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JURISTIC PERSONALITY

INTRODUCTION
The main object of law is to regulate the relationship between individuals in the society. The
validity of the acts and omissions of persons is determined on the basis of their
reasonableness. All these acts which do not adversely affect the interest of others are held to
be lawful whereas the acts which interfere with for the protection of interests of mankind.
Therefore rights and duties form the basis for judging legality of man’s acts. The law
imposes liability for unreasonable and unlawful acts1, the enforcement of which is ensured
through legal sanctions. The law being concerned with regulating the human conduct, the
concept of legal personality constitutes an important subject mater of jurisprudence for there
cannot be rights and duties without a person.

ORIGIN OF THE CONCEPT OF JURISTIC PERSONALITY


The word “person ” is derived from the Latin word "persona ” which meant a mask worn by
actors playing different roles in a drama. Until sixty century the word was used to denote the
part played by a man in life. Thereafter, it began to used in the sense of a living being
capable of having rights and duties.

Many writers have restricted the use of the term “personality ” to human beings alone
bcause it is only thy who can be subject-matter of rights and duties, and therefore of juristic
personality. But it must be stated that the term has a far wider connotation in law and
includes gods, angles, idols2, corporation3, etc. though they are not human beings.
Conversely, there may be living persons such as slaves, who are not treated as “person” law
because they are not capable of having rights and duties. Likewise, in Hindu law an ascetic
"sanyasi ” who has renounced the world ceases to have any proprietary rights and his entire
estate is passed on his heirs and successors and his legal personality is completely lost.

1 Legally speaking "acts" also include opinion


2 In India idoels are legal persons as decided by the privy council in Pramatha Nath Mulick V. Pradyuma
Kumar Mulick, 1925, LR 52, Ind. App. 252 3
SALOMAN V. SALOMAN (1897) A1 22
686

All modem times relating to personality resemble one another in one way to the other
because they are derived form the same origin.

The term "personality” in English "personalite" in French, “personlichkeit”, in German are


all derived form the classic Latin word "persona” which originally meant the theatrical mask
put on by the Greek actors on stage while acting in a drama. But this concrete noun says
ALLPORT, got converted and transformed itself into one that is abstract and multiple in
meaning. This gave rise to as many as fifty interpretations of the term “personality” which
have been discussed in detail by G.W.ALLPORT.

The theologist used the term "personality" to designate “the members of the trinity” and
later on the trinity were designate as "personae

The philosophers made in equal to true essence of life laying more emphasis upon
nationality. Some of the philosophers twisted it to the side of ethics and maintained that
"personalty" may be regarded as an ethical rather than a metaphysical conception. There are
still thinkers who-consider personality as "the ideal and perfect attribute of 'being’ - never
fully attained by human kind",

To LOTZE personality was "the dieal ofperfection”. The conception of personality as


an ideal is exalted still further in Ramaticism.

GOETHE regarded personality as the "supreme value Jurists did not lag behind. They
interpreted it as "any individual enjoying legal status", And consequently individuals
material possessions with which the law like wise had concerned came to be known as his
“personality”.

The sociologists made it equal to the individual himself. For them “personality” is the
integration of all traits which determine the role and status of the person in society.
687

Personality, therefore, was interpreted as social effectiveness. The psychologists put it equal
to the assemblage of personal qualities.

DEFINITION OF PERSON
The word "person" is derived form the Latin word “persona”. This term has a long history.
To begin with, it simply meant a mask. Later on, it was used to denote the part played by a
man in life. After that, it was used in the sense of the man who played the part. In later
Roman law, the term persona. Last of all the term is used in the sense of a being who is
capable of sustaining rights and duties.

Many definitions of persons have been given by various jurists, they have defined
“persons ” in different ways.

The German jurist LITELMANA considers “mil” as the essence of legal personality. To
quote him “personality is the legal capacity of will, the bodiliness of men for their
personality a wholly irrelevant attribute ”.

SALMOND defines a “person ” as, “any being to whom the law regards as capable of rights
or duties Any being that is so capable, is a person whether human being or not and nothing
that is no so capable is a person even though he be a man ”1.

According to PATON, a legal personality is a particular device by which law creates units to
which it ascribes certain powers. It is merely a convenient juristic device by which the
problem of organizing rights and duties is arised out. He also defines legal personality is a
medium through which some such units are created in whom rights can be vested.

According to GRAY, a person is “an ■ entity to which rights and duties may be attributed”.

' SALMOND : Jurisprudence (12l1' Ed) P.229


688

According to the German writers: “will is the essence of a personality. A legal person is one
who is capable of will”.

According to MEURER, ‘The jurists conception of the juristic person exhausts itself in the
will and the so called physical persons are for the law only juristsic persons with a physical
'super fluim .

According to KARLOWA, “the body is not merely the house in which the human personality
dwells, it is together with the soul which now for his life is inseparably bound -with it, the
personality. So, not only as a being which has the possibility of willing but as a being which
can have manifold bodily and spiritual needs and interests as a human center of interests, is a
man, a person”.

According to the English and American jurists, a person must have not only a “corpus” but
also “an animus ”. Mere “animus ” or will is not enough. A person is one who has rights and
duties. It is something which can own rights and is capable of doing acts which affect the
rights of others.

S A VIGNY has defined the term "person” as the “subject or bearer of a right" but, as
pointed out by HOLLAND, this definition is not exhaustive. Rights avail against persons as
much as they are reposed in them.

A person is not necessarily a human being. There may be human beings who are not persons.
Slaves are not person sin the legal sense as they cannot have rights. In the same way, there
may be persons who are not human beings. This is particularly so in the case of corporations.

According to the Hindu law, idols are legal person. Although they have a personality in the
eye of law, they are not human beings. The term “personality ” has a wider significance than
humanity.
689

Under the Indian penal code the word person includes any company or association, or body
of persons, whether incorporated or not.

In the philosophical sense, personality is the basis of human being. In the legal sense, it is the
capacity of being a “right and duly hearing unity”. Legal personality is a device by which
law creates units to which it attributes certain legal rights and duties. Legal personality is an
artificial custom of law.
v

Thus “person” in juristic term are of two kinds namely natural and legal. The former are
human beings capable of rights and duties. Legal persons are beings who may be real
“natural” or imaginary “artificial” in whom law vests rights and duties and thus attributes
personality by way of fiction.

STATUS
Personality should be distinguished from status and capacity. “Status” is a word which is
given various meanings. SALMOND1 says that generally there are four meanings of the
word:
1) Legal condition of any kind, whether personal or proprietary.
2) Personal legal conditions, excluding proprietary relations.
3) Personal capacities and incapacities as opposed to other elements of personal status.

4) Compulsory as opposed to conventional legal position.

According to AUSTIN, the complex of rights and duties, or capacities and incapacities which
especially affect a narrow class are term as “status”.
*

Dr .ALLEN says that “status may be described as the fact or condition of membership of a
group of which the powers are determined extrinsically by law status affecting not merely one
particular relationship, but merely one particular relationship, but being a

1 SALMOND : Jurisprudence
690

condition affecting generally through in a varying degree a member’s claims and poM'er”1.

In short, "status " is condition which arises due to the membership of a class or group and
affects the rights and duties of the members of that class. In other words status indicates the
rights and liabilities which a person ash by virtue of his being a member of a particular class
or group. There are number of grounds which lead to the creation of a status such as
minority, marriage, office and profession, etc. a person can have a number of status at the
same time. He might be a husband, a father, and an office at the same time. The general
principle of status is that when created by the law of one country, it is or ought to be
judicially recognized as being he case everywhere, all the world over”2

CAPACITY
Capacity means the rights and powers of a person by virtue of his being at a particular
position. A person can have many capacities. If a person is a judge he has the capacity of a
judge as well as the capacity of a citizen at the same time. But the double capacity does not
mean personality. His legal personality is only one. Therefore, a person in one capacity
cannot enter into a contract or an other alike legal transaction with himself in his other
capacity. On the same principle where a creditor become his debtor’s executor, he could not
sue himself. But, later on this hardship was mitigated by giving the creditor a right of
retainer. Similarly in many o'ther cases this rule has been relaxed.

LEGAL POSITION OF AN UNBORN CHILD “LEGAL STATUS OF UNBORN


PERSONS”
A child in the mother’s womb has for many purposes been regarded by a legal fiction as
already born, in accordance with the maxim.....

Nasciturus Pro Jam nato baelor.

' DR.ALLEN . Legal Duties


2 Re Luck’s statement Trust (940) 1 Ch.864
691

The fiction was intended that in all matters affecting its interests the unborn child in
“utero” should be treated as already born, but in English law, this fiction has been applied
only for the purposes of enabling the child if it is born to take a benefit1. It has been thought
reasonable that a posthumous child who has lost his father should not be deprived of his
benefits under Lord CAMPBELL’s act for the death of his father2. 3

In criminal law, too, an unborn child has been recognized in a number of offences. By the
time of COKE, it was well settled law that killing a child in mother’s womb was a crime but
not a felony and if the child was born alive and thereafter died of the pre-natal injuries, it was
murder. Thus, where the head of the child was extruded from its mother’s womb and the
surgeon in charge of the delivery was so grossly incompetent that he crushed the skull of the
child resulting him to death, the surgeon was held guilty of manslaughterJ.

In English law, however, it has been doubted whether an infant bom alive is entitled to
recover from injuries inflicted upon before birth4.

In an Irish case, where a claim was advanced by a female infant against a railway company
for injuries inflicted upon her while in her mother’s womb through an accident due to the
defendants negligence, it was hold by the Irish courts that no cause of action was disclosed.
The two of the four judges proceeded upon the ground that the company owed no duty of
care towards a person whose existence was unknown to them, and not upon the ground that
an unborn child possesses, in no case, any right of immunity from personal harm.

But in a Canadian case1, a seven months pregnant woman, who while descending from the

term, was injured by the negligence of Montreal Tramways servants and with the

1 ELLIOT V. JOICEY (1935) A.C. 209 at P.238


2 The Goerge and Richard (1871) L.R.3ad & Ecc 466
3 R.V.Senior, (1832), Mood CC 344, R.V.West, (1948), Car & Kir 784
4 WINFIELD : Text book of the Law of Tort, (4th Ed.) PP 596; University of Toronto Law Jour. (1942)
P.278
692

result she gave birth to a child with deformed feet, was allowed, in an action on behalf of the
child, to recover for the pre-natal injuries.

The rights of an unborn child, whether proprietary or personal, are also contingent on his
birth as a living human being. The legal personality attributed to him by way of anticipation
facts away “ab initio ” if he has never taken his place among the living.

Abortion and child destruction are crimes, but such acts do not amount to murder or
manslaughter unless the child is born alive before he dies. Similarly, a posthumous child may
inherit, but if he dies in the womb, or is still born, his inheritance fails to take effect, and
none can claim through him, though it would be otherwise if he lived for an hour after his
birth. Again, though the law attributes no right to a person not yet even conceived, it may
protect their interests.

In India, too the principle laid down in Tagore V. Tagore*2, that a person to be entitled to
take under a will must in fact or in contemplation of law be in existence at the time of the
testator’s death, has apparently been attired by the tree acts, viz.
1) The Hindu transfers and bequests act, 1914;
2) Hindu disposition of property, act, 1916;
3) The Hindu transfers and bequests “city of Madras ” act, 1921...

