16 September 2026 Legal Updates

Trust Not A Juristic Person, Cannot Be Arrayed As Accused : Supreme Court

Case details

• Case: Madasa Masih-Ul-Uloom Educational and Charitable Trust v. State of Karnataka & Ors. (Criminal Appeal @ SLP (Crl.) No. 1358 of 2026)
• Court: Supreme Court of India
• Bench: Justice J.B. Pardiwala and Justice K. Vinod Chandran

Background: what is a “Trust” in law?

Before getting into the facts, it helps to understand one basic idea this case turns on. A Trust (governed by the Indian Trusts Act, 1882) is not a company or an organisation with its own legal identity — it is simply an arrangement. One person hands over property to another person (the “trustee”), who holds and manages it for the benefit of someone else (the “beneficiary”). The law places all rights and duties — including the right to sue and the liability to be sued — on the trustee personally, not on the “Trust” as an abstract entity. This background matters because the entire outcome of this case depends on whether the Trust itself, as opposed to its trustees, can be made an accused in a criminal case.

Facts of the case

• IMAP Limited (I Monetory Advisory Private Limited) and its group companies ran various businesses, including financial/investment schemes, and collected money from members of the public as investments.
• These investments were not refunded to investors/depositors, leading them to file complaints.
• Multiple FIRs were registered — some by a Special Investigation Team (SIT) set up by the State of Karnataka, and some by the State Anti-Corruption Bureau (ACB) under the Prevention of Corruption Act, 1988.
• Because of the scale of the matter, the Delhi Special Police Establishment Act, 1946 was invoked, and the case was handed over to the CBI for investigation.
• The appellant, Madasa Masih-Ul-Uloom Educational and Charitable Trust (“the Trust”), runs educational institutions. Its Managing Trustee and the Trust itself were both made accused/petitioners (petitioner Nos. 1 and 2) before the Special Court.
• The allegation was that a trustee of the Trust (the second respondent in this appeal) promoted IMAP Limited's business within the community, presenting its financial activities as being compliant with Islamic principles — helping IMAP attract investors.
• It was further alleged that the Managing Trustee (shown as accused No. 32) raised funds through his association with IMAP's Directors, used part of the proceeds for his own real estate dealings (purchasing large properties), and also brought funds into the Trust to construct its educational institutions.
• Because money was said to have been accepted as “donation” by the Trust from this chain of activity, the Trust itself (not just the individuals involved) was arrayed as an accused in the criminal case — Spl. C. No. 1055 of 2019, before the LXXXI Additional City Civil and Sessions Judge, Bengaluru (a Special Court that handles cases involving elected MPs/MLAs in Karnataka).
• The Trust filed a discharge application, asking to be dropped from the case. The Special Court rejected this application entirely.
• The Trust then challenged this rejection before the Karnataka High Court, which also declined to interfere and upheld the Special Court's order.
• Only the Trust (and not the Managing Trustee) then filed the present appeal before the Supreme Court, challenging its continued prosecution as an accused.

What the appellant (the Trust) argued

• The legal question of whether a Trust counts as a “juristic person” (i.e., an entity capable in law of suing or being sued, like a company) has already been referred to a larger, three-Judge Bench of the Supreme Court — as seen from the order dated 24.10.2024 in Administrator Smt. Tara Bai Desai Charitable Ophthalmic Trust Hospital Jodhpur v. Managing Director Supreme Elevators India Pvt. Ltd. & Ors., (2025) 3 SCC 80.
• Even while that larger reference remains pending, a coordinate (equal-strength) Bench of the Supreme Court has already ruled on this exact question in Sankar Padam Thapa v. Vijaykumar Dineshchandra Agarwal, 2025 SCC OnLine SC 2194, holding clearly that a Trust is not a juristic person and cannot be sued.
• Applying that same reasoning here, the Trust argued it should never have been arrayed as an accused in this criminal case in the first place, and the proceedings against it should be dropped.

What the State of Karnataka/CBI argued in response

• The Sankar Padam Thapa ruling relied upon by the Trust arose in a very different context — a cheque-dishonour case under Section 138 of the Negotiable Instruments Act, 1881 — whereas the present case involves offences under the Indian Penal Code as well as the Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004. The two situations, they argued, are not comparable.
• There is a clear and traceable money trail connecting the Trust to the funds collected through the alleged fraud, which they said justified continuing to treat the Trust as an accused.

How the Supreme Court reasoned through this

• The Court first looked closely at Sankar Padam Thapa itself, and noted that this earlier ruling had already dealt with the argument about the pending larger-Bench reference. Importantly, no order had been passed anywhere directing courts to pause or wait for that reference to be decided before applying the existing law.
• The Court explained a foundational rule of precedent (called stare decisis): when two decisions of equal Bench strength conflict with each other on a point of law, courts must follow the earlier of the two decisions. This rule had itself been conclusively laid down by a 5-Judge Constitution Bench in National Insurance Company Limited v. Pranay Sethi, (2017) 16 SCC 680 — and Sankar Padam Thapa had correctly applied it.
• Following this chain, Sankar Padam Thapa had relied on an even earlier decision, Pratibha Pratisthan v. Manager, Canara Bank, (2017) 3 SCC 712. That case (decided under the Consumer Protection Act, 1986) had held that a Trust is not a “person” at all in the eyes of the law, and therefore cannot even be treated as a “consumer” entitled to file a consumer complaint.
• The Court then went back to first principles, interpreting Sections 3 and 13 of the Indian Trusts Act, 1882. It reaffirmed that a Trust has no independent legal existence of its own — it is only an obligation attached to property, which a trustee agrees to hold and manage for someone else's benefit. Because a Trust is not a legal “person,” the duty to sue or to defend any legal proceeding falls squarely on the trustee, never on the Trust as a concept.
• Applying all of this to the present case, the Court held that the Trust could not be treated as an accused, since it is not capable of being a juristic person in the first place. It further observed that the actual allegation of accepting money was, in substance, an allegation against the Trustee personally (the second respondent) — and the prosecution against him continues separately and is unaffected by this ruling.

What the Court finally decided (Held)

The Supreme Court directed that the criminal proceedings in Spl. C. No. 1055 of 2019 shall not continue against the appellant Trust. It made clear that this relief is limited only to the Trust — the case will continue as usual against the Managing Trustee and all the other accused persons named in it. The appeal was allowed only to this extent, and any other pending applications in the matter were rejected.

Key legal principles established

• A Trust cannot be an “accused” in a criminal case, because it has no separate legal identity of its own — in the eyes of the law, only the trustee (a real person) can sue or be sued, not the Trust as an abstract idea.
• A legal question being referred to a larger Bench for final settlement does not automatically freeze or suspend the existing law on that question — courts must keep applying the current binding precedent unless an order specifically says otherwise.
• When two Supreme Court Benches of equal strength give conflicting views on the same legal question, courts must follow whichever view came first in time, until a larger Bench resolves the conflict.
• Even if money can be traced back to a Trust through its trustees' actions, that alone is not enough to make the Trust itself criminally liable — responsibility has to be fixed on the individual trustees who actually managed and controlled the funds.

Quick glossary for easier understanding

• Juristic person: An entity that the law treats as capable of having rights and duties, and of suing or being sued — for example, a company. A Trust, per this ruling, is not one.
• Discharge application: A request made by an accused person (or entity) to be removed from a criminal case before the trial begins, usually on the ground that there isn't enough basis to proceed against them.
• Stare decisis: The principle that courts should stand by earlier decided points of law, so that the law remains consistent and predictable.