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TMI Blog1963 (7) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... seek relief against the State of Andhra Pradesh in two of the petitions and the State of Bihar in the third petition by the issuance of a writ of certiorari or other appropriate writ or direction for quashing the orders of the Commercial Tax Officer of the State concerned assessing the Corporation to sales tax and also for quashing the notice of demand issued to them for payment of the sum assessed. When the learned Attorney-General opened the case for the petitioners in Writ Petition No. 202 of 1961, learned counsel appearing for the respondents asked for our permission to raise certain preliminary objections to the maintainability of the Writ Petitions Nos. 202 and 203 of 1961. Learned counsel for the respondents in Writ Petition No. 204 of 1961 Intimated to us that his clients have already raised certain preliminary objections to the maintainability of the writ petition and they also wish to take objections similar to those taken oh behalf of the respondents in Writ Petitions Nos. 202 and 203 of 1961. We asked learned counsel for the respondents in Writ Petitions Nos. 202 and 203 of 1961 that he should formulate his preliminary objections to the maintainability of the writ pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f its capital contributed by Government, and can it claim to enforce fundamental rights under Part III of the Constitution against the State as denned in article 12 thereof ? " The questions were raised by way of preliminary objections to the maintainability of the writ petitions under article 32 of the Constitution. As the whole case is not before us, it is necessary to state only the following facts in order to appreciate how the controversy arises. The State Trading Corporation of India Ltd. and K.B. Lal, the then Additional Secretary, Ministry of Commerce and Industries, Government of India, moved tins court under article 32 of the Constitution for quashing by a writ of certiorari or any other appropriate writ, direction or order, certain proceedings instituted by or under the authority of the respondents, (1) the Commercial Tax Officer, Visakhapatnam; (2) the State of Andhra Pradesh; and (3) the Deputy Commissioner of Commercial Taxes, Kakinada. Those proceedings related to assessments of sales tax under the provisions of the Andhra Pradesh Sales Tax Act Writ Petitions Nos. 202 and 203 of 1961 are between the parties aforesaid. An Writ Petition No. 204 of 1961, the parties a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w" or "equal protection of the laws" within the territory of India is available to any person (article 14). The protection against the enforcement of ex post facto laws or against double-jeopardy or against compulsion of self-incrimination is available to all persons (article 20), so is the protection of life and personal liberty under article 21 and protection against arrest and detention in certain cases, under article 22. Similarly, freedom of conscience and free profession, practice and propagation of religion is guaranteed to all persons. Under article 27, no person shall be compelled to pay any taxes for the promotion and maintenance of any particular religious denomination. All persons have been guaranteed the freedom to attend or not to attend religious instructions or religious worship in certain educational institutions (article 28) And, finally, no person shall be deprived of his property save by authority of law and no property shall be compulsorily acquired or requisitioned except in accordance with law, as contemplated by article 31. These, in general terms, without going into the details of the limitations and restrictions provided for by the Constitution, are the fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n groups, classes or associations of persons, with which we are not immediately concerned. But irrespective of whether a person is a citizen or a non-citizen or whether he is a natural person or a juristic person, the right to move the Supreme Court by appropriate proceedings for the enforcement of their respective rights has been guaranteed by article 32. It is clear on a consideration of the provisions of Part III of the Constitution that the makers of the Constitution deliberately and advisedly made a clear distinction between fundamental rights available to "any person" and those guaranteed to "all citizens". In other words, all citizens are persons but all persons are not citizens, under the Constitution. The question next arises : What is the legal significance of the term "citizen"?. It has not been defined by the Constitution. Part II of the Constitution deals with "Citizenship", at the commencement of the Constitution. Part II, in general terms, lays down that citizenship shall be by birth, by descent, by migration and by registration. Every person who has his domicile in the territory of India shall be a citizen of India, if he was born in the territory of India or eith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not". Hence, all the subsequent provisions of the Act relating to citizenship by birth (section 3), citizenship by descent (section 4), citizenship by registration (section 5), citizenship by naturalisation (section 6) and citizenship by incorporation of territory (section 7) have nothing to do with a juristic person. It is thus absolutely clear that neither the provisions of the Constitution, Part II, nor those of the Citizenship Act aforesaid, either confer the right of citizenship on, or recognise as citizen, any person other than a natural person. That appears to be the legal position, on an examination of the relevant provisions of the Constitution and the Citizenship Act. But it was contended that this court had expressed itself to the contrary in certain decisions, and some of the High Courts have also taken a contrary view, which we may now proceed to consider. In what is now known as the First Sholapur case, Chiranjit Lal Chowdhuri v. Union of India [1950] S.C.R. 869; [1951] 21 Comp. Cas. 33. , Mukherjea J., speaking for the majority of the court, made the following observations at page 898, which seem to countenance the contention raised on behalf of the petitioners tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Constitution. It will thus appear that the decision of this court proceeded on an examination of the provisions of article 31, which is not confined to citizens only and has reference also to the property of " any person ". But there are observations made in the course of the judgment which would support the view propounded on behalf of the respondents. At page 694, Mahajan J., while discussing the scope and effect of the provisions of the Constitution in Part III, with particular referenda to articles 19 and 31, made the following observations: "In considering article 31 it is significant to note that it deals with private property of persons residing in the Union of India, while article 19 only deals with citizens defined in article 5 of the Constitution. It is thus obvious that the scope of these two articles cannot be the same as they cover different fields. It cannot be seriously argued that so far as citizens are concerned, freedoms regarding enjoyment of property have been granted in two articles of the Constitution, while the protection to property qua all other persons has been dealt with in article 31 alone. If both articles covered the same ground, it was unnecessa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cisive one way or the other in the absence of a clear decision of this court. We have, therefore, to examine the legal position afresh on the footing that it is still an open question. On an examination of the relevant provisions of the Constitution and the Citizenship Act aforesaid, we have, as already indicated, reached the conclusion that they do not contemplate a corporation as a citizen. But Mr. Setalvad, appearing on behalf of the petitioners, contended that Part II of the Constitution relating to citizenship is not relevant for our purposes because it does not define "a citizen" nor does it deal with the totality of "citizenship". It was further submitted that the same is the position with reference to the provisions of the Citizenship Act. It is common ground, therefore, that the constitutional and the statutory