Bombay High Court
Case BriefsHigh Courts

   

Bombay High Court: In a petition filed by the petitioner Uttamrao Rambhaji Shelke seeking quashing and setting aside of the impugned order dated 16-09-2021 passed by the Principal Secretary, Law and Judiciary Department, Mantralaya, Mumbai appointing the respondent 3 to 14 as Members of Managing Committee of Shree Sai Baba Sansthan Trust, Shirdi Taluka Rahata, District Ahmednagar, a Division Bench of R D Dhanuka and S G Mehare, JJ. held that the State Government has committed vast illegalities in appointing these trustees by disregarding the principles laid down by this Court in a series of judgments. It further stated that various resolutions passed by the State Government appointing the persons as trustees on the said Sansthan Trust are in violation of the principles laid down by this Court and in breach of the provisions of Shree Sai Baba Sansthan Trust (Shirdi) Act, 2004.

The Court remarked that “if the State Government would have appointed independent trustees and not the politicians who are having close connection with the ruling party, the said Sansthan Trust which is a public Trust and is a custodian of public money and properties would have saved huge amount of public money spent on unnecessary litigations.”

The Court noted that the record indicates the idol of Shri Sai Baba was set up at Shirdi in 1954 and a scheme was framed in 1984 by Bombay High Court. The State Government enacted Shree Sai Baba Sansthan Trust (Shirdi) Act, 2004. The Principal Secretary and Senior Legal Advisor to the Government appointed 16 members comprising of various professionals, various devotees of Shree Sai Baba and various other uncontroversial persons.

However, since last 3 terms, the State Government started appointing politicians to most of these posts without considering the scheme of the Trust and contrary to the provisions of the said Act which also formed the subject matter of the Public Interest Litigations.

The Court noted that none of these appointments were made in compliance with the directions issued and the principles laid down in various judgments which were supposed to be complied with.

The Court observed that the said Sansthan Trust is set up with the purpose of public cause having the properties worth crores of rupees owned by the said Trust. When power is vested with the authority, it must exercise the same for the public good and it is expected that the State Government to at least keep the God away while distributing public largesses. Thus, there is no propriety in appointing the persons as trustees, against whom criminal cases are pending in a non-transparent manner

The Court further noted that the appointment of the trustees to such public trust has to satisfy the test of public interest by keeping the purpose and intent of creating such trust under the said Act for the betterment of and in the interest of large members of public devotees of Shri Sai Baba and not the private interest of the ruling Government to accommodate their party workers or politicians. The entire purpose and intent of creating such trust by the State Government under the scheme sanctioned by the Court is thus ex-facie defeated for the political gains of the party in Power.

Thus, the Court quashed and set aside the impugned order dated 16-09-2021 passed by the Principal Secretary, Law and Judiciary Department, Mantralaya, Mumbai appointing the respondent 3 to 14 as Members of Managing Committee of Shree Sai Baba Sansthan Trust, Shirdi Taluka Rahata, District Ahmednagar.

The Court further directed State Government to constitute a new “the Shree Sai Baba Sansthan Management Committee” within a period of eight weeks in accordance with the provisions of section 5 of 2004 Act, and in line with the principles laid down by the Courts in the judgments and until the State Government such new Committee is constituted, the affairs of the “Shree Sai Baba Sansthan Trust, Shirdi” shall be supervised, monitored and looked after by a committee consisting of (A) The Principal District Judge, Ahmednagar, (B) The Collector, Ahmednagar (C) The Chief Executive Officer of Shree Sai Baba Sansthan Trust Shirdi, subject to no major financial decision to be taken without permission of the Court.

[Uttamrao Rambhaji Shelke v. State of Maharashtra, 2022 SCC OnLine Bom 2280, decided on 13-09-2022]


Advocates who appeared in this case :

Mr. R.S. Deshmukh, Senior Counsel i/by D.R. Deshmukh for the petitioner;

Mr. R.N. Dhorde, Special Counsel a/w Mr.D.R. Kale, Government Pleader for the respondent no.1;

Mr. A.S. Bajaj for respondent 3;

Mr. P.R. Katneshwarkar h/f Mr.S.N. Gaikwad for respondent 4;

Mr. N.L. Jadhav for respondent 5;

Mr. A.C. Darandale for respondent 6;

Mr. Mazhar A. Jahagirdar for respondent 8;

Mr. R.A. Tambe for respondent 9.


