JAMIA MILLIA ISLAMIA

JURISPRUDENCE ASSIGNMENT
On

Legal Personality

SUBMITTED TO: PROF. EQBAL HUSSAIN

SUBMITTED BY: MOHD OVAIS(SEC-A)
BA LLB(H),5TH SEM
 ACKNOWLEDGEMENT

Firstly, I would like to express my profound sense of gratitude towards the almighty for
providing me with the authentic circumstances which were mandatory for the completion of
my project.

Secondly, I am highly indebted to Professor Eqbal Hussain , Faculty of Law, Jamia Millia Islamia
University, New Delhi for providing me with constant encouragement and guidance
throughout the preparation of this project.

My cardinal thanks are also for my parents, friends and all teachers of law department in our
college who have always been the source of my inspiration and motivation without which I
would have never been able to unabridged my project.
 TABLE OF CONTENTS

1.CONCEPT OF PERSON………………………………………………………………………………………….1
1.1 Introduction………………………………………………………………………….…………....................1
1.2 Historical Background of the Concept of ‘Person’………………………….………………….…1
1.3 Definition of ‘Person’…………………………………………………………………………….……..……...2
1.4 Meaning of Natural Person………………………………………………………..……………….………..2
1.5 Meaning of ‘Legal Person’…………………………………………………………………………………..…2
1.6 Natural Person vis-a-vis Legal Person…………………………………………………………………….3
Natural Person and legal Person………………………………………………………………….…………….3

2. CORPORATE LEGAL PERSONALITY……………………………………………………...…………….…4

2.1 Corporate Sole………………………………………………………………………………….…………………….4
2.2 Corporate Aggregate……………………………………………………………………………………...…..…8
2.3 Theories of Corporate Personality………………………………………………...………………….…..8
2.3.1 The Fiction theory………………………………………………………………………....……….…..….…. 8
2.3.2 The Concession theory………………………………………………………………................…….….9
2.3.3 The Purpose theory……………………….……………………………………………...….….………...….9
2.3.4 The Symbolist theory…………………………………………………………………………….……...…....9
2.3.5 The Realist theory……………………………………………………………………………………….……….9
2.4 Lifting or Piercing the Corporate Veil………………………………………..…………………………..10

3. CONCLUSION………………………………………………………………………………………..…………….11
3.1 Limitations to Legal Personality……………………………………………………………….……………11
3.2 Conclusion ……………………………………………………………………………………………….…..…..…12

Bibliography……………………………………………………………………………………………….………..13
1.CONCEPT OF PERSON

1.1 Introduction
The term ‘person’ is derived from Latin word ‘persona’ which means a mask worn by actors
playing different roles in a drama. In modern days it has been used in a sense of a living person
capable of having rights and duties. Now it has been used in different senses in different
disciplines. In the philosophical and moral sense the term has been used to mean the rational
quality of human being. In law it has a wide meaning. It means not only human beings but also
associations as well. Law personifies some real thing and treats it as a legal person. This
personification both theoretically and practically clarifies thought and expression. There are
human beings who are not persons in legal sense such as outlaws and slaves (in early times). In
the same way there are legal persons who are not human beings such as corporations,
companies, trade unions; institutions like universities, hospitals are examples of artificial
personality recognized by law in the modern age. Hence, the person is an important category of
concept in legal theory, particularly business and corporate laws have extensively used the
concept of person for protection as well as imposing the liability.