provisions discussed above have no reference to juristic persons. But even so, it was contended, we have to review the legal position in the light of the pre-existing law, i.e., the common law, which, it was claimed, was preserved by article 372 of the Constitution. In this connection, reference was made to Halsbury's Laws of England, volume 6, third edition, pages ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h juristic persons at all, but it is more difficult to accept the argument that the expression " citizen " in Part II of the Constitution is not conterminous with the same expression in Part III of the Constitution. Part II of the Constitution, supplemented by the provisions of the Citizenship Act (LVII of I955) deals with " citizens " and it is not correct to say that citizenship in relation to juristic persons was deliberately left out of account so far as the Constitution and the Citizenship Act were concerned. On the other hand, the more reasonable view to take of the provisions of the Constitution is to say that whenever any particular right was to be enjoyed by a citizen of India, the Constitution takes care to use the expression " any citizen " or "all citizens", in clear contradistinction to those rights which were to be enjoyed by all, irrespective of whether they were citizens or aliens, or whether they were natural persons or juristic persons. On the analogy of the Constitution of the United States of America, the equality clause in article 14 was made available to " any person ". On the other hand, the protection against discrimination on denominational grounds (article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ff is quite apposite : "It is usual to speak of the nationality of legal persons, and thus to import something that we predicate of natural persons into an area in which it can be applied by analogy only. Most of the effects of being an ' alien or a 'citizen' of the State are inapplicable in the field of corporations ; duties of allegiance or military service, the franchise and other political rights do not exist." (page 308). This apart, it is necessary to refer to another aspect of the controversy. It was regard on behalf of the petitioners that the distinction made by the Constitution between " persons " and " citizens " is not the same thing as a distinction between natural and juristic persons and that as " persons" would include all citizens and non-citizens natural and artificial persons, the makers of the Constitution deliberately left artificial persons out of consideration because it may be that the pre-existing law was left untouched. It is very difficult to accept the contention that when the makers of the Constitution were at pain to lay down in exact terms the fundamental rights to be enjoyed by " citizens " and those available to all " persons ", they did not think ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Part III, which proclaims fundamental rights, was very accurately drafted, delimiting those rights like freedoms of speech and expression, the right to assemble peaceably, the right to practise any profession, etc., as belonging to "citizens" only and those more general rights like the sight to equality before the law, as belonging to " all persons." In view of what has been said above, it is not necessary to refer to the controversy as to whether there were any citizens of India before the advent of the Constitution. It seems to us, in view of what we have said already as to the distinction between citizenship and nationality, that corporations may have nationality in accordance with the country of their incorporation; but that does not necessarily confer citizenship on them. there is also no doubt in our mind that Part II of the Constitution when it deals with citizenship refers to natural persons only. This is further made absolutely clear by the Citizenship Act which deals with citizenship after the Constitution; came into force and confines it only to natural persons. We cannot accept the argument that there can be citizens of this country who are neither to be found within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anteed to citizens by article 19(1), sub-clauses (f) and (g). These sub-clauses read : 19 (1) All citizens shall have the right- (f) to acquire, hold and dispose of property ; (g) to practise any profession, or to carry on any occupation, trade or business. The State Trading Corporation claims to be a citizen for the application of these sub-clauses, which fact being disputed on the other side, has given rise to the two questions above set out. As the questions amply indicate, the share capital of the State Trading Corporation is entirely contributed by the Central Government. The shares are held by the President of India and two Secretaries to Government. The State of Andhra Pradesh, therefore, denies that the State Trading Corporation being an artificial person is a citizen and, consequently, contends that article 19 is inapplicable because the word " citizen " in the article refers to natural persons. Additionally, it contends that being a department of Government, the State Trading Corporation cannot claim protection of article 19 against an action of the State. Mr. Setalvad, in formulating the grounds on which he rests the claim of the State Trading Corporation to citizen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re several States in our Republic and there is a great danger of one Government stifling the trading activities of another Government either by law or executive action against which article 19 is the only effective safeguard. He submits that it could not have been intended that while every individual citizen should be protected, a group of citizens, should by mere incorporation, lose the benefits of the guarantee in article 19. We are dealing here with an incorporated company. The nature of the personality of an incorporated company, which arises from a fiction of law, must be clearly understood before we proceed to determine whether the word " citizen " used in the Constitution generally or in article 19 specially, covers an incorporated company. Unlike an unincorporated company, which has no separate existence and which the law does not distinguish from its members, an incorporated company has a separate existence and the law recognises it as a legal person separate and distinct from its members. This new legal personality emerges from the moment of incorporation and from that date the persons subscribing to the memorandum of association and other persons joining as members are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tween " nationality" and " citizenship" and the two words are synonymous and relies upon the following passage from Weiss on Nationality and Statelessness in International Law (1956), pages 4, 6: " One of the terms frequently used synonymously with nationality is citizenship. Historically, this is correct for States with the Roman conception of nationality, but not for States with the feudal conception of nationality, where citizenship is used to denote not political status but membership of a local community. It has, however, become usual to employ the term ' citizen' instead of ' subject' in republican States -including common law countries such as the United States : he who before was a 'subject of the King ' is now a ' citizen of the States'- and in that sense and in those States the terms ' nationality ' and ' citizenship' must be regarded as synonymous." It is, therefore, contended somewhat syllogistically that all incorporated corporations have the nationality of the State under the laws of which they are incorporated, that nationality is synonymous with citizenship and, therefore, incorporated companies are citizens. From this it is but a mere step, which is also taken, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he word " person " includes a company, etc., because that word has not been used, in article 19. The claim of corporations aggregate, like the petition to the benefits which article 19 gives, must depend on whether the word " citizen " which is actually used can bear a similar enlarged meaning. Mr. Setalvad is right in contending that the use of the word " person " with an enlarged meaning in some places and of the word " citizen " in other places does not by itself prove that artificial person are outside the meaning of the word " citizen ". The contrast may not be between natural and artificial persons, so much as between citizens and non-citizens, and it is possible that where the benefit is intended to go to non-citizens, a word of wide meaning is used and where the benefit is meant for citizens, only the word " citizen " is used. It is true that the word " citizen " cannot include an enemy or an alien while the more general word " person " may, but that does not answer the question whether the word " citizen " can include a company or association on body of individuals, to borrow the words of the definition. The answer to that question must depend, as already pointed out, on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on whom they may be conferred by law. Of course the Constitution also confers some rights on aliens and assists and protects them but the guarantee in the preamble is to the citizens alone, that is, individuals who enjoy full civic rights in the body politic. Then follows a special chapter entitled "Citizenship". That part contains seven articles. Article 5 spoke at the commencement of the Constitution. That article uses the word "person" but the context shows that only natural persons were meant. Citizenship was conferred on every person who had his domicile in the territory of India, and (a)who was born in the territory of India ; or (b)either of whose parents was born in the territory of India; or (c)who has been ordinarily resident in the territory of India for not less than five years immediately preceding such commencement. The reference to the birth of the person or of his parents clearly shows that only natural persons were meant because corporations though born in a metaphorical sense do not have parents. By the same token article 6 also refers to natural persons. Articles 7, 8, 9 and to so clearly speak of a natural person as to need no elaboration. That leaves arti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al persons. In article 20(2) entrance to educational institutions is guaranteed to citizens and the entrant can only be a natural person and not a corporation. The above analysis shows that in 34 places, the words " citizen " and " citizenship" refer to natural and not artificial persons. The question is whether in the thirty-fifth place the word is meant to include corporations aggregate. For this purpose we must ascertain if there is anything special which points to a different use of the word. Sub-clauses (a) to (e) of article 19 contemplate natural persons. The claim is that the word "citizen" must bear a different meaning in respect of clauses (f) and (g) because corporations acquire, hold and dispose of property and carry on trade or business. It is argued that if several citizens carry on business together as an incorporated company they cannot lose the guarantee which is given to citizens, and we are invited to give a meaning to the word which is wide enough to include companies. It has been shown above that the way in which the words "citizen" and "citizenship" have been used in the Constitution goes to show that such was not the intention at least in 34 other places. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is and an enfranchisement of persons' of pure or partial Athenian descent. Resident foreigners had inter married and though there was a partial recognition of foreigner permanently settled (domiciled) in Athens even from the days of Peisistratus there was no recognition of the offsprings of mixed marriages as citizens. These were added to the list of citizens because citizenship no longer depended on membership of the phratries. This state of affairs continued till Pericles abrogated the enlightened measure. He limited citizenship to those of Athenian descent on both sides. Had he come earlier some famous men of Athens like Themistocles would have been barred from not only office but other civic rights. It is not necessary to follow the history of Athens further. It is reasonable to believe that all other States in Greece except Sparta followed this kind of citizenship. The Spartans had their own system of rule with two kings and an elected council (gerusia) elected by the citizens which was both advisory and judicial. There was also an assembly of all citizens over twenty called the appella which elected the magistrates and met monthly. The right of vote in the election of the ger ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t with citizenship, namely, membership of body politic with full civic rights. In the middle ages this membership of the State began to carry a dual status, one status was political and the other civil. The double status came in Central Europe in the wake of Roman Law and was partly due to the growth of feudal vassalage; by which what might have grown into nations composed of " clans " became divided into feudal chieftainships. The feudal lord did not concern himself with descent as such so long as his follower held land or rendered service according to his laws. Such laws did not apply to foreigners but if the foreigner held lands or chattels or rendered service he was equally bound. But the main reason was the impact of international relations. An individual began to be viewed in two capacities. Firstly, he was regarded as the subject of a certain State (a political status) and, secondly, as one entitled to certain rights and privileges in his own State (a civil status). Both arose from the bond to a particular State or territory but it would be wrong to say that the word " nationality " describes the civil status. The word " nationality " whether denoting an ethnic group or poli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... majority or minority, his marriage, succession, testacy or intestacy, must depend." Thus, in the middle ages, it was begun to be realised that the legal personality of persons was composed of a political status and a civil status ; It was possible for a person to have political status but not civil status, that is to say, he could be a national but not a citizen but it was difficult to imagine a citizen without political status. This political status was determined according to two different theories. One was the theory of descent (jus sangunic) and the other a theory of domicile (jus soli). The European countries applied the former and the common law countries the latter to determine the status. We have already seen that according to Roman Law the son of a Roman citizen was also a Roman citizen and it did not matter where he was born and this was the theory which was recognised in Central Europe. In the common law countries (and 1 include the United States of America) birth in the territory ox the King (jus soli) determined political as well as civil status. Descent from a citizen or subject outside the territory was recognised statutorily. Statutes from the time of Edward III re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aturalization Law (1889) gave recognition only to childern born in France of a father also born in France and to children born abroad of a French father. The former German law adhered only to the principle of descent but later recognised marriage, naturalization, etc. In Italy long residence of the lather and his domicile in Italy is considered sufficient. Today nationality has assumed enormous importance and the principles of dual nationality and statelessness cut across some of the former theories and Cogordan's statement "que tout homme doit posseder une nationalite" Every person must possess a nationality) is no longer true because of many stateless persons. It is not my intention to speak exhaustively about citizenship and nationality. I have, I hope, sufficiently established my point that citizenship and nationality from the earnest times to date have been viewed as the attributes of natural persons. We are not concerned, however, with other peoples or nations or States. We are concerned only with our laws on the subject. When the French Naturalization Law of 1889 differed from the English Law Sir James Ferguson stated on the advice of the law officers in Parliament that if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zens of certain countries named in the Act. India was one of such countries. This new citizenship was Commonwealth citizenship. It also contained transitional provisions and section 12(4) provided : "12. (4) A person who was a British subject