*Arunima Bose, Editorial Assistant has put this report together.

Madhya Pradesh High Court
Case BriefsHigh Courts

Madhya Pradesh High Court: The Division Bench of Rohit Arya and Milind Ramesh Phadke, JJ., admitted a petition which was filed to address and examine some issues:

1. Whether a self-styled Trust allegedly registered as Arya Samaj Vivah Mandir Trust can solemnize marriage between a Hindu boy and a Muslim girl?

2. Whether the said Trust has authority in law to issue marriage certificate?

3. Whether the said Trust in its aims and objects can indulge in such activities?

4. Whether the bylaws of the alleged Trust are duly ratified by the Registrar Public Trust or either under any Public Trust Act or other Act as the document doesn’t reflect so?

5. Whether on a mere declaration on affidavit or a notarized affidavit the Trust can convert religion of a Muslim girl as Hindu?

6. Whether the alleged Arya Samaj Vivah Mandir Trust by itself can be held to be an Arya Samaj Mandir which is solely for the purposes of solemnization of marriage having no affiliation or permission by the State/National body of the Arya Samaj Mandir?

Court hereby appointed Shri Faizal Ali Shah, a prominent Advocate of the Court to assist in the context of aforesaid questions with relevant literature and recitals of holy Kuran.

The Court was requested to look into the matter of hundreds of indiscriminate marriage certificates being issued to young boys and girls by such marriage shops on payment of huge amount without verification of their age and identities and no record was being maintained. It was prayed that the Court may also consider appointing a high-level police inquiry into the affairs of the instant Arya Samaj Vivah Mandir Trust.

Case has been listed for further hearing on 28-07-2022.

[Rahul v. State of Madhya Pradesh, 2022 SCC OnLine MP 1386, decided on 16-06-2022]


Advocates who appeared in this case :

Shri Suresh Agrawal, Advocate, for the petitioner;

Shri M.P.S. Raghuvanshi, Additional Advocate General with Shri Devendra Choubey, Government Advocate, for the State;

Shri Balwant Singh Billowria, counsel with Shri Prabhat Kumar Singh, Advocates, for respondent 6.


*Suchita Shukla, Editorial Assistant has reported this brief.

Case BriefsSupreme Court

Supreme Court of India: While deliberating on the instant appeals expressing grievance over the judgment of Andhra Pradesh HC (Amravati) wherein it had directed the authorities concerned to conduct a re-auction of the entire properties by fixing the upset price higher than what has been fixed earlier, the Division Bench of M.R. Shah* and B.V. Nagrathna, JJ., held that unless there is concrete material and it is established that there was any fraud and/or collusion or the land in question was sold at a throw away price, the sale pursuant to the public auction cannot be set aside at the instance of strangers to the auction proceeding.

Facts and Litigation Trajectory

As per the facts of the case, a proposal was published by the office of Commissioner, Endowments Department to auction the land in question belonging to Sri Markendaya and Omkareswara Swamy Devasthanam, Eluru, which was published in the newspaper on 10.03.1997. Notification to sell the subject land was published in the Andhra Pradesh Gazette on 22.05.1997. Nobody raised any objection against the said proposal. The probable expected price of the land was fixed at Rs. 4,00,000/- per acre and the total extent of land was about 1.81 acre. The Commissioner of Endowments Department granted permission to sell the land. The Executive Officer of the Temple Trust issued tender/public notice to sell the land in question by way of an open auction in the presence of the Deputy Commissioner, Endowments on 22.05.1998. Thereafter the auction took place on 24.06.1998 in which 45 people participated. The appellant herein was declared as the highest bidder.

One L. Kantha Rao, who did not participate in the auction held on 24.06.1998, filed a Writ Petition in 1999 before the High Court to direct the Executive Officer/ the Temple Committee not to execute the sale deed in respect of the auctioned land. The High Court granted interim stay of all further proceedings subject to the condition that he furnishes a bank guarantee of a sum of Rs.30 lakhs within two weeks from the date of the said interim order. During the pendency of the aforesaid writ petition the office of the Commissioner, Endowments Department unilaterally passed an order dated 10.02.1999 cancelling the auction held on 24.06.1998. The Executive Officer of the Temple was instructed to conduct a re-auction for the land in question keeping the upset price of Rs.30 lakhs. The matter reached the High Court and it observed that while Commissioner had revoked the order dated 10.02.1999, the revision filed against the same had become infructuous, however, liberty was granted to the said L. Kantha Rao to file a revision against the original order passed by the Commissioner.