1.2 Historical Background of the Concept of ‘Person’

The term ‘person’ and ‘personality’ has a historical evolution. Roman law, Greek law and Hindu
law, has used the concept too. In Roman law, the term had a specialized meaning, and it was
synonymous with ‘caput’ means status. Thus, a slave had an imperfect persona. In later period
it was denoting as a being or an entity capable of sustaining legal rights and duties. In ancient
Roman Society, there was no problem of personality as the ‘family’ was the basic unit of the
society and not the individual. The family consisted of a number of individuals, but all the
powers were concentrated with ‘pater familias’ means the head of the family. If a head of the
family dies, and there is an interval between his death and devolution of property on the heir
who accepted inheritance, the property will vest in a person during the interval. This was
called hereditas jacens which was developed by the Romans. The hereditas jacens is considered
by some scholars as similar to legal personality. Hereditas jacens means the inheritance during
the interval between death of the ancestor and the acceptance of the inheritance by the heir.
Some scholars are not ready to agree with the views that it has some connection with present
doctrine of legal personality, even if it is there, it may be in a very limited sense. There was a
provision in Roman law that other institutions or group who had certain rights and duties were
capable to exercise their legal rights through a representative.
Under Greek law, an animal or trees were tried in court for harm or death done to a human
being. It can be said on the basis of this practice that these objects were subject to duties even
though they may not possesses rights. This is an element of the attribution of personality.
Under early English law, there are some incidences in it had found that an animal or tress or
inanimate objects had been tried in Court under law. The trees and animals were subject to
duty but not rights. After 1846, this system has modified and it was made clear that animals or
tresses are capable of possessing rights and duties; therefore, there is no question of
personality.
1.3 Definition of ‘Person’

The term ‘person’ is derived from the Latin term ‘Persona’ which means those who are
recognized by law as being capable of having legal rights and being bound by legal duties. It
means both- a human being, a body of persons or a corporation or other legal entity that is
recognized by law as the subject of rights and duties.
Savingy has defined person as the subject or bearer of right. But Holland has criticised this
definition on the ground that persons are not subject to right alone but also duties. He says: the
right not only resides in, but is also available against persons. There are persons of incidence as
well as of inherence.
Kelson rejected the definition of personality as an entity which has rights and duties. He has
also rejected the distinction between human beings as natural persons and juristic persons. He
says the totality of rights and duties is the personality; there is no entity distinct from them.
However, Kelson’s view has been criticised for the reason that in law natural person is different
from legal persons who are also capable of having rights and duties and constitute a distinct
entity.
Salmond’s definition seems to be more correct than the earlier definitions. In the words of
Salmond: “So far as legal theory is concerned, a person is any being whom the law regards as
capable of rights and duties. Any being that is so capable is a person, whether a human being or
not, and no being that is not so capable is a person even though he be a man.”
Salmond further explains that the extension of the conception of personality beyond the class
of human beings is one of the most noteworthy achievements of the legal imagination.
Persons can be classified into (a) natural person, and (b) legal or artificial or juristic person.
There are some natural persons who do not enjoy the status of legal persons and vice versa.

1.4 Meaning of Natural Person

A natural person is legally defined as a living human being. A natural person is a being, to whom
the law attributes personality in accordance with reality and truth. Natural person is a human
being who is regarded by law as having rights and being bound by duties. A human being must
satisfy two conditions in order to be a natural person in law, namely, he must be a living human
being and he must be recognized by the state as person so he must not be a slave in the
absolute control of his master or otherwise civilly dead as a monk who has renounced the
world.

1.5 Meaning of ‘Legal Person’

The word person is derived from the Latin word ‘persona’. Used in the context of
law, persona came to signify the subject of legal rights and duties. It came to denote not an
individual litigant as a human being, but anybody or anything permitted to assert legal claims or
 subjected to legal duties. From the legal perspective, the mask of personality does not,
therefore, necessarily have to be worn by human beings.
Legal personality may be said to refer to the particular device by which law creates, or
recognizes units to which it ascribes certain powers and capacities. Persons are the substances
of which the rights and duties are the attributes. It is in this respect that persons possess
judicial significance.

1.6 Natural Person vis-a vis Legal Person

Legal persons are those which are the creations of law e.g. the company, corporations, trade
unions, etc. Salmond says legal person is any subject matter other than human beings to which
the law attributes legal personality. Generally, legal personality is granted by law to all human
beings, legal personality being an artificial creation of the law may be conferred on entities
other than individual human beings. The law, in creating legal persons, always does so by
personifying some real thing. [6] Following are the differences between natural person and legal
person:
Natural Person
1. A natural person is a human being and is a real and living person.
2. He has characteristics of the power of thought speech and choice.
3. Unborn, dead man and lower animals are not considered as natural persons.
4. The layman does not recognize idiot, company, corporation, idol etc. as persons.
5. He is also a legal person and accordingly perform their functions
6. Natural person can live for a limited period. i.e. he cannot live more than 100 years.