With the result that the bequest can be made to unborn persons, subject to the limitations and
provisions contained in section-113, 114, 115 and 116 of the Indian suggestion act, 1925.
The limitations and the provisions with respect to gifts "inter vios” on behalf of unborn
persons were contained in Chapter II of the transfer of property act, 1882, which did not
originally apply to the Hindus,"' but has now been extended by the transfer of property
“amendment ” act XX of 1929. Sections 13 to 16 of the transfer of property act deal with the
limitations and provisions concerning gifts made in favour of unborn

Montreal Tramways Co. V. Leveilie, (1943) 4 DLR 337, See also Pinchin N.O. V Santam Ins Co. Ltd.
1963 (2), SA 254, (WLD), "Compensation for the Harmful Effects of Illegitimacy, " (1966) 66, Col. L.Rev.
127
2 Tagore V. Tagore, (1872) Beng L.R. 377
persons and they correspond to sections-113 to 116 of the Indian succession act concerning
wills. All these sections which are similar in substance assume that gifts and wills made in
favour of unborn children are valid under certain limitations and provisions contained in
these sections. From this what can be inferred is that the interests and benefits of an unborn
are well protected under Indian law.

In briefly, unborn children are persons in the eye of law. Property can be transferred in
favour of unborn children. Unborn children become contingent owners. The ownership
become vested in them of their birth. A child “en venire sa mere ” or in other words a child
in the mothers womb is indisputable a legal person. An injury to a child in the womb is an
offence under the criminal law. The interests of the unborn in the womb are thus recognized
and protected by the law. They can'sustain a legal personality.

An unborn person has contingent or qualified kind of legal personality. In this connection it
may be noted that a child in its mother’s womb is, for certain purposes, regarded, by a legal
fiction, as already born. These purposes are:
1) The acquisition of property by the child itself, or
2) Being a life chosen to form part of the period in the rule against perpetuities.

The recognition of the legal personality of a child in the womb’s illustrated in the case of
procedure that a pregnant woman condemned to death is not execute unless she has been
delivered of her body. Similarly it has been hold that a posthumous child is entitled to
compensation for the death of his father.

But the personality of an unborn person is contingent on his being born as living being.

LEGAL STATUS OF DEAD MAN


The question whether the deceased continues to have legal personality requires careful
consideration. Let us see whether the dead have any legal rights. The testaments of the dead
are respected and enforced by the law. This does not mean that the dead have a right to have
their wills enforced. The will is enforced in the interest of the living legates
694

to whom property is bequeathed. If the will does not contain any disposition of property in
favour of any human legatee, it will not be enforceable. This shows that right to have a will
enforced is not that of the testator but only that of the living legates.

The reputation of the dead is also protected by the law. A libel on dead persons may be
actionable in a court of law. This is, however, not a recognition of any right in favour of tire
dead. The living relations of the deceased would be harmed by defamatory statements against
him.

That is why such defamation is made actionable. It is obvious that the dead have no rights.
That they have no duties clear enough, for they are beyond the reach of the sanctions of law.
So deceased persons lose their personality with their lives.

In law, the dead are things, not persons. Being not punished after their death, they is not
entitled to any rights, though in following cases they have been given some rights.
1) Right of reputation.
2) Right of will
3) Right of decent burial.

SALMOND observes that generally speaking, the personality of a human being may be said
to commence with his birth and cease with his death. Therefore dead men are no longer
persons in the eyes of the law. They cease to having rights since they cease to any interests
nor do they have any duties. A dead man’s corpse is not "property” in the eye of law. It
cannot be disposed of by an instrument. Earlier, it was held that a person cannot, during his
life-time, make a will disposing of any part or organ of his body but there has been a change
in trend in modern times and today it is perfectly legal to donate eyes or any part of one’s
body for the progress of medical science and in the interest of humanity.
695

SALMOND points out three things in respect of which anxieties of living men extend
beyond the period of their deaths, of which law will take notice. They are men’s body; her
reputation and his estate1.

Though the dead man’s corpse is the property of no one the law, however, seeks to ensure its
decent burial2 or cremation3. The criminal law provides that any imputation against a
deceased person, if it harms the reputation of that person of living, and is intended to hurt the
feelings of his family or other near relatives, shall be an offence of defamation under
Section-499 of the Indian penal code.4

The reputation of dead man is to some extent protected by the law. The defamation against a
dead person is no doubt punishable under the criminal law but only when it affects the
interests of his relatives and near-ones who are living. The right so protected is in really not
that of the dead man but that of his living descendants5.

It is true that dead persons are not recognized as legal persons but the testamentary
dispositions of the dead are carried out by law. A person, can by his will make a valid trust
for repairs and maintenance of the graveyard because it amounts to a charitable or public
trust but he cannot, by a direction in his will provide that certain parts of his estate shall be
permanently used for the maintenance of his own grave or tomb. Such a direction would be
void and unenforceable being against the rule of perpetuity. The law of succession permits
the desires6 of the dead man to regulate the action of his successors. Whatever gifted by the
deceased for a charitable purpose, shall be enforceable by law and the testament to that
extent shall be valid.

' SALMOND . Jurisprudence (12th Ed.) P.301


2 R.V.STEWART : (1840) 12 AD and El 773
3 R.V. Prince, (1884) 12 QBD 247
4 Explanation 1 of the Sec.499, 366
5 R V.ENSOR, (1887) ILR 366
6 DRAIVIASUNDARAM V. SUBRAMANIA, 145 MLJ, 210 (Mad.)
696

LEGAL STATUS OF ANIMALS


Law does not recognize beasts or lower animals as persons because they are merely things
and have no natural or legal rights. SALMOND regards them as merely objects of legal rights
and duties, but never the subjects of them.

Beasts being incapable of legal rights and duties, their interests are not recognized by law.
Though, legal history reveals that archaic codes contained provisions regarding punishment
to animals if they were found guilty to homicide1. Even under the modem law the
trespassing beast may be detrained “damage feasant", and detained until its owner or some
one else interested in the beast pays compensation to the person wronged.

SUTHERLAND, in his principles of criminology, has referred to an interesting trial of some


rats in 1519. They were charged and tried for ravaging the fields of a farmer. The counsel for
the defendant rats pleaded that no doubt their clients had caused severe damage to the
plaintiff but at the same time the numerous holes made by their clients made the soil of the
plaintiff more fertile. The court rejected the defence and awarded the sentence of
punishment. The court, however, ordered that while executing the sentence, care should be
taken that the rats are duly protected from dogs, cats, howls, etc. so much so that taking a
lenient view towards pregnant female -rats, the court ordered to stay the execution of their
sentence until they delivered the offsprings.

The modem law, however, holds the master liable for the wrong caused by their pets, beasts
and animals. The liability so imposed on the master does not arise out of the principle of
vicarious liability but because of his negligence in keeping the animal well within control.
Likewise, a wrong done to a beast may be a wrong to its owner or to the society of mankind,
but not to the beastr The law, however seeks to extend protection to animals in two ways,
namely,

' SUTHERLAND refers to certain instances when beasts were punished. If an ox gores a man or a woman
to death, then he was stoned and his flesh was not eaten. In Germany, a cock was charged and accused of
contumacious crowing. It was brought in the witness box and tried. But the counsel failed to prove the
innocence of his feathered client hence it was killed. In ancient Greek law also there are evidences of
animals and trees being punished like human beings - SUTHERLAND • Principles of Criminology, P.44
697

1) Cruelty to animals is an offence,1 2and3


2) A trust for the benefit of a particular class of animals as opposed to one for
individual animals is valid and enforceable as public and charitable trust.

For example, a trust for the maintenance of a home for stray-dogs and broken-down horses
was held to be a valid and enforceable trust being charitable in nature.

In Re Dean, Cooper Dean V.Stevens a testator vested his property in trustees for
maintenance of his horses and hounds. North J. held that it was not a valid trust enforceable
in any way on behalf of these non-human beneficiaries. Therefore the trustees were free to
spend money in the manner indicated by the testator if they so pleased, but even if they did
not apply the money for this purpose, it would not amount to a breach of trust. It is thus clear
than animals and beasts neither have rights nor duties and are, therefore, incapable of
sustaining a legal personality.

As SALMOND rightly suggest, the duties towards animals are in fact duties towards the
society itself. The society does have an interest in the protection and well-being of the
animals.

A reference may be made about the police-dog used for detection of crime and criminals.
Despite the fact that they play a crucial role in apprehending offenders, it must be stated that
a conviction cannot be based solely on the evidence of a poice-dog unless it is corroborated
by other supporting evidence. The reason being that the police-dogs cannot be subjected to
cross examination like human beingsJ. This again supports the contention that animals do not
have legal personality.

Briefly, "the legal status of lower animals". Beasts are not persons either natural or legal.
They are merley thigns. They are often the objects of legal rights and duties, but never the
subject of them. In ancient codes, animals were however punished for their wrongs.

1 The Prevention of Cruelty to Animals Act, 1960 (ActNo.-59 of 1960)


2 (1889) 41 Ch.D.552
3 Dr.Paranjape N V : Criminology & Penology (9th ED. 1996) p.222
698

The modem law does not recognize this but shows a relic of it in the rule that a trespassing

beast may be distrained damage feasant and kept until the owner pays compensation.

That which is hurt to beast is in law a wrong to its owner, it is no wrong to the basic. Beasts
can be no owner of property. In two cases beasts possess legal rights:-
1) Cruelty to animals is a criminal offence.
2) A trust for the benefit of particular class of animals “as opposed to one for
individual animal ”

The beast otherwise has no rights and liabilities at law and wherever the interests of animals
conflict with that of human beings, tire latter are preferred.

LEGAL STATUS OF IDOL AND MOSQUE


It has been judicially held that idol is a juristic person and as such it can hold property. Its
position is, however, like that of a minor and the priest, i.e. pujari acts as a guardian to look
after its interests. The privy council, in historic case of... Pramatha Nath Mullick V.
Pradymumna Kumar Mullic held that an idol is juristic person and its will as to its location
must be duly respected. The court directed that idol be represented by "a disinterested next
friend to be appointed by the court to put up its point of view.

Similar view was reiterated by the supreme court of India in.. .Yogendra Nath Naaskar V.
Commissioner of income tax1 2where in it was held that an idol is a juristic person capable
of holding property and of being taxed through its "shebaits ” who are entrusted with the
possession and management of its property. An idol can be treated as a unit of assessment for
assessing its liability under the income tax act. The court further observed that if the idol
“deity” is allowed in law to own property, there is no reason why it should not be liable to be
taxed under the law of-taxation. It is because of the legal personality of idols that the rule
against perpetuity does not apply in case of religious endowments .

1 (1969)3 SCR 742


2 Vijay Chand V. Kalipad, (1914) l-Cai.57
699

Idols and funds... was considered to be a juristic person. It owned property. It could sue and
could be sued. A fund dedicated for a religious purpose was also of the nature of legal
person. It has certain rights and received certain protection from law, such as the property
dedicated to a “math".

Now a brief account of the position of legal personality in modem times shall be given.

As regards the legal personality of a Mosque, the courts have expressed conflicting views.

In Maula Bux V. Hafizudding1 the high court of Lahore held that a Mosque was a juristic
person capable of being sued. But the privy council held a contrary view in...Masjid Shahid
Ganj2 case and observed that mosques are not artificial persons in the eyes of law
and, therefore, no suit can be brought by or against them. However the privy council left the
question open whether for any purpose a mosque can be regarded as juristic person.

