9911796707
TMI Blog1963 (7) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... ng with citizens on the date the Constitution came into force and the Citizenship Act dealing with citizens thereafter. We must, therefore, hold that these two provisions are completely exhaustive of the citizens of this country and these citizens can only be natural persons. The fact that corporations may be nationals of the country for purposes international law will not make them citizens of this country for purposes of municipal law or the Constitution. Nor do we think that the word " citizen " used in article 19 of the Constitution was used in a different sense from that in which it was used in Part II of the Constitution. The first question, therefore, must be answered in the negative. In view of this answer, we do not consider it necessary to answer the second question as that would have arisen only if the first question had been answered in the affirmative. - 202 TO 204 OF 1961 - - - Dated:- 26-7-1963 - B.P. SINHA ,S.K. DAS, P.B. GAJENDRAGADKAR, A.K. SARKAR, K.N. WANCHOO, M. HIDAYATULLAH K.C. DAS GUPTA, J.C. SHAH AND N. RAJAGOPALA AYYANAGAR, JJ. M.C. Setalvad, G.S. Pathak, B. Parthasarathy, B. Dutta, J.B. Dadachanji, O.C. Mathur, Ravinder Narayan, J.B. Dadacha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the State Trading Corporation is, notwithstanding the formality of incorporation under the Indian Companies Act, 1956, in substance a department and organ of the Government of India with the entirety of its capital contributed by Government and can it claim to enforce fundamental rights under Part III of the Constitution against the State as denned in article 12 thereof ? These two questions which have been raised by way of preliminary objections to the maintainability of the writ petitions are common to all the three petitions. In our view these two questions are of great constitutional importance and no decision of the court finally deciding these two questions has been brought to our notice. We consider that by reason of the great constitutional importance of the questions raised, these three writ petitions should be placed before a larger Bench for decision. We accordingly direct that these three writ petitions by placed before the learned Chief Justice for necessary orders. OPINION [The opinion of Sinha, CJ. Das, Gajendragadkar, Sarkar, Wanchoo and Rajagopala Ayyangar, JJ. was delivered by Sinha, CJ. Hidayatullah, Das Gupta and Shah JJ. delivered separate opinio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts head office at New Delhi, in May, 1956. The second petitioner is a shareholder in the first petitioner company. The two petitioners claim to be Indian citizens as all its shareholders are Indian citizens. Proceedings were taken for assessment of sales tax, and in due course of those proceedings demand notices were issued. It is not necessary for the purposes of deciding the two points referred to us to set out the details of the assessments or the grounds of attack raised by the petitioners. It is enough to say that the petitioners claim to be Indian citizens and contend that their fundamental rights under article 19 of the Constitution had been infringed as a result of the proceedings taken and the demands fox sales tax made by the appropriate authorities. When the case was opened on behalf of the petitioners in this court, before the Constitution Bench, counsel for the respondents raised the preliminary objections which have taken the form now indicated in the two questions, already set out. The Bench rightly pointed out that those two questions were of great constitutional importance and should, therefore, be placed before a larger Bench for determination. Accordingly, they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred to in the article. By article 16, equality of opportunity in matters of public employment has been guaranteed to all citizens, subject to reservations in favour of backward classes. There is an absolute prohibition against all citizens of India from accepting any title from any foreign State, under article 18(2), and no person who is not a citizen of India shall accept any such title without the consent of the President, while he holds any office of profit or trust under the State (article 18(3)). And then we come to article 19 with which we are directly concerned in the present controversy. Under this article, all citizens have been guaranteed the rights: ( a )to freedom of speech and expression; ( b )to assemble peaceably and without arms ; ( c )to form associations or unions ; ( d )to move freely throughout the territory of India; ( e )to reside and settle in any part of the territory of India; ( f )to acquire, hold and dispose of property ; and ( g )to practise any profession, or to carry on any occupation, trade or business. Each one of these guaranteed rights under clauses ( a ) to ( g ) is subject to the limitations or restrictions indicated in clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )( i ), but who has migrated to India and has been registered, as laid down in article 6( b )( ii ), shall also be deemed to be a citizen of India. Similarly,, a person of Indian origin, residing outside India, shall be deemed to be a citizen of India if he has been registered as such by an accredited diplomatic or consular representative of India in the country where he has been residing (article 8). Persons coming within the purview of articles 5, 6 and 8, as aforesaid, may still not be citizens of India if they have migrated from India to Pakistan, as laid down in article 7, or if they have voluntarily acquired the citizenship of any foreign State (article 9). Whose, in short, are the provisions of the Constitution in Part II relating to " Citizenship ", and they are clearly inapplicable to juristic persons. By article II, the Constitution has vested Parliament with the power to regulate, by legislation, the rights to citizenship. It was in exercise of the said power that Parliament has enacted the Citizenship Act, 1955 (LVII of 1955). It is absolutely clear on a reference to the provisions of this statute that a juristic person is outside the purview of the Act. This is an Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hough the observations quoted above would seem to lend countenance to the contention raised on behalf of the petitioners, they really do not determine the controversy one way or the other. In that, case, a shareholder of the Sholapur Spinning and Weaving Company made an application under article 32 of the Constitution for a declaration that the Act impugned in that case was void, as also for the enforcement of his fundamental rights by a writ of mandamus against the Government and the directors of the company, restraining them from exercising any power under the Act. It is not necessary to refer to the details of the controversy in that case because it is plain that it was not the company which was seeking the enforcement of its fundamental rights, if any, but only a shareholder. As a matter of fact, the company opposed the petition under article 32 of the Constitution. It is manifest that the observations quoted above were purely obiter and did not directly arise for decision of the court. Then we come to the Second Sholapur case, reported as Dwarkadas Shrinivas v. Sholapur Spinning and Weaving Co. Ltd. [1954] S.C.R. 674; [1954] 24 Comp. Cas. 103. In the First Sholapur case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd dispose of property. Article 31(1) is a sort of corollary, namely, that after the property has been acquired it cannot be taken away save by authority of law. Article 31 is wider than article 19 because it applies to everyone and is not restricted to citizens. But what article 19(1)( f ) means is that whereas a law can be passed to prevent persons who are not citizens of India from acquiring and holding property in this country no such restrictions can be placed on citizens. But in the absence of such a law non-citizens can also acquire property in India and if they do then they cannot be deprived of it any more than citizens, save by authority of law." But it has got to be said that those observations, though they may appear to support the contention raised on behalf of the respondents, were not made directly with reference to the question now before us, namely, whether a corporation could claim the status of a citizen. That