immediately before the date of the commencement of this Act and does not become a citizen of the United Kingdom and colonies by virtue of any of the foregoing provisions of this section shall on that date become such a citizen unless- (a) he is then a citizen of any country mentioned in sub-section (3) of section 1 of this Act under a citizenship law having effect in that country or a citizen of Eire; or (b) he is then potentially a citizen of any country mentioned in sub-section (3) of section 1 of this Act..." One of the Commonwealth countries (Canada) had already such laws, but others followed immediately afterwards. India lagged behind and the citizenship laws came in the Constitution and in the Act of 1935. During the period between 1948 and 1950 Indian citizens were only potentially so. They however enjoyed Commonwealth citizenship which term was synonymous with British subject in effect but was more appropriate to certain countries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is book " British Nationality Law ", at page 9; in the form of a pedigree which may be seen. It is enough to read the various headings in the pedigree to realize' that there is no room for artificial persons there. From the point of view of Mr. Setalvad's argument this raises an intriguing situation. If corporations possessed citizenship immediately before our Constitution they would be citizens under the English Act of 1948, that is to say, British subjects without citizenship or commonwealth citizens and only potential citizens oGBP India. The Indian Constitution dealt with natural persons and not artificial persons in its provisions dealing with citizenship and the status of corporations was not disturbed by those provisions. When, the Citizenship Act was enacted in 1955, it began to speak from January 26, 1950, and it might have affected corporations but for the fact that it excluded them. Thus if there was any citizenship which the corporations enjoyed, it remained where it was. The corporations, if at all, would thus be Commonwealth citizens, not Indian citizen because no law has made them Indian citizens. But I do not accept the basic argument that corporations enjoyed citiz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ality of corporations. Clive Parry does mot recognise this nationality and calls it quasi-nationality. I shall now (explain in what sense the word "nationality" is used in this connection. There have been many theories about the nationality of corporations which were again reconsidered during the First World War. According to Hilton Young (22 Harward Law Review, page 2) there were four main theories at first. The first theory viewed a corporation as the national of the State in which its members or the majority of them or owning the greater part of the capital, were nationals. This theory considered the word " corporation " as " a collective name for the corporators", the corporate veil being considered to be of such gossamer texture as to hide almost nothing. This theory of which the chief proponents were Sommieres and Morawets was criticised on all hands and particularly by Maitland and was abandoned as it made nationality a matter of accident and KaSTe to change day in and day out. The second theory regarded nationality as determined by the nationality of the State under which it was created. The United States of America has adhered to it but England may be said to have adopted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idence and even have more than one residence under certain laws. On what then did nationality depend ? According to English common law a corporation incorporated under the English law had British nationality and it did not matter if its members held a different nationality. A corporation which was not of British nationality was an alien corporation. According to the laws of many European countries, particularly France, nationality depended upon the siege social by which is meant the seat or centre of control. Both, these theories suffered during the First World War. As regards the English common law the leading case was Janson v. Driefontein [1902] AC. 484, from which I have already quoted certain extracts. In that case it was decided that a company possessed the nationality of the country under the laws of which it was incorporated and that the nationality of the shareholders was not determinative of the question. Once this nationality was determined then the corporation received the treatment as a national as an alien or as an enemy as the case was in peace or in war. This view was revised in the First World War. In Daimler Co. Ltd. v. Continental Tyre and Rubber Co. (Great Brita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neutral country through agents properly authorized and resident here or in the neutral country, is prima facie to be regarded as a friend, but may, through its agents or persons in de facto control of its affairs, assume an enemy character. (6) A company registered in the United Kingdom but carrying on business in an enemy country is to be regarded as an enemy." The House of Lords case is regarded as an instance of judicial legislation on the subject of "enemy character" and it undoubtedly was so. It is not as if this theory has been universally accepted. It was criticised by Sir Arnold McNair in 1923/24 British Year Book of International Law, page 44, and by Mr. Ralph A. Norem in American Journal of International Law, volume 24, page 310. We have seen that in the United States a corporation is a domestic corporation of the State which incorporates it or under the laws of which it is incorporated. Some of the States have even laws to this effect. While other countries were revising their attitude in Europe, the United States adhered to this theory and the Supreme Court observed that the Congress had definitely adopted the policy of disregarding stock ownership as a test of enemy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t en Belgique est soumise a la lot beige, Men que I'acte constitulif ait etc passe en pays etranger" (Every society of which the principal establishment is in Belgium is under the laws of Belgium, notwithstanding that the incorporation took place in a foreign country). In the Mixed Arbitral Tribunals which followed the First World War there were some cases which were decided on the theory of control but many others were decided on the theory of domicile depending upon the composition of the Tribunal. There are indeed many other tests which I have not mentioned such as the test of beneficial interest, or of substantial ownership or of responsibility which it is not necessary to describe here. It would not be wrong to say that the control theory is also losing ground and there is a great support for the theory that the juridical life of the corporation must ultimately fix its nationality. It is also to be noticed that Herr Marburg and M. Mazeaud, two noted thinkers, have pointed out that all this law is not so much to fix the nationality of a corporation but its enemy character. Many writers (including Dicey, Cheshire, Foote and Farnsworth) have also pointed out that the conception ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s." Oppenheim also points out (International Law, Lauterpacht Edition) page 642, note 3 : " The nationality of corporations is mainly a matter of Private International Law, and considerations of public policy have a decisive influence upon the attitude of every State with regard to it." Citizenship depends upon municipal law and the same learned author says (ibid, page 643): " It is not for international law but for municipal law to determine, who is, and who is not, to be considered a subject." Hyde in his International Law volume (2nd edition) page 1066 also says : " Citizenship as distinct from nationality, is a creature solely of domestic law. It refers to rights which a State sees fit to confer upon certain individuals who are also its nationals." But perhaps the most practical argument against the recognition of corporations as citizens comes from M. Niboyet (who, as Mr. Vaughan Williams points out) observed in his Manual of Private International Law that in computing the total number of citizens of a country we do not add to the number of physical persons the number of corporations of that nationality. Indeed Lord Atkinson (and all who formed the majority except