Legal Review and Analysis of Sankar Padam Thapa vs Vijaykumar Dineshchandra Agarwal 2025 INSC 1210

1. Heading of the Judgment

Case Title: SANKAR PADAM THAPA vs. VIJAYKUMAR DINESHCHANDRA AGARWAL
Citation: 2025 INSC 1210
Court: Supreme Court of India
Jurisdiction: Criminal Appellate Jurisdiction
Criminal Appeal No.: Criminal Appeal No. _____ of 2025 (@ SLP (Crl.) No. 4459 of 2023)
Judges: Hon'ble Mr. Justice Ahsanuddin Amanullah and Hon'ble Mr. Justice Prashant Kumar Mishra
Date of Judgment: October 09, 2025

2. Related Laws and Sections

The judgment revolves around the interpretation and application of the following legal provisions:

• The Negotiable Instruments Act, 1881 (NI Act):
  Sections 138 & 142: Dealing with the offence of dishonour of a cheque and the conditions for filing a complaint.
  Section 141: Deals with offences by companies. It stipulates that if the offence is committed by a company, every person who was in charge of and responsible for the conduct of the company's business at the time of the offence shall be deemed guilty.

• The Indian Trusts Act, 1882:
  Section 3: Defines a "trust" as an "obligation annexed to the ownership of property" arising out of confidence reposed and accepted by the owner.
  Section 13: Mandates that a trustee is bound to "maintain and defend all such suits" for the preservation of the trust-property.

• The Code of Criminal Procedure, 1973 (CrPC):
  Section 482: Inherent powers of the High Court to quash proceedings to prevent abuse of the process of court.

• Precedents Cited:
  SMS Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89
  Pratibha Pratisthan v. Manager, Canara Bank, (2017) 3 SCC 712
  K.K. Ahuja v. V.K. Vora, (2009) 10 SCC 48
  K.P. Shibu v. State of Kerala, 2019 SCC OnLine Ker 7585

3. Basic Judgment Details

• Parties: Appellant - Sankar Padam Thapa (Complainant); Respondent - Vijaykumar Dineshchandra Agarwal (Chairman/Trustee of Orion Education Trust).

• Nature of Case: Appeal against the judgment of the Meghalaya High Court which quashed a complaint case under Section 138 of the NI Act.

• Core Dispute: A cheque for Rs. 5 Crores, issued by the Respondent as the Chairman/Authorized Signatory of Orion Education Trust, was dishonoured. The Appellant filed a complaint under Section 138 of the NI Act against the Respondent individually, without making the Trust itself an accused.

• Impugned Judgment: The High Court quashed the complaint, agreeing with the Respondent's contention that the Trust, being a juristic person, was a necessary party and its non-joinder made the complaint non-maintainable.

4. Core Principle and Analysis of the Judgment

The Central Issue: Maintainability of a Complaint Against a Trustee Without Impleading the Trust

The core legal question before the Supreme Court was whether a complaint under Section 138 of the NI Act is maintainable against the Chairman or a Trustee of a Trust who signed the dishonoured cheque, without making the Trust itself a co-accused in the proceedings.

The Supreme Court's In-Depth Analysis and Reasoning

The Supreme Court allowed the appeal and set aside the High Court's order. Its reasoning is founded on a clear distinction between a "Company" and a "Trust."

1. Legal Status of a Trust: An Obligation, Not a Juristic Person
   The Court conducted a thorough analysis of the Indian Trusts Act, 1882. It emphasized that a trust, as defined under Section 3, is an "obligation" and not a legal entity. Relying on Section 13, the Court held that the duty to "maintain and defend" suits is cast upon the Trustee, not the Trust itself. The Trust operates only through its Trustees, who are the legal owners of the trust property for its beneficial purposes. Therefore, a Trust lacks an independent legal existence and is not a juristic person capable of suing or being sued in its own name. Consequently, there is no legal requirement to implead the Trust as an accused.

2. Vicarious Liability Under Section 141 NI Act and the Position of the Signatory
   The Court extensively referred to its landmark judgments in SMS Pharmaceuticals Ltd. and K.K. Ahuja. It reiterated the legal principle that a person who signs a cheque which is later dishonoured is, by virtue of that very act, responsible for the incriminating act and falls squarely within the ambit of Section 141(2) of the NI Act. The Court drew an analogy, stating that the position of the Respondent as the "Chairman/Authorized Signatory" of the Trust is akin to a Managing Director of a company. By virtue of this position and the act of signing the cheque, he was prima facie in charge of and responsible for the conduct of the Trust's business. Therefore, no specific averment beyond this was needed to initiate proceedings against him individually.

3. Rejection of Contrary High Court Views
   The Supreme Court expressly overruled the line of judgments from various High Courts (like Prana Educational and Charitable Trust, Mukund, and Bijaya Manjari Satpathy) which had held that a Trust is a juristic person and a "company" under Section 141. The Court stated that equating a Trust with a company was a "fallacy." It clarified that a company, following the principle in Salomon v. A Salomon & Co., is a distinct legal entity separate from its members, a status not afforded to a Trust under the Trusts Act.

4. Clarification on the Precedent of Pratibha Pratisthan
   The Respondent had argued that a Trust is a juristic person. The Court, while acknowledging that the precedent in Pratibha Pratisthan (which held a Trust is not a 'person' under the Consumer Protection Act) has been referred to a larger Bench, firmly stated that until that reference is decided, the law declared in that case continues to hold the field. It further found the reasoning in Pratibha Pratisthan, which aligns with the Trusts Act, to be more persuasive and applicable to the case at hand.

5. Final Outcome and Supreme Court Directions

The Supreme Court allowed the appeal and issued the following directions:

• The Impugned Judgment of the Meghalaya High Court dated November 21, 2022, was quashed and set aside.

• The criminal complaint case (Criminal Case No.44(S)/2019) before the Judicial Magistrate, Shillong, was restored to be proceeded with in accordance with the law.

• The Trial Court was directed to take steps with due expedition, given that the matter originated in 2019.

6. Multiple Choice Questions (MCQs) Based on the Judgment

Question 1: According to the Supreme Court's judgment in Sankar Padam Thapa v. Vijaykumar Dineshchandra Agarwal (2025 INSC 1210), what is the legal status of a Trust as per the Indian Trusts Act, 1882?
(a) A Trust is a juristic person, similar to a company, and can sue or be sued in its own name.
(b) A Trust is an obligation annexed to the ownership of property and is not a separate legal entity.
(c) A Trust is considered an 'association of individuals' under the Negotiable Instruments Act.
(d) A Trust is a body corporate with a legal existence independent of its trustees.

(b) A Trust is an obligation annexed to the ownership of property and is not a separate legal entity.

Question 2: In the aforementioned judgment, the Supreme Court held that a complaint under Section 138 of the NI Act is maintainable against a Trustee who signed the cheque without impleading the Trust. This is primarily because?
(a) The Trust is always a necessary party, but the complaint can proceed against the signatory first.
(b) The signatory of a dishonoured cheque is automatically covered under the vicarious liability clause of Section 141(2) of the NI Act.
(c) The Negotiable Instruments Act explicitly mandates that Trusts must be sued through their trustees.
(d) The High Court has the inherent power under Section 482 CrPC to implicate the signatory alone.

(b) The signatory of a dishonoured cheque is automatically covered under the vicarious liability clause of Section 141(2) of the NI Act.