The Supreme Court of India (“Supreme Court”), vide its order in Madasa Masih-UI-Uloom Educational and Charitable Trust v. State of Karnataka, Criminal Appeal No. 4363 of 2026 (arising out of Special Leave Petition (Criminal) No. 1358 of 2026), held that a trust is not a juristic person and cannot be arraigned as an accused in criminal proceedings. A bench comprising Justice J.B. Pardiwala and Justice K. Vinod Chandran, on September 10, 2026, allowed the appeal and directed that the criminal proceedings against the appellant trust be discontinued, while leaving the proceedings against the other accused persons undisturbed.

Brief Facts

The appellant, Madasa Masih-UI-Uloom Educational and Charitable Trust (“Trust”), a public educational and charitable trust, was arraigned as an accused in criminal proceedings before the LXXXI Additional City Civil and Sessions Judge (Special Court), Bengaluru (Spl. C. No. 1055 of 2019) (“Special Court”).

The underlying case concerned M/s I Monetory Advisory Private Limited (“IMAP Limited”) and its group companies, which were engaged in several businesses including financial activities. It is alleged that the Trust’s managing trustee (“Managing Trustee”) collected funds for promoting the activities of IMAP Limited among the community, projecting that such activities were in compliance with Islamic tenets. However, the proceeds of these funds were utilised by the Managing Trustee in real estate business, acquiring substantial immovable properties. It was further alleged that the Trust received money by way of donation, resulting in the Trust being impleaded as an accused. Additionally, various investors lodged complaints alleging non-refund of their investments. Several FIRs were lodged by the Special Investigation Team (“SIT”) constituted by the State of Karnataka, and certain FIRs were also registered by the State Anti-Corruption Bureau (“ACB”) under the Prevention of Corruption Act, 1988. Subsequently, the Delhi Special Police Establishment Act, 1946 was invoked, and the investigation was transferred to the Central Bureau of Investigation (“CBI”).

The discharge application filed by the Trust was rejected in toto by the Special Court, and the High Court of Karnataka declined to interfere with the order of the Special Court. The Trust alone (without the individual Managing Trustee) (“Appellant”) preferred the present appeal before the Supreme Court.

Issue before the Court

The issue before the Supreme Court was whether a trust- not being a juristic person- could validly be arraigned as an accused in criminal proceedings.

Arguments of the Petitioner/Appellant

The Appellant advanced the contention that while the issue regarding whether a trust can be considered to be a juristic person has been referred to a three-Judge bench of the Supreme Court in the case of Administrator Smt. Tara Bai Desai Charitable Ophthalmic Trust Hospital Jodhpur v. Managing Director Supreme Elevators India Private Limited, (2025) 3 SCC 80 (“Tara Bai Case”), a coordinate bench of the Supreme Court in Sankar Padam Thapa v. Vijaykumar Dineshchandra Agarwal, 2025 SCC OnLine SC 2194 (“Sankar Padam Thapa Case”), had laid out that a trust cannot be considered to be a juristic person and, therefore, it cannot sue or be sued. Thus, the Appellant placed reliance on this decision to contend that the Trust, not being a juristic person, could not validly be arraigned as an accused.

Arguments of the Respondent

The Respondents raised the following contentions:

1. The decision in the Sankar Padam Thapa Case was rendered in the context of Section 138 of the Negotiable Instruments Act, 1881, whereas the present proceedings were under the Indian Penal Code, 1860 as well as the Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004, and were therefore distinguishable.

2. Further, in this case there existed a clear money trail establishing the flow of funds to the Trust, thereby justifying its arraignment as an accused.

Decision of the Court

In the Sankar Padam Thapa Case, the coordinate Bench applied the settled principle- as laid down by the constitution bench in National Insurance Company Limited v. Pranay Sethi, (2017) 16 SCC 680, that in the event of a conflict between judgments by benches of equal strength, the earlier view alone should be followed. The coordinate Bench in the Sankar Padam Thapa Case followed the prior ruling in Pratibha Pratisthan v. Manager, Canara Bank, (2017) 3 SCC 712, wherein it was held, in the context of the Consumer Protection Act, 1986, that a trust does not qualify as a “person” and therefore cannot be a consumer. The Supreme Court further noted, while interpreting Sections 3 and 13 of the Indian Trusts Act, 1882, that a trust does not have a separate legal existence of its own and it constitutes merely an obligation attached to the ownership of property, arising from a confidence placed in and accepted by the owner and the responsibility to institute or defend legal proceedings vests in the trustee, not the trust.

Based on the legal position laid down above, the Supreme Court held that a trust is not liable to be arrayed as an accused, since it is not a juristic person. It observed that the allegation of acceptance of funds was attributable to the Managing Trustee, against whom the prosecution was continuing. Accordingly, the Supreme Court directed that the Trust shall not be arraigned as an accused in the proceedings in Spl. C. No. 1055 of 2019 pending before the Special Court.

Outlook

It is a settled law that a trust, as such, has no independent legal personality and cannot sue or be sued in its own name and litigations concerning a trust must be brought by or against its trustees. However, questions surrounding rights and liabilities of trusts continue to haunt the courts even today. For instance, the question, whether or not a trust falls within the purview of a ‘consumer’ under clause 2(1)(d) of the Consumer Protection Act, 1986 has been referred to a larger bench as per the Court’s order in the Tara Bai case.

The present decision reinforces the distinction between the legal status of a trust and the individual accountability of its trustees. While the proceedings against the Trust were discontinued, the prosecution against the Managing Trustee and the other accused persons remained undisturbed. The ruling thus underscores that a trust’s lack of independent legal personality does not, by itself, shield individuals from prosecution for their alleged acts, and highlights the importance of identifying the appropriate accused when initiating criminal proceedings involving a trust.

Please find attached a copy of the judgment, here.

This update has been contributed by Nidhi Arya (Partner) and Akash Mukherjee (Associate).

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