Lord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en so it is not a " national ", that is to say, an individual who is a part of our nation./ When we count Indian nationals for purposes of census we do not count the corporations as nationals. The argument is not one whit advanced by dropping the word "citizen" and using the word "national". No doubt the existence of corporations as entities is recognised but the entity obtains only such rights as the law confers on it. This entity cannot claim other rights as a matter of course or by standing side by side with citizens. This entity cannot aspire to hold a public office or to membership of Parliament or the legislatures or to franchise or to entry into educational institutions. This is because it is not a citizen in the true sense of the term and because its " nationality " though of consequence in public or private international law, in treaties, in conventions and in protocols, is of no consequence in municipal law except to the extent that the municipal law says so. This is not to say that corporations have not been given any protection under our Constitution. Unlike the Constitution of the United States of America our Constitution does not overlook corporations. The General Cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udge-made United States Constitution ". Perhaps this was forced upon the Supreme Court by the diversity of citizenship existing in the United States but it may be noted that the word " citizen " has not been held to include corporations in other articles. Since this precedent was strongly relied upon I shall briefly refer to it. The Constitution of the United States of America overlooked corporations and this has made the language intractable in places. The Supreme Court has supplied this want by " judicial legislation ". How this was done may be explained. I have already referred to the dictum of Chief Justice Taney and to the attitude of the Congress and the Supreme Court on the subject of nationality of corporations. There is a fixed view that nationality follows incorporation and is unalterable. This geographical theory coupled with dual citizenship of the State and the United States has led to some difficulties. Corporations were always regarded as the citizens of the State of incorporation but not of the United States. The citizenship of the State has been accepted for purposes of exercise of the judicial power of the United States. The following provisions of the Constituti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poration was incorporated and the plaintiff was a citizen of another State, and it was held that the court would look behind the corporate veil to the stockholders and give the federal courts jurisdiction because of the diversity of citizenship thus found. In a later case some of the stockholders were not citizens of the State where the corporation was incorporated but of the state in which the opposing litigant was a citizen. To avoid robbing the federal courts of their jurisdiction, the court held that for purposes of diversity of citizenship all of the stockholders of a corporation would be conclusively presumed to be citizens of the chartering State. This rule, however, had to be modified later so as to make an exception in the case of a stockholder plaintiff. Now it is believed that the courts have come to the position that the corporation is itself a citizen of the State of its incorporation for the purposes of diversity of citizenship." The following extract from St. Louis and San Francisco Railway Co. v. James [1896] 161 US. 545, 562 563 sums up the position so far as the Supreme Court is concerned : " There is an indisputable legal presumption that a State corporation, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tween Great Britain and the United States of 1783 and 1794 and the treaty of Guadalupe Hidalgo between the United States and Mexico, Other examples are found in Hyde and international documents. Similarly, treaties of commerce are construed to include corporations within expressions denoting natural persons. But even in international sphere corporations are not on a par with natural persons or nationals. As Hyde points out : "..........at least in a technical sense, a corporation is not, for many purposes, to be deemed a national of the State to which its life is due, and lacks many privileges that enure to a natural person......." The question is whether the precedent of the United States Supreme Court should be followed. Apart from the fact that this involves a conscious effort at judicial legislation, I am of opinion that such a spirit of libre recherche scientifique is hardly justified in India in view of the following considerations : (a)we have a single citizenship and there is no citizenship of the States to create diversity; (b)we have only one set of courts and not two with separate jurisdictions; (c)our Constitution has not completely overlooked corporations and some ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 45), at page 56) as follows : " It occurs frequently that a State creates, e.g., for a commercial purpose, a separate legal entity, in law distinct from the State, but in fact, if the veil of personality is pierced, identical with it. Examples are. . . . . . . . notably many companies under State control, the State possessing all or practically all the shares in that company." If the corporation is to be regarded as a separate entity from its members and not merely as an association of individuals, it is not permissible to tear the veil aside. Corporations in which the State owns the stock do not, in the United States, benefit from the immunity of the State. It is because of these difficulties that the Supreme Court of the United States settled the question of Federal jurisdiction in the face of diversity of citizenship by making an irrebuttable presumption of law that the stockholders of a corporation incorporated in a State are citizens of that State and the corporation is thus also a citizen of that State. There is a fiction upon a fiction. I do not think that it is permissible under our laws to raise such an irrebuttable presumption of Indian citizenship in respect of every m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udgment it is not possible to pierce the veil of incorporation in our country to determine the citizenship of the members and then to give the corporation the benefit of article 19. If we did pierce the veil and saw that the corporation was identical with Government there would be difficulty in giving relief unless we held that the State can be its own citizen. Nor is it possible to raise an irrebuttable presumption about the citizenship of the members. I have given detailed reasons already in answer to the first question posed for our decision. If we go by the corporate entity then we must hold that article 19 applies to natural persons. On that subject I have said a great deal but what I have said sums up to the following passage from Ducat v. Chicago [1868] 48 111. 172, quoted by Farnsworth {op. cit.) at page 310 and approved by the United States Supreme Court: " The term citizen can be correctly understood in no other sense than that in which it was understood in common acceptation when the Constitution was adopted, and as it is universally explained by writers on government, without exception. A citizen is of the genus homo, inhabiting, and having certain rights in some State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corporation in most cases will share the benefit. We need not be apprehensive that corporations are at the mercy of State Governments. For these reasons my answers to the questions posed are against the State Trading Corporation. Das Gupta, J.