Then on the basis of the liberty granted by the High Court, the said Shri L. Kantha Rao filed a revision before the Government challenging the order dated 22.12.1998 although he was not a participant in the auction in which appellant herein was declared the highest bidder. The said revision was allowed thereby quashing and setting aside the order dated 22.12.1998 and directing the Commissioner to refund the amount paid by the appellant and to conduct a re-auction of the land.

The appellant filed a writ in before the Single Judge bench of the HC who decided that Kantha Rao had not locus standi. He did not participate in the tender-cum-auction and when 45 persons participated in tender-cum-auction, nothing prevented him to participate in tender-cum- auction proceedings.

Mere depositing the money saying that the amount would fetch more is of no argument that can be looked into without establishing malafides or fraud played by the vendor or vendee”.

The Division Bench of the HC set aside the judgment and order passed by the learned Single Judge and directed the authorities concerned to conduct the re-auction of the entire land by fixing the upset price higher than what had been fixed earlier by observing that since more than twenty years had elapsed from the date of issuance of GO Rt. No. 1808 dated 26.11.1999 and price of the land in question had risen. The Division Bench also observed that the writ petitioner as well as the appellant shall also be allowed to participate in the re-auction, if they are otherwise eligible.

Contentions

Harin P. Raval, appearing on behalf of the appellant, contended that the Division Bench of the HC has committed a grave error in setting aside the 1998 auction and ordering a re-auction, as the decision was reached by an improper appreciation of the facts. he also contended that the auction sale was conducted after wide publicity in the well-known newspapers, so there was no illegality in conducting the auction, therefore, the Division Bench of the High Court ought not to have set aside such a sale after a period of approximately twenty years from the date of conducting the public auction and the sale that too at the instance of a person, who never participated in the auction. Since the respondent did not even participate in the 1998 auction, therefore he does not have any locus.

The Division Bench of the High Court did not properly appreciated the fact that the proceedings initiated by L. Kantha Rao were by way of  PIL and therefore after his death, his wife could not have continued the PIL proceedings by way of writ petition before the High Court as a private litigation.

The counsels for the respondents argued that the duty of the State is parens partriae in respect of the charitable endowments and to ensure its due protection, therefore the Government cannot act against the interest of the temple. Thus the re-auction was justified if in case of a trust, the consideration is inadequate. They argued that the court should always keep the larger interest of the public in mind while interfering with the decision of the authority. Further, the concept of locus standi has been widened by this Court while dealing with matters of public interest. It is the duty of the Court to see that the price fetched is adequate.

Observations

Upon perusing the facts and the rival contentions, the Court observed that the Division Bench of the HC failed to appreciate and consider the lack of bonafides of L. Kantha Rao. Noting that since Rao did not participate in the 1998 auction proceedings or made any offer, the Court stated that he should not have been permitted to to raise any objection subsequently on the valuation.

Once the appellant was found to be the highest bidder in a public auction in which 45 persons had participated and thereafter when the sale was confirmed in his favour and even the sale deed was executed, unless and until it was found that there was any material irregularity or illegality in holding the public auction and/or auction/sale was vitiated by any fraud or collusion, it is not open to set aside the auction or sale in favour of a highest bidder on the basis of some representations made by third parties, who did not even participate in the auction proceedings and did not make any offer”.

The Court further noted that Kantha Rao did not raise any objection at an appropriate stage or time, therefore is unlikely that he had any grievance vis-a-vis the auction. The Court also pointed out the failure of the Division Bench to not analyze the covert method applied by a fence sitter to nullify the auction proceedings via filing a PIL. The Court noted that the “subsequent lucrative offer” for the land was made simply to frustrate the auction proceedings with malafide intent-

if there was any error in the decision-making process adopted by the authority, the remedy available was to question the sale deed in an appropriate proceeding available under the law and not by filing a petition under Article 226 of the Constitution of India”.

Finally the Court observed that more than 23 years have passed since the auction and the sale, hence it is obvious that the value of the land won’t be the same as it was in 1998. Therefore the point of consideration is the “value of the property at the time when the sale was conducted”. The Court pointed out that the respondents could not point out with any material that price offered by the appellant in the year 1998 was not a fair value.