question did not arise in that case also because the company, as such was not seeking any relief. Even if the company were interested in seeking relief under article 31 of the Constitution, it could do so without having the status of a citizen. In the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d has a British nationality, irrespective of the nationality of its members. So far as domicile is concerned, the place of incorporation fixes its domicile, which clings to it throughout its existence. In this connection, reference was made to the case of Janson v. Driefontein Consolidated Mines [1902] A.C. 484, 497, 501, 505. , for the proposition that a company may be regarded as a national of the country where it was incorporated, notwithstanding the nationality of its shareholders. It is not necessary to refer to other decisions, because the position is absolutely clear that a corporation may claim a nationality which ordinarily is determined by the place of its incorporation. But the question still remains whether "nationality" and "citizenship are interchangeable terms. Nationality" has reference to the jural relationship which may arise for consideration under international law. On the other hand " citizenship " has reference to the jural relationship under municipal law. In other words, nationality determines the civil rights of a person, natural or artificial, particularly with reference to international law, whereas citizenship is intimately connected with civic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate body is not a citizen of the United States " (page 965). "Persons " defined: "Notwithstanding the historical controversy that has been waged as to whether the framers of the Fourteenth Amendment intended the word, ' person', to mean only natural persons, or whether the word person', was substituted for the word, ' citizen', with a view to protecting corporations from oppressive State legislation, the Supreme Court, as early as the Granger cases 94 US. 113 , decided in 1877, upheld on the merits various State laws without raising any question as to the status of railway corporation-plaintiffs to advance due process contentions. There is no doubt that a -corporation may not be deprived of its property without due process of law ; and although prior decisions have held that the 'liberty' guaranteed by the Fourteenth Amendment is the liberty of natural, not artificial, persons, nevertheless a newspaper corporation was sustained, in 1936, in its objection that a State law deprived it of liberty of press. As to the natural persons protected by the due process clause, these include all human beings regardless of race, color, or citizenship (page 981). We have already r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntithesis between the privileges or immunities of citizens of the United States and life liberty or property of any person, besides laying down who are the citizens of the United States. Section I aforesaid is in these terms and brings out the distinction very clearly : " All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws." The question may be looked at from another point of view. Article 19 lays down that " all citizens " shall have the right to freedoms enumerated in clauses ( a ) to ( g ). Those freedoms, each and all of them are available to " all citizens. The article does not say that those freedoms, or only such of them as may be appropriate to particular classes of citizens, shall be available to them. If the court were to hold that a corporation is a citizen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re completely exhaustive of the citizens of this country and these citizens can only be natural persons. The fact that corporations may be nationals of the country for purposes international law will not make them citizens of this country for purposes of municipal law or the Constitution. Nor do we think that the word " citizen " used in article 19 of the Constitution was used in a different sense from that in which it was used in Part II of the Constitution. The first question, therefore, must be answered in the negative. In view of this answer, we do not consider it necessary to answer the second question as that would have arisen only if the first question had been answered in the affirmative. Let the cases go back to the Bench for hearing on merits with this opinion. Costs of the hearing before the Special Bench will be dealt with by the Bench which ultimately hears and determines the controversy. Hidayatullah, J. Two questions have been referred to this Bench for opinion. They are : " (1) Whether the State Trading Corporation, a company registered under the Indian Companies Act, 1956, is a citizen within the meaning of article 19 of the Constitution and can ask for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord " person " so as to exclude artificial persons like corporations aggregate, cannot also be regarded as exhaustive. He thus contends that corporations aggregate which, according to him, were citizens before the Constitution and the Citizenship Act, continue to enjoy the privileges of citizens, one of which is the guarantee in article 19. In support of his submission that corporations were and continue to be citizens, he relies upon the fact that corporations possess a nationality and claims that in this connection " nationality " and " citizenship " bear the same meaning. He relies upon the observations of Mukherjea J. (as he then was) in Chiranjit Lal Chowdhuri v. Union of India [1950] SCR. 869, 898 ; [1951] 21 Comp. Cas. 33, 53, where the learned judge observed obiter : The fundamental rights guaranteed by the Constitution are available not merely to individual citizens but to corporate bodies as well except where the language of the provision or the nature of the right compels the inference that they are applicable only to natural persons. An incorporated company, therefore, can come up to this court for enforcement of its fundamental rights and so may the individual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rried person. The personality of the members has little to do with the persona of the incorporated company. The persona that comes into being is not the aggregate of the personae either in law or in metaphor. The corporation really has no physical existence; it is a mere " abstraction of law " as Lord Selborne described it in G. E. Rly. v. Turner [1872] LR. 8 Ch. App. 149 , or as Lord Macnaghten said in the well-known case of Salomon v. Salomon and Co. [1897] AC. 22, 51 a it is " at law a different person altogether from the subscribers to the memorandum of association." This distinction is brought home if one remembers that a company cannot commit crimes like perjury, bigamy or capital murder. This persona ficta, being a creature of a fiction, is protected by natural limitations as pointed out by Palmer in his Company Law (20th edition), page 130 and which were tersely summed up by counsel in R. v. City of London [1632] 8 SV. Tr. 1087, 1138 , when he asked " can you hang its common seal ?". It is true that sometimes the law permits the corporate veil to be lifted, but of that later. There is a rule of English Law that a company or an incorporated co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Corporation are Indian citizens then the Corporation as a whole must be a citizen, for the whole cannot be different from its parts. Both the arguments involve fallacies. The first assumes that " nationality " of corporations and citizenship of natural persons are the same concepts and caps it with the fallacy of ignorantio elonchi which in English is called the fallacy of irrelevant conclusion because instead of proving that corporations are citizens, it is sought to be shown that they ought to be citizens for the remedy is so good and effective. The second involves the fallacy of petitio priucipii because it tends to beg the question and founds a conclusion on a basis that as much needs to be proved as the conclusion itself. In my opinion, the State Trading Corporation cannot be said to be a citizen either by itself or by taking it as the aggregate of citizens, that nationality of a corporation is a different concept not to be confused with citizenship of natural persons, that the word " citizen ''in article 19(1), sub-clauses ( f ) and ( g ), refers to a natural person, that the State Trading Corporation is really a