Company or Corporation whether Citizen of India?

Introduction

The law recognises two kinds of person, namely, natural persons and legal persons who are artificial creations of law. A natural person is a living human being and legal person, on the other hand, is any subject matter to which the law attributes legal personality. Legal personality being the creation of law, can be conferred on entities other than human beings. As Salmond rightly observed, the law in creating legal persons always does so by personifying some real things. He further pointed out that although all legal personality involves personification, the converse is not true.

Nature of Corporate Personality

Corporate personality is a creation of law. Legal personality of corporation is recognised both in English and Indian law. A corporation is an artificial person enjoying in law capacity to have rights and duties and holding property. A corporation is distinguished by reference to different kinds of things which the law selects for personification.

Juristic personality of corporations pre-supposes the existence of three conditions:

Firstly, there must be a group or a body of human beings associated for certain purpose, Secondly, there must be organs through which the corporation functions, and thirdly, the corporation is attributed will (animus) by legal fiction. It is significant to note that a corporation is distinct from its individual members. The legal personality of its own and it can sue and be sued in its own name. It does not come to an end with the death of its individual members and, therefore, has a perpetual existence.

Besides corporations the banks, railways, universities, colleges, church, temples, hospitals etc., are also conferred legal personality. The Union of India and the States are also legal or juristic persons.

Definition of Corporation Aggregate

A corporation aggregate is an association of human beings united for the purpose of forwarding their certain interests. Limited companies are the best examples of a corporation aggregate.

Is a Company Citizen of India?

The question whether company or corporation may be treated as a citizen of India came up for consideration before the Supreme Court in State Trading Corporation versus Commercial Tax Officer (AIR 1963 SC 811), the Supreme Court held that a company or a corporation could not be a citizen of India and therefore, could not claim, such of the fundamental rights, as had been conferred upon the citizens only.

The State Trading Corporation was a Government company registered under the Companies Act, 1956. It consisted of President of India and the Secretary to the Ministry of Commerce as its shareholders and enjoy the status of a private limited company. Answering in the negative, the Supreme Court held that Indian Constitution does not define the term ‘Citizenship’.

Part II of the Constitution dealt with Citizenship in certain circumstances only, but the tenor of these provisions was such that they could not apply to the juristic person like a company or a corporation. The Citizenship act, 1955 expressly excludes a company, association or body of individuals, whether incorporated or not, from the concept of a person under the act. Thus, only a natural person could be a citizen of India under the Constitution as well as under the citizenship act.

The Supreme Court distinguished between citizenship and nationality in this case and stated that a company or a corporation might have nationality, which is determined by the place of its incorporation, but it does not have citizenship.

In R.C. Cooper versus Union of India (AIR 1970 SC 564), the Supreme Court clarified that the fundamental rights of the shareholders of citizens were not lost when all of them joined together to form a company. The petitioners in this case argued that the policy of nationalisation of banks had adversely affected the fundamental rights conferred by Article 19(1)(f) and Article 31(2). The court allowed the petition and observed that when rights of the company and shareholders were involved, they cannot be denied grant of relief as to their fundamental rights but it should not be misinterpreted to mean that company may be treated as a citizen.

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

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