Conclusion

Based on the facts, the Court concluded that the auction was conducted and held in the year 1998 and was sold in favour of the appellant then on payment of the full sale consideration as per the highest bid offered by him. Therefore, the valuation as on the date of auction is the relevant consideration and not the value after so many years and over two decades after conducting the auction and confirming the sale.

The Court also set aside the impugned decision of the Division Bench and restored the decision rendered by the Single Judge Bench of the HC.

K. Kumara Gupta v. Sri Markandeya and Sri Omkareswara Swamy Temple and ors., 2022 SCC OnLine SC 196, decided on 18.02.2022


*Judgment by: Justice MR Shah


Sucheta Sarkar, Editorial Assistant has put this report together


Case BriefsSupreme Court

Supreme Court of India: Noting the donations being made to the Trust to be ‘bogus donations’ Bench of Uday Umesh Lalit and Ajay Rastogi, JJ., cancelled the registration of the Trust under Section 12AA and 80G of the Income Tax Act, 1963.

What transpired the present matter?

Present appeal challenged the decision of Calcutta High Court setting aside the order passed by Commissioner of Income Tax (Exemption) cancelling the registration of respondent Trust under Section 12AA of the Income Tax Act, 1961 and another order passed by the Income Tax Appellate Tribunal dismissing appeals therefrom.

Background

Trust was registered under Section 12AA of the Act and was also accorded approval under Section 80G (vi) of the Act.

It was stated that in a survey conducted on an entity named School of Human Genetics and Population Health, Kolkata under Section 133A of the Act, it was prima facie observed that the Trust was not carrying out its activities in accordance with the objects of the Trust. Hence a show-cause notice was issued by the CIT.

Hence CIT invoked the provisions of Section 12AA(3) of the Income Tax Act and cancelled the registration under Section 12AA of the Act. This resulted in cancellation of the approval granted to the Trust under Section 80G of the Act.

When the matter reached High Court, Trust submitted that it had received donations from various donors and the Trust was under no obligation to verify the source of the funds of the donor or whether those funds were acquired by performance of any unlawful activity.

Further, it was also added that the funds were applied for the purposes of trust and that there was no evidence to suggest that those funds were applied for any illegal or immoral purposes or that the Trust was a namesake.

High Court had allowed the appeal and set aside the order of cancellation of the registration of the Trust while directing for the restoration of its registration.

Analysis, Law and Decision

Bench noted that as per the answers to the questionnaire put forward to the Managing Trustee, it depicted the extent of misuse of the status enjoyed by the Trust by virtue of registration under Section 12AA of the Act.

The answers also showed that the donations were received by way of cheques out of which substantial money was ploughed back or returned to the donors in cash. As per the facts, the said donations were ‘bogus’ donations and that the registration conferred upon the Trust under Section 12AA and 80G of the Act was completely being misused by the Trust.

Hence, the authorities were right in cancelling the registration under Section 12AA and 80G of the Act.

Opinion on High Court’s decision

Supreme Court held that High Court erred in entertaining the appeal and it did not even attempt to deal with the answers to the questions and whether the conclusions drawn by the CIT and the Tribunal were in any way incorrect or invalid.

Conclusion

While setting aside the decision under challenge, Court allowed the present appeal and restored the order passed by the CIT and the Tribunal. [Commissioner of Income Tax (Exemptions) v. Batanagar Education and Research Trust, 2021 SCC OnLine SC 529, decided on 2-08-2021]


Advocates before the Court:

Pet. Advocate(s)   ANIL KATIYAR
Resp. Advocate(s)   ABHIJIT SENGUPTA[caveat]
Kerala High Court
Case BriefsHigh Courts

Kerala High Court: A Full Bench of A.M. Shaffique, Sunil Thomas and Gopinath, JJ., held that there is no limitation period for wife/divorced wife to claim her property entrusted to husband/in-laws given in the form of dowry or otherwise.

Questions involved was:

Whether trust created by a wife entrusting her property to her husband gets extinguished after the dissolution of marriage and whether she can initiate proceedings invoking Section 10 of the Limitation Act, 1963 without any limitation of time?

For the above-stated question, reference was made to the decision of Bindu K.P. v. Surendran C.K., [2018 (2) KHC 1] wherein it was held that claim of the wife or ex-wife for a dowry is not barred by any length of time.

