Note

Is society a body corporate?

Nivedita Shankar
Corporate Law Division

nivedita@vinodkothari.com
corplaw@vinodkothari.com
January 19, 2015

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 Is society a body corporate?

Note

The term body corporate is used at a number of places in the Companies Act, 2013 (‘Act,
2013’). Although, the Act, 2013 defines a body corporate in section 2(11) of Act, 2013,
the definition is however inclusive in nature. Thus, to conclude if any entity is a body
corporate or not, it is necessary to study the characteristics of that entity. In this article,
we have attempted to analyse if a society which is registered under the Societies
Registration Act, 1860 (‘Act, 1860’) is at all a body corporate.

Definition of ‘body corporate’ under Act, 2013

The Act, 2013 defines a body corporate or corporation as follows:

“body corporate” or “corporation” includes a company incorporated outside

India, but does not include—
(i) a co-operative society registered under any law relating to co-operative
societies; and
(ii) any other body corporate (not being a company as defined in this Act), which
the Central Government may, by notification, specify in this behalf;

Although, the section provides an inclusive definition of ‘body corporate’, it does not list
out the major characteristics of a body corporate. Further, on the question as to
whether a society is a body corporate or not, the Department of Company Affairs in its
Circular No. 8(26)/2(7)/63-PR, dated 13-03-1963 stated that the term body corporate
does not include a society registered under Act, 1860 for the purpose of Act, 1956.

Judicial pronouncements

In this regard, one may refer to the Supreme Court’s ruling of The Board Of Trustees,
Ayurvedic ... vs The State Of Delhi And Another 1, in which reference was made to the
definition of a ‘corporation’ in Halsbury (Laws of England, 3rd Edn. Vol.9, page 4) which
is reproduced below:

A corporation aggregate has been defined as a collection of individuals united

into one body under a special denomination, having perpetual succession under
an artificial form, and vested by the policy of the law with the capacity of acting
in several respects as an individual, particularly of taking and granting property,
of contracting obligations and of suing and being sued, of enjoying privileges
and immunities in common, and of exercising a variety of political rights, more or
less extensive, according to the design of its institution, or the powers conferred

1
Read the entire text of the ruling at : http://indiankanoon.org/doc/1830726/
 Is society a body corporate?

Note
upon it, either at the time of its creation or at any subsequent period of its
existence.

Further, the Supreme Court in the ruling of S.P. Mittal Etc. Etc vs Union Of India And
Others2, also referred to the definition of corporation in Halsbury (Laws of England,
3rd Edn. Vol.9, page 4) to summarise the major characteristics of a corporation as
follows:

i. a continuous identity, i.e., the original member or members or his or their

successors are one
ii. the persons to be incorporated;
iii. the name by which the persons are incorporated;
iv. a place and
v. words sufficient in law to show incorporation. In law, the individual incorporators
are members of which it is composed or something wholly different from the
corporation itself, for a corporation is a legal person just as much as an individual.
A corporation aggregate can express its will by deed under a common seal.

In the case of K.C. Thomas vs R.L. Gadeock And Anr3 , the Patna High Court relied on the
ruling of Bonsor vs Musicians’ Union4 to conclude that a society registered under the
Act, 1860 may not be a separate legal entity distinct from the members constituting it in
a sense similar to that of a company incorporated under the Indian Companies Act, yet a
society can have properties of its own. This is clear from section 5 of the Act, 1860.
Section 5 of the Act, 1860 clearly states that the property of a society may be vested in
its trustee or in the governing body of the society. Thus, the legal title will be with the
governing body or the trustees, but the equitable title will be with the society. The
provisions of section 5 (Property of society how vested), section 6 (Suits by and against
societies), section 7 (Suits not to abate) and section 8 (Enforcement of judgment against
society) were also referred to in the ruling of The Board Of Trustees, Ayurvedic ... vs The
State Of Delhi And Another5 wherein, the Supreme Court stated obiter that these
sections did not show the intention to incorporate a society similar to that of a
company. On the contrary, the very resort to the machinery of trustees or the governing
body for the time being acquiring and holding the property showed that there was no
intention to incorporate the society as to give it a corporate capacity for the purpose of
holding and acquiring property.

2
Read the entire text of the ruling at : http://indiankanoon.org/doc/312939/
3
Read the entire text of the ruling at: http://indiankanoon.org/doc/641986/
4
Read the entire text of the ruling at:
http://www.vanuatu.usp.ac.fj/courses/LA313_Commercial_Law/Cases/Bonsor_v_Musician%27s_Union.ht
ml
5
Read the entire text of the ruling at: http://indiankanoon.org/doc/1830726/
 Is society a body corporate?

Note
Further, it is also to be noted that unlike Act, 2013, the Act, 1860 does not require an
entity to be incorporated as a society, it only requires registration.

Conclusion

Given the discussion above, it is clear that a society does not fulfill any of the
characterstics of a body corporate as laid down by the Supreme Court in the ruling of
S.P. Mittal Etc. Etc vs Union Of India And Others6. Further, registration as a society also
entails very limited number of compliances as compared to a company. Hence, society
may be considered as possible vehicle to do business.

6
Read the entire text of the ruling at : http://indiankanoon.org/doc/312939/