Trustee Can Face Cheque Bounce Case Even If Trust Isn't Made Accused: Orissa High Court

The Orissa High Court has reiterated that arraigning and issuing demand notice to the concerned trustee, who issued a cheque on behalf of the trust, is sufficient and the trust need not be impleaded as an accused in a cheque dishonour case under Section 138 of the Negotiable Instruments Act, 1881 (the 'NI Act'). [2026 LiveLaw (Ori) 90]

Negating a plea brought under Section 482 of the CrPC seeking to quash cognizance order as well as pending criminal proceedings on the aforesaid premise, the Bench of Justice Sibo Sankar Mishra held–

“The Hon'ble Supreme Court, after examining the legal nature of a Trust and the statutory scheme of the N.I. Act, answered the question in the affirmative and held that when a cause of action arises on account of dishonour of a cheque and a complaint is instituted under the N.I. Act, the same is maintainable against the Trustee who has signed the cheque, without any requirement of arraying the Trust as an accused.”

The opposite party allegedly supplied hardware materials worth Rs.22,42,145/- on credit, with an understanding that the outstanding amount would be paid within two months. The petitioner issued a cheque in favour of the opposite party/complainant for clearing the outstanding dues. The cheque got dishonoured for lack of funds.

Thereafter, the opposite party issued a demand notice, which was returned undelivered. Subsequently, he instituted the complaint. The SDJM, Dharamgarh found prima facie material and took cognizance of offence under Section 138 of the NI Act against the petitioner and the co-accused.

The petitioner challenged such cognizance order before the High Court primarily on the ground that the transaction in question was between the complainant and a trust, and that the cheque was issued by the petitioner from the account of the said trust.

It was argued that since the trust was not arraigned as an accused, the complaint case against the petitioner is not maintainable. To substantiate such argument, reliance was placed on Bijaya Manjari Satpathy v. State of Orissa, 2022 LiveLaw (Ori) 158.

Hence, the moot question which arose for consideration was whether the complaint under Section 138 of the NI Act is liable to be quashed merely on the ground that the trust, from the bank account of which the cheque was issued, has not been arrayed as an accused.

For answering the question, the Court placed heavy reliance on the law laid down by the Supreme Court in Sankar Padam Thapa v. Vijaykumar Dineshchandra Agarwal, 2025 LiveLaw (SC) 991 wherein it was held that when a cause of action arises on account of dishonour of a cheque and a complaint is instituted under the NI Act, the same is maintainable against the trustee who has signed the cheque, without any requirement of arraying the trust as an accused.

Accordingly, the Court found no fault in the impugned order whereby cognizance was taken against the trustee-petitioner, and thus held–

“The ratio laid down by the Hon'ble Supreme Court is directly applicable to the controversy raised in the present case. The contention of the petitioner that the complaint is fundamentally defective merely because “Srusti”, “the Trust”, has not been impleaded as an accused, therefore, cannot be accepted. The petitioner cannot derive any advantage from the earlier decisions which proceeded on a contrary legal premise, particularly when the Hon'ble Supreme Court has expressly held that the views taken in, inter alia, Bijaya Manjari Satpathy and the other judgments referred to therein do not lay down the correct law and have been overruled.”

Resultantly, the petition filed under Section 482 CrPC was dismissed.

Case Title: Suniti @ Sunita Patnaik v. Sajjan Kumar Agrawal

Case No: CRLMC No. 2229 of 2022

Date of Judgment: July 30, 2026

Counsel for the Petitioner: Mr. Manas Chand, Advocate

Counsel for the Opposite Party: Mr. Tanmay Mishra, Advocate

Citation: 2026 LiveLaw (Ori) 90

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