Counsel for the appellant Sri S.K. Balachandran placed the following decision before the Court:

    • Swapna v. Thankavelu, 1990 SCC OnLine Ker 168: – In the above case, a Single Judge of this Court held that when valuable articles are entrusted by the wife to the husband for safe custody, the husband remains in the position as a trustee who is bound to account to the wife all her properties at any time when she demands. The aforesaid judgment was delivered following the Supreme Court judgment in Pratibha Rani v. Surajkumar, (1985) 2 SCC 370. It was further held that if the husband is a trustee, the wife is entitled to follow the property in the possession of the trustee, and Section 10 of the Limitation Act would apply.
  • Chacko v. Annamma, (1985) 2 SCC 370: – In this case, the Division Bench of this Court approved Swapna’s case stated above. In the above case, on a detailed analysis of the relevant provisions including Section 10 of the Limitation Act and the provisions of the Trusts Act, overruling an earlier judgment in Annamma v. Thressiamma, 1971 SCC OnLine Ker 86, it was held that there is a creation of trust in respect of stridhanam property and therefore Section 10 applies.
  • In Bhatacharjee v. Sarathi Choudhury, 1993 SCC OnLine Ker 13, while considering the impact of Section 12 of the Protection of Women from Domestic Violence Act, 2005, the Supreme Court held that as long as the status of the aggrieved person remains, and the stridhanam remains in the custody of the husband, the wife can put forth a claim under Section 12 of the Act.

Question involved in the above reference was the following:

When there is a change in circumstances between the spouses, especially when there is a dissolution of marriage and substantial time had elapsed, whether the trust created between them would be extinguished?

Section 10 of the Limitation Act states as follows:

“10. Suits against trustees and their representatives- Notwithstanding anything contained in the foregoing provisions of this Act, no suit against a person in whom property has become vested in trust for any specific purpose, or against his legal representatives or assigns (not being assigns for valuable consideration), for the purpose of following in his or their hands such property, or the proceeds thereof, or for an account of such property or proceeds, shall be barred by any length of time.

Explanation.-For the purposes of this section any property comprised in a Hindu, Muslim or Buddhist religious or charitable endowment shall be deemed to be property vested in trust for a specific purpose and the manager of the property shall be deemed to be the trustee thereof.”

In view of the decisions referred above, it is settled that,

when the wife entrusts with the husband any property belonging to her, a trust is created and the husband is bound to return the same to his wife. If the same is not returned, the wife has a right to demand the same by filing a suit or as in the present case, file an application before the Family Court or take other necessary steps under the relevant statutes in force.

When Section 10 of the Limitation Act indicates that there is no limitation for initiating any such action, in the absence of any other statute providing for a limitation, the trustee cannot take a contention that he shall not return the trust property on account of any period of limitation. The question posed is, when the relationship between the parties gets deranged and results in divorce, whether the trust gets extinguished and the divorced wife would be entitled to invoke Section 10 of the Limitation Act and file a suit at her will and pleasure at any point in time. In such an event, the questions to be considered are (i) whether a trust had been created at any point of time, (ii) if a trust has been created and the husband remains in the position of a trustee, whether it gets extinguished on the dissolution of marriage or under any other circumstances.

Under Section 77 of the Indian Trusts Act, 1882, a trust gets extinguished only under certain circumstances. Section 77 reads as under:

“77. Trust how extinguished.— A trust is extinguished—
(a) when its purpose is completely fulfilled; or
(b) when its purpose becomes unlawful; or
(c) when the fulfilment of its purpose becomes impossible by the destruction of the trust-property or otherwise; or
(d) when the trust, being revocable, is expressly revoked.”

Hence, unless any of the above-stated eventualities as mentioned take place, which is a question of fact to be decided on a case to case basis and once a trust is created, it continues to operate, even though marriage is dissolved. However, in an instance where there is an agreement between the parties settling the obligations arising from the trust, it gets fulfilled in terms of Section 77(a).

As per the Dowry Prohibition Act, 1961, when a statutory trust is created in respect of dowry, the principle aforestated shall apply.

Further, the Court added that, in the case of ornaments which are given in the form of dowry, definitely, a statutory trust is created. Even otherwise, if the ornaments owned by the wife do not form part of the dowry and if there is an entrustment of gold ornaments by the wife to the husband or his parents, a trust gets created, in which event, the trustee or trustees, as the case may be, are liable to return the same and there is no limitation for claiming the same by the wife/divorced wife.