-I think the State Trading Corporation of India is entitled to fundamental rights under article 19(1)(f) and (g) of the Constitution as a citizen of India. The petitioner bases its claim to these fundamental rights on the fact that all its members are citizens. That this is so is not disputed by the respondent. But the respondent resists the claim on the legal basis that the Corporation is not a natural person but only an artificial person forming a distinct entity from the natural persons who are its members. According to the respondent no artificial person is a citizen of India either under the Constitution or under the Citizenship Act which was passed in 1955 in accordance with the Constitution. The ; respondent also contends that it would be a mistake to confuse nationality with citizenship and while it is correct that the present petitioner having been incorporated in India under the Indian Companies Act is a national of India it woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to citizenship. I agree with the contention raised on behalf of the respondent that it is not reasonably possible to read into these articles of the Constitution any intention that an artificial person might also be a citizen. We also find that the Citizenship Act, 1955, which was enacted by Parliament in exercise of the powers preserved to it by article 11 of the Constitution, expressly excludes from its benefit " any company or association or body of individuals, whether incorporated or not." A corporation is not a citizen under the Citizenship Act; 1955, nor is a corporation as such a citizen under the constitutional provisions on the question of citizenship. From this it seems an easy step to say: articles 5 to 11 do not make the corporation a citizen; the .Citizenship Act does not make the corporation a citizen; there is no other Indian law that makes the corporation a citizen; and so the , problem is solved: corporation is not a citizen for the purpose of fundamental rights. That, according to the respondent, should end the search for light I am unable to agree. After all it is a Constitution that we are interpreting and it has again and again been laid down that those on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir fundamental right under article 19 when they are jointly engaged in the same business. For, in all these cases the claim of each to the fundamental right cannot be in law defeated by the fact that several other citizens have joined him in making a similar claim for themselves. As soon as, however, two or more persons, who are in their own right citizens of India, form themselves into a private company, or seven or more persons, each of whom is a citizen in his own right form a public incorporated company, they are faced with the proposition that the company not being a citizen, it is excluded from the right which they could have claimed. It is well known that for many years before 1950 when the Constitution came into force much of the trade and industry of this country was being carried on by corporations. Most of these corporations were and are composed of persons who are clearly citizens of India under the provisions of the Constitution. The obvious effect of the strictly legalistic approach that a corporation being an artificial person cannot be a citizen for the purpose of any of the fundamental rights even when all its members are citizens of India would thus be to deny ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... looking at the composition of the corporation, in deciding whether the corporation is entitled to fundamental rights ? In my judgment the answer to the question must be in the affirmative. Indeed I would go further and say that to take another view is an insult to the intelligence and understanding of those who drafted the Constitution. I am thus clearly of opinion that the Constitution-makers, when they used the word " citizen " in article 19, intended that at least a corporation of which all the members were citizens of India would get the benefit of the fundamental rights enshrined in that article. The legal position that the corporation is a distinct entity from its members does not appear to me to create any real difficulty in the way of giving effect to this intention. The proposition, viz., that the corporation is a distinct legal entity from its members, is too well established to require discussion. I see no reason, however, why the charm of this legal learning should so hold us captives as to blind us to the great rule of interpretation of giving effect to the intention of those who made the law unless the words make that impossible. I can and nothing in the words of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ranted to corporations may be mentioned : Express Newspapers {Private) Ltd. v. Union of India [1959] SCR. 12 Bengal Immunity Co. v. State of Bihar [1955] 2 SCR. 603 ; 6 STC. 446 Bombay Dyeing and Manufacturing Co. Ltd. v. State of Bombay [1958] SCR. 1122. In my judgment, therefore, the first question referred to this Special Bench should be answered in the affirmative. On the other question that has been referred, I agree with the conclusion of my learned brother. Shah J, that the State Trading Corporation is not in substance a department and organ of the Government of India. As I entirely agree with the reasoning on which he has based this conclusion, I do not propose to discuss the matter further. For the reasons mentioned above I would answer the two questions referred to this Special Bench thus: (1)The State Trading Corporation, so long as it consists wholly of citizens of India, can ask for enforcement of the fundamental rights guaranteed to citizens under article 19(1)(f) and (g) of the Constitution. (2)The State Trading Corporation is not a department or organ of the Government of India and can claim to enforce the fundamental rights under Part III of the Constitution a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at this stage concerned to deal with any right which the second petitioner, K. B. Lall, may have, to maintain the petition, for the questions deal only with the right of the company to set up the protection of article 19(1)(f) and (g ) of the Constitution. Article 19 guarantees certain basic freedoms in favour of citizens; it provides that : " (1) All citizens shall have the right- (a) to freedom of speech and expression; (b) to assemble peaceably and without arms; (c) to form associations or unions ; (d) to move freely throughout the territory of India; (e) to reside and settle in any part of the territory of India; (f) to acquire, hold and dispose of property; and (g) to practise any profession, or to carry on any occupation, trade or business." The fundamental freedoms (exercise whereof is by clauses (2 ) to (6) subject to certain restrictions) being expressly guaranteed to citizens, the question which presents itself at the threshold is whether the company can claim to be a citizen and on that basis claim protection of the freedoms to acquire, hold and dispose of property, and to carry on any trade, occupation or business. The plea that a company incorporated under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... persons. By articles 15 (1) and (2), 16(1) and (2), 19(1) and 29(2) citizens are the recipients of fundamental rights guaranteed thereby. Certain fundamental rights are declared in favour of groups such as denominations, sections, minorities or institutions, e.g., articles 26, 29(1), 30(1) and 30(2): these would in the very nature of things be groups of individuals. By certain other articles prohibitions are declared, e.g., articles 17, 23(1), 24 and 28(1), for removal of evils, such as untouchability, traffic in human beings, forced labour, employment of children in hazardous employment and against imparting of religious instructions in educational institutions. The expression " citizen " used in Chapter III has undoubtedly a narrower connotation than " person". By article 367 of the Constitution read with section 3(42) of the General Clauses Act a " person " includes any company or association or body of individuals whether incorporated or not. By declaring rights in favour of persons, it may at first sight appear that it was intended to confer those rights upon persons artificial as well as natural. But this presumption is not in fact uniformly true in articles 25(1), 28(3) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ificial persons may not be protected against executive or legislative action. Was it intended by the Constituent Assembly when declaring the freedoms under article 19 to make a deliberate departure, and in respect of rights declared under article 19 to restrict the enforcement thereof against action of the law-makers or the executive only in favour of natural persons and not in favour of artificial persons ? It is in this background we may turn to the question whether the declaration of citizenship under articles 5, 6 and 8 of the Constitution, and the Citizenship Act, 1955, was to be exhaustive, or merely to deal with the