685

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 ofMadras ” 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), "Compensationfor 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 2and

3
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. “Double capacity does not connote double double
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 capacityfor 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 unitedfor 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 fa9ade.
 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
Company V. Brown- observed that a Jcompany 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 ofstate 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.