UNIVERSITY OF PETROLEUM & ENERGY STUDIES

CONSTITUTION ASSIGNMENT ON
COMPANY OR CORPORATION AND FUNDAMENTAL RIGHTS AVAILABLE

Date of Submission: MARCH 5th,2012

SUBMITTED BY: MUDIT LATORIYA BALLB-A SEM-II 500017547 R450211064

SUBMITTED TO: DR. ABHILASHA KATARIA

Contents
1) 2) 3) 4) 5) 6) 7) 8) INTRODUCTION CORPORATION AS CITIZEN CAN FUNDAMENTAL RIGHTS BE ENJOYED BY JURISTIC PERSON FUNDAMENTAL RIGHTS AVAILABLE TO CORPORATION FUNDAMENTAL RIGHTS NOT AVAILABLE TO CORPORATION REASON- SOME FUNDAMENTAL RIGHTS GIVEN TO CORPORATION AND SOME NOT CORPORATE CITIZENSHIP CONCLUSION

COMPANY OR CORPORATION AND FUNDAMENTAL RIGHTS AVAILABLE

INTRODUCTION

FUNDAMENTAL RIGHTS

Fundamental Rights' is a charter of rights contained in the Constitution of India. It guarantees civil liberties such that all Indians can lead their lives in peace and harmony as citizens of India. These include individual rights common to most liberal democracies, such as equality before law, freedom of speech and expression, freedom of association and peaceful assembly, freedom to practice religion, and the right to constitutional remedies for the protection of civil rights by means of writs such as habeas corpus. Violations of these rights result in punishments as prescribed in the Indian Penal Code, subject to discretion of the judiciary. The Fundamental Rights are defined as basic human freedoms which every Indian citizen has the right to enjoy for a proper and harmonious development of personality. These rights universally apply to all citizens, irrespective of race, place of birth, religion, caste, creed, color or Gender. They are enforceable by the courts, subject to certain restrictions. The Rights have their origins in many sources, including England's Bill of Rights, the United States Bill of Rights and France's Declaration of the Rights of Man. The seven fundamental rights recognised by the constitution are: 1) Right to equality, including equality before law, prohibition of discrimination on grounds of religion, race, caste, sex or place of birth, and equality of opportunity in matters of employment, abolition of untouchability and abolition of titles. 2) Right to freedom which includes speech and expression, assembly, association or union, movement, residence, and right to practice any profession or occupation (some of these rights are subject to security of the State, friendly relations with foreign countries, public order, decency or morality), right to life and liberty, right to education, protection in respect to conviction in offences and protection against arrest and detention in certain cases. 3) Right against exploitation, prohibiting all forms of forced labour, child labour and traffic in human beings; 4) Right to freedom of religion, including freedom of conscience and free profession, practice, and propagation of religion, freedom to manage religious affairs, freedom from certain taxes and freedom from religious instructions in certain educational institutes.

5) Cultural and Educational rights preserving Right of any section of citizens to conserve their culture, language or script, and right of minorities to establish and administer educational institutions of their choice; and 6) Right to constitutional remedies for enforcement of Fundamental Rights. 7) Right to information act, 2005.

CORPORATION AS CITIZEN

Freedom under article 19 are limited to citizens and if literally construed these freedoms would not be available to corporation because corporation cannot be talked of as having or possessing citizenship. But it has been held that shareholders can challenge the validity of a law on ground of violation of their fundamental rights and company may be joined in such proceedings with proper pleadings. The decision relevant to this point are : Amritsar municipality v. State of Punjab (AIR 1969 SC 1100 (1106) : (1969) 1 SCC 475 Barium chemicals v. Company law board (AIR 1967 SC 297 (305) : 1966 SUPP. SCR 311: (1966) 36 COMP CAS 639.