department of Government behind the corporate veil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... citizenship " in any other place bears the extended meaning or throws any light on this problem. The word " citizen " is used in 29 places and the word " citizenship " in 6 places. These words are also used in headings to Chapters and marginal notes but these may be ignored. It is worth inquiring if there is any place at all other than article 19 where not only a natural person but also an artificial person is meant. The word first occurs in the preamble thus : " We the people of India, having solemnly resolved . . . to secure to all its citizens : Justice, social, economic and political; Liberty of thought, expression, belief, faith and worship ; Equality of status and of opportunity ; and to promote among them all Fraternity assuring the dignity of the individual and the unity of the Nation, etc." "Liberty of thought, expression, belief, faith and worship, equality of status "and" dignity of the individual " are expressions appropriate to natural persons and not to companies, associations and other corporations aggregate and the word " citizen " in the preamble refers to individuals for whom the Constitution was being made. In this connection, it must be remembered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Constitution. As we shall see presently, the Citizenship Act of 1955 expressly excludes companies, etc ., from its provisions. The power conferred by article 11 or entry No. 17 may give rise hereafter to the question whether Parliament can invest corporations, institutions, trusts, funds, ships or aeroplanes with citizenship but till Parliament does so there is nothing in Part II to indicate that the words " citizen " and "citizenship " were used to include any of them. In the fourth part which is entitled " Directive Principles " that word " citizen " is used twice. In article 39 it is qualified by the words ." men and women " which addition tells its own story. In article 44 the State is asked to endeavour to secure a uniform civil code for all citizens and the word plainly means men and women because it is impossible to think that the Constitution is thinking of a uniform civil code for corporations. In the other parts of the Constitution " citizenship" is a condition precedent for some office, post or privilege. The President, the Vice-President, the Governors, the Members of Parliament and the Legislative Assemblies, the Judges of the Supreme Court and High Courts mus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is purpose it is necessary to find out that is meant by "citizen" and "citizenship" generally and to trace historically the concept of citizenship to see if that concept included at any time artificial persons like corporations so that the word can be said to be intended to bear such a meaning. The word "citizen" which is used in article 10 of the Constitution has not been defined. Its meaning in the context of article is most be found out. If it bore the same meaning as in the other parts of the Constitution, it would mean a member, born or naturalised, of the State on which the Constitution, a law of Parliament confers citizenship Is there in law a citizenship of group of persons who may be all citizens or some of whom may be non-citizens ? The answer is that the world in its normal meaning does not admit bulk citizenship which is the only way to describe it. Salmond in an article on Citizenship and Allegiance ( 1901 1902 Law Quarterly Review, Part I, pages 270-82) says that the word is derived from the Latin " civitas" and " civis" More directly, of course, the root is in the French words " citoyen" or " cityeen". From the earliest times, the concept of citizenship ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re exposed in a ravine of Mt. Taygetus and of the others those that lived all boys were taken away at the age of seven and trained as citizens. All the Hellenic States followed Athens but Crete perhaps was influenced by Sparta. This is the earliest recognition of citizenship that we need consider in Europe. The next to consider is the conception of citizenship in Rome. The words " civitas " and " civis " were used in Roman Law to describe persons who had the freedom of the city and who enjoyed all political and civic privileges of Government. In this way were distinguished a slave ( servus ) , an enemy ( hostis ) who had none of these rights on the one hand and a foreigner ( peregrinus ) particularly from a country with which Rome was on terms of peaceful intercourse on the other, from citizens. Though by Justinian's time everyone became a citizen, unless he was an unmanumitted slave, in the time of Gaius citizenship was the privilege of Romans and carried with it the right to vote ( jus suffragaii ) and the right to hold public office ( jus honorum ) , the right to a Roman marriage ( jus connubium ) and the right to legal relations ( jus commercium ) . The son of a R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ionnaire de l Academic francaise it appeared for the first time in 1835. Even the Code Napoleon dealt with rules concerning the status of Frenchmen abroad but did not provide for the status of foreigners in France. The recognition of nationality as a test of the law applicable to an individual followed the famous lecture by Mancini at the University of Turin in 1851. The impact of international relations added to the civic rights possessed by a citizen by investing him with a political status which he could claim abroad. The word " nationality " itself has now come to acquire two distinct meanings, a political one by which is indicated the membership of a State and the other an ethnic one denoting membership of a nation. All this time citizenship has also meant membership of a State but in a municipal aspect. In this sense, the word " national" and " citizen " are not interchangeable as has been sometimes supposed. In the United States Public Law 414 (82nd Congress) (2nd session) section 308 is entitled " Nationals bat not citizens of the United States at birth." According to Weiss, " Nationality and Citizenship ", page 5 : "...that the term "American National" has a wider mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es the principle of descent also was recognised statutorily except in the case of children whose parents though citizens had never resided in the States, but the governing theory was birth in the territory of the States. I have, I think, sufficiently explained that citizenship and nationality are not entirely similar concepts though the words are sometimes used interchangeably owing to the fact that most citizens art also nationals and vice versa. But strictly speaking citizenship " is a term of municipal law, and denotes the possession within the particular State of fall civil and political rights, subject to special disqualification such as minority or sex. The conditions on which citizenship is acquired are regulated by municipal law." (J. B. Moore, Digest of International Law, Volume III (1906), page 273). The disqualifications of citizenship in the past and even today are many and different from country to country. Some of them which operate even today in several countries are : minority, heresy, colour, lack of settled abode, insolvency, infamy, treason, sex, etc. I have wondered what would have been the argument in this case to support the claim of citizenship if our C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We have thus to see how our own citizenship has evolved and who are the persons who are citizens and what further arrangement exists for investing others with citizenship. As India was, for centuries, ruled by Britain we have necessarily to examine the laws on the subject of citizenship and nationality before Independence. There was no law of citizenship in India. The Indian Naturalization Act was merely supplemental to the Imperial Act and hardly needed. I have already pointed out that the English common law recognised the priniple of jus soli but English statute law (the Naturalization Act of 1870 in particular) recognising descent conferred British nationality on persons : ( a )born in Great Britain or the Dominions ( jus soli ) ; ( b )up to and including the second generation of descent from natural born British subjects born abroad; and ( c )by naturalization, denization and resumption. The statutes