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Sankar Padam Thapa vs. Vijaykumar Dineshchandra Agarwal

Not available · 2025 INSC 1210Decided 9 Oct 2025
Not available
Justice Ahsanuddin Amanullah · Justice Prashant Kumar Mishra

Background

William Carey University, facing a financial crisis, entered into an MoU handing over its management to Orion Education Trust. The respondent is the Chairman of Orion. A cheque issued in connection with this arrangement was dishonoured, and a complaint under the Negotiable Instruments Act, 1881 was filed against the respondent personally, without making the Trust itself an accused. The Meghalaya High Court quashed the criminal proceedings, holding that since the Trust was not made a party, the Chairman could not be held vicariously liable.

Decision Breakdown

The Supreme Court examined whether a complaint under the NI Act is maintainable against the Chairman/a Trustee of a Trust when the Trust itself has not been arraigned as an accused. Relying on its earlier rulings in SMS Pharmaceuticals and K.K. Ahuja, the Court reiterated that a person who, by virtue of holding an office such as Chairman or signatory of the cheque, is shown to be in charge of and responsible for the conduct of business, can be held liable under Section 141 of the NI Act even without elaborate averments about day-to-day control. The Court held that a Trust's distinct legal character does not create a blanket immunity requiring the Trust to be separately arraigned before its Chairman can be prosecuted. It set aside the High Court's quashing order and restored the criminal complaint to the trial court for proceedings to continue, while flagging (without deciding) a related legal question pending before a larger bench in another case.

Lesson Learnt

A signatory or the head of an unincorporated body such as a Trust cannot escape a cheque-bounce prosecution merely by arguing that the Trust itself was not made an accused; responsibility for issuing the cheque and control over the underlying transaction can be enough to fix personal liability under the Negotiable Instruments Act.

Official source (sci.gov.in)View Judgment (PDF)

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