Rights in article 19(1) are available only to citizen. Determination of citizenship, which is dealt with in part-II of Indian constitution, is therefore a condition precedents for availability of fundamental rights in this article. An alien or a foreigner has no right under this article because he is not a citizen of India. Juristic person such as companies are not citizens within the meaning of article 19. Citizens under this article means only natural persons who have status of citizenship under the law. Registered companies and societies are therefore not treated as citizens for the purpose of this article. In Rustom cavasjee cooper v. Union of India, where the petitioner was a shareholder, a director and holder of deposit of current accounts in the bank, question arose if he could challenge the nationalism of bank, which was a company. The court held that an action of the state may impair the rights of company alone and not of its shareholders; it may impair the rights of a shareholder and not of a company ; it may impair the rights of shareholders as well as company. Jurisdiction of the court to grant a relief cannot be denied, when by state action the rights of individual share holder are impaired, if that action impair the rights of company as well.

Approving this position the court in benett coleman and co. v. Union of India said that fundamental rights of citizens are not lost when they associate to form a company. The fact that companies are petitioners does not prevent this court from giving relief to shareholders who have asked for protection of their fundamental rights by reason of the effect of law and of action upon their rights. From these cases it is clear that citizens qua citizens do not loose their rights under article 19(1) merely because they have formed a company and the state action affecting their rights refers to the company and not to citizens as individuals. In the application of rights, however, the nature of right should be relevant. Right to trade or business cannot claim the same consideration as right to freedom of speech and expression. In the age of liberalization and globalization in some point in future the question may arise whether Indian citizen by becoming stakeholders in multinational corporations may claim article 19(1) rights on behalf of such corporation. In that case courts may have to remove corporate veil to find out if the real person behind the corporation are the citizens and if their interests are substantial enough to invoke the relevant right in article 19(1).

CAN FUNDAMENTAL RIGHTS BE ENJOYED BY JURISTIC PERSON

In, what is now known as the first Sholapur case, Chiranjit Lal Chowdhuri' v. The Union of India, Mukherjea, J., speaking for the majority of the Court, made the following observations at page 898, which seem to countenance the contention raised on behalf of the petitioners that fundamental rights are available to juristic persons also, as to citizens :

"The fundamental rights guaranteed by the Constitution are available not merely to individual citizens but to corporate bodies as well except where the language of the provision or the nature of the right compels the inference that they are applicable only to natural persons. An incorporated company, therefore, can come up to this Court for enforcement of its fundamental rights."

In that case, a shareholder of the Sholapur Spinning and Weaving Company made an application under Art. 32 of the Constitution for a declaration that the Act impugned in that case was void, as also for the enforcement of his fundamental rights by a writ of mandamus against the Government, and the directors of the company, restraining them from exercising any power