on the subject are collected by Clive Parry in his Nationality and Citizenship Laws and need not be referred to in detail here as we are really not concerned with them except as the background of our laws. In 1914, the British Nationality and Status of Aliens Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ritish India by virtue-of section 1 of the English Act of 10.48 and every Indian in the Indian States as a protected person enjoyed Commonwealth citizenship of course this citizenship was to continue till India enacted its own citizenship laws and thereafter if there was a common clause preserving this citizenship and was to cease if there was an express abrogation of Commonwealth citizenship. Under the English Act of 1948 Indians became Commonwealth citizens or British subjects without citizenship and were regarded as potential citizens of India. The Indian Constitution made provisions for citizenship on the inauguration of the Constitution but it was not a law for the purpose of the British Nationality Act, 1948. It only provided that certain natural persons were to be regarded as citizens of India from January 26, 1950. In so far as we are concerned, this created a hiatus because the scheme of Indian citizenship was not completely worked out on January 26, 1950. The Constitution no doubt declared who were Indian citizens on that date but the status of a British subject without citizenship which was mellifluously called Commonwealth citizenship " could not be liquidated" unless ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enship, there is no room for artificial persons. The argument here repelled is sought to be supported by referring to the rule of law under which corporations are said to possess nationality. Nationality in this context is not to be confused with the status of a citizen. What is meant by that nationality may next be seen. Ordinarily corporations are given recognition by law as persons who can sue or be sued. Corporations also own property, carry on business, or trade. But it is not to be thought that corporations have an access to courts as a matter of course. The courts are open as a matter of course to natural persons and not to intangible concepts, like corporations. Unless the law gives this right to corporations they cannot sue or be sued. What the law does is to invest corporations with a distinct personality and with a right to sue and with a disability to be sued. Ordinarily such rights and disabilities attach to " persons" but that word is given an extended meaning to include corporations. In this way the law invests an intangible body with a unity and individuality and creates a legal person capable of suing or being sued. Foreign corporations enjoy the same privilege b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmans call this theory Grundungs theorie, that is, the theory of the place of birth. The theory has great names behind it Calvo, Fiore, Pineau, Weiss, etc . This theory is inadequate to cover corporations which are not authorised by the State and has been modified in the United States by evolving a theory of " implied consent to extra-territorial service". The third theory considers that a corporation acquires the nationality of the place where its acts or any of its acts are performed. This theory is rejected universally by lawyers but it was adopted by businessmen in the Congress of Joint Stock Companies held at Paris in 1889. Under this theory nationality can be changed at will. Obviously, enough difficulty is likely to be felt in the event of simultaneous actions in different countries. The fourth theory considers that corporations are domiciled where they have a permanent home. This theory was influenced by Von Bar who considered that though juristic persons could not be nationals either jure sanguinis or jure soli, they could be nationals by domicile. Chief Justice Taney summed up the thought by saying that " a corporation must dwell in the place of its creation an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.C. 307, 345 all the shares of the respondent company (except one) were held by a German company and, all directors were Germans though the company was incorporated in Great Britain. If the principle that nationality follows incorporation applied, the respondent company would have had a British nationality and it could not change it. But the House of Lords applied the principle of effective control to determine its nationality. In the Court of Appeal the case was heard by the Full Court and the above principle was held applicable (Buckley L.J. dissenting ) . The majority view was confirmed by the full judicial strength of the House of Lords by majority. Lords Shaw and Parmoor considered that enemy character depended on whether it was incorporated in an enemy country. The majority (Lords Halsbury, Mersey, Kinnear, Atkinson, Parker and Sumner), however, considered that it depended upon where the effective control lay. Lord Parker summarized the law in six propositions as under : " (1) A company incorporated in the United Kingdom is a legal entity, a creation of law with the status and capacity which the law confers. It is not a natural person with mind or conscience. To use th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... my character. In other words, in the United States there was no attempt to look behind the corporate veil. We have also seen that England drifted from the theory of domicile to the continental theory of siege social. But France, Germany, Italy and Belgium went a step further than before. The Cour de Cassation departed from the principle of siege social in Societe Conserve Lenzburg in which it was held that the court was entitled " to go to the bottom of things and ascertain whether a corporation was really French or not." The French Minister of Justice issued a circular in 1916 which stated the French approach to the question thus : " Les formes juridique dont la societe est revetue, le lieu de son principal establissement, tous les indices auxquels s'attache le droit prive pour determiner la nationalite d'une societe, sont inoperants, alors qu'il s'agit de fixer au point de vue du droit public le caractere reel de cette societe. Elle doit etre assimilec aux sujets de nationalite ennemie des que notoirement sa direction on ses capitaux sont en totalite ou en majeure partie entre les mains de sujets ennemis, car, en pareil cas, derriere la fiction du droit prive se diss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted out that the conception of the nationality of a corporation is important only in war and it has significance not so much in municipal law as in public international law. During times of peace the domicile of a corporation which, as Lord Westbury pointed out, is an idea of law creating a relationship between an individual and a particular country is allowed to operate a fiction. A corporation resembles a natural person in the matter of domicile except that an individual can choose his domicile but a corporation's domicile is tied to its place of birth. The law of the country of its birth gives it such rights as it considers practicable and foreign corporations share in those rights subject to any special provisions. In times of war these rules and the rule of corporate entity give way and public policy dictated by the consideration whether the resources of the corporation are likely to be used for enemy purposes determines the issue. Thus in the Daimler case [1916] 2 A.C. 307 the fons et origo of the control theory" " the acts of a company's organs, its directors, managers, secretary and so forth, functioning within the scope of their authority are regarded as the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kinson (and all who formed the majority except Lord Halsbury) was of opinion in the Daimler case [1916] 2 A.C. 307 that: " The question of the residence of the company apart, I do not think that the legal entity, the company, can be so completely identified with its shareholders, or the majority of them, as to make their nationality its nationality." We have only two laws on the subject of citizenship and none on the subject of the nationality of corporations. The fundamental law provides only for natural persons where it enacts rules for determining citizenship and the Citizenship Act excludes corporations. The chapter on fundamental rights does not altogether ignore corporations