The Supreme Court of India has unequivocally held that a 'trust' does not possess the characteristics of a juristic person and, consequently, cannot be named as an accused in criminal proceedings. This pronouncement came in a case involving alleged financial irregularities in Karnataka, where the Court quashed criminal proceedings against an appellant-trust, while allowing the proceedings against its trustees to continue.
A bench comprising Justice J.B. Pardiwala and Justice K. Vinod Chandran delivered the judgment, setting aside an order of the Karnataka High Court that had refused to quash the criminal proceedings against the trust. The Supreme Court underscored that a trust fundamentally represents an obligation annexed to the ownership of property, arising from confidence reposed in and accepted by the owner for the benefit of another, or of another and the owner. The Court clarified that a trust does not possess a separate legal existence of its own, which would enable it to sue or be sued. Instead, the responsibility for maintaining or defending legal actions rests squarely with the trustees, not with the trust entity itself.
Legal Rationale and Precedents
The Supreme Court's decision reaffirmed the legal position previously established in *Pratibha Pratisthan v. Manager, Canara Bank (2017)*. This precedent articulated that a trust, by its very nature, is not a juristic person. The bench further noted that this principle was subsequently followed in *Sankar Padam Thapa v. Vijaykumar Dineshchandra Agarwal (2025)*, which dealt with cheque dishonour proceedings.
In the present case, the State of Karnataka had argued against the non-arraignment of the appellant-trust in the criminal proceedings. The State contended that the ruling in *Sankar Padam Thapa*, which permitted cheque dishonour proceedings against trustees even without the trust being arrayed as an accused, should not be applied to the current matter. The State highlighted that the present case involved alleged offences under the Indian Penal Code and the Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004, distinguishing it from a cheque dishonour case.
Rejection of State's Argument and Operative Outcome
The Supreme Court, however, rejected the State's argument. The Court acknowledged that the broader question of whether a trust constitutes a juristic person is currently under reference to a larger bench. Despite this ongoing reference, the Court affirmed that the established legal position, as laid down in *Pratibha Pratisthan* and subsequently upheld in *Sankar Padam Thapa*, leads to the unequivocal conclusion that a trust is not a juristic person. Consequently, a trust can neither initiate nor be subjected to legal proceedings as an independent entity.
Based on this reasoning, the Supreme Court allowed the appeal to the extent that the criminal proceedings initiated against the Madasa Masih-UI-Uloom Educational and Charitable Trust were quashed. Crucially, the Court clarified that this decision does not impede the continuation of criminal proceedings against the individual trustees, thereby distinguishing the liability of the trust as an entity from the personal liability of its administrators. The judgment reinforces the principle that while a trust itself cannot be an accused, the individuals responsible for its administration remain accountable for their actions under relevant laws.