under the Act. It is not necessary to refer to the details of the controversy in that case because it is plain that it was not the company which was seeking the enforcement of its fundamental rights, if any, but only a shareholder. As a matter of fact, the company opposed the petition under Art. 32 of the Constitution. It is manifest that the observations quoted above were purely obiter and did not directly arise for decision of the Court. It was also stated that, the precedents of the Supreme Court of the United States which hold that corporations are citizens of the State of incorporation for purposes of federal jurisdiction cannot be followed in India. On a similar question in the case of the State Trading Corporation Of India Ltd. vs The Commercial Tax Officer, the court was considering if the State Trading Corporation, a company registered under the Indian Companies Act, 1956, is a citizen within the meaning of Art. 19 of the Constitution and can ask for the enforcement of fundamental rights granted to citizens under the said article; and (2) whether the State Trading Corporation is, notwithstanding the formality of incorporation under the Indian Companies Act, 1956, in substance, a department, organ of the Government of India with the entirety of its capital contributed by Government could claim to enforce fundamental rights under Part III of the Constitution against the State as defined in Art.12 of the constitution. There can be no citizens of India not mentioned in Part II of the Constitution or by the Citizenship Act, 1955. These provisions are wholly exhaustive and contemplate only natural persons. Part III of the Constitution makes a clear distinction between fundamental rights available to "any person" and those guaranteed to "all citizens", indicating thereby that under the Constitution all citizens are persons but all persons are not citizens Part II of the Constitution relating to 'citizenship' is clearly inapplicable to juristic persons and the provisions of the Citizenship Act, 1955, enacted by Parliament under Art. 11 of the Constitution, show that such persons are outside the purview of the Act. It cannot therefore, be said that either Part II of the Constitution or the Citizenship Act, 1955, confers the right of citizenship or recognises as citizen any person other than a natural person. They do not contemplate a corporation as a citizen. Chiranjit Lal Chowdhuri v. The Union of India [1950] S.C.R. 869, It was inter-alia stated that: The fundamental rights guaranteed by the Constitution are available not merely to individual citizens but to corporate bodies as well except where the language of the provision or the nature of the right, compels the inference that they are applicable only to natural persons. An incorporated company, therefore, can come up to the Supreme Court for enforcement of its fundamental rights and so may the individual shareholders to enforce their own; but as the company and its shareholders are in law separate entities, it would not be open to an individual shareholder to complain of a law which affects the fundamental right of the company except to the extent that it constitutes an infraction of his own rights as well. In order to redress a wrong to the company the action should prima facie be brought by the company itself. Article 32 of the Constitution is not directly concerned with the

determination of the constitutional validity of particular enactments, what it aims at is the enforcement of fundamental rights guaranteed by the Constitution and to make out a case under the Article it is incumbent on the petitioner to establish not merely that the law complained of is beyond the competence of the Legislature but that it affects or invades his fundamental rights guaranteed by the Constitution, of which he could seek enforcement by an appropriate writ or order. Under Art. 32 the Supreme Court has a very wide discretion in the matter of framing writs to suit the exigencies of particular cases and an application under the article cannot be thrown out simply on the ground that the proper writ or direction has not been prayed for. [It is manifest that the observations quoted above were purely obiter and did not directly arise for decision of the Court. State Trading Corporation Of India Ltd vs The Commercial Tax Officer, 1963 AIR 1811, 1964 SCR (4) 89 State Trading Corporation Of India Ltd vs The Commercial Tax Officer, 1963 AIR 1811, 1964 SCR (4) 89 (DAS GUPTA and SHAH JJ., dissenting) that the answer to the first question must be in the negative.

FUNDAMENTAL RIGHTS AVAILABLE TO CORPORATION.

These are the fundamental rights that are available to corporation :1) Article 14 Equality before law: - The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India. 2) Article 20 - Protection in respect of conviction for offences.(i) No person shall be convicted of any offence except for violation of a law in force at the time of the commission of the Act charged as an offence, nor be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence. (ii) No person shall be prosecuted and punished for the same offence more than once. (ii) No person accused of any offence shall be compelled to be a witness against himself. 3) Article 22- Protection against arrest and detention in certain cases. 4) Article 25- Freedom of conscience and free profession, practice and propagation of religion. 5) Article 27- Freedom as to payment of taxes for promotion of any particular religion. 6) Article 32- Remedies for enforcement of rights conferred by this Part. These are the fundamental rights given to any person since corporation being juristic or legal person can enjoy these rights.

FUNDAMENTAL RIGHTS NOT AVAILABLE TO CORPORATION.

These are the fundamental rights that are not available to corporations:1) Article 15- Prohibition of discrimination on grounds of religion, race, caste, sex or place of birth. 2) Article 16- Equality of opportunity in matters of public employment. 3) Article 19 - Protection of certain rights regarding freedom of speech, etc. (1) All citizens shall have the right (a) to freedom of speech and expression; (b) to assemble peaceably and without arms; (c) to form associations or unions; (d) to move freely throughout the territory of India; (e) to reside and settle in any part of the territory of India; and (g) to practise any profession, or to carry on any occupation, trade or business.