as did the American Constitution. In places the word person is used which attracts the definition in the General Clauses Act and in others the word " citizen ". The word " citizen " could have been defined specially for article 19(1)( f ) and ( g ) but it is not. There is nothing which can justify us in giving a special meaning to the word " citizen " for purposes of clauses ( f ) and ( g ). The fact that corporations are regarded in some circumstances as possessing nationality does not make th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ca our Constitution does not overlook corporations. The General Clauses Act is applicable to interpret the Constitution and that Act, as has been pointed out already, defines " person " as including corporations. The following articles of the Constitution employ the word " person" which applies equally to individuals and to corporations, etc. Article 14 : Equality before the law. Article 20 : Protection in respect of convictions for offences. Article 27 : Freedom as to payment of taxes for promotion of any particular religion. Article 31 : Compulsory acquisition of property. The seven freedoms guaranteed by article 19(1) are for " citizens". It was easy to say that the word " citizen " included corporations, etc . of Indian nationality for purposes of any of the clauses of article 19(1) but it has not been so said. It is to be noticed that in the third part the Constitution defines " the State ", " the law ", " law in force ", "estate" and "rights". The expression "law in force" is defined twice and differently. Can it be said that the word " citizen" was purposely left vague so that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... citizenship of the State has been accepted for purposes of exercise of the judicial power of the United States. The following provisions of the Constitution of the United States may be read at this stage : Article I, section 8 : " Congress shall have power . . . to establish an uniform rule of naturalization." Article III, section 1 " The judicial power of the United States shall be vested in one Supreme Court, and in such inferior courts as the Congress may from time to time ordain and establish ..." Article III, section 2 : " The judicial power shall extend . . . to controversies . . . . between a State and citizens of another State; between citizens of different States; between citizens of the same State claiming lands under grants of different States, and between a State, or the citizens thereof, and foreign States, citizens or subjects." Article IV, section 2: " The citizens of each State shall be entitled to all privileges and immunities of citizens in the several States." Amendment XIV, section 1 : " All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ames [1896] 161 US. 545, 562 563 sums up the position so far as the Supreme Court is concerned : " There is an indisputable legal presumption that a State corporation, when sued or suing in a circuit court of the United States, is composed of citizens of the State which created it. . . . . That doctrine began, as we have seen, in the assumption that State corporations were composed of citizens of the State which created them; but such assumption was one of fact, and was the subject of allegation and traverse, and thus the jurisdiction of the Federal courts might be defeated. Then, alter a long contest in this court, it was settled that the presumption of citizenship is one of law, not to be defeated by allegation or evidence to the contrary. There we are content to leave it." States have, however, begun to destroy the presumption which is thus erected by requiring a corporation as a condition to doing business there to incorporate in the State. This can be done because the Supreme Court has rejected the claim of corporations to citizenship for purposes of the privileges and immunities clauses quoted above. As Corwin pointed, out in The Constitution and what it means today, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hip of the States to create diversity; ( b )we have only one set of courts and not two with separate jurisdictions; ( c )our Constitution has not completely overlooked corporations and some of the fundamental rights are prima facie guaranteed to corporations as well; ( d )members of a corporation who are citizens can enforce the rights under article 19(1)( f ) and ( g ). Even if corporations may not be able to do so directly, the members who are citizens by enforcing their personal rights can effectively benefit the corporation. The only persons who are not able to do so are non-citizens whether as individuals or as members of a corporation. ( e )There has never been a recognition of a corporation as a citizen; and ( f )Unless a presumption juris et de jure is raised that corporations whether composed of citizens only or of non-citizens only or of citizens and non-citizens, are citizens of India, every time inquiry will have to be made into their composition and there is no discernible principle on which the citizenship can be based when there is diversity of citizenship in the composition of the corporation. I am, therefore, of opinion that the State Trading Corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corporation is thus also a citizen of that State. There is a fiction upon a fiction. I do not think that it is permissible under our laws to raise such an irrebuttable presumption of Indian citizenship in respect of every member of a corporation in India and it is obvious that if no such presumption can be raised the citizenship of corporations raises an issue of fact. Can we say that if all the corporators are found to be Indian citizens then we must hold that the corporation is an Indian citizen ? Sucb a view was held in an early case by the Supreme Court of the United States see Bank of the United States v. Deveaux [1809] 5 Cranch. 61 ; 3 L. Ed 38. In that case Chief Justice Marshall, while recognising that a corporation aggregate was certainly not a citizen because it was an "invisible", "intangible" and "artificial" being, held that since the Constitution dealt with matters generally and not in detail, and the general purpose and object of the law of incorporation showed that such an artificial person was to have corporeal qualities, a corporation had the character of a citizen if those that composed it had that character. In the Daimler case [1916] 2 AC. 307, Lord Parke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r sense than that in which it was understood in common acceptation when the Constitution was adopted, and as it is universally explained by writers on government, without exception. A citizen is of the genus homo, inhabiting, and having certain rights in some State or district... These privileges attach to him in every State into which he may enter, as to a humam being as a person with faculties to appreciate them, and enjoy them, and not to an intangibility, a mere legal entity, an invisible artificial being, but to a man, made in God s image. It is not necessary to refer to the earlier cases of this court. The point was not raised in this form before and even the observations of Mukherjea J. (as he then was) were obiter. In most cases an individual member also joined the corporation in the petition for the enforcement of fundamental rights (as is the case here also) and this court was content to leave the matter there. Joseph Kuruvilla Vellukunnel v. Reserve Bank of India [1962] 32 Comp Cas 514 (SC) was heard by this court in which the Palai Bank Ltd. was a party along with others. No objection was raised about the competency of the Palai Bank to claim the benefit of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 1955 in accordance with the Constitution. The ; respondent also contends that it would be a mistake to confuse nationality with citizenship and while it is correct that the present petitioner having been incorporated in India under the Indian Companies Act is a national of India it would be wholly erroneous to think that it also became on such incorporation a citizen of India. The fact that it is a national of India puts it in no better position than any other person, natural or artificial, which is not a citizen of India in the matter of fundamental rights. While creating fundamentals flights " the people of India" created some which they conferred on all persons (articles 14, 20,21, 22,23, 24, 25, 26, 