IMPORTANT POINT
Trustees can only be prosecuted under Section 138 of the Negotiable Instruments Act if there are specific averments of their involvement in the day-to-day affairs of the Trust.

JUDGMENT :

(Prayer: Criminal Original Petition filed under Section 482 of the Code of Criminal Procedure to call for the records pertaining to the impugned complaint in S.T.C.No.4417 of 2022 pending on the the file of the Fast Track Court V Metropolitan Magistrate, Saidapet, Chennai and quash the same in so far as the petitioners/accused No.5 to 8 are concerned as illegal, arbitrary, abuse of process of law and oppressive.)

1. The Criminal Original Petition has been filed seeking to quash the proceedings in S.T.C.No.4417 of 2022 pending on the the file of the Fast Track Court V Metropolitan Magistrate, Saidapet, Chennai, in so far as the petitioners (accused No.5 to 8) are concerned.

2. The respondent has filed a complaint under Section 138 of the Negotiable Instruments Act against the Trust and other trustees on the ground that he entered into Memorandum of Understanding and signed a loan in favour of the Trust. The same was not repaid back and on repeated demands and requests, cheque was issued by the Trust which was signed by the 2nd accused. When the same was sent for collection, it was dishonored with an endorsement 'insufficient fund'. After service of the statutory notice, a private complaint was filed before the Court below.

3. Heard the learned counsel for the petitioner.

4. The respondent has been served with notice and the name has also been printed in the cause list. There is no appearance either in person or through counsel.

5. The petitioners have been arrayed as A5 to A8 in the complaint. The only averment that has been made against the petitioners is extracted hereunder:

“7. The complainant states that the above said second accused are Trustee/Authorized Signatory, 3rd to 8th are Trustees also in charge of day to day affairs of the 1st accused Trust, the details of present outstanding of facilities of the trust are as mentioned below:”

6. On carefully going through the complaint, it is seen that it is only A2 & A3 who had participated effectively on behalf of the Trust (A1). The only question is as to whether the petitioners must face the ordeal of trial only on the ground that they are also the Trustees of A1 Trust.

7. This Court in Abraham Memorial Educational Trust, Nos.1 & 2, Basement, Cotton Complex, Residency Road, Bangalore – 560 025 and others Vs. C.Suresh Babu, reported in 2012 (5) CTC 203 has held that a Trust is a juristic person liable for punishment for offences under Section 138 of the Negotiable Instruments Act. This Court held that it must be construed as a Company in terms of Section 141 of the Negotiable Instruments Act and hence, every trustee who is incharge and responsible for running day to day affairs of the Trust are liable to be prosecuted besides the Trust. This position was thereafter reiterated in R. Vivekanandan Vs. Chandrakanthan, reported in 2012 (2) MWN Criminal DCC 94.

8. The allegations made against the petitioners (A5 to A8) which has been extracted supra is a mere reproduction of the language used under Section 141 of Negotiable Instruments Act.

9. The Hon'ble Apex Court in Siby Thomas Vs. Somany Ceramics Limited, reported in 2024 (1) SCC 348 has held that whenever the Directors of the Company are added as an accused, it must be stated as to how and in what manner they are incharge and responsible for the conduct of the day to day affairs of the Company. Since, this concept is applied to a Trust also, there must be averments in the complaint with respect to other Trustees as to how and in what manner they were incharge and responsible for running the day to day affairs of the Trust. In the absence of the same, they cannot be made to face the criminal prosecution under Section 138 of the Negotiable Instruments Act.

10. In the light of the above discussion, this Court finds that the continuation of the criminal proceedings as against the petitioners (A5 to A8) for offences under Section 138 of the Negotiable Instruments Act will be an abuse of process of law and it requires the interferen