These rights are given to citizen of India and juristic persons such as companies are not citizens within the meaning of article 19. Citizen under this article mean only natural persons who have status of citizenship under the law.

REASON SOME FUNDAMENTAL RIGHTS GIVEN TO CORPORATION AND SOME NOT.

The Fundamental Rights available in the Constitution of India are for "any person' or 'all citizen' or 'all persons' as the case may be. By virtue of Article 367,the definition given in the General Clauses Act are applicable to the interpretation of the Constitution also & hence the expression "any person" or 'all person' include any company, or association or body of individuals whether incorporated or not. Hence a corporation which is a juristic person will also be entitled to the benefits of these fundamental rights & will also be subject to its provisions. Same hold good for State which is a "person" within the meaning of "any person" or 'all person' as mentioned in the fundamental rights. The fundamental rights such as provided under Article 14 Equality before law, Article 21. Protection of life and personal liberty, etc which all are applicable to any or all

person will be covering even Company, whereas Articles such as 19. Protection of certain rights regarding freedom of speech, etc. which covers only the citizens will not be applicable to Company.

CORPORATE CITIZENSHIP:

The position on corporate citizenship in India is laid down by the decision of the Supreme Court in State Trading Corporation v. Commercial Tax Officer, and its subsequent interpretations in RC Cooper, TELCO and Bennett Coleman. The Court in State Trading Corporation rejected the possibility of corporations being treated as citizens for the purposes of Article 19. This position has not been challenged or doubted by any subsequent dicta and now forms a fairly settled proposition in Indian Constitutional Law. However, what is of interest is way this position has come about, and how Citizens United may become an important influence in India should the question of political speech of corporations arise in the future. Before going any further, let me clarify why the citizenshipof a corporation assumes particular relevance in the case of Article 19. The Fundamental Rights conferred by Part III of the Indian Constitution, can be broadly categorised into those that confer rights on all persons and those that confer right on all citizens. Article 19, in clause (1)(a) of which the right to free speech is ensconced, belongs to the latter category. Thus, unlike in the United States, for claiming the right to free speech under the Indian Constitution, the petitioner must establish status as a citizen. Citizenship in India is governed by the Indian Constitution and the Citizenship Act, 1955, neither of which specifically provides for corporate citizenship. In fact, the Citizenship Act excludes juristic persons from its scope. However, in State Trading Corporation, it was argued that neither the Constitution nor the Act is exhaustive of the concept of citizenship, and that the common law concept of citizenship must continue under Article 372 of the Constitution. However, the Court (Justices Das Gupta and Shah dissenting) rejected these arguments- holding that the concept of citizenship is restricted to natural persons; atleast unless the Constitution or the Act is amended to include the concept of corporate citizenship. There are three schools of thought that can be traced across the opinions of the judges in State Trading Corporation- (i) the majority with its emphasis on the independence of the corporate form, and the consequent deprivation of status as a citizen; (ii) Justice Das Guptas dissent, treating a corporation as little more than an association of persons, and allowing citizenship; and (iii) Justice Shahs dissent, upholding independent corporate personality, and also confirming its status as a citizen. A closer look at these three views makes this case and Citizens United seem oddly similar.

CONCLUSION: There are some fundamental rights given to corporation as these rights are given to any person including any legal person and since corporation are legal person so they are entitled to get these rights. Some fundamental rights are not given to corporation as those rights are only given to citizens and corporations are not citizens since citizenship can only be given to natural person not any artificial person.

BIBLIOGRAPHY: Links: 1) http://statutelaw.blogspot.in/2011/03/22-can-fundamental-rights-be-enjoyed-by.html 2) http://www.criticaltwenties.in/lawthejudiciary/political-contribution-by-corporations-acomparative-study-part-ii 3) http://indiacode.nic.in/coiweb/welcome.html

Books referred: 1) VN SHUKLAS CONSTITUTION OF INDIA 11TH EDITION 2) THE CONSTITUTION OF INDIA ( PM BAKSHI)