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2019 (8) TMI 665

..... ", no successful prosecution against the petitioners, invoking the provisions under section 141 of the N. I. Act, can be sustained - HELD THAT:- All the trustees are the owners of the property, but they are obliged to use the same in a particular manner. If a number of trustees exist, they are the joint owners of the property. The trustees are bound to maintain and defend all suits, for the preservation of the trust-property and the assertion or protection of the title thereto. Thus it appears that the "trust" is not capable of suing and being sued in a court of law, even though the trustees can maintain and defend suits for the preservation and protection of the trust-property. Therefore, a "trust" is not a juristic person or a legal entity, as the juristic person has a legal existence of its own and hence it is capable of suing and being sued in a court of law. Thus it appears that a "trust" is not like a body corporate, which has a legal existence of its own and therefore can appoint an agent - thus "trust" is not a body corporate. Whether the "trust" is an "association of individuals" or not? - HELD THAT:- A mere .....

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..... KSFE Ltd. in Crl. M. C. No. 3804 of 2018. Salil Narayanan (K. A.) , SC, for KSFE Ltd. in Crl. M. C. Nos. 3827 and 3832 of 2018. Arun Antony , SC, for KSFE Ltd. in Crl. M. C. No. 3844 of 2018. P. C. Anil Kumar , SC, for KSFE Ltd. in Crl. M. C. No. 3852 of 2018. JUDGMENT The petitioners are accused in C. C. No. 731 of 2017 on the files of the Court of the Judicial Magistrate of First Class-I, Kothamangalam. The second respondent in the above said Crl. M. Cs. filed a complaint before the court below against the petitioners and other persons alleging offence under section 138 of the Negotiable Instruments Act, 1881 (for short "the N. I. Act"). The petitioners are the trustees of a trust, namely, Indira Gandhi Memorial Trust, Nellikuzhy. The trust is arraigned as the first accused in the above said complaint. 2. The above Crl. MCs. have been filed praying for quashing the complaint and further proceedings against the petitioners in the above said case. 3. Considering the nature and importance of the question of law involved in these Crl. MCs., this court appointed advocate Sri Jamshed Hafees as Amicus Curiae. 4. Heard learned counsel for the petitioners, learned counsel for t .....

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..... , manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation.-For the purpose of this section,- (a) 'company' means any body corporate and includes a firm or other association of individuals ; and (b) 'director', in relation to a firm, means a partner in the firm." The Explanation to section 141 of the N. I. Act provides that "company" means any body corporate and includes a firm or other association of individuals for the purpose of section 141 of the N. I. Act. 8. There is no dispute that "trust" is not a firm. Now, the question to be considered is as to whether the "trust" is a body corporate or not. For that purpose, it is necessary to go through the relevant provisions of the Indian Trust Act, 1881 (for short "the Act") to ascertain as to whether the "trust" is a juristic person or not. 9. A juristic person is also known as a legal person or a legal entity. A juristic person is one to which law attributes legal personality. The legal personality is an artificial creation of law, conferred upon entiti .....

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..... ist, they are the joint owners of the property. The trustees are bound to maintain and defend all suits, for the preservation of the trust-property and the assertion or protection of the title thereto. Thus it appears that the "trust" is not capable of suing and being sued in a court of law, even though the trustees can maintain and defend suits for the preservation and protection of the trust-property. Therefore, a "trust" is not a juristic person or a legal entity, as the juristic person has a legal existence of its own and hence it is capable of suing and being sued in a court of law. Thus it appears that a "trust" is not like a body corporate, which has a legal existence of its own and therefore can appoint an agent. The above discussion would make it clear that a "trust" is not a body corporate. 16. The next question to be considered is as to whether the "trust" is an "association of individuals" or not. The three judge Bench of the apex court in CIT v. Indira Balkrishna [1960] 39 ITR 546 (SC) ; AIR 1960 SC 1172 construed the meaning of the expression "association of persons" in the context of the Income-tax .....

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..... trustees are not the beneficiaries and hence the trustees do not have any common benefit. The duty of the trustee is to utilise the trust property for the benefit of the beneficiaries in accordance with the terms of the agreement of trust. 21. Thus it is clear from section 3 of the Act that the trustees do not get any benefit out of the trust-property and the benefit will be obtained individually by the beneficiaries or the beneficiaries and the author of the trust. Therefore, it cannot be said that the trustees are persons join together for a common action to achieve some common benefit. It is true that the beneficiaries get the benefit. However, the beneficiaries do not become the beneficiaries by their own volition. Since the common purpose of the "trust" is not to achieve benefit to the trustees, the "trust" cannot be said to be an "association of persons/body of individuals". 22. The proposition that a "trust" is not an "association of persons" gains support from the decision of the apex court in Pratibha Pratisthan v. Manager, Canara Bank [2017] 2 KHC 420 ; AIR 2017 SC 1303. The apex court held in Pratibha Pratisthan v. Manage .....

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