamma Vs. Valmiki Anna Satram: 1984-2 ALT 157;
• Sale deed to an association – K. Kala Vs. Dist Registrar, Madurai: 2016 3 MLJ 50, 
• Sale deed to an association – State of Punjab Vs. Amolak Ram Kapoor: [1990] 79 STC 315; ILR1991- 2 P&H 218.
• Sale deed to an association – Asst. Commr. Vs. Shivalingawwa: ILR 2003 Kar 2855;
• Lease deed by trust to school – TNP Mothoo  Natarajan Vs. PV Ravi: 2015-2 MLJ (Cri.) 656;
• Lease deed by a firm -2014-3 ALT 46;
• Settlement deed to private trust –Kolli  Venkata Raja Vs. Govt. of AP: 2014-1 ALT 155;
• Lease deed to a public trust –Nadigar  Sangham Charitable Trust, rep. by its managing Trustee, R. Sarathkumar Vs. S. Murugan:2013-1 MLJ 433;
• Sale deed to Board of Trustees – Commissioner of Income Tax Vs. Chemists and Druggists Association Building Trust: 1995-215 ITR(Mad) 741;
• Mortgage deed by a College – Sonar Bangla Bank Vs. Calcutta Engineering College:  AIR 1960 Cal 450.

Similarly, the registration and revenue authorities, without objection, register deeds relating to such properties in the names of such institutions, associations etc.

It was held by our Apex Court in Kamaraju  Venkata Krishna Rao Vs. Sub Collector,  Ongole, AIR 1969 SC 563, that, under Hindu Law, a tank can be an object of charity and when a dedication was made in favour of a tank, the same was considered as a charitable institution. Without deciding whether that institution can also be considered as a juristic person, it was held that the same had to be registered in its name (ie., in the name of the tank) in the Inam register though it had continue to be managed by its Manager.

It is also noteworthy that Salmond on Jurisprudence reads: “Legal persons, being the arbitrary creations of the law, may be of as many kinds as the law pleases.”

Read Blog: Dedication of Property in Public Trusts

Is Trust A Juristic Person to File a Complaint Under the N.I. Act

Section 141 of the Negotiable Instruments Act, 1881, says as to “Offences by companies”. In Explanation (a) to this section it is stated as under:

• “  ‘Company’ means any body corporate and includes a firm or other association of individuals.”

Basing on the above Explanation the main contention of the accused (revision petitioners) in Prana Educational and Charitable Trust v. State of Kerala, ILR 2023-4 Ker 252; 2023-6 KHC 175; 2023-4 KLJ 453; 2023-6 KLT 231, was the following:

• Trust is not a juristic person as defined under Section 141 of the N.I. Act.
• The 1st accused being a charitable Trust and the 2nd accused being the Managing Trustee and signatory of the cheque, prosecution against the Trust and the Managing Trustee is not legally sustainable.

The accused relied on K.P. Shibu v. State of Kerala, 2019 (3) KHC 1. It was held in this decision that a Trust is not a body corporate or an association of individuals as provided in the explanation to Section 141 of the N.I. Act.

The case of the complainant was that the cheque of the 1st accused (Trust) was signed and issued by the 2nd accused to discharge the liability of the Trust, on receipt of money as loan, for and on behalf of the Trust.  

The High Court accepted the contention of the complainant pointing out that the expression “company” as used in subclause (a) of the explanation to Section 141 was that it was inclusive of any body corporate or “other association of individual“.

The Kerala High Court accepted the case of the complainant relying on the following decisions:

• .(1)  Madras High Court in Crl. OP Nos. 12630 and 12661 of 2012 and M.P. Nos. 1, 1, 2 and 2 of 2012. It was held that though there was compulsory sentence of imprisonment prescribed under Section 138 of the N.I. Act, a Trust (an Artificial Person) can be prosecuted – as a drawer – and a Trust can be imposed only with fine or compensation.
• Following Ramanlal Bhailal Patel v. State of Gujarat, 2008 (5) SCC 449, it was further held that (i) A Trust, either private or public/charitable or otherwise, is a juristic person who is liable for punishment for the offence punishable under Section 138 of the Negotiable Instruments Act; (ii) A Trust, either private or public/charitable or otherwise, having either a single trustee or two or more trustees, is a company in terms of Section 141 of the Negotiable Instruments Act; and  (iii) For the offence under Section 138 of The Negotiable Instruments Act, committed by the Trust, every trustee, who was in-charge of the day-to-day affairs of the Trust shall also be liable for punishment besides the Trust.
• (2) Bombay High Court (Aurangabad Bench) in The Dadasaheb Rawal Co-op. Bank of Dondaicha Ltd v. Ramesh and others in Criminal Revision Application No.239 of 2006. It was opined that a plain reading of the expression “company” as used in sub-clause (a) of the Explanation is that it is inclusive of any body corporate or “other association of individuals”. The term “association of individuals” will include club, trust, HUF business, etc. It shall have to be construed ejusdem generis along with other expressions “company” or “firm”.
• (3)  Gujarat High Court in Shah Rajendrabhai Jayantilal v. D. Pranjivandas and sons in R/SCR.A/1970/2015. It was found that the term “association of individuals” would include club, trust, Hindu Undivided Family business. Prima facie, it shall have to be construed ejusdem generis along with other expression “company” or “firm”. Therefore, a joint family business must be deemed as a juristic person like a company or firm. The High Court followed Anita Handa v. M/s. Godfather Travels & Tours Pvt Ltd, 2007 (11) SCC 297 (wherein it was viewed that a complaint against a Director of the company would not be maintainable if the company is not impleaded as accused; and that a plain reading of the expression “company” as used in subclause (a) of the explanation appended to Section 141 is that it is inclusive of any body corporate or “other association of individual“.