27, 28 and 30); but some were created that were conferred only on citizens and were denied to others. Among those conferred on citizens only are the fundamental rights created by articles 15, 16, 19 and 2Q. The word " citizen" was not however defined in the Constitution and so we have not got a key, that is provided by a clear definition, to the minds of those who framed the Constitution, on the question whether they intended to exclude corporations as such from the fundamental ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the , problem is solved: corporation is not a citizen for the purpose of fundamental rights. That, according to the respondent, should end the search for light I am unable to agree. After all it is a Constitution that we are interpreting and it has again and again been laid down that those on whom Halls this task have to take a broad and liberal view of what has been provided and should not rest content with the mere grammarians' role. If, as is undoubtedly true, a syllogistic or mechanical approach of construction and interpretation of statutes should always be avoided it is even more important when we construe a Constitution that we should not proceed mechanically but try to reach the intention of the Constitution-makers by examining the substance of the thing and to give effect to that intention, if possible. There was some discussion at the Bar as to whether there were citizens of India, even before the Constitution. It will serve no useful purpose, in my opinion, to enter into that controversy. For, I am inclined to think that the Constitution in dealing with the matter of citizenship had no intention to keep any former citizenship alive. If that had been intended a suitab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... citizens of India under the provisions of the Constitution. The obvious effect of the strictly legalistic approach that a corporation being an artificial person cannot be a citizen for the purpose of any of the fundamental rights even when all its members are citizens of India would thus be to deny a considerable part if not the major part of Indian industry and commerce (using the word " Indian " to mean " carried on by Indian citizens") the valuable protection of the fundamental rights under article 19(1)( f ) and ( g ). No doubt the mere fact that the effect is inconvenient or even regrettable can be no justification for a forced construction of a constitutional provision. But it is permissible, say proper, often to consider the effect of proposed construction to find an answer to the question: was that the intention of the Constitution-makers? What do we find here ? In article 19(1)( f ) and ( g ) the Constitution-makers are creating a right intended to be of great benefit to industry and trade. They decide to restrict this benefit to only citizens of India. They are aware that much if not most of the trade and industry carried on by Indian citizens are carried on by them, af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well established to require discussion. I see no reason, however, why the charm of this legal learning should so hold us captives as to blind us to the great rule of interpretation of giving effect to the intention of those who made the law unless the words make that impossible. I can and nothing in the words of the Constitution that stands in the way of giving effect to the intention of the Constitution-makers of giving all citizens of India, whether forming into a corporation or not, the benefit of the fundamental rights under articles 19(1)( f ) and ( g ). Whether the Constitution-makers also intended that a corporation of which, the major portion of the interest was held by citizens of India would also get the benefits of the rights, it is unnecessary for the purpose of this case to investigate. This view of the law was taken, and in my opinion rightly, by the Bombay High Court in State of Bombay v. R. M. D. Chamarbaugwala ILR. [1955] Bom. 680. It is of interest also to mention that in this view of the law it is possible to appreciate what was said by way of dicta by Mr. Justice Mukherjea (as he then was) in Chiranjit Lal Chaudhuri v. Union of India [1950] SCR. 869 ; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, so long as it consists wholly of citizens of India, can ask for enforcement of the fundamental rights guaranteed to citizens under article 19(1)( f ) and ( g ) of the Constitution. (2)The State Trading Corporation is not a department or organ of the Government of India and can claim to enforce the fundamental rights under Part III of the Constitution against the State as defined in article 12 thereof. Shah, J. On May 18, 1956, the State Trading Corporation of India Ltd., hereinafter called " the company ", was incorporated as a private limited company under the Indian Companies Act, 1956, with an authorised capital of Rs. 5 crores divided into five hundred thousand shares of Rs. 100 each. Ninety eight per cent. of the subscribed capital, which was contributed out of the funds of the Government of India, stood registered in the name of the President of India and the remaining two per cent, in the names of two Joint Secretaries in the Ministry of Commerce and Industry. On February 12, 1961, the Commercial Tax Officer, Visakhapatnam, assessed the company in the sum of Rs. 5,79,198.17 nP. to sales tax in respect of certain transactions and issued a notice demanding payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e whereof is by clauses ( 2 ) to (6) subject to certain restrictions) being expressly guaranteed to citizens, the question which presents itself at the threshold is whether the company can claim to be a citizen and on that basis claim protection of the freedoms to acquire, hold and dispose of property, and to carry on any trade, occupation or business. The plea that a company incorporated under the Indian Companies Act is not a " citizen " within the meaning of article 19 of the Constitution is advanced principally on two grounds : (1)That prior to January 26, 1950, there was no law relating to citizenship in force in India and by articles 5 to 10 of the Constitution only natural persons were for the first time declared citizens. Under the provisions of the Citizenship Act, 10.55, only natural persons may claim rights of citizenship since the commencement of the Constitution. The company which came into existence after the promulgation of the Constitution not being a citizen under the Citizenship Act, to 1955, is therefore incompetent to enforce the rights claimed by it, for articles 5 to II constitute an exhaustive code relating to citizenship in India, and an artificial pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Constitution read with section 3(42) of the General Clauses Act a " person " includes any company or association or body of individuals whether incorporated or not. By declaring rights in favour of persons, it may at first sight appear that it was intended to confer those rights upon persons artificial as well as natural. But this presumption is not in fact uniformly true in articles 25(1), 28(3) and probably article 20 (3) by the use of the expression "person" having regard to the character of the right conferred natural persons only could be the beneficiaries of the rights declared thereby. By article 15(1) and (2) prohibitions are imposed against the State in making discrimination between citizens on the ground of religion, race, caste, sex or place of birth; clauses (1) and (2) of article 16 declare equality of opportunity to citizens in matters of public employment, and article 18(2) imposes restrictions on citizens against acceptance of titles from any foreign State. In these articles, the expression "citizen" may refer only to a natural person. But that cannot be decisive of the meaning of the expression "citizen" in article 19. In ascertaining the meaning of expressio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formed the foundation of the Indian jurisprudence, attributed to artificial persons prior to the Constitution the status of citizens or " subjects " as it was usual to call them in a monarchical form of Government. Waite C.J. in Virginia L. Minor v. Reese Happersett 21 Wall, 162 ; 88 US. 627 observed : There cannot be a nation without a people. The very idea of a political community, such as a nation is implies an association of persons for the promotion of