Case at a Glance
A charitable trust was arrayed as an accused in the CBI case over the collapse of IMAP Limited and its group companies, on the allegation that funds raised from investors reached the trust as donations through its managing trustee. The Special Court in Bengaluru refused to discharge it and the Karnataka High Court declined to interfere. The Supreme Court, following Sankar Padam Thapa v. Vijaykumar Dineshchandra Agarwal, (2025) 10 SC CK 1087, held that a trust has no legal existence separate from its trustees and is not a juristic person, so it cannot be arrayed as an accused. Proceedings against the trust were stopped, while the case against the trustee and other accused continues.
Investors who were not refunded by M/s I Monetory Advisory Private Limited (IMAP Limited) and its group companies filed complaints, leading to several FIRs, investigation by a State Special Investigation Team and the Anti-Corruption Bureau, and later by the CBI. The case is pending as Spl. C. No. 1055 of 2019 before the Special Court for former and sitting MPs/MLAs in Bengaluru, with offences under the Indian Penal Code and the Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004.
The prosecution alleged that a trustee of the appellant Trust promoted IMAP’s activities in the community and that the Managing Trustee (Accused No. 32) raised funds through IMAP and its directors, part of which the Trust accepted as donations for its educational institutions. The Trust was therefore arrayed as an accused. Its discharge application was rejected by the Special Court, and the High Court refused to interfere. Before the Supreme Court, the Trust relied on Sankar Padam Thapa, while the CBI argued that that case arose under Section 138 of the Negotiable Instruments Act and that there was a clear money trail to the Trust.
The Key Question Before the Court
Can a trust, as distinct from its trustees, be arrayed as an accused in a criminal prosecution?
No Separate Legal Existence, No Prosecution of the Trust
The Bench noted that whether a trust is a juristic person had been referred to a three-Judge Bench in Administrator Smt. Tara Bai Desai Charitable Ophthalmic Trust Hospital Jodhpur v. Managing Director, Supreme Elevators India Pvt. Ltd., (2025) 3 SCC 80, but that a coordinate Bench in Sankar Padam Thapa v. Vijaykumar Dineshchandra Agarwal, 2025 SCC OnLine SC 2194, had since held that a trust cannot sue or be sued, after considering the effect of the pending reference and relying on Pratibha Pratisthan v. Manager, Canara Bank, (2017) 03 SC CK 0038, (2017) 3 SCC 712. Citing National Insurance Company Limited v. Pranay Sethi, (2017) 10 SC CK 0044, (2017) 16 SCC 680, and A.P. Electrical Equipment Corporation v. Tahsildar, 2025 SCC OnLine SC 447, on following the earlier view where Benches of equal strength differ, the Court chose to follow Sankar Padam Thapa.
Relying on Sections 3 and 13 of the Indian Trusts Act, 1882, the Court held that “a Trust does not have a separate legal existence of its own” and that “The obligation to maintain or defend suits is placed on the shoulders of a Trustee and not on the Trust itself.” It concluded that “the Trust is not liable to be arrayed as an accused, it being a concept not capable of being termed as a juristic person.” The Court noted that the allegation of receiving money was in substance directed at the trustee, whose prosecution continues.
What the Court Actually Held
- A trust has no legal existence separate from its trustees and is not a juristic person.
- A trust therefore cannot be arrayed as an accused in a criminal case; the trustee is the proper person to answer.
- Spl. C. No. 1055 of 2019 shall not proceed against the appellant Trust.
- The prosecution of the trustee and the other accused is unaffected; the appeal was allowed.
Why This Judgment Matters
- It applies the ‘trust is not a juristic person’ principle from civil and cheque-bounce law to a major financial-fraud prosecution.
- It guides investigating agencies to proceed against trustees personally rather than against the trust as an entity.
- It shows the Supreme Court following an earlier coordinate Bench while a larger Bench reference remains pending.
What Should Advocates Take Away From the Judgment?
For Trusts and Trustees
- A trust as such cannot be prosecuted, but trustees remain personally answerable for their acts.
- Charitable trusts receiving donations should keep clear records of the source of funds.
For Counsel
- Seek discharge of a trust named as an accused by relying on Sankar Padam Thapa and this ruling.
- Track the pending three-Judge Bench reference in Tara Bai Desai, which may finally settle the question.
Key Takeaways
- A trust is not a juristic person under the Indian Trusts Act, 1882.
- Criminal proceedings must be directed against trustees, not the trust itself.
- The Court followed Sankar Padam Thapa despite the pending larger Bench reference.
- Dropping the trust does not end the case against the trustee or other accused.
Frequently Asked Questions
Can a trust be prosecuted in India?
Following Sankar Padam Thapa, the Supreme Court held that a trust, having no legal existence separate from its trustees, cannot be arrayed as an accused; the trustees are the proper persons to be proceeded against.
Does this end the case against the trustee?
No. The Court made clear that only the Trust is dropped; proceedings against the trustee and the other accused continue.
Is the issue finally settled?
A reference to a three-Judge Bench on whether a trust is a juristic person (Tara Bai Desai) was noted as pending; this Bench followed the coordinate Bench decision in Sankar Padam Thapa in the meantime.
Conclusion
The ruling separates the trust from the people who run it. If money from a fraudulent scheme reached a trust, the law looks to the trustees who acted, not to the trust as a legal shell, and the prosecution of those individuals goes on.
Practical takeaway: Where a trust is named as an accused, seek its discharge on the ground that it is not a juristic person, while preparing the trustee’s defence separately.
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