The Kerala High Court (Prana Educational and Charitable Trust v. State of Kerala, ILR 2023-4 Ker 252) distinguished its earlier decision, K.P. Shibu v. State of Kerala, stating the following:

• “It is discernible that the said decision is not so elaborative and the interpretation of the term “association of individuals” not done by applying the ratio of ejusdem generis. The principle of ejusdem generis intended for the construction of constitutional and statutory provisions means “of the same kind” and this doctrine provides that the general words which follow the specified words will be restricts to the same class of the specified words. While applying this principle,
• (1) the general words must follow the specific words and the specific words must necessarily constitute, a genus/class
• (2) the legislative intention of the statute to be born in mind for restricting the general word to the genus/class of the specified words if follows and
• (3) this principle has to be used by the Courts properly and apply where it is necessary and not use this principle where it is not necessary so as to defeat the purpose of the statute and to cause miscarriage of justice are the conditions to be satisfied.”

A Concluding Discordant Note

As explained above (under the notes, ‘A Trust’ is “An Obligation” and Not a Legal Entity), ‘a trust’, according to the definition, being ‘an obligation’, it does not convey the idea that it is a legal person (or any body corporate), association of individuals or a tangible or a corporeal property. Therefore it appears that Abraham Memorial v. C. Suresh Babu, 2013- 2  Bank   Case  133: 2012-5 CTC 203: CC 2012-175 361, and Prana Educational and Charitable Trust v. State of Kerala, ILR 2023-4 Ker 252, are not correctly decided (in law, as it now stands). It may also be pointed out that a trust differs from ‘firm’, as firm is, in law, a collection of partners and it is a compendious name for all the partners, or only an ‘association of persons’.

Read Blog: What is Partnership, in Law? How to Sue a Firm?

It may also be pointed out that trustees can be proceeded against, in proper cases, if a cheque signed by them (in the capacity as trustees) is dishonoured.

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[1]     Shiromani Gurdwara Vs. Som Nath Dass: AIR 2000 SC 1421, M Siddiq Vs. Mahanth Suresh Das (Ayodhya Case):2020-1 SCC 1.

[2]     M Siddiq Vs. Mahanth Suresh Das (Ayodhya Case): 2020-1 SCC 1

[3]     ‘Hindu and Mohamedan Endowments’ by P. R. GanapathiIyer, (Quoted in: Papanna Vs. State of Karnataka: AIR1983 Kar 94.

[4]     MV Elisabeth Vs. Harwan Investment and Trading: 1993 Supp (2) SCC 433. M Siddiq Vs. Mahanth Suresh Das (Ayodhya Case):2020-1 SCC 1.

[5]PratapSinghji v. Charity Commissioner: AIR 1987 SC 2064

[6]DeokiNandan  Vs. Murlidhar:  AIR 1957 SC 133, Quoted in: M Siddiq Vs. Mahanth Suresh Das (Ayodhya Case): 2020-1 SCC 1, Pratap Singhji  Vs. Charity Commissioner: AIR 1987 SC 2064

[7]Idol of Sri Renganatha-swamy Vs. PK Thoppulan Chettiar: 2020 0 Supreme(SC) 177; MJ  Thulasiraman Vs. Comr, HR & CE: AIR 2019 SC 4050.

[8]Vidarbha and Marathwada, Nagpur Vs. Mangala: 1982 0 MhLJ 686

[9]Maria Antonica Rodrigues Vs. DR Baliga: AIR 1967 Bom 465.

[10]   Govt. of the Province of Bombay Vs. Pestonji Ardeshir Wadia:  AIR 1949 PC 143; Thiagesar Dharma Vanikam  Vs.  CIT: AIR 1964 Mad 483: 1963- 50 ITR 798  (Mad);  Ramdass Trust Vs. Damodardas 1967 Raj LW 273; Quoted in: Sagar Sharma Vs. Addl. CIT: 2011-239 CTR 169:  2011-52 DTR 89. Duli Chand Vs. Mahabir Pershad Trilok  Chand Trust: AIR 1984 Del 144; Thanthi Trust Vs. Wealth Tax Officer: 1989- 45 TAXMAN 121: 1989-178  ITR 28; Chikkamuniyappa Reddy Memorial Trust Vs. State: ILR 1997  Kar 2460; KishorelalAseraVs. Haji Essa Abba: 2003-3 Mad LW 372: 2003-3 CCC367; Sagar Sharma Vs. Addl. CIT: 2011-239 CTR 169: 2011-336  ITR 611; Sambandam Vs. Nataraja Chettiar: 2012-1 Mad LW 530.