DOUBLE CAPACITY DISTINGUISHED FROM DOUBLE PERSONALITY


According to SALMOND, English law recognizes many different capacities in which a
persons may act. At times he has power to do an act in an official or representative capacity
which he has no power to do in his private or individual capacity. Thus a man may have two
or more capacities but he has no power to enter into a legal transaction with himself.
Therefore double capacity does not mean double personality. For example a director of a
company may also be a trustee of a trust, thus he may have two distinct capacities
nevertheless his personality remaining single.

The English law did not recognize double personality and therefore, a person could not sue
himself3, or contract with himself or convey properly to himself in the guise of
double capacity.

1 IAR 1925 Lah 372


2 (1940) 67 1A -251
3 Per Beast C.J. in Neale V. Turton (1827) 4 Bing 149 (151)
700

SALMOND contemplates certain hardship1 on account of non-recognition of double personality

in English law but the exceptions being far and few, the rule that no one can enter into a legal

transaction with himself still subsists.

In briefly, English law recognized many different capacities in which a man may act. Often he
has power to do an act in an official or representative capacity when he would have no power to
do the act in the private capacity or on his own account.

A man may have more capacities but this does not give him the pweor to enter into legal
transaction with himself.
personality

This rule worked hardship in many cases and this had to be mitigated e.g. when a creditor became
his debtor’s executor, the rule that he could not sue himself for the debt was mitigated by giving
him a right of retainer.

In short, the English law generally does not recognize double personality though it recognizes

double capacity.

KINDS OF PERSONS
Law recognizes only two kinds of persons, namely...
1) Natural persons, and
2) Legal persons whoa re artificial creations of law.

Legal persons are also known as artificial, juristic or fictitious persons.

1 for example where a creditor became his debtor’s executor, the rule that he could not sue himself for debt
created hardship, but it was mitigated by giving him right of retainer.
701

11 NATURAL PERSONS
A natural person is a living human being. But all living human beings nned not
necessarily be recognized as persons in law.

According to HOLLAND, “ a natural" persons is “such a human being as is


regarded by the law as capable of rights and duties s- in the language of Roman law,
as having a status

According to another writer, natural persons are “living human beings recognized as
persons by the state The first requisite of a moral human being is that he must be
recognized as possessing a sufficient status to enable him to possessing a sufficient
status to enable him to possess rights and duties. A slave in Roman law did not
possess a personality sufficient to sustain legal rights and duties. Inspite of that, he
existed in law because he could make contracts which under certain circumstances
were binding on his master. Certain natural rights possessed by him could have legal
consequences if he was manumitted. Likewise, in Roman law, an exile or a captive
imprisoned by the enemy forfeited his rights. However, if he was pardoned or freed
his personality returned to him. In the case of English law, if a person became an
outlaw he lost his personality and thereby became incapable of having rights and
duties.

The second requisite over, he must possess essentially human characteristics.

For example, before the abolition of slavery, the slaves were considered as ‘res’’ and
were devoid of any legal personality for they could have no rights and duties. Again
lunatics and infants have tmly a restricted legal personality. They do not have civil
rights such as right to vote, etc.

In other words, a natural person is a human being. But all human beings are not legal
persons. In olden days tire slaves were not considered legal persons. Tire case of the
slave is well known that they were treated no more than the mere
702

chattels. Similarly, a person who takes a religious or holy order or enters a monastery
has in certain system been treated as civilly dead.

In Hindu society, too, when a person becomes a “sanyasi" his proprietary rights
extinguish and his property goes to his heirs as if he were dead.

At one time, human beings who had been declared "outlaws " were not regarded as
persons in the eyes of the law and killing them was not homicide.

Lunatics, new born babies and infants, have, however, been said to have limited and
restricted rights. They do not possess as many civil rights as nor mal human beings
do have. Though in modern times, it has been the tendency to grant legal personality
to all living within the territory of the state, the most systems, however provide a rule
that wheresoever legal personality is granted it begins at birth and ends with death.

Important persons and outcastes are excluded from a share of the heritage; and so
are persons born blind and deaf; as well as mad men, idols, the dumb and those
1

who have lost a sense of a limb.

According to HOLLAND, ‘natural person” is "such a human being as is regarded


by the law as capable of rights and duties - in the language of Roman law, as having
a status

According to another writer, natural persons are “living human beings recognized as
persons by the state”. The first requisite of a normal human being is that he must be
recognized as possessing a sufficient status to enable him to possess rights and
duties.

A slave in Roman law did not possess a personality sufficient to sustain legal rights
and duties. Inspite of that, he existed in law because he could make
703

contracts which under certain circumstances wer binding on his master. Certain
natural rights possessed by him could have legal consequences if he wsa manumitted.
Likewise, in Roman law, an exile or a captive imprisoned by the enemy forfeited his
rights. However, if he was pardoned or freed, his personality returned to him.

21 LEGAL PERSONS

Legal persons are real or imaginary beings to whom personality is attributed by law
by way of ‘'fiction ” whereas it does not exist in fact.

Juristic persons are also defined as these things, mass or property, group of human
beings or an institution upon whom the law has conferred a legal status and who are
in the eye of law capable of having rights and duties as natural persons.

Law attributes by legal fiction a personality o some real thing. A fictitious thing is
that which does not exist infact but which is deemed to exist in the eye of law.

There are two essentials of a legal person and these are :


i) The corpus. And
ii) The animus.

The corpus in the body into which the law infuses the animus, will or intention of a
fictitious personality.

The animus is the personality or the will of the person. There is a "double fiction ” in
a juristic person is created or made an entity. By the second fiction, it is claimed with
the will of a living being.

Juristic persons come into existence when there is in existence a thing, a mass of
property an institution or a group of persons and the law attributes to them the
704

character of person. This may be done as a result of an act of the sovereign or by a


general rule prescribed by the government.

A legal person has a real existence but its personality is fictitious. Personification is
essential for all legal personality but personification does not create personality.
Personification is a mere metaphor. It is used merely because it simplifies thought
and expression.

A firm, a jury, a bench of judges or a public meeting is not recognized as having a


legal personality. The animus is lacking in their case.

According to SALMOND, a legal person is any subject mater other than a human
being to which the law attributes personality. This extension for good and sufficient
reasons of the concept of personality beyond the class of human .beings is one of the
most noteworthy feats of the legal imagination.

The law in creating legal persons, always does so by personifying some legal thing.
Personification, however, conduces go greatly to simplicity of thought and speech
that its aid is invariably accepted. The thing personified may be termed the corpus of
the legal person so created; it is the body into which the law infuses the animus of a
fictitious personality.

Therefore, SALMOND rightly remarked that although all legal personality involves
personification, the converse is not true. It simply mean that personality is a definite
legal devised for compnendour expression. It is for the law only to recognize an
entity as a legal person by devolving personality upon that entity. This devolving of
personality is known as personification but this does not mean that all types of
personification mean legal personality.
705

PERSONALITY STARTS WITH BIRTH


When a child is bom alive he is considered to be a person in the eye of law. For some
purpose, the maxim "naxciturus pro im nato habelur” also applies. In English law is applied
to enable the child only if he is to take a benefit. Such child “in the womb ” is
considered as a life chosen to for part of the period in the rule against perpetuities. In Hindu
law a child in womb is considered in existence “in case of partition" and he inherits the
property if he is born alive. If a partition takes place among the co-parceners “ while the child
is in womb ” a share is to be reserved for him. If the share is not reserved then the partition
would reopen and the new born boy would take the same share which he would have taken if
he was born before the partition. Apart from these rights he is considered to be capable of
owning personal rights also. If a pregnant woman is awarded death sentence, the execution of
the sentence shall be postponed till she is delivered of the child. Abortion and child
destruction are crimes. In English law killing of a child amounts to murder only when the
child is completely born alive. The offence is the same
“murder" where the injuries are inflicted while the child is in the womb but he is born alive
and dies afterwards due to the injuries so inflicted. In India the law is different.
"The causing of the death of a child in the mother’s womb is not homicide. But is may
amount to culpable homicide to cause the death of a living child, if any part of that child ahs
been brought forth, though the child may not have breathed or completely born1 It means
that if any part of the body of the child has emerged from the mother’s body, to cause any
injury to the child to sue for torts are concerned, the law is still unsettled on this point. In
England it was held that a posthumous child is entitled to compensation under Lord
CAMPBELL’s act for the death of his father2.

PERSONALITY ENDS WITH DEATH: CERTAIN RIGHTS PROTECTED


AFTER DEATH
The rights are generally created at birth and they extinguish at death. But the law, in certain
matters, recognizes and protects the duties and interests of the deceased. There are three
rights in this respect i.e..about the deceased’s body, his reputation and his estate.

1 See Indian penal code, I860, Sec.299, Explanation,


3 2 The Gorge and Richard (1871), LR 3 Ad. Ed466
706

Law secures decent burial for all dead men and the violation of a grave is criminal offence. In
certain societies law permits the certain of trusts for worship at the tomb of the deceased and
it enforces such trust. The reputation of the deceased receives protection from law in certain
cases. According to maxim “de mo tius nil nisi bonum ”
(dead have no rights and can suffer no wrong), the libel to the dead is not an offence in the
eye of law, but if the publication of a defamatory matter about the deceased brings scandal
on his family “on living persons ” and provokes them to commit breach of peace,
it is misdemeanor to English law. There are similar provisions in Indian law, “it may amount
lo defamation to impute anything to a deceased person, if he imputation 'would
harm the reputation of that person if living and is intended to be hurtful to the feeling of the
family”. The law respects the desires of the dead person regarding his estate, and his estate
devolves according to his will if he has left any. Subject to these expectations the general
theory is that the personality begins at birth and ends at death.

ANIMALS
ANIMALS HAVE NO LEGAL PERSONALITY
Animals are not persons in the eye of law and, therefore, they are not subjects of legal rights
and duties.

In ancient times animals for some purposes, were treated as persons. In ancient Greek law,
animals and trees were tried in courts for their wrongful acts.

In Roman law also, in some cases, inanimate objects were considered as having rights and
subject to duties. For example, “hereditus jacens” was treated as a person about which we
would discuss later.

In middle ages also, we find instances of the trial of the birds and animals.

KEETON in his book has given some cases of his nature1. "In Germany, a cock was placed

in the prisoner’s box and was accused to contumacious crowing and as the

1 The Elementary Principles of Jurisprudence


707

counsel of the bird could not establish its innocence so the bird was destroyed". There are a
number of instances of this kind in ancient Indian stories where animals were sued I courts.
There is a very popular story about the Moghul emperor Jahangir where an animals was
treated as capable of owning rights. A chain which was got hung by the emperor to be pulled
by the person who wanted justice from the emperor, happened to be pulled, by chance, by
the horns of a bullock. The bullock was presented before the emperor. It was decided that the
bullock might have pulled the chain to complain against his master for making him carry
heavy loaded. The master of the bullock was summoned and he was ordered to reduce the
load which he made his bullock to carry.

In modern times, no legal system recognizes animlas as persons. Therefore they have no
rights and liabilities. The human acts which are considered by law as wrongs against animals
are really speaking, not wrongs against the animals, but are wrong either against the person
who owns that animals or against the society. An animals cannot own property. A trust made
in favour of animals is a trust of imperfect obligation - it cannot be enforced. However, “a
trust for the benefit of particular classes of animals as opposed to one for individual animals,
is enforceable as a public trust” in England.