In light of the above, the Court agreed with the law laid down in Chacko v. Annamma, (1993) 1 KLT 675 and upheld the view expressed in Bindu K.P. v. Surendran C.K., [2018 (2) KHC 1]. [Sheela K.K. v. N.G. Suresh, 2020 SCC OnLine Ker 4240, decided on 24-09-2020]

Uttarakhand High Court
Case BriefsHigh Courts

Uttaranchal High Court: Lok Pal Singh, J., addressed an application that sought to quash criminal proceedings under Sections 420, 468, 471 of Penal Code, 1860 and Section 66(D) of Information Technology Act pending in Judicial Magistrate Court.

In the present matter, a complaint was lodged against the applicant that he committed forgery for purpose of cheating by using as genuine the forged and fraudulent document with the intention to cause damage to the Trust and hacked the information stored in the computer.

A charge-sheet was submitted by against the applicant in respect of selfsame offences. Further, Magistrate took cognizance and summoned the applicant to face the trial in respect to the mentioned offences.

Siddhartha Singh, applicant for the counsel submitted that the applicant was an old trustee and was appointed as the President of Kailashanand Mission Trust. He submitted that proceedings against the applicant are nothing but the outcome of the revengeful activity of the complainant and his associates. Complainant concealed the fact of the applicant being the President of the Trust and went on to lodging an FIR against him in the name of him being an “Unknown Hacker”.

According to the applicant’s counsel, the entire proceedings are nothing but an abuse of process of law and Court.

Senior Advocate, Rakesh Thapliyal on behalf of the complainant due to nefarious activities of the applicant, Swami Kailashanand was annoyed with him and by way of a resolution of trust, he cancelled all rights of the applicant and even removed him from the post of Manager of Trust.

He further submitted that various complaints were filed against the applicant for forging Trust’s letter pad, seals and receipt book and resolutions.

Applicant’s Counsel while relying on the Supreme Court case in, International Advanced Research Centre for Powder Metallurgy and New Materials (ARCI) v Nimra Cerglass Technics (P) Ltd., (2016) 1 SCC 348, argued that in order to bring a case for offence of cheating, it is not merely sufficient to prove that a false representation was made, but it is further necessary to prove that the representation was false to the knowledge of accused and was made in order to deceive complainant.

According to the ruling in Supreme Court case of Amit Kapoor v. Ramesh Chander, (2012) 9 SCC 460, in which certain principles in respect of exercise of jurisdiction under Section 482 CrPC are laid down, one of the principles which hold significance in the present matter is following:

“…Court should apply the test as to whether the uncontroverted allegations as made from the record of the case and the documents submitted therewith prima facie establish the offence or not.”

Thus, in the present matter, High Court stated that in view of the above, a bare perusal of FIR as well as the charge sheet, it is apparent that foundation of criminal offence is laid against the applicant. Jurisdiction under Section 482 CrPC should not be exercised to stifle or scuttle the legitimate prosecution. Court stated that in the present case, this is not the stage to quash the charge sheet.

Hence, Since, prima facie case is made out against the applicant, the Magistrate has rightly taken cognizance and summoned the applicant to face the trial in respect of the offences complained of against him. [Vijay Kumar Gupta v. State of Uttarakhand, Criminal Misc. Application No. (C-482) No. 1087 of 2016, decided on 18-12-2019]

Kerala High Court
Case BriefsHigh Courts

Kerala High Court: B Sudheendra Kumar, J. allowed the petition and quashed the complaint and further proceedings against the petitioners which were filed by the Respondent 2.

In the instant case, Respondent 2, Branch Manager, had filed a complaint against the petitioners, trustees of a trust, alleging offence under Section 138 of the Negotiable Instruments Act, 1881. Hence, the instant criminal cases had been filed by petitioners, praying for quashing the complaint and further proceedings against them. The Court appointed Advocate Jamshed Hafiz as amicus curiae.