rights of natural persons. It may be necessary first to have a true concept of citizenship and to ascertain whether the common law of England, which formed the foundation of the Indian jurisprudence, attributed to artificial persons prior to the Constitution the status of citizens or " subjects " as it was usual to call them in a monarchical form of Government. Waite C.J. in Virginia L. Minor v. Reese Happersett 21 Wall, 162 ; 88 US. 627 observed : " There cannot be a nation without a people. The very idea of a political community, such as a nation is implies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... primarily of importance for international law, while the quality of a ' British subject' or ' Commonwealth citizen' is probably relevant only as a matter of the municipal law of the countries concerned." Citizenship and nationality emphasize different facets of a single concept of association with or membership of a political community. The form and content of the association have varied in their historical evolution with the complexion of the governmental machinery, but in essence they denote the relation which a person bears to the sovereign authority. Citizenship is the relation that a person bears to the State in its national or/and municipal aspect; nationality appertains to the domain of international law, and represents the political status of a person, by virtue of which he owes allegiance to a particular sovereign authority. "Citizen" and "national" are frequently used as interchangeable terms, but the two terms are not synonymous. Citizenship in most societies is the highest political status in the State ; it is employed to denote persons endowed with full political and civil rights. There are in some States nationals who, though owing allegiance, lack citizenship-such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Loud. Lindley at page 505, proceed on the view that the company concerned in that case was a national of the Republic of South Africa and the question as to the validity of the contract of insurance by British underwriters against capture during transit to the United Kingdom by the foreign State before declaration of war was valid. Similarly, Attorney-General v. Jewish Colonization Association [1901] 1 KB. 123 ; 1 EDC. 303 was decided on the footing that a public corporation is capable of nationality, and in Generali v. Selim Cotran [1932] AC. 268 it was accepted that a public corporation has the attributes of nationality. In Gasque v. Commissioners of Inland Revenue [1940] 2 KB. 80, Macnaghten J. observed : " But by analogy with a natural person the attributes of residence, domicil and nationality can be given, and are, I think, given by the law of England to a body corporate. It is not disputed that a company formed under the Companies Acts has British nationality, though, unlike a natural person, it cannot change its nationality." In Kuenigl v. Donnersmarck [1955] 1 QB 515 ; [1956] 26 Comp Cas 1 it was held that a company incorporated under the laws of England and registere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst discrimination under article 14, against deprivation of property under article 31(1), against compulsory acquisition or requisition of property for purposes not public and without payment of compensation under article 31(2), against imposition of taxes the proceeds of which are specifically appropriated for payment of expenses for maintenance of a particular religion or religious denomination under article 27, against being subjected to taxation without authority of law under article 265, and to the freedom of trade, commerce and intercourse, subject only to the provisions of Part XIII still did not guarantee the right to carry on business or trade, to acquire, hold and dispose of property and the right to form associations, or the right to take up residence of its choice within the territory ? Unless the language or the scheme of the Constitution is so compulsive, it would be difficult to reach that conclusion, on any predilection as to a limited connotation of the expression citizen occurring in article 19(1). It may be remembered that constitutional practice is not inconsistent with the recognition of artificial persons as citizens. The Constitution of the United States of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a citizen is a national who under the law of the State is entitled to enforce full civil and political rights, British Indian subjects prior to the Constitution had within the territory of British India that quality of rights which would go to make them citizens. Similarly, the subjects of the Indian States had the rights of citizenship within their own States, and those rights were not affected by the standstill and merger agreements of their rulers with the Dominion of India. The thesis being merely to establish the existence of rights which were analogous to rights of citizenship prior to the enactment of the Constitution, it is Unnecessary to enter upon a detailed examination of the constitutional developments which took place between August, 1947, and November 26, 1949, which culminated in the setting up of the Republic of India by the erstwhile British Indian subjects and the subjects of the Indian States. It may be sufficient to observe that before the Indian Independence Act, 1947, the legislature was invested with the power to confer upon foreigners rights as British Indians by naturalization, and had also sought to invest the Government of the day with power to deny entry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubject, was excluded from the rules governing local citizenship. The Act contemplated the passing of Citizenship Acts by various Dominions and till the enactment of such Acts accorded to the citizens, potential or actual, of any Dominion (which expression included India) the status of Commonwealth citizen. In relation to this citizenship, allegiance to the British Crown was not a condition. This brief review of the legislative history is sufficient to destroy the assumption that the status of citizenship was not recognized under the common law operative in India prior to January 26, 1950, for, in my judgment, British subjects of Indian origin held for all purposes the status in British India of citizens. That status arose by birth and could also be conferred by naturalization. If a natural person could be a citizen prior to November 26, 1949 (the day on which by article 394, articles 5 to 9 came into force), there is no reason to suppose that artificial persons who were nationals of the British Empire and who could claim the protection abroad could not claim rights of citizenship within the territory of India, when they were in fact exercising all the rights and privileges which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion which declares that the citizens of each State shall be entitled to all the privileges and immunities of citizens of the several States." The learned judge however made it clear that he was restricting the observations only to the claim of citizenship made by a corporation in a State other than the State which incorporated it. On page 360 he observed : ". . . . a grant of corporate existence is a grant of special privileges to the corporators, enabling them to act for certain designated purposes as a single individual, and exempting them (unless otherwise specially provided) from individual liability. The corporation being the mere creation of local law, can have no legal existence beyond the limits of the sovereignty where created. . . having no absolute right of recognition in other States, but depending for such recognition and the enforcement of its contracts upon their assent, it follows, as a matter of course that such assent may be granted upon such terms and conditions as those States may think proper to impose." It may be noticed that corporations have been regarded as persons within the meaning of the 14th Amendment and, therefore, they cannot be deprived of their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he petition holding that the fundamental rights of the petitioner under articles 31(1) and (2), 19(1) (f) and 14 were not infringed. The observations of Mukherjea J. cannot be regarded as an expression of a considered opinion of the court holding that all fundamental rights are enforceable by individual citizens as well as corporate