Legal Person
1. Legal person is being, real or imaginary whom the law regards as capable of rights or duties.
2. Legal persons are also termed “fictitious”, “juristic”, “artificial” or “moral”.
3. In law, idiots, dead men, unborn persons, corporations, companies, idols, etc. are treated as
legal persons.
4. The legal persons perform their functions through natural persons only.
5. There are different varieties of legal persons, viz. Corporations, Companies, Universities,
President, Societies, Municipalities, Gram panchayats, etc.
6. Legal person can live more than 100 years. Example: (a) the post of “American President” is a
corporation, which was created some three hundred years ago, and still it is continuing. (b)
“East India Company” was established in sixteenth century in London, and now still is in
existence.

2.CORPORATE LEGAL PERSONALITY

Legal personality is a fictitious attribution of personality by law, a sort of personification of law.

Legal persons being artificial creations of law can be of as many kinds as the law devises.
Continental jurisprudence recognizes three kinds of legal persons, namely:
 (i) Groups or series of men, usually called corporations: The first class of legal persons consists of
corporations, namely those which are constitutes by the personification of groups (e.g.,
corporation aggregate) or series of individuals (e.g., corporation sole). In State Trading
Corporation of India v. Commercial Tax Officer, the Court observed that corporation are
undoubtedly legal persons but is not a citizen within the meaning of Article 19 of the
Constitution and cannot ask for the enforcement of fundamental rights granted to citizens
under the said article.

(ii) Institutions like hospitals, libraries etc.: The second class is that in which corporations or
object selected for personification not a group of series of persons but an institution is. The law
may, if it pleases, regard a church, a hospital or a university or a library as a person. That is to
say it may attribute personality not to any group of persons connected with the institution, but
to the institution itself. In the tradition and practice of English Law, legal personality is not
limited by any logical necessity or indeed by any obvious requirement of expediency to the
incorporated bodies of individual persons. In India, institutions like university, temple, public
authorities, etc. are considered as legal persons. Under Indian law, trade unions and friendly
societies are legal entities. They own properties and suits can be brought in their names though
not regarded as corporations.

(iii) Funds or estates like the estates of deceased persons: The third kind of legal person is that in
which the corpus is some fund or estate devoted to special uses, a charitable fund for example,
or a trust estate, or the property or a dead man or of a bankrupt.

3.1 Corporate Sole

Corporation sole is a legal entity consisting of a sole incorporated office, occupied by a single
man/women and it has legal continuity.
A corporation sole consists of one person only, and the successors of that person in some
particular station or office. The King of England is a corporation sole; so is a bishop; and in the
Church of England every parson and vicar is, in view of the law, a corporation sole.[33]
To understand the concept of corporation sole one needs to deal with two yet similar
questions: First, it was necessary to discover what application the concept had, which involved
understanding why it had come into being in the first place; but Second, it was necessary to ask
what forms of law the use of this concept had excluded. Law, in ruling some things in, is always
ruling some things out (though it was by implication the English genius to stretch the terms of
this proposition as far as they would go). Even English law could not conjure up terms of art
that were infinitely adaptable. That the corporation sole was a term of art contrived to meet a
particular practical problem rather than deduced from a set of general juristic precepts, could
not be doubted. Nor could it be doubted that the application of this contrivance was rather
limited. But what was surprising was how much, nonetheless, was ruled in, and how much ruled
out.
The origins of the corporation sole Maitland traced to a particular era and a particular problem.
The era was the sixteenth century, and coincides with what Maitland calls ‘a disintegrating
process . . . within the ecclesiastical groups’, when enduring corporate entities (corporations
‘aggregate’, which were, notwithstanding the misleading terminology, more than the sum of
their parts) were fracturing under political, social and legal pressure. However, the particular
problem was not one of groups but of individuals; or rather, it was a problem of one individual,
the parish parson, and of one thing, the parish church. Was this thing, a church, plausibly either
the subject or the object of property rights? The second question – of objectivity – was the
more pressing one, as it concerned something that was unavoidable as a cause of legal dispute,
namely ‘an exploitable and enjoyable mass of wealth’.
But it could not be addressed without considering the other question, and the possibility that
the ownership of this wealth does not attach to any named individuals but to the church itself.
The law could probably have coped with this outcome, but the named individuals involved,
including