Please click here to download the Prism as PDF.
The Supreme Court of India reiterates that a trust cannot sue or be sued
The Supreme Court of India (“Supreme Court”) has in Madasa Masih-Ul-Uloom Educational and Charitable Trust vs. State of Karnataka and Ors.[1] reiterated that a trust is not a person and cannot sue or be sued. This decision has considered a pending reference before a 3 (three) judge bench on the issue and has reiterated the findings of earlier decisions on the subject.
Brief facts
I Monetory Advisory Private Limited (“IMAP Limited”) and its group companies were engaged in various businesses including financial investments. Investments were collected from various people who eventually filed complaints that their investments had not been refunded. A special investigation team constituted by the State of Karnataka along with the State Anti-Corruption Bureau under the Prevention of Corruption Act, 1988 registered numerous first information reports (FIRs) on these complaints. Eventually, the provisions of the Delhi Special Police Establishment Act, 1946 were invoked and the matter was assigned to the Central Bureau of Investigation (CBI).
The matter came before a Special Court in Karnataka (“Special Court”), which observed that the allegations targeted persons in the management of IMAP Limited and a trustee of the appellant. The primary allegation was that the trustee was responsible for promoting the activities of IMAP Limited amongst a particular community and misappropriated the funds obtained. Further, the trustee, along with the directors of IMAP Limited, raised funds for the appellant, which were accepted as donations.
The trustee and the appellant filed discharge applications before the Special Court, which were rejected. The appellant and the trustee challenged this order before the Hon’ble Karnataka High Court, which refused to interfere with the same.
Being aggrieved, the appellant trust alone preferred a special leave petition before the Supreme Court of India.
Issue
Whether a trust is a juristic person that can sue or be sued?
Findings and analysis
The Supreme Court granted leave to appeal and allowed the criminal appeal inter alia observing and holding that:
- In Sankar Padam Thapa vs. Vijaykumar Dineshchandra Agarwal[2], the impact of a pending reference on the same issue in Administrator Smt. Tara Bai Desai Charitable Opthalmic Trust Hospital Jodhpur vs. Managing Director Supreme Elevators India Private Limited and Ors.[3] was considered. Nonetheless, the bench followed an earlier decision in which it was held that a trust cannot sue or be sued and that the obligation to maintain or defend actions is placed solely on a trustee.[4]
- In National Insurance Company Limited vs. Pranay Sethi[5], a Constitution Bench held that “…for questions of law, in the case of conflict between equal Bench-strength judgments, the earlier view alone should be followed”. This decision was squarely applicable to the issue at hand.
- The appellant trust is not liable to be arrayed as an accused since it is not capable of being termed as a juristic person.
Conclusion
This judgment reinforces that a trustee of a trust remains liable for actions purportedly undertaken in the name of the trust. Therefore, as a general consideration and subject to advice, a trustee should consider adopting adequate safeguards before taking any action or decision for and on behalf of a trust. These safeguards may include recording the scope of authority in trustee resolutions, ensuring that decisions are taken collectively where the trust deed so requires, and seeking indemnity or insurance cover.
This Prism is prepared by:
|
Farhad Sorabjee |
Pratik Pawar |
Shanaya Cyrus Irani |
Siddhesh S. Pradhan |
For more details, please contact km@jsalaw.com.
[1] Special leave petition (Crl.) No. 1358 of 2026 (decided on September 10, 2026)
[2] 2025 SCC Online SC 2194
[3] (2025) 3 SCC 80
[4] Pratibha Pratisthan vs. Manager, Canara Bank (2017) 3 SCC 712
[5] (2017) 16 SCC 680