their general welfare. Each one of the persons associated becomes a member of the nation formed by the association. He owes it allegiance and is entitled to its protection. Allegiance, and protection are, in this connection, reciprocal obligations. The one is a compensation for the other ; allegiance for protection and protection for allegiance. For convenience it has been found necessary to give a name to this membership. The object is to designate by a title the person and the relation he bears to the nation. For this purpose the words " subject", " inhabitant" and " citizen " have been used, and the choice between them is sometimes made to depend upon the form of the Government. Citizen is now more commonly emplo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a person, by virtue of which he owes allegiance to a particular sovereign authority. "Citizen" and "national" are frequently used as interchangeable terms, but the two terms are not synonymous. Citizenship in most societies is the highest political status in the State ; it is employed to denote persons endowed with full political and civil rights. There are in some States nationals who, though owing allegiance, lack citizenship such as those belonging to colonial possessions which are not included within the metropolitan territory, and do not participate in the government. Even in States where association of nationals in the governmental machinery does not exist or is too tenuous to be effective, the national, endowed with capacity to exercise personal and political rights, may be called a citizen. Again there may be citizens even in States having a form of government, which permits an effective association of its citizens with the administration, who do not participate in the government, or who by reason of sex, minority or personal disqualification are incompetent or are unable to participate. Citizenship is therefore membership of a jural society investing the holder with all th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th a natural person the attributes of residence, domicil and nationality can be given, and are, I think, given by the law of England to a body corporate. It is not disputed that a company formed under the Companies Acts has British nationality, though, unlike a natural person, it cannot change its nationality." In Kuenigl v. Donnersmarck [1955] 1 QB 515 ; [1956] 26 Comp Cas 1 it was held that a company incorporated under the laws of England and registered in England and so having an English domicil, and by analogy, British Nationality, did not cease by English law to be an English company subject to English law merely because it was under enemy control. McNair J. observed at page 535: " I think that it is also clear that, in so far as nationality can by analogy be applied to a juristic person, its nationality is determined in an inalienable manner by the laws of the country from which it derives its personality." The personality of a corporation aggregate therefore springs from the laws of the country in which it is incorporated, and upon that personality is impressed the nationality of that country, for the corporation is, by virtue of the law incorporating it, capable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ociations, or the right to take up residence of its choice within the territory ? Unless the language or the scheme of the Constitution is so compulsive, it would be difficult to reach that conclusion, on any predilection as to a limited connotation of the expression citizen occurring in article 19(1). It may be remembered that constitutional practice is not inconsistent with the recognition of artificial persons as citizens. The Constitution of the United States of Mexico 1917, of El Salvador 1950, and of the Spanish people do recognise the status of corporations as citizens. It was also not disputed at the Bar and could not reasonably be disputed that it was open to Constitution-makers and Parliament of India to make express provisions declaring artificial persons as citizens of India. But it is urged that the intention of the Constitution-makers was not to recognise the corporate character of a company as a citizen. It is said that the provisions of articles 5, 6 and 8 and the law made under article 11 in matters post-constitutional, are exhaustive of the conferral of the right of citizenship and there can be no citizen who does not satisfy the prescribed requirements. A neces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts which took place between August, 1947, and November 26, 1949, which culminated in the setting up of the Republic of India by the erstwhile British Indian subjects and the subjects of the Indian States. It may be sufficient to observe that before the Indian Independence Act, 1947, the legislature was invested with the power to confer upon foreigners rights as British Indians by naturalization, and had also sought to invest the Government of the day with power to deny entry into India to foreigners or even of nationals of British possessions. Part II of the British Nationality and Status of Aliens Act, 1914, relating to the naturalization of aliens was not extended to British India, though Parts I and III were intended to apply to all territories which formed part of the British Empire subject to the provisions-of section 26 of the Act which preserved the power of Colonial or Dominion Governments and Legislatures to legislate on the subject of nationality and to safeguard the validity of laws passed by them relative to the treatment of different classes of British subject. Under the Act of 1914 the place of birth within the British Empire was determinative of British nationality, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... status arose by birth and could also be conferred by naturalization. If a natural person could be a citizen prior to November 26, 1949 (the day on which by article 394, articles 5 to 9 came into force), there is no reason to suppose that artificial persons who were nationals of the British Empire and who could claim the protection abroad could not claim rights of citizenship within the territory of India, when they were in fact exercising all the rights and privileges which natural persons who were citizens exercised, except those which by their incorporation they could not exercise. There was before the Constitution no statute which indicated even indirectly that a corporation aggregate could not be a citizen. At the time when the Constitution of the United States of America was proclaimed, no citizenship laws were enacted, but rights of citizenship were recognized under diverse provisions of the Constitution of the United States. The American Constitution recognized even without any express statute law, citizenship of States, and also of the Union, Under the Constitution of the United States of America, the expression " citizen " has been given different meanings under divers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xistence beyond the limits of the sovereignty where created. . . having no absolute right of recognition in other States, but depending for such recognition and the enforcement of its contracts upon their assent, it follows, as a matter of course that such assent may be granted upon such terms and conditions as those States may think proper to impose." It may be noticed that corporations have been regarded as persons within the meaning of the 14th Amendment and, therefore, they cannot be deprived of their property or rights without due process of law: Smyth v. Ames 169 US. 466 a and Kentucky Finance Corporation v. Paramount Auto Exchange Corporation 262 US. 544 . Our Constitution has not accepted the doctrine of due process as a test for protection of fundamental freedoms, but has sought to effectuate protection of those freedoms by the 19th article. In this court there has been no definite expression of opinion about the rights of corporations aggregate to enforce the fundamental freedoms under article 19 of the Constitution, though it seems to have been consistently assumed that corporations aggregate are entitled to claim protection of the courts against violation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that an application at the instance of a corporation alleging infringement of a fundamental right to carry on business was maintainable. Again in State of West Bengal v. Union of India Suit No. 1 of 1961 