{"id":217712,"date":"2019-08-05T17:00:59","date_gmt":"2019-08-05T11:30:59","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=217712"},"modified":"2019-08-13T13:41:58","modified_gmt":"2019-08-13T08:11:58","slug":"ker-hc-trust-is-an-obligation-annexed-to-ownership-of-property-cannot-be-prosecuted-under-ni-act-as-it-is-neither-a-body-corporate-nor-an-association-of","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2019\/08\/05\/ker-hc-trust-is-an-obligation-annexed-to-ownership-of-property-cannot-be-prosecuted-under-ni-act-as-it-is-neither-a-body-corporate-nor-an-association-of\/","title":{"rendered":"Ker HC | \u2018Trust\u2019 is an \u2018obligation annexed to ownership of property\u2019 \u2013 cannot be prosecuted under NI Act as it is neither a body corporate nor an association of individuals"},"content":{"rendered":"

Kerala High Court: <\/strong>B Sudheendra Kumar, J. allowed the petition and quashed the complaint and further proceedings against the petitioners which were filed by the Respondent 2.<\/p>\n

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.<\/p>\n

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.<\/p>\n

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.<\/p>\n

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<\/a>, 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”<\/em>.<\/p>\n

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<\/b><\/a>, decided on 06-02-2019]<\/p>\n","protected":false},"excerpt":{"rendered":"

Kerala High Court: B Sudheendra Kumar, J. allowed the petition and quashed the complaint and further proceedings against the petitioners which were <\/p>\n","protected":false},"author":8808,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,10],"tags":[36938,36937,23584,36936,14611],"class_list":["post-217712","post","type-post","status-publish","format-standard","hentry","category-casebriefs","category-highcourts","tag-association","tag-ownership-of-property","tag-section-138-ni-act","tag-section-141-ni-act","tag-trust"],"yoast_head":"\nKer HC | \u2018Trust\u2019 is an \u2018obligation annexed to ownership of property\u2019 \u2013 cannot be prosecuted under NI Act as it is neither a body corporate nor an association of individuals | SCC Times<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, 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