The learned counsel for the petitioners, Shaji Chirayath had argued that no successful prosecution against the petitioners, invoking the provisions under Section 141 of the NI Act, could be sustained, as the “Trust” was not an “association of individuals”. The learned counsel for the Respondent 2, Salil Narayanan K.A. argued that the “Trust” was an “association of individuals” and hence, the petitioners were vicariously liable under Section 141 of the NI Act. The learned amicus curiae, Jamshed Hafiz submitted that the “Trust” will not come within the ambit of “association of individuals” and hence, the provisions of Section 141 of the NI Act could not be made applicable to prosecute the petitioners under Section 138 of the NI Act.

The first issue involved in the instant case was that the “trust” was a body corporate or not. As per the Sections 3,11,13,47 and 48 of the NI Act, it was clear that the trustees were the owners of the property and were bound to maintain and defend all suits for the preservation of the trust. Thus it appeared that the “Trust” was not capable of suing and being sued in a Court of law. Therefore, a “Trust” was not a juristic person and was not like a body corporate, which had a legal existence of its own.

The second issue involved was that the “trust” was an “association of individuals” or not. For this, the Court placed reliance on Ramanlal Bhailal Patel v. State of Gujarat, (2008) 5 SCC 449, in which it was held that an “association of persons/body of individuals” was one in which two or more persons join in a common purpose and common action to achieve some common benefit. As per Section 3 of the NI Act, the trustees do not get benefit out of the trust. Therefore, it could not be said that the trustees were persons joined together for a common action to achieve some common benefit. Since, the common purpose of the “Trust” was not to achieve benefit to the trustees, the “Trust” could not be said to be an “association of persons/body of individuals”.

In view of the above, it was held that the “Trust” was neither a “body corporate” nor an “association of individuals” as provided in the explanation to Section 141 of the NI Act. Therefore, no prosecution against the petitioners, the trustees, invoking the provisions under Section 141 of the NI Act could be maintained. Consequently, no successful prosecution against the petitioners, invoking the provisions of Section 141 of the NI Act, could be sustained as the petitioners did not sign the cheque involved in the instant case. The complaint and further proceedings against the petitioners in the instant case were quashed.[N.M. Nabeesa v. State of Kerala, 2019 SCC OnLine Ker 2481, decided on 06-02-2019]

Case BriefsHigh Courts

Madras High Court: The Bench of M. Nimal Kumar, J. refused to quash proceedings pending on the file of Judicial Magistrate (III), Coimbatore.

The complainant filed a case against the petitioner for an offence punishable under Section 138 NI Act, 1881 (dishonour of cheque). Petitioner took a hand loan of Rs 6 lakhs from the complainant. The amount was agreed to be repaid within 6 months along with an interest at 18% per annum for which petitioner issued a cheque. However, petitioner defaulted in paying either the amount or the interest. Consequently, complainant presented the cheque on the bank but it was dishonoured. Hence, he instituted the case.

M. Prabhakaran, counsel for the petitioner submitted that the subject cheque was issued for collateral security for the loan secured by Sri Venkateswara Educational and Charitable Trust. It was contended that the case which was preferred against the petitioner in his individual capacity was not maintainable.

However, the High Court held the said contention to be not acceptable for the reason that the cheque was issued in the name of the petitioner for the loan availed. Further, the petitioner neither repaid the money nor replied to the statutory notice sent by the complainant. It was also held that the claim of “security cheque” was a matter of fact which had to be decided only in the trial. Resultantly, the present petition was dismissed.[K. Velu v. P. Damodharan, 2019 SCC OnLine Mad 315, dated 07-01-2019]

Case BriefsSupreme Court

Supreme Court: The bench of Madan B. Lokur and P.C. Pant, JJ held that a Trust cannot file a complaint under the provisions of the Consumer Protection Act, 1986 as a Trust is not a person and therefore not a consumer.

The bench took note of the various definition provisions under the Act to come to the conclusion that a Trust does not fall under the category of a ‘complainant’ as defined under Section 2(b) of the Act. The Court also considered the definition of ‘consumer’ under Section 2(d) of the Act which included the word ‘person’. The Court said that ‘person’ as per Section 2(m) of the Act includes a firm whether registered or not; a Hindu undivided family; a co-operative society; every other association of persons. However, it does not include ‘Trust’.

Hence, the Court held that based on a plain and simple reading of the provisions, a Trust cannot be a complainant and cannot file a consumer dispute under the provisions of the Act. [Pratibha Pratisthan v. Manager, Canara Bank, 2017 SCC OnLine SC 202, decided on 07.03.2017]