bodies. The question was mooted in two later cases: Bengal Immunity Company Ltd. v. State of Bihar [1955] 2 SCR. 603 ; 6 STC. 446 and State of Bombay v. R. M. D. Chamarbaugwala [1957] SCR. 874. It may be pointed out that the High Court of Bombay in State of Bombay v. R.M. D. Chamarbaugwala ILR [1955] Bom. 680, held that an application at the instance of a corporation alleging infringement of a fundamental right to carry on business was maintainable. Again in State of West Bengal v. Union of India Suit No. 1 of 1961 decided on Dec. 21, 1962 Sinha C.J., in delivering the judgment of the majority, observed : " The fundamental rights are primarily for the protection of rights of individuals and corporations enforceable against executive and legislative action of a governmental agency . . ." It may be pointed out that there have been scores of cases in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mp. Cas 33 and held that a corporation was entitled to raise by a petition under article 226 a plea of a breach of a fundamental right under article 19. Authorities in the Calcutta High Court appear to be somewhat conflicting. In Everett Orient Line Incorporated v. Jasjit Singh AIR. 1959 Cal. 237, it was held that the rights conferred by article 19 being granted only to citizens, non-citizens could not enforce such rights and the company incorporated in India not being a citizen could not challenge the validity of sections 52-A and 167 (12A) of the Sea Customs Act on the ground that those provisions infringed article 19 (1)(g) of the Constitution. The same view was affirmed in Cherry Hosiery Mills Ltd. v. S. K. Ghose AIR 1959 Cal. 397. It was held in that case that a company was not entitled to enforce the fundamental rights guaranteed under article 19, which are available only to citizens. But it was held in T. D. Kumar and Brothers (Private) Ltd. v. Iron and Steel Controller AIR. 1961 Cal. 258 ; [1961] 31 Comp Cas 714, that a corporation ordinarily resident in India for a period exceeding five years prior to the commencement of the Constitution being a person was a citizen within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its shareholders are Indians, its directors are Indians, its capital is Indian-that such a corporation should not have the right under clause (f) to acquire, hold and dispose of property, or under clause (g) to practise any occupation trade or business ?" In Assam Co., Ltd. v. State of Assam AIR. 1953 Assam 177, the High Court of Assam proceeded to consider the claim for protection of fundamental rights under article 19(1)(f) on the assumption that a corporation could seek to enforce those rights. In Reserve Bank of India v. Palai Central Bank Ltd. ILR. [1961] 1 Ker. 166 ; 31 Comp Cas 154, Raman Nair J. observed : "Many of the rights in article 19(1) and, in particular, those in clauses (f) and (g) thereof, are capable of enjoyment by companies. Our Constitution-makers could not have been unaware of the existence of legal persons. By article 19(1)(c) they gave all citizens the right to form associations and unions, and it could not have been their intention that the corporate bodies so formed by citizens should be denied the rights guaranteed to the individual citizens, in particular that the agencies through which a substantial portion of their business is conducted by the citi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rights of citizenship. By reason of their constitution, artificial persons are incapable of rendering service -military or civil-but that may not by itself be a ground for holding that they cannot be citizens. If the corporations or artificial persons can be regarded as nationals of the State where they are incorporated and if they are permitted to exercise the various functions for which they are constituted and no prohibition is imposed upon them in the enforcement of the rights similar to those which are enforceable by natural persons who are citizens, notwithstanding the special character of the corporations and their incapacity to perform duties or to exercise such other rights which natural persons may possess, it will not be a ground for depriving them of the rights of citizenship for enforcing the fundamental rights under article 19. Two views are presented before us as to the meaning of the expression "citizen" used in article 19(1). On the one hand it is said that a citizen is a person natural or artificial who is entitled to all the rights which are capable of being enjoyed by the citizens under municipal law as distinguished from persons who are aliens or persons w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se [1951] 21 Comp Cas 33 (SC), which have already been set out. I am, however, unable to agree with the principle enunciated by the learned Chief Justice. A corporation is distinct from the shareholders who constitute it. The theory of corporate existence independent of shareholders, and its capacity to exercise rights has been built on Salomon v. Salomon and Co. Ltd. [1807] AC. 22 The rights and obligations of the company are different from the rights and obligations of the shareholders. By action taken against the company, the shareholders may be indirectly affected because their interest in the capital of the company is reduced. But action taken against the company does not directly affect the shareholders. The company in holding its property and carrying on its business is not the agent of the shareholders. Mukherjea J. in Chiranjit Lal Ckowdkury's case [1951] 21 Comp Cas 33 (SC), pointed out the difference in the passage already quoted between the rights of the company and the shareholders. Even if a company consists of shareholders who are all Indian citizens, the company has still a distinct personality and an infringement of the rights of the company alone will not furnish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uted by the Government of India. But it is a commercial body, incorporated as the memorandum of association indicates to organise and undertake trade generally with State trading countries as well as other countries in commodities entrusted to it for such purpose by the Union Government from time to time and to undertake purchase, sale and transport of such commodities in India or anywhere else in the world and to do various acts for that purpose. The articles of association make minute provisions for sale and transfer of shares, calling of general meetings, procedure for the general meetings, voting by members, board of directors and their powers, the issue of dividend maintenance of accounts and capitalisation of profits. The State Trading Corporation has been constituted not by any special statute or charter but under the Indian Companies Act as a private limited company. It may be wound up by the order of a competent court. Though it functions under the supervision of the Government of India and its directors, it is not concerned with performance of any governmental functions. Its functions being commercial, it cannot be regarded as either a department or an organ of the Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment department, will be presumed not to be a servant or an agent of the State. The fact that a Minister appoints the members of the corporation and is entitled to call for information and to supervise the conduct of the business, does not make the corporation an agent of the Government. Where, however, the corporation is performing in substance governmental, and not commercial functions, an inference that it is an agent of the Government may readily be made. In Tamlin v. Hannaford [1950] 1 KB. 18, a house had vested by the operation of the Transport Act, 1947, in the British Transport Commission and the question arose whether the house could be regarded as owned by the Crown and administered by the British Transport Commission as Crown's agent. Denning L.J. pointed out that the Minister of Transport had extensive powers over the British Transport Commission. The Minister had powers as great as those of a man who holding all the shares in a private company possesses. He appointed the directors, i.e., the members of the Commission, and fixed their remuneration. They were bound to give him the information he wanted, he was entrusted with power to give directions of a general na ..... X X X X Extracts X X X X X X X X Extracts X X X X
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