In India, cruelty against animals “as defined in various statues" is an offence, but, as
observed earlier, this duty is not a duty towards the animals; it is a duty towards the society
or the state. In our country a trust for the benefit of animals can be legally created1.

In other words legal persons are real or imaginary being to whom personality is attributed by
law by way of “fiction ” where it does not exist in fact. Legal personality being the creation
of law, can be conferred on entities other than human beings. As SALMOND, rightly
observed “the law is creating legal persons always does by personifying some real thing".
He further pointed out that although all legal personality involves personification the
converse is not true2. For illustration, the estate of a dead man, the

1 See • "Jamnabai V. Khimsi" 14 bora and Laila Pd. V. Brahmanand, AIR (1953) All. 449
2 SALMOND . Jurisprudence (12,h Ed.) P.306
708

jury, a bench of judges are all personification but law does not confer any legal personality
on them.

Legal persons are artificial or imaginary beings to which law attributes personality by way of
"fiction" where it does not exist in fact. They are capable of rights and duties like natural
persons.

HIBBERT prefers to classify legal persons into three different categories:


1) Certain non-living things can be conferred legal personality by personification.
The existence of such a legal person is real but its personification is fictitious.

• “The preadium dominas and pradium Servians ” under the ancient Roman law of
easements were the examples of such legal personality. The former meant a piece
of land which invested a person with rights over the latter i.e. another piece of
land. The owner of "preadium Servians” was subject to these rights. It was
through a fiction of law that a presumption was made that "preadium dominans "

possessed a right over the "preadium Servians" and that the latter owed certain
duties to the former. Thus, both were regarded as legal persons. The English law,
however, does not accept these tenements as legal person1.

2) A collection of rights and duties may be vested in some real or imaginary beings
to whom personality is attributed by law. The "heriditas jacens” under the
Roman law is a peculiar example of such a legal personality. The law conferred
legal personality on the dead man until the heir had entered upon his inheritance.
Thus by fiction of the law, the dead man’s rights and duties were not extinct but
continued even after his death ahd he was deemed to be a legal person as though
he was still alive. It may, however, be noted that English law as also the Indian
law does not recognize the fiction of "heriditas jacens" and the estate of the
deceased vests "ipso facto" in his heirs and successors immediately after his
death.

1 SALMOND : Jurisprudence (12th Ed.) P.306


709

3) FITGERALD, the learned editor of SALMOND’s jurisprudence writers that legal


persons, being the arbitrary creations of the law may be of several kinds. The English
law, however, recognizes only a few kinds of legal persons which include...

a) Corporations,
b) Institutions such as trade unions and societies and associations, and
c) The estate of funds.

Law attributes by legal fiction a personality of some real thing. A fictitious thing is
that which does not exist in fact which is deemed to exist in the eye of law.

There are two essentials of a legal person and these are...


1) The corpus, and
2) The animus.

The corpus in the body into which the law infuses the animus, will or intention of a
fictitious personality.

The animus is the personality or the will of the person. There is a “doable fiction” in
a juristic person is created or made an entity. By the second fiction, it is claimed with
the will of a living being.

Juristic persons come into existence when there is in existence a thing, a mass of
property an institution or a group of persons and the law attributes to them the
character of person. This may be done as a result of an act of the sovereign or by a
general rule prescribed by the government.

A legal person has a real existence-but its personality is fictitious. Personification is


essential for all legal personality but personification does not create personality.
Personification is a mere metaphor. It is used merely because it simplifies
710

thought and expression. A firm, a jury, a bench of judges or a public meeting is to


recognized as having a legal personality. The “animus" is lacking in their case.

KINDS OF LEGAL PERSON


There are three kinds of legal persons, viz.
1) Corporations,
2) Institutions, and
3) Fund or estate.

H CORPORA TIONS -EVOL UTJON OF THE IDEA OF CORPORA TE PERSONA LITY


A corporation is a group or series of persons which by a legal fiction is regarded and
treated as itself. A corporation is an artificial or fictitious person constituted by the
personification of a group or a source of individuals. The individuals forming the
“corpus ” of the corporation are called its members. A corporation is either a
corporation aggregate or a corporation sole.

Three conditions are necessary for the existence of a corporation.


There must be a group of body of human beings associated for certain
purposes.
There must be organs through which the body or the group acts.
A will is attributed to a corporation by a legal fiction.

The corporation is distinguished from the individuals who constitute the corporation.
A corporation has a personality of the individuals. A corporation can sue and be
sued. Even if the members of a corporation die, the corporation continues. A
corporation is recognized by law as a permanent and continuous legal entity. It is not
affected by the deaths of its members. A corporation can enter into contracts with its
members as it has a personality distinct from that of the members. A corporation can
have property and rights and duties. Unlike natural persons, a corporation can act
only through its agents. It does not die in
the way natural persons die. Law provides special procedure for the winding up of a
corporation.

ROMAN LAWS’ PATER FAMILIAS


The idea of legal personality can be traced in Roman and ancient Hindu laws. The
ancient Roman society was undeveloped and its organization was not very complex,
therefore the problem of legal personality did not bother them much. The family was
the unit of the society. Though family consisted of a number of individuals, all the
powers were centred “paler familias". He represented the whole family, therefore,
there was no theoretical difficulty about his position.

HEREDITAS JACENS; FISCUS, COLLEGIA, ETC.


However the “hereditas jacens ” of Roman law is considered by many as having
some resemblance with the legal personality. The f‘hereditas jacens" was used by
Romans to mean the inheritance in the inheritance between the death of the ancestor
and the acceptance of inheritance by his heir. It was a legal person or not is a
controversial point. Whether it represented the “persona” of he ancestor
“deceased” or of the heir “taking effect retrospectively after his acceptance of the
inheritance” is a question about which there is disagreement among the jurists.

According to IHERING, the original doctrine was that the title of the heir related
back to the death of the ancestor but, later on there came a change and a theory that
the “hereditas jacens " represented the ancestor developed. However, there is no
direct evidence to establish that it was a legal person. On the basis that
“hereditas jacens” never appears to have been made party to any proceeding nor to
have been called in action. SAVIGNY and SOHM say that it was not a juristic
person. From the opinion expressed by ancient Roman jurists it is gathered that
“hereditas jacens” had certain rights such as the right to receive protection.
Therefore, it may be considered as legal person in a very limited sense. Other objects
and institutions or groups who had certain rights and duties were “focus”
(pious foundations), “collegia, sociatates publicanorum ” etc. Their rights have
712

exercised through a representative. From the above discussion we can conclude that
in Roman law there arose on occasion or necessity to theorize and develop the
concept of legal personality , but the germs of the idea were, undoubtedly present in
Roman law.

ENGLISH LAW
In England, there are two types of juristic persons:
1) Corporation sole, and
2) Corporation aggregate.

The origin and the course of evolution of the two are quite different, therefore, it
necessitates their discussion separately.

fl CORPORATION SOLE

It consists of series of successive persons, one member at a time, e.g.


sovereign, post master general, secretary of state for war, etc. It is a natural
person performing the duties of a mythical person, who never dies or retires.
The living official is only an agent or representative through whom the legal
person of corporation sole performs his duties.

In another words, corporation sole is an incorporated series of successive


persons. It consists of a single person who is personified and regarded by law
as a legal person. - A single person, who in exercise of some office or
function, deals in the legal capacity and has rights and duties. A corporation
sole is perpetual. The examples of corporation sole are...
a) Sovereign - crowd, king, emperor
b) The post master general
c) The solicitor to the treasury
d) The secretary of the state of war
e) The minister of education
f) Public trustee
713

g) Comptroller & auditor general of India


h) Archbishop
i) Minister of health, etc.

A corporation sole is distinguished form “a mere succession of officers or


persons exercising the same rights".

A Prof. GRAY pointed out, "if a corporation sole exists, an occupant of an


office can generally acquire property of the benefit of this successors as well
as himself he can generally recover for injury inflicted on property pertaining
to the office while such property was in the hands of his predecessor and he
can sometimes enter into a contract which will bind or endure to the
advantage of his successors’’^.

A corporation sole does not require a seal but a corporation aggregate can act
or express its will only by a deed under the common seal. The existence of
common seal is the evidence of incorporation and the non- existence of a
common will is an evidence against in corporation. A corporation can change
its seal at will.

According to DIAS and HUGHES, the main purpose of the corporation sole
is ro ensure continuity. It avoids any obeyance "in siesisn” moreover, the
occupant of the office can acquire property for the benefit of his successors.
He may contract to bind or benefit them. He can sue for injuries to the
property while it is in the hands of the predecessor.

Generally, corporation sole are the holders of a public office which are
recognized by law as corporation. The chief characteristic of a corporation is
its "continuous entity endowed with a capacity for endless duration ”.

1 GRAY : Nature & Sources of the Law P.57


714

A corporation sole is an illustration of "double capacity”. For instance, the


King of England exercises the function of the crown and in his capacity as the
constitutional head, he can confer rights and duties upon himself as an
individual. The natural person may thus owe a duty to himself as a legal
person. Same is the position of the President of India. As regards the British
crown it is generally said, "the king is dead, long live the king". This proverb
indicates the double capacity of the crown as a natural person, i.e individual,
while the latter part expresses his position as a legal personality. In simple
word, it means that even after the death of the king; his legal as a crown
remains in existence as a corporation sole.

According to DIAS and HUGHES, “a question that is also asked is whether


a corporation can survive the last of its members. Prof. GOVER mentions a
case in which all the members of the company were killed by a bomb while at
a general meeting, but the company was deemed to survive

The object of corporation sole is similar to that of corporation aggregate. In it


a single person holding a public office holds the office in a series of
succession, meaning thereby that with his death, his property, rights and
liabilities, etc. do not extinguish but they are vested in the person who
succeeds him. Thus, on the death of a corporation sole, his natural personality
is destroyed but legal personality continues to be represented by the
successive person. In consequence, the death of a corporation sole does not
adversely affect the interests of the public in general.

CORPORA TION A GGREGA TE


A corporation aggregate is an incorporated group of co-existing persons. It
has several members at a time. It is a artificial or fictitious persons
constituted by the personification of a group of individuals. The individuals
forming the corpus of the corporation are called its members.
715

A corporation aggregate is an "association of human beings united for the


purpose offorwarding their certain interests

Limited companies are the best example of a corporation aggregate. Such a


company is formed by a number of persons who as shareholders of the
company contribute or promise to contribute to the capital of the company for
furtherance of a common object. Their liability is limited to the extent of their
share-holding in the company. A limited company is thus formed by the
personification of the shareholders. The property of the company is not that
of the shareholders but its own property and tis assets and liabilities are
different from that of its members. The shareholders have a right to receive
dividends for the profits of the company but not the property of the
company1. For certain purposes, company has an independent existence from
those of its members2. 3

It is for this reason that the company may become insolvent but its members
may still be rich and wealthy. Conversely, the insolvency of the members
does not adversely affect the company and it may continue to have a
flourishing business. The death of members does not finish the existence of
the company.

GROWER elites a unique example of this and writes that in the general
meeting of a company all the members died due to bomb explosion but it did
not affect the existence of the company and it continued functioning as
beforef

' Colonial Bank V. Whilley, (1885) 30 Ch. D.261


2 Saloman V. Saloman & Co. (1887) Act 22; see also the American case of People’s pleasure park Co. V.
Roheledar, (1908) 61 SER 794
3 GOWER : Modern Company Law, P.72
716

It must, however, be noted that a partnership firm is not a company in the


eyes of law. It represents only aggregate of the individual members. The
existing partners own the property and the debts. There cannot be one-man
firm but there can be a one-man company as held in the historic Saloman
case1. This judgment established the principle of corporate personality.