decided on Dec. 21, 1962 Sinha C.J., in delivering the judgment of the majority, observed : " The fundamental rights are primarily for the protection of rights of individuals and corporations enforceable against executive and legislative action of a governmental agency . . ." It may be pointed out that there have been scores of cases in this court in which it has been assumed without contest that a company is a citizen, and competent to enforce fundamental rights under article 19(1) ( f ) and ( g ) of the Constitution. I propose only to set out a short illustrative list of cases picked up at random : Bijay Cotton Mills Ltd. v. State of Ajmer [1955] 1 SCR. 752 , Kasturi and Sons ( Private ) Ltd. v. Shri N. Salivateeswaran , [1959] SCR. 1, Express Newspapers ( Private ) Ltd. v. Union of India [1959] SCR. 12 , Fedco ( Private ) Ltd. v. S. N. Bilgrami [1960] 2 SCR. 408 , Messrs. Hatisingh Manufacturing Co. Ltd. v. Union of India [1960] 3 SCR. 528 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Customs Act on the ground that those provisions infringed article 19 (1)( g ) of the Constitution. The same view was affirmed in Cherry Hosiery Mills Ltd. v. S. K. Ghose AIR 1959 Cal. 397 . It was held in that case that a company was not entitled to enforce the fundamental rights guaranteed under article 19, which are available only to citizens. But it was held in T. D. Kumar and Brothers ( Private ) Ltd. v . Iron and Steel Controller AIR. 1961 Cal. 258 ; [1961] 31 Comp Cas 714, that a corporation ordinarily resident in India for a period exceeding five years prior to the commencement of the Constitution being a person was a citizen within the provision of article 5( c ) of the Constitution, and entitled to enforce fundamental rights under article 19(1), but a company incorporated after January 26,1950, will not be regarded as a citizen, for the Citizenship Act expressly excludes artificial persons from the benefit of citizenship rights. In recording this conclusion the earner judgment of the Calcutta High Court in Liberty Cinema v. Commissioner, Corporation of Calcutta AIR 1959 Cal. 45 was referred to and it was pointed out that in the group of cases which were t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In Reserve Bank of India v. Palai Central Bank Ltd. ILR. [1961] 1 Ker. 166 ; 31 Comp Cas 154, Raman Nair J. observed : "Many of the rights in article 19(1) and, in particular, those in clauses ( f ) and ( g ) thereof, are capable of enjoyment by companies. Our Constitution-makers could not have been unaware of the existence of legal persons. By article 19(1)( c ) they gave all citizens the right to form associations and unions, and it could not have been their intention that the corporate bodies so formed by citizens should be denied the rights guaranteed to the individual citizens, in particular that the agencies through which a substantial portion of their business is conducted by the citizens of this country and a considerable portion of their property held, should not have the protection of clauses ( f ) and ( g ). That would mean a denial of the fundamental rights to property and occupation not merely to companies but to all corporate bodies even though they may be Indian in every sense of the term, their members Indian, directors Indian and capital Indian, a denial which virtually amounts to a denial of those fundamental rights to the citizens who (though, of course, di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the rights similar to those which are enforceable by natural persons who are citizens, notwithstanding the special character of the corporations and their incapacity to perform duties or to exercise such other rights which natural persons may possess, it will not be a ground for depriving them of the rights of citizenship for enforcing the fundamental rights under article 19. Two views are presented before us as to the meaning of the expression "citizen" used in article 19(1). On the one hand it is said that a citizen is a person natural or artificial who is entitled to all the rights which are capable of being enjoyed by the citizens under municipal law as distinguished from persons who are aliens or persons who are not competent to exercise such rights. The distinction, according to this view, springs from the capacity to exercise the rights whether the body which exercises the rights is a natural person or an artificial person. The other view is that citizens are only natural persons who, being nationals and not aliens, are under the municipal law competent to exercise all the rights which the State permits. This view proceeds on the assumption that an artificial person can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obligations of the shareholders. By action taken against the company, the shareholders may be indirectly affected because their interest in the capital of the company is reduced. But action taken against the company does not directly affect the shareholders. The company in holding its property and carrying on its business is not the agent of the shareholders. Mukherjea J. in Chiranjit Lal Ckowdkury's case [1951] 21 Comp Cas 33 (SC), pointed out the difference in the passage already quoted between the rights of the company and the shareholders. Even if a company consists of shareholders who are all Indian citizens, the company has still a distinct personality and an infringement of the rights of the company alone will not furnish a cause of action to the shareholders. The doctrine of what is called "ripping open the corporate veil" was evolved by American jurists in dealing with cases under the " diversity of jurisdiction" clause to enable companies constituted within the State to have recourse to the Federal Courts in respect of disputes arising in other States as citizens. If the company is not a citizen it would be difficult to found a claim upon this doctrine attributing the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articles of association make minute provisions for sale and transfer of shares, calling of general meetings, procedure for the general meetings, voting by members, board of directors and their powers, the issue of dividend maintenance of accounts and capitalisation of profits. The State Trading Corporation has been constituted not by any special statute or charter but under the Indian Companies Act as a private limited company. It may be wound up by the order of a competent court. Though it functions under the supervision of the Government of India and its directors, it is not concerned with performance of any governmental functions. Its functions being commercial, it cannot be regarded as either a department or an organ of the Government of India. It is a circumstance of accident that on the date of its incorporation and thereafter its entire shareholding was held by the President and the two Secretaries to the Government of India. Strong reliance was sought to be placed upon the decision of the House of Lords in Bank Voor Handel En Scheepvaart N. V. v. Administrator of Hungarian Property [1954] AC. 584 , in support of the contention that the State Trading Corporation, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y readily be made. In Tamlin v. Hannaford [1950] 1 KB. 18 , a house had vested by the operation of the Transport Act, 1947, in the British Transport Commission and the question arose whether the house could be regarded as owned by the Crown and administered by the British Transport Commission as Crown's agent. Denning L.J. pointed out that the Minister of Transport had extensive powers over the British Transport Commission. The Minister had powers as great as those of a man who holding all the shares in a private company possesses. He appointed the directors, i.e ., the members of the Commission, and fixed their remuneration. They were bound to give him the information he wanted, he was entrusted with power to give directions of a general nature, in matters which appeared to him to affect the national interest, as to which he was the sole judge and the Commissioners were bound to obey him. Notwithstanding these great powers the corporation could not be regarded as an agent of the Minister any more than the company is the agent of the shareholders or even of the sole shareholder. Denning L.J. observed : "In the eye of the law, the corporation is its own master and is answe ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
