In a criminal appeal arising from the IMAP Limited money trail case, the Supreme Court has held that a Trust is not a juristic person and cannot be prosecuted, while clarifying that the proceedings against the other accused, including the Trustee, will continue. The Court said that a Trust cannot be arrayed as an accused in criminal proceedings, as it does not have a separate legal existence of its own under the Trusts Act.
The Apex Court clarified that the obligation to maintain or defend suits, including criminal prosecution, lies on the Trustee and not on the Trust itself. The Court followed the co-ordinate Bench decision in Sankar Padam Thapa v. Vijaykumar Dineshchandra Agarwal [2025 SCC Online SC 2194], which applied the principle that for questions of law, in the case of conflict between equal Bench-strength judgments, the earlier view alone should be followed.
The Court also declined to await the outcome of the pending three-Judge Bench reference on whether a Trust is a juristic person, since no order had been passed to keep the matter pending for that reference.
A Two-Judge Bench comprising Justice J.B. Pardiwala and Justice K. Vinod Chandran noted that the question whether a Trust is a juristic person has 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], and the reference was pending. Despite this, a co-ordinate Bench in Sankar Padam Thapa v. Vijaykumar Dineshchandra Agarwal [2025 SCC Online SC 2194], took the view that a Trust is not a juristic person and cannot sue or be sued.
The Court then relied on Pratibha Pratisthan v. Manager, Canara Bank [(2017) 3 SCC 712], which was rendered in the context of the Consumer Protection Act, 1986, and held that a Trust is not a person and therefore cannot be a consumer, disabling a Trust from raising a consumer dispute.
Interpreting Sections 3 and 13 of the Trusts Act, the Court observed that a Trust does not have a separate legal existence of its own, making it incapable of suing or being sued, since it is only an obligation annexed to the ownership of property arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another, or of another and the owner. The obligation to maintain or defend suits is placed on the shoulders of a Trustee and not on the Trust itself.
Briefly, the underlying allegations relate to M/s I Monetary Advisory Private Limited (IMAP Limited) and its group companies, which were engaged in various businesses including financial activities. Investments were collected from numerous people, and complaints arose because the investments were not refunded. Multiple FIRs were registered by a Special Investigation Team (SIT) constituted by the State of Karnataka, and some FIRs were also registered by the State Anti-Corruption Bureau (ACB) under the Prevention of Corruption Act, 1988. Eventually, the provisions of the Delhi Special Police Establishment Act, 1946 were invoked, and the matter was assigned to the CBI. The proceedings are under the IPC as well as the Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004, and a clear money trail was found leading to the Trust.
The Special Court noted that the second respondent, who was a trustee of the appellant Trust, was responsible for promoting the activities of IMAP Limited among the community by projecting that the financial activities followed Islamic tenets. The Managing Trustee, arrayed as accused No. 32, allegedly obtained funds for propagating and furthering the business of IMAP Limited among community members, and used the proceeds to indulge in real estate business and purchase large extents of property and buildings. It was further alleged that the Managing Trustee had associated with the Directors of IMAP Limited to raise funds for the Trust, which was carrying out constructions in educational institutions run by the Trust. Money was allegedly accepted as donation by the Trust, which led to the Trust itself being arrayed as an accused.