The facts of the case are that one Saloman was carrying the business of boot
and shoe manufacture. He incorporated a company named “Saloman & Co
Ltd. ” With seven subscribers consisting of himself, his wife, four sons and
one daughter. The company took over the personal business assets of
Saloman for $38,782 and in turn, Saloman took 20,000 share of $ 1 each,
debentures worth $ 10,000/- of the company’s assets and the balance in cash.
His wife, four sons and a daughter took $1 share each. Subsequently, the
company went into liquidation due to general trade depression. There were
various unsecured creditors, who contended that Saloman could not be treated
as a secured creditor of the company in respect of the debenture held by him,
as he was the managing director of one-man company, which was not
different from Saloman and the clock of the company was a mere shame and
fraud, Lord MAC NAUGHTEN observed:

" When the memorandum is duly signed and registered, though there be only
seven shares, taken, the subscribers are a body corporate exercising all the
functions of an incorporated company... the company is at law a different
person altogether from subscribers to the memorandum, and though, it may
be that after incorporation the business is precisely the same as it was before
and the same persons are managers, and the same hands receive the profits;
the company is not in law the agent of the subscribers or trustees of them.
Nor are the subscribers, as members,

' (1887) AC.22


717

liable, in any share or form except to the extent and in the manner provided
by the companies act1.

Thus, it was decided in this case that a corporate body has its own existence
or personality separate and distinct from its members and, therefore, a
shareholder cannot be held liable for the acts of the company even though he
hold virtually the entire share capital. Tire case also recognized the principle
of limited liability of a company. Thus, where a shareholder has already paid
the full amount on the shares and is the holder of full-paid shares, he cannot
be required to pay anything more to help to meet the obligation of the
company.

The legal statues and position of company has been aptly described by the
supreme court of India in Tata Engineering & Locomotive Company Ltd., V
State of Bihar2. The court observed, ‘the corporation in law is equal to a
natural person and. has a legal entity of its own”. The entity of the
corporation is entirely separate from that of its shareholders and its assets are
separate from those of its shareholders.

According to HALSBURY’s laws of England a corporation aggregate is a


collection of individuals united into one body under a special domination
having perpetual succession under an artificial form and vested by the policy
of the law with the capacity of acting in several respects of an individual,
liberty of taking and granting property, of contracting obligations and of
suing and be sued, of enjoying privileges and immunities in common dnd
expressing a variety of political rights more or less extensive, according to
the decision of its institution or the powers conferred upon it either at the
time of its creation or at any subsequent period of its existence.

1 Colonial Bank V. Whilly, (1885) 30 Ch. D26I


3 AIR 1965 SC 40 (46)
718

There are following ingredients of a corporation aggregate -


a) It is an artificial or fictitious or a legal person existing in the eye of
law.
b) It has legal entity quite distinct and separate from its members.
c) It has perpetual succession.
d) It is the owner of its property.
e) It has common seal.
f) It can enter into contracts and can incur obligations.
g) It an sue and be sued.

SALMOND says that corporation aggregate are by far the more and
numerous and important examples of such types of corporations are as
under:-
a) Joint stock companies constituted under the companies act..
b) Corporations constituted under special acts of parliament, for
example:-
i) State Bank of India,
ii) Life Insurance Corporation of India,
iii) State Trading Corporation of India
iv) Reserve Bank of India
c) A municipal corporation “in England".
d) Companies or corporations created by Royal Charter e.g. East India
Company established in 1600.

LIFTING OR PLERCING THE CORPORATE VEIL


It has been said earlier that by fiction of law, a corporation is clothed with a distinct
personality, yet in reality it is an association of persons who are in fact, in a way, the
beneficial owners of the property of the body corporate. A company, being an artificial
person, cannot act on its own, it can act only through natural persons.
719

Undoubtedly, the whole law of corporation is based on the theory of corporate entity but the
separate personality of the company and its statutory privileges should be used for legitimate
business purposes only. Where the legal entity of the company is being used for fraudulent
and dishonest purpose, the individuals concerned will not be allowed to take the shelter
behind the corporate personality. The court, in such cases, shall break through the corporate
and apply the principle of what is known as “lifting or piercing the corporate veil”1.

The corporate veil of a company may be lifted to ascertain the true character and economic
realities behind the legal personality of the company. The company’s separate personality
may be disregard in the following cases.

1) Where companies are in the relationship of holding and subsidiary or sub- subsidiary
companies.
2) Where the benefits of limited liability of shareholders or members is destroyed
because of a statutory provision making the liability of each share holder or member
unlimited, in case the number of shareholders or members fall below the prescribed
legal minimum, e.g. of two in a private limited company, or below
seven in case of a public limited company; in such a case each shareholder or
member is personally liable to an unlimited extent ‘‘as in a partnership firm ” to any
creditor of his company for any debt or liability contracted by the company after the
expiration of six months from the date the number of members so fall below the legal
minimum, if the member concerned knowing continued as a member.

3) In certain matters concerning the law of taxes, debts, duties and stamps, where the
question of ‘‘controlling interest” is in issue. “Berendsen Ltd. V. Commissioner
of Inland Revenue; Commissioner of Income-Tax. V Meenakshi Mills Ltd.,
Madurai”.

1 Sections 45, 147, 212, 247 and 542 of the companies act, 1956 contain provisions relating to lifting the
corporate veil to reach the real forces of action behind the company’s legal fa 9ade.
720

In the last mentioned case the supreme court of India hold that though a company is a
legal person, with a distinct and separate personality of its own, yet income tax
authorities and courts are entitled to lift the veil of that corporate personality and to
pay heed to economic realities behind the legal fapade.
4) Under the law relating to foreing exchange and controls.
5) Under the regulations relating to trading with enemy, where the test of control is
adopted
6) Under express provision of statute.
7) The courts have sometimes lifted the corporate viel of the companies in quasi-
criminal cases.

THE POSITION OF COMPANY PERSONALITY IN INDIA


The concept of corporate personality is well recognized in Indian law. The position of the
“karta” in Hindu coparcenary is an illustration on this point. In coparcenary system although
each member of the joint Hindu family has some rights and duties; but the
“karta” is overall head of the joint family who manages the entire family property. He has
right to alienate the property and other members of the family are under his control. He can
sue and be sued on behalf of the joint family. In juristic terms, he is a corporation sole having
a double capacity, i.e. as a natural person he is the eldest member of the family and as a legal
person he is in the capacity of the “karta ” of the joint family.

Further, Hindu idols have been recognized as corporate entities. It is for this reason that the
rule against perpetuity does not apply in case of religious endowments created in favour of
Hindu idols1.

The Union of India and the states have "also been recognized as corporate entities under art.
300 of the constitution of India. The President of India is a corporation sole like the British
crown.

Vijay Chand V. Kalipad (1914) 1 Cal-57


721

The Reserve Bank of India has also a corporate existence because it is an incorporated body
having an independent existence. But the Union Public Commission ad a joint Hindu family
are not recognized as legal persons because both these cannot hold property in their own
names and can neither sue nor be sued in a court of law.

ADVANTAGES OF INCORPORATION
The law finds it difficult to deal with collective ownership and collective actions with
collective group of persons as a single legal entity. There were practical difficulties in
making numerous individuals as parties to a suit against the group. This problem has been
mitigated by the incorporation of the collective group as a corporate entity which an sue or
be sued without making each of its members party to the suit.

As regards the advantages of incorporation, SALMOND observes "there is probably nothing


which the law can do by the aid of the conception of incorporation which it cannot do
without it1 ”. The statement suggest that incorporation is not the only means to remove the
difficulties arising due to complexities of collective ownership, but the concept of trusteeship
may also serve the same purpose. SALMOND considers incorporation as an expanded form
of trusteeship and says that incorporation is a form of fictitious trusteeship. It must, however,
be accepted that incorporation is advantageous as compared with trusteeship because in the
former there is single personality which has single owner instead of collective ownership.
That apart, trustees being living human beings, on their death, new trustees have to be
appointed which is not so in case of an incorporated entity because of its perpetual existence.
These two elements, namely,
i) Single legal personality, and
ii) Perpetual existence, given an edge to incorporation over trusteeship in the field of
law

The element of single personality and permanence are absent in trusteeship and
incorporation secures these objects more conveniently and, therefore, they are regarded as
almost indispensable in the present context.

1 SALMOND : Jurisprudence (12,h Ed.) P.336


722

Professor KEETON, has summarized the advantages of incorporation thus:-


a) Incorporation greatly simplifies legal procedure, enabling persons to sue a single
incorporated body rather than numerous individuals. The corporation, on its part,
can also sue as a single legal person.
b) The death or withdrawal of member or members does not disturb the existence of
an incorporated body. The members may come and go but the corporation
continues perpetually for ever
c) The financial liability of shareholders is limited only to the extent of their
shareholding and not beyond it.
d) An incorporated body being a legal entity, can freely dispose off its property
in its own name. Its property is clearly distinguished from that of the
shareholder’s property.
e) Incorporation helps the growth of commerce and industries. Even small investors
have an opportunity to invest their income in the capital of the corporate body. In
this incorporation enables the petty investors to contribute to the development of
national economy.

USES AND PURPSOES OF INCORPORATION


According to SALMOND, there is probably nothing which the law can do by the aid of the
conception of incorporation which it could not do without it. But there are many things
which it can by such aid do better and more easily then would otherwise be possible. Among
the various reasons for admitting this extension of personality we may distinguish one as of
general and fundamental importance namely the difficulty which the law finds in dealing
with common interest vested in large number of individuals and with common action in the
management and protection of such interest, the normal state of things with which the law is
familiar and to which its principles are conformed - is individual ownership. With a single
individual the law knows well how to deal but common ownership is a source of serious and
manifold difficulties that the answer is incorporation by personification of a body of
individuals, i.e. the formation of a corporation.
723

The chief uses and purposes of incorporation may be summarized as under;_


a) Corporate personality, i.e,. legal entity, legal person
b) Self existence, quite distinct and separate from its members.
c) Perpetual succession.
d) Limited liability
e) Availability of capital in large sum
f) Collective ownership
g) Management by few selected hands
h) Loan facilities
0 Relief in taxation
j) Large scale business becomes possible

CREATION AND EXTINCTION OF CORPORATIONS


The creation and extinction of corporation does not take place in natural course but it is
determined by the law. Incorporated entities are created by charter statutes, acts, ancient
customs or mutual agreement between the members and they continue their existence
perpetually until they are extinguished by the process of dissolution. SALMOND observed
that a corporation has a perpetual existence, but there may be a period during which a
corporation sole remains suspended due to the death of person holding public office and
some other person being appointed in his place. Thus during this intervening period, the
corporation sole is not extinct but it merely remains suspended.

The members of a collective group form themselves into corporation for two obvious
reasons, namely,
i) For the unity of purpose and
ii) For the permanence of the institution.

It must, however, be noted that every coiporate body is not recognized as a legal entity.

For the creation of legal entity two things are deemed necessary.
724

i) Firstly, the corporate body should be collective group of persons united for
furtherance of a common interest, and
ii) Secondly, it must be in an organized form.

Commenting on the nature of corporation MAITLAND observed that corporation is a


fictitious person which has neither the capacity to run nor to many nor falling ill, it is a
group of persons which has united as collective body for some common object, the will of
the corporation is different from that ofits members. Likewise, the decisions taken by
corporation cannot be said to be the decisions of its members. It may, however, be assumed
that the corporation represents the collective will of its members1. 2

LIABILITY OF CORPORATIONS
Generally, speaking corporation can do only those things which are incidental to the
fulfillment of the purposes for which it has been created under the law. All its acts must be
directed to its legally appointed ends. Thus, a company incorporated by special statute is
limited to the powers conferred by the statute and those which are reasonably incidental
thereto. The purpose and objects of a company registered under the companies act, are
contained in its memorandum of association and the company cannot go beyond the limits so
laid down for its activities. Anything done by the company beyond its object clause in “ultra
vires’’".

It may be reiterated that a corporation is not a natural person, therefore it neither has a body
nor brain or soul of its own. It has to act through its agents, employees and other personnel.
It therefore follows that a corporation neither has its own will nor an interest of it own. The
interest of a company is in fact the interest of its shareholders which is represented by the
board of directors. Despite this reality, the law confers a fictitious legal personality or
corporations which vests rights, duties and property in them. Consequently, a corporation
can sue or can be sued and owes both civil and criminal liability for the acts done by it3.

1 DR.MURRAY : History of Political Thought from Plato to tire present, P.388 2


The doctrine of ultra vires is an important rule of company law
3 Comford V. Carlton Bank, (1899) 1QB 392
725

CIVIL LIABILITY
A corporation cannot personally commit a tort. It is an artificial person having no brain and
body of its own. It may, however, be held liable for the wrongful acts committed by its agents
or servants during he course of their employment. This liability is based on the principle of
vicarious liability. The company is, therefore, liable for the torts of its employees and agents
just as a master is held liable for the wrongful and negligent acts of his servants.

As to the question whether the principle of vicarious liability could also extend even to the

actions involving malice as an ingredient, there has been a shift in the trend in recent years.

Earlier, in Stevens V.Midland Counties Rly. Company1 BARON ALDERSON took the view
that a corporation does not possess a mind of its own, hence it cannot be held liable in a civil
action involving malice. This view was reiterated again in Abrath V. North Eastern Railway
Company2. 3 In this case the railway company prosecuted Dr.Abrath, a surgeon for issuing a
false certificate to a passenger who was alleged to have received injuries in a railway
accident. The surgeon was, however, acquitted. Thereafter the surgeon sued the railway
company for malicious prosecution. The plaintiff “the doctor ” had to prove that prosecution
against him was launched with an improper motive. Lord BRAMWELL, however, ruled that
a corporation being merely a fiction, it is not possible to attribute any mind to it, and
therefore, it is incapable of conceiving any malice.

Overruling the decision in Abrath’s case Lord LINDLEY in citizen’s life Assurance
- J
Company V. Brown observed that a company can beheld liable for the torts involving
malice such as defamation. In this case a superintendent of the company sent a circular letter
to its policy holders containing certain allegations against an ex-employee of the company.
The ex-employee sued the company for defamation. Lord LINDLEY held the

'(1854) 10 Ex. 352


2 (1886) 11 AC 247
3 (1867) 2 QB 534; followed in Ormiston V.G.W.Rly, (1917) 1 KB 598
726

company liable for defamation on the basis of vicarious liability as the tort was committed in
the tort was committed in the course of employment of the company.

It is now well settled that a corporation may be sued for malicious prosecution or deceit or
defamation which involves malice as an essential ingredient.

A corporation is, however, not liable if the act of its employee or sevant or agent is not
authorized by the article of its association.

The case of Poulton V. London & S.W. Rly. Company is a leading decision on this point. In
this case a station master in the employment of the defendant Railway company arrested the
plaintiff for refusing to pay the freight for a horse that had been carried by the railway. The
railway company had authority under the act of parliament to arrest a person who did not pay
the fare, but none to arrest a person for non-payment of freight for the carriage of goods. The
court held the company not liable because it had no power itself to arrest for such non-
payment, therefore, it could not delegate such a power to the station master “its employee” to
do so. The plaintiffs remedy for the illegal arrest in such a case could be against the station
master personally and not the railway company as the master of its employee. The real reason
for the decision appears to be that the station master did not have the “implied authority” to
make such an arrest on behalf of the railway company and as such the latter could not be held
vicariously, liable for the same.

CRIMINAL LIABILITY
A body corporate can be held vicariously liable for the wrongs committed by its employee
just as the liability of the principal extends to unauthorized acts of his agent. But a
corporation cannot be held criminal liable for the criminal acts of his employees on the
principle of vicarious liability.

Commenting on this, aspect of corporate liability, SALMOND observes, “to punish a body
corporate, either criminally or by the enforcement ofpenal redress, is in reality to
727

punish the beneficiaries on whose behalf its property is held for the acts of the agents b whom
it fulfils the functions"1. 2

It is for this reason; SALMOND says that criminal liability of corporation is of exceptional
nature. Even assuming that a corporation is deemed to possess an imaginary will just it is
attributed an imaginary existence by legal fiction, the only acts that can emanate from the so-
called will, are those which the memorandum of association pennits to do i.e. which are
“inlra vires" the company. Therefore a corporation cannot commit a crime because a criminal
act or illegal act would be necessarily "ultra vires" its memorandum of association.

This orthodox view has, however, been abandoned now and a corporation can be held
criminally liable for the criminal acts doe by its representatives. It is well settled that a
corporation may incur criminal liability in cases involving malice, fraud or other wrongful
motives. A company may be held liable for libel, malicious prosecution or deceit . The will
of the human beings who control the affairs of the corporation is attributed to the corporation
itself. Thus, in R.V.I.C.R. Haulage Ltd3, the company was Indicted for conspiracy along
with its managing directors and others and the fraud of the director was imputed to the
company.

MAITLAND holds that a corporation has a real existence, and therefore, has its own will
which is different from the will of its members. Relying the realist theory of corporate
personality, he attributes criminal liability on corporation for malicious prosecute on libel or
fraud4.

The practical difficulty as regards imposition of criminal liability on corporation arises in


respect of punishing them for their guilt. There seem to be two possibilities in this regard. If
the corporation be punished with fine or forfeiture, it would be easy to carry out

1 SALMOND . Jurisprudence (12,h Ed.) P.315


2 Comford V. Carlton Bank, (1899) QB 392
3 (1944) 1 KB 551
4 Edward V Midland Rly. Co., (1880) S QBD 287
728

the punishment with fine or forfeiture, it would be easy to carry out the punishment without
punishing its members. But if any corporeal punishment is awarded, then it would be
difficult to separate the members from the corporate entity. Obviously the court has to
exercise its discretion in such cases. It would be pertinent to refer to some leading decisions
to illustrate the point further.

In D.P.PVKant Sussex Contractors Ltd1. The manager of a transport company submitted


false returns to obtain petrol coupons. The division court held that the company had,
committed fraud through its manager and therefore was liable for that offence.

In yet another case, Moore V.Bresler Ltd2, 3the secretary of the company and himself the
branch manager and sales manager of the company. He did certain acts which were
“ultra vires” the board of directors of the company. The court, however, held the company
criminally liable being a legal person.

In R.V.I.C.R. Haulgae LtdJ, a company was held liable for conspiracy to defraud. Its

managing directors and some others had conspired to practice fraud upon another company.

In India also criminal liability may be imposed on corporations under the companies act4,
and other statutes. For instance, section-140 of the customs act provides ‘‘if a person
committing an offence was committed was in-charge of and was responsible to the company
for the conduct of business of the company, as well as the company shall be deemed to be
guilty of the offence and shall be liable to be proceeded against and punished accordingly”
The explanation for the purpose of this section provides that
“company" means a body corporate "and includes a firm or other association of individuals.

1 (1944) KB 146
2 (1944) 2 Ail ER 515
3 (1944) KB 551
4 Sections-63,73(2-B), 108-F(2), 538, 539,629, ETC.
729

In the ultimate analysis it may be stated that corporation can undoubtedly be held criminally
liable but its liability must inevitably be limited to fines, forfeiture or burdening the property
in any other way. For heinous offences committed under the orders of the corporation only
the members responsible for issuing such orders can be prosecuted and individually
punished.

DIFFERENCE BETWEEN CORPORATION AND FIRM


A corporation is a legal person having existence apart from that of its individual members. It
is recognized by law as a new being, a distinct "persona”, creating an absolutely different
entity from those who compose it.

A firm is not a legal person. It has no distinct legal entity, it being only the sum of its
individual members.
A corporation can contract with its individual members as it is a distinct entity from
the members composing it,
A firm having no distinct personality cannot so contract.
A corporation can possess property, have rights and duties and liabilities as a distinct
person; the property and the debts of a firm are nothing else than those of the
partners.
A corporation is a permanent legal entity and is not affected by the death of its
members. There is no such permanence in a firm. A change in the list of partners is
the substitution of a new firm.
A corporation aggregate cannot act or express its will except by deed under its
common seal. There is no such formality in the case of a firm.
In the case of a corporation the liability of the shareholders may be limited; in the
case of a firm the liability of the partners is unlimited.
A corporation secures the monopoly as to its name; a firm cannot always claim such
monopoly.
730

THEORIES OF CORPORATE PERSONALITY

DIVERGENCE BETWEEN THEORY AND PRACTICE


There are various theories of corporation personality which have attempted to theory, the
nature and authority of it. This might make one to gather that theoretically all the legal
problems regarding juristic persons have been fully explored but this is not true. There is a
great divergence between theory and practice. Anyone theory alone is not capable of solving
the problems fully. Therefore, the courts have not followed anyone theory consistently. The
reason of the gap between theory and practice is that the theorists have kept themselves more
occupied with either a philosophical explanation of legal personality, or in making it to fit in
some political ideology than with the practical problems.

Writers have expressed conflicting views regarding the exact nature of corporate personality.
These vies find expression through different theories of corporate personality which are as
follows:
1) Fiction theory;
2) Realistic theory;
3) Bracket theory;
4) Concession theory
5) Purpose theory

II FICTION THEORY
This theory is expounded mainly by SAVIGNY, SALMOND, KELSON and
HOLLAND.
*

According to this theory, a corporation is clothed with a legal personality. The


personality of a corporations is different from its members.
731

The theory says that only human beings can property be called "persons”. Same kids
of groups, etc. are regarded as persons for certain purposes only by a fiction of law
and they have no real personality.

This theory is most applicable to English law where the courts have not proceeded on
any hard and a fast principle in this recognition of juristic persons. There is much
flexibility in the theory and it can accommodate the various decisions
“which are sometimes divergent also” or legal personality. This theory is very
popular because it is not based on any metaphysical notion or argument. It is argued
on the basis of this theory that as a juristic person has only a fictitious will, it cannot
commit crimes.

SAVIGNY regarded corporation as an exclusive creation of law having no existence


apart from its individual members who form the corporate group and whose acts by
fiction, are attributed to the corporate entity1. As a result of this, change in the
membership does not affect the existence of corporation or its unity. SAVIGNY
further pointed out that there is double fiction n case of a corporation. By one fiction,
the corporation is given a legal entity, by another it is clothed with the will of an
individual. Thus fictitious personality of a corporation has also a wil of its own
which is different from that of its members.

Sir JOHN SALMOND also supports the view that a corporation has a fictitious
existence. It is distinct from its members and capable of surviving even after all
the members have ceased to exist. A company incorporated by an act of
/

parliament can only be dissolved by another such act.

KELSON also regards legal personality as a fiction. To quote his words, "it is the
convenient peg upon which to hang legal rights and duties. Thus, a group of persons
or a successive series of persons is a legal person because it has an imaginary
personality by the fiction of law”.

1 SAVIGNY : Systems of Modem Roman Law (Translated by Ratingon) P.181


732

Professor GRAY justifies fiction theory on the ground that the main object of
incorporating is to protect the interests of person having common objectives. Like
fictitious personality, the will of the corporation is also an imaginary creating of
law1.

Sir FREDERICK POLLOCK in a. learned essay on the fiction theory of corporation


"2 has shown that the English common law has given no countenance
to the fiction theory of corporate personality. The fact, however, remains that in
English law neither collective liabilities nor collective powers can be incurred or
claimed by a body of individuals. Unless it can satisfy the requirements of
incorporation. Unincorporated bodies are not treated as legal persons in English law.
Before a body of persons can have rights and duties in their corporate
• character they have to produce an authoritative document having the approval of the
state which defines the purpose for which it exists, the means by which tis will is
manifested, the extent of the liability undertaken by each of its members and so forth.
An ordinary social club, for instance, though it plays a large part in English life has
no recognition as a legal person in its collective capacity. The club can neither sue
nor be sued in its own name unless it has formally submitted to an act of
incorporation as prescribed by the law. It is therefore clear that English law favours
the rigid theory that corporate personality is a mere pretence of he law and entirely
dependent upon the fiat of the state

Dr.JENKS observes: “There would it may be suggested be little practical difficulty


in the working out of a more liberal view of the collective person than that adopted
hitherto by Englishiaw”3.

1 GRAY : Nature and Source of Law, P.55


2 POLLOCK : Essays in the Law, (suv voce)
JENKS : The New Jurisprudence, P.156
As matters stand at present, however the classical fiction theory thus holds, the field
in English though, as will presently be seen, it is being seriously assailed by the
exponents of the realist theory.

The fiction theory thus believes that incorporation is a fictitious extension of


personality resorted to for the purpose of facilitating dealings with property owned by
a large body of natural persons. The fiction theory, however, fails to answer
satisfactorily the civil and criminal liability of corporations. It is assumed that the will
of the corporation is attributed to it by the fiction of law, then it leads one to infer that
it must always be lawful as the will conferred by law can bnever be for unlawful or
illegal ends. It, therefore follows that the corporation would always do “intra vires”
acts and never indulge into acts which are “ultra vires”.
Thus, it can never have "mensrea ” which is an essentials ingredient for a criminal

act.

The fiction theory has been criticized by Sir FEDRICK POLLOCK who refutes the
acceptance of the theory in the common law of England. He maintains that under the
English law neither collective liabilities nor collective power can be claimed by a
body of individuals unless they are duly incorporated under the existing law. In other
words unincorporated bodies are not treated as legal persons in English law. So also
is the position in Indian law. An ordinary law cannot be treated as legal person in its
collective capacity. It can neither sue nor be sued unless it is duly restricted under the
relevant law. Thus, corporate personality is a mere creation of law.

REALISTIC THEORY
This theory has another name also i.e. “organic theory”. The main exponent of this
theory is GIEREK, the great German jurist. He has been followed by MAITLAND,
BESELER, LASSON, BLUNTSCHULI, ZITELMANN, MIRAGLIA, Sir
FREDERICK POLLOCK, GELDARI, POLLOCK, JETHROW BROWN, etc.
734

Realist theory says that a group has a real will, real mind, and a real power of action.
A corporation has all the characteristics which a natural person has. Therefore,
juristic persons are real in the same sense in which human beings are. Legal
personality is not fictitious, nor it depends upon state’s recognition. The emphasis, in
this theory on corporate life contains elements of reality “at least in the modern age ”
but to attribute real will to the corporation and to compare it will biological organism
leads with the theory to absurdity. Closely linked with
“realist theoryis “institutional theory” It has been propounded by a French jurist
HAURIOU. This theory is based on collectivist outlook. It says that the individual is
integrated into the institution and becomes a part of it. Different interpretations have
been given to the theory and have been used to serve divergent purposes. Pluralists
interpretation is that there can be independent institutions within the institution of
state "they consider state only as a supreme institutions”. Fascist interpretation is that
the state is the only institutions and other institutions within it are parts of it, and,
therefore, they must function according to the direction of the state. By putting this
interpretation they used the theory to suppress other individuals.

It is a real person possessed of a real will of its won and capable of actions and
responsibilities. It is a personality that is recognized and not created by law.

GIERKE the great German jurist, he believed that every collective group has a real
mind, a real will and a real power of action. A corporation, therefore, has a real
existence irrespective of the fact whether it is recognized by the state or not. The
corporate will of the corporation finds expression through the acts of its directors,
employees or agents/The existence of a corporation is real and not based on any
fiction. It is a psychological reality and not a physical reality. Professor GRAY,
however, denies the existence of collective will. He calls it a figment to quote his
own words, “to get rid of the fiction of an attributed will by
735

saying that corporation has a real general will is to drive out one fiction by
another”1.

Psychological research has shown that the association of many persons produces a
"will” distinguishable from that of the separate members of the group. From the
interpretation of many wills there arise a single group or corporate will which is
distinct from the totality of the wills of its members and which inspires the action
taken by the group just as an individual will of a man inspires the man’s own action.

As DICEY observed "when a body of twenty, or two thousand, or two hundred


thousand men bind themselves together to act in a particular way for some common
purpose, they create a bond which by no fiction of law, but by the very nature of
things differs from the individuals of whom it is constituted”. If individual
consciousness and individual will invests an individual with personality, group
consciousness and group will invest the group with a personality of the individual.
MIRAGLIA observes : “the corporation is in a certain aspect more real than the
individuals, because it possesses greater complexity ofparts and represents a higher
form of evolution ”2.

When it is said that corporate personality is a reality it is not suggested that a


corporation is an actual person. All that is meant is that a corporation is a
representation of physical realities that exist independently of the flat of the state and
are recognized rather than created by it. The conception of group personality belongs
thus to the world not of material but of psychical realities.

Prof. GRAY denies the reality of a collective will. He observes, “a collective will is
a figment to get rid of the fiction of an attributed will by saying that corporation has
a real general will is to drive out one fiction by another’’3.

1 GRAY . Nature & Sources of Law, P 55


2 MIRAGLIA : Comparative Legal Philosophy, P.371
1 GRAY : Nature and Sources of Law, P.55
736

Sir JOHN SALMOND is of the view that even if the group will is a reality, it is not
possible to concede, “the reality of the unitary national entity which may in law
survive the last of its members"1. 2 He further points out that the realist theory is
inapplicable to a “corporation sole”. The attribution of personality to the succession
of the holders of certain offices where there can be no pretence to psychological
unity, is regarded by him as destructive of the realist theory of corporate personality.
It may, however, be observed that as pointed out by GRAY, “a corporation sole is
not a fiction or juristic person, it is simply a series of natural persons some of whose
rights are different and devolve in a different way from those of natural persons in
general" .

Even English law is now tending in the attention of according recognition to


collective persons as real persons.

In Willmott V. London Road Car Company3 a lessee covenanted not to assign or


underlet without the consent of the lessor, which was not to be withheld in respect of
“a respectable and responsible person ’. It was held that the word “person ’ in the
covenant included a corporation.

That group of collective personality is a reality cannot now be seriously disputed in


the light of the present day knowledge of mass psychology. Once it is realized that
for the real existence of incorporeal persons physical perception to the senses in
unnecessary, it would be easy to see that moral entities are real organisms, endowed
with a real will can sustain legal personality since they are efficient subjects of rights.

1
SALMOND : Jurisprudence, P.432
2 GRAY • Nature and Sources of the Law, P.58
3 (1910)2 Ch 525
737

Fascists have made use of the realistic theory of corporate personality to support the
omnipotence of the state. The realistic theory opposes the contention of the
concession theory that personality is attributed by the state.

Some other continental jurists such as BLUNTSCHLI, BESELER MIRAGLIA have


also supported the realistic theory.

In England it was supported by POLLOCK, MAILAND and Dr.JETHRO BROWN.


DICEY also contends that the personality of a group is a reflection of its
consciousness and will. Thus, group personality is as real as the personality of an
individual.1.

J.C.GRAY, has criticized the realistic theory pointed out that collective will can have
no reality, ’t is nothing but a mere fiction. SALMOND also holds that even if it is
assumed that the group will is a reality, the reality of the unitary national entity
which may in law survive the last of its members cannot be conceded to2. He further
argues that the realistic theory cannot be applied in case of corporation sole because
it is simply a series of natural persons whose rights are different from those of natural
persons in general.

The main different between fiction theory and realistic theory lies in the fact that the
former denies that corporate personality has any existence beyond what the state
chose to give it, the latter holds that a corporation is a representation of physical
realities which the law recognizes.

BRACKET THEORY-OR SYMBOLIST THEORY


This theory says that he members of the corporation are the only persons who have
lights and duties. The granting of juristic personality means putting a bracket round
the members in order to treat them as a unit. This is done for the

1 MIRAGLIA • Comparative Legal Philosophy, P.371


2 SALMOND : Jurisprudence (12lh Ed.) P.328-29
738

purposes of convenience. In other words juristic personality is only a symbol which


helps in effectuating the interest or the purpose of the group. The theory speaks great
truth when it says that the groups are only to effectuate the interest of its members,
but it has certain weakness also. The contention of the theory that only human beings
have personality and the group is so far from the truth. In modem times, it is agreed
on all heads and is fully established that corporation has a legal personality which is
separate and distinct from its members and it has entirely different rights and duties.
It is the separate personality that enters into the contract and other legal transaction
with others. How a person can enter into contract with a bracket? This question hits at
the very not of the theory. An important implication of theory is that law can remove
the bracket at anytime and can look behind the entity to discover the real state of
affairs.

Simply says that, bracket theory means the members of a corporation are the bearers
of the rights and duties which are given to corporation for the sake of convenience. It
is not always practicable or convenient to refer all the innumerable members of a
corporation. A bracket is placed around them to which a name is given. That bracket
is the corporation.

The bracket theory is associated with the well-known German jurist IHRING.
According to this theory juristic personality is only a symbol to facilitate the working
of the corporation bodies. Only the members of the corporation are
“persons" in real sense and a bracket is put around them to indicate that they are to
be treated as one single unit when they form themselves into a corporation.

The supporters of Bracket theory argue that just as a synonymous word is put within
brackets to give an equivalent meaning, so also collective form of a group of
different individuals is expressed through a corporation and their separate identifies
are given a unified form. Thus incorporation is done merely for the sake of
convenience. The American juristic HOHFELD has advocated this theory in a
different form. In his view corporate personality is the creation of arbitrary
739

legal rules designed to facilitate proceedings by and against an incorporated body in


law-court.

SALMOND criticizes the theory of group person on two grounds. It is not applicable
to a corporation sole as we cannot have any group-mind or group-personality.
Moreover, a corporation aggregate can exist even there is only one surviving member
or there is no member at all. Collective will is considered to be a fiction and it is
pointed out that to replace the fiction theory, by realist theory, is to drive out, one
fiction by another fiction.

According to KEETON, if corporations exist independently of state recognition,


there must be a number of corporate personalities which have not yet received legal
recognition. The state may concede legal existence but which are united simply to
achieve together limited ends”.

According to KELSON, legal personality is itself nothing but a fiction. Legal order
can attribute legal personality at will. If it wishes to do so, it can personify things,
institutions or groups; "juristic and physical persons are essentially on the same

plane. The physical person is the personification of the sum total of legal rules
applicable to one person. The juristic persons is the personification of the sum total
of legal rules applicable to a plurality of persons.

In the modem time realist theory is suitable regarding corporate personality.

41 CONCESSION THEORY
' .

This theory quite close to theYiction theory . The supporters of one are thee
supporters of the others-. The man characteristic of this theory is that it treats the
dignity of being a “juristic person as having to be conceded by the state, that is,

1 The Concession theory is based up with and some times confused with fiction theory, PATON, Op. Lit.
P.411
2 Its supporters are SAVIGNY, SALMOND and DICEY
740

the law. The identification of law with state is a "sne qua non ” for this theory, where
as no such condition is necessary in the case of fiction theory.

It is, thus, by grace or concession alone that legal personality is granted created or
recognized. So far as this theory maintains that grace of law or of the state is the only
source form which legal personality may flow, the theory states a truism. It states
truism is the sense only that all rights whether human or corporate, emanate from
what the law gives, and where the law does not provide anything, at least, its
recognition is essential to validate, maintain or perpetuate what already exists or is
conferred by nature or what man has taken or created for himself. The concession
theory, is thus, the necessary concomitant of any theory of unfettered state
sovereignty. One value of the theory is that it has been used for political purposes to
strengthen the state and to suppress the autonomous bodies within the state1. No such
body has any claim to recognized as a person. Since this theory is regarded as laying
down the sociological truth that all group life, "as apart form the mere grant of legal
personality" is created by the state, it is then both mischievous and erroneous2.

In other words, this theory says that corporate bodies have legal personality only to
the extent granted by law. Here law means the state. In other words, the law is the
exclusive source or authority which can confer juristic personality. Though this
theory states a truism, by leaving the creation of juristic personality absolutely at the
discretion of state, it leaves room for mischief. This theory has been used in many
cases to suppress autonomous institutions. It differs from the fiction theory in one
important respect. It is that the former identifies law with the state which the latter
does not.

1 See, FRIEDMANN, W. op.cit., P.512, Also, DIAS, cit. P.362 2


PATON : Op. Cit., P412
741

5j PURPOSE THEORY
The main exponent of this theory was BRINZ, the noted German jurist. The theory is
founded on the view that corporations are treated as “persons" for certain specific
purposes. The assumption that only living persons can be the subject-matter of rights
and duties; would have deprived imposition of rights and duties on corporations
which are non-living entities. It, therefore, became necessary to attribute
“personality" to corporation for the purpose of being capable of having rights and
duties.

The origin of purpose theory is to be traced back to “stiftung", i.e. “foundations"


which were treated as juristic persons. A foundation is analogous to a trust for
specific charitable purpose such as propagation of education, grant of scholarships,
etc. Those foundations were attributed juristic personality in Germany in order to
facilitate legal transactions. The “stiftung” being a kind of charitable fund, was not a
real person, therefore, it was personified for the specific purpose for which it was
created.

Dr. FRIEDMANN analysed these different theories of juristic personality and


concluded that almost all of them had a political significance and their role in
attending to the legal problems has only been rather secondary1. The fiction theory
of juristic personality is founded on psychology of man which is inevitable part of
human nature. In its purest form, this theory is completely, free from any political
influences but the concession theory which is derived from fiction theory, necessarily
has as political inkling which aims at strengthening the power of the state thus
enabling it to keep the collective groups fully under control. The concession theory
was extensively used to tae over the property of church durin the French revolution.
Likewise, the realistic theory is also predominantly political rather than legal, in its
objectives. It is based on organic theory of the state which are supported by fascists
to uphold supremacy of the state. Though jurists like GIERKE and JELLINEK tried
to reconcile the sovereign power of the

1 FRIEDMANM : Legal Theory, (5'" Ed.) P.557


742

state with the rights of independent collective groups or associations by self-imposed

limitations on the state, but their efforts failed to achieve the desired results.

Expressing their views about the theories of legal personality, DIAS and HUGHES
observed that there is no single theory which takes into account all the aspects of the
problem of personality. The theories that have been propounded are philosophical,
political or analytical. But it must be borne in mind that functional basis of the law
cannot be ignored. It is for this reason that English law has not committed itself to
any particular theory. There is undoubtedly a great deal of theoretical sense in each
theory, but it is not easy to say how much of its affects a particular decision.

61 HOHFELD’S THEORY
HOHFELD has also given a theory about “corporatepersonality”. His theory is
closely related to the Bracket theory. He says that only human beings have rights and
duties and “corporate personality is a merely a procedural form, which is used to
work out in a convenient way for immediate purpose, a complex class of jural
relation.

HOHFELD1 draws a distinction between human beings and juristic persons. The
juristic persons, according to him, are the creation of arbitrary rules of procedure. It is
only of the human beigns who have rights, duties, powers and liabilities. Transactions
are also conducted by them, and it is they, who finally become
1 entitled and responsible. There are, however, arbitrary rules which restrict the extent
of their responsibility in a number of ways, that is, to the amount of the shares. The
“corporate person" is only a procedural form, which is used to work out in a
convenient way for immediate objects a mass of jural relations of a large number of
individuals, and to put off a detailed functioning out of these relations among the
individuals “inter se ” for a later and more appropriate occasion.

1 W.N.HOHFELD : Fundamental Legal Conceptions, Chapter 5,6 and 7


743

The theory so propounded by HOHFELD is clearly analytical in its nature. His view
that corporate personality is a procedural form may appear to be a misleading use to
the word “procedural"1.

72 KELSON’S THEORY
KELSON makes an analytical and formal approach to the concept of personality. He
says that for legal purposes there is no contrast between natural and juristic persons.
Personality is always a matter of law. In law personality means the totality of rights
and duties. Any entity which bears the totality is a person in the eye of law. To make
a distinction between natural and legal persons is meaningless. Law individualizes
certain parts of the legal order and establishes a unity in the rights and duties
pertaining to it. The device is for procedural facility and it is the rights of “human”
individuals that are real. KELSON’s theory does not throw any light on the nature of
the group personality nor it helps in solving practical problems. It is submitted that to
do this is not in the province of the “pure thing of law”, therefore, KELSON did not
bother himself with actual working or practical problems.

In other words, the most important theory worth noting is KELSON’s theory of
corporate personality2. KELSON who adopts a purely formal approach recognizes
no distinction between human beings as “natural persons” and
“juristic persons". Any such distinction, for him is irrelevant, since all legal
personality is artificial and derives its validity from superior norm3. “Personality”
according to him, “is only a technical personification of a complex of norms a focal
point of imputation which gives a unity to certain complexes of rights and duties".
The totality of rights and duties is person in law’ there is no entity distinct form them.
The concept of person, therefore, for him, is always a matter of law. The biological
character of human beings fall out of its domain.

'See, DAS, Op Cit. PP360-361


2 For KELSON’s Theory of Corporate Personality see his General Theory of Law and State, PP93-109 3
FRIEDMANN, W op.cit., P.233
744

H the club, social and pubic utility organizations have limbs in them and wills of their own. A
corporation, thus, according to this theory, is capable of rights and liable to duties.
This does not postulate that human beings alone are the subject of legal rights. Any
being or body with a will and life of its own is capable of having legal right and
bound by legal duties and liabilities. What thus, in essence, this theory emphasizes is
that any being or body should have a will of its own.

According to the organism theory of personality, corporations are social organisms,


whereas human beings are physical organisms. Corporations are distinct from those
who are their members. Their wills are also different from the wills of their members.
For it is not what the individual members decide at corporation memetin while
passing resolutions, it is rather what the corporation as a body deciedes. The wil of
each individual member of the corporation gets submerged into the will of the
corporation.

The organism theory has however, been subjected to a seven criticism from the view
point of a corporate sole. Because in a corporate sole, there is single individual as a
trustee, fiduciary or office-holder. How could organism theory then apply to it? A
reply advanced to this objection by the supporters of the organism theory is that in
case of a corporate sole, the single individual holding the office does not function
individually with his or her own will; it is rather the will of that individual modified
or determined by the will also of the advisers of that individual representing the
corporate sale.

UNINCORPORATED ASSOCIATIONS
Before concluding the discussion on incorporation, it would be desirable to contrast it with
unincorporated associations which, according to SALOND, are nothing but the sum total of
their members. These unincorporated bodies may vary in size and importance from small
social clubs to all powerful professional bodies holding considering power in industrial
activities. The rights and duties of a club are nothing more than the rights and
745

duties of its members who are contractually related “inter se” and its property is joint-
property of the members , though in fact it is often held by trustees on behalf of the members
to simplify transactions1. 2

Unincorporated bodies have no legal personality whatsoever. Therefore, it can neither sue
nor be sued in its own name. The liability of its members is unlimited. For instance, a
partnership firm is not a legal person therefore, none of its partners can contrast with the
partnership firm because a man cannot make a contract with himself.

The decision of house of lords in Taffvale Railway Company V. amalgamated society of


Railway servants", however seems to have blurred the distinction between incorporated
associations can sue and be sued in their own name and not the unincorporated ones. In the
instant case, the house of lords ruled that a trade union, though not incorporated and
registered under the trade union act could be sued in torts for the wrongful acts of its
officials. The union concerned had to pay $ 2300 by way of damages in addition to the legal
expenses incurred by the plaintiff in litigation. The decision created a great furor among the
labouring classes and they protested against it. Consequently, the trades dispute act, 1906
was passed which restored immunity of trade unions from liability for the torts of their
servants. The act was. however, amended in 1927 to curtail this immunity in the event of
strikes and lock-outs in industries.

Now. it is a well settled law that the trade unions by virtue of the trades dispute act, 1906,
cannot be sued in torts. They can. however, be sued in contract. The question of trade union’s
personality once again camp up for decision in the case of Bonsor V. Musician’s UnioiT. In
this case, a member sued his union for breach of contract on account of wrongful expulsion.
The personality of the union had to be considered by the court for the reason that if a union is
not a separate legal entity from its members, an action for breach of contract would fail as a
member cannot bring an action against himself. Tire

1 SALMOND . Jurisprudence (12th Ed.) P.326


2 (1901) AC 426
-’(1956) AC 104
746

house of lords held that a member sue for breach of contract, implying that it has some legal
existence independent of its members.

CONCLUSION
For the foregoing analysis it may be concluded that incorporation has great importance
because it attributes legal personality to non-living entities such as companies, institutions
and group of individuals which helps in determining their rights and duties. Clothed with
legal personality, these non-living entities can own, use and dispose of property in their own
names. Unincorporated institutions are denied this advantage because their existence is not
distinguished form the members.

Professor KELSON, through his analytical approach to legal personality, has concluded that
there is no divergence between natural persons and legal persons for the purposes of law. In
law “personality ” implies conferment of rights and duties therefore, for the convenient
attribution of rights and duties, the conception of juristic personality should be used in its
procedural form.

Expressing his views about the theories of legal personality, Dr.Sethna remarked that the
existence of corporation is neither wholly fictitious nor wholly real, instead, it is partly
fictitious and partly real. However, this assertion of Dr.Sethna hardly serves any useful
purpose m the determination of rights and duties of corporate entities.