S.138 NI Act | Cheque Dishonour Complaint Maintainable Against Trustee Without Arraying Trust As Accused : Supreme Court

The Supreme Court on Thursday (October 9) observed that a cheque dishonor complaint would be maintainable against a trustee, who has signed a cheque on the Trust's behalf, without arraying the Trust as an accused. The Court reasoned that since a Trust is not a juristic person, and neither sues nor is sued, therefore, trustees responsible for day to day affairs of the Trust would be held liable, particularly the one who signed the cheque.

“When a cause of action arises due to an alleged dishonour of cheque and a complaint is initiated under the NI Act, the same is maintainable against the Trustee who has signed the cheque, without the requirement to array the Trust also as an accused.”, the court held.

A bench of Justices Ahsanuddin Amanullah and Prashant Kumar Mishra heard the case that arose out of a ₹5 crore cheque issued by Orion Education Trust, signed by its Chairman, Respondent, in favour of the Appellant for liaisoning services. The cheque was dishonoured due to insufficient funds. The appellant filed a complaint under Sections 138/142 NI Act against the Respondent personally.

The High Court quashed the complaint, holding that since the trust was not named as an accused, the proceedings against its Chairman-Respondent alone were not maintainable.

Setting aside the High Court's ruling, the judgment authored by Justice Amanullah, citing SMS Pharmaceuticals Ltd. v. Neeta Bhalla (2005) and K K Ahuja v V K Vora, (2009), held that the person who signs the cheque is clearly responsible for the act and can be prosecuted without the trust being separately arraigned.

Since the Respondent was the Chairman and Authorized Signatory of the Trust who personally signed the cheque, he was prima facie responsible for the act of issuing the cheque. making him liable without the need for the Trust to be arraigned as an accused, the court held.

Accordingly, the appeal was allowed, and the cheque dishonour case was restored to its original file in the Trial Court.

Cause Title: SANKAR PADAM THAPA VERSUS VIJAYKUMAR DINESHCHANDRA AGARWAL

Citation : 2025 LiveLaw (SC) 991

Click here to read/download the judgment

Appearance:

For Petitioner(s) Mr. Aditya Singh, AOR Mr. Shubham Singh, Adv. Mr. Kamal Kishor, Adv.

For Respondent(s) Mr. Ardhendumauli Prasad, Sr. Adv. Mr. Dinesh Gangwani, Adv. Ms. Anusha Rathore, Adv. Mr. Amjid Maqbool, Adv. Ms. Pallavi Pratap, AOR