[11]   AIR 1968 Guj 184.

[12]   See also: RamabaiGovindVs. RaghunathVasudevo: AIR 1952 Bom 106.

[13]   AIR 1949 PC  143

[14]   AIR 1984 SC 1004

[15]   2019-5 KHC 661; 2019-4 Ker LJ 981; 2019-4 Ker LT 1056

[16]   2003-3 Mad LW 372: 2003-3 CCC367

[17]   AIR 1964 Mad 483; 1963- 50 ITR 798

[18]   Referred to in: Thanthi Trust Vs. Wealth Tax Officer: 1989-78 CTR 54: 1989- 45 TAXMAN 121: 1989-178  ITR 28.

[19]   AIR 1968 Guj 184.

[20]   See also: Ramabai Govind Vs. Raghunath Vasudevo: AIR 1952 Bom 106.

[21]   12th Edn., Page 305.

[22]   Quoted in: Shriomani Gurudwara Vs. Shri Som Nath: AIR 2000 SC 1421.

[23]   (1888) ILR 12 Bom 247

[24]   Quotted in M Siddiq Vs. Mahanth Suresh Das (Ayodhya Case):2020-1 SCC 1

[25]   Roscoe Pound, Jurisprudence, Part IV, 1959 Edition.

[26]   Quoted in: Shiromani Gurdwara  Vs. ShriSom Nath: AIR 2000 SC 1421; M Siddiq Vs. Mahanth Suresh Das (Ayodhya Case):2020-1 SCC 1.

[27]   AIR 1981 SC 212

[28]   Quoted in: Shriomani Gurudwara Prabandhak Vs. Shri Som Nath  :AIR 2000 SC 1421. See also: Samatha Hyderabad Abrasives Minerals Vs. State of AP: AIR 1997 SC 3297.

[29]   AIR 2000 SC 1421.

[30]   KM Senthivel Pillai Vs. Kulandaivel Pillai: 1970-2 MADLJ 555; P. Jayader Vs. Thiruneelakanta Nadar: ILR 1966-2 Mad 92; Commissioner of Endowments Vs. Sri Radhakanta Deb: 1969-35 Cut LT 992.

[31]   See Chapter: DEDICATION IN PRIVATE TRUSTS AND FAMILY TEMPLE.

[32]   Shanmughan  Vs. Vishnu Bharatheeyan:  AIR  2004 Ker 143.

[33]   Pratap Singhji Vs. Charity Commissioner: AIR 1987 SC 2064. M R GodaRao Sahib Vs. State of Madras: AIR 1966 SC 653. See also: Ram Charan Das Vs. Mst. Girjanandani Devi: AIR 1959 All 473; S. Shanmugam Pillai Vs. K. Shanmugam Pillai: AIR 1972 SC 2069; Controller of Estate Duty WB Vs. Usha Kumar: AIR 1980 SC 312.

[34]page 36. Quoted in M.Siddiq Vs.Mahant Suresh Das: 2020-1 SCC 1,

[35]   Quoted in: Maharashtra State Co Op. Bank Ltd. Vs. Asst. PF Commir: AIR 2010 SC 868; Santhoshkumar Vs. Shaji: AIR  2013 Ker 184; Ans Gopal Sheo Narain Vs. PK Banerji: AIR  1949 All 433.

[36]   See: Sri Silambani Vs. Chidambaram Chettiar: AIR 1943 Mad 691.

[37]   AIR 1964 Mad 483; ([1963] 50 ITR 798)

[38]   Quoted in: Thanthi Trust Vs. Wealth Tax Officer: (1989)78 CTR 54: (1989) 45 TAXMAN 121: (1989) 178  ITR 28. See also: Kishorelal Asera  Vs. Haji Essa Sait : 2003-3 Mad LW 372: 2003-3 CCC 367.

[39]   Eg.  Punjab Town Improvement Act, 1922; Nagpur Improvement Act, 1936; Calcutta Improvement Act, 1911; Rajasthan Urban Improvement Act; United Province Town Improvement Act, 1919 etc.

[40]   Kishorelal Asera Vs. Haji Essa Abba Sait Endnts: 2003-3 Mad LW 372: 2003-3 CCC 367

[41]   K. Dhondoji Rao Vs Dominion of India: AIR 1957  Kar 94.

[42]   Kishorelal Asera Vs. Haji Essa Abba Sait Endts.:  2003-3 Mad LW 372: 2003-3 CCC367

[43]   AIR 1964 Mad 483

[44]   AIR 1965 SC 59

[45]   AIR 1964 Mad 483

[46]   2013- 2  Bank   Case  133: 2012-5 CTC 203: CC 2012-175 361. Relied on in Hakkimuddin Taherbhai Shakor Vs. State of Gujarat: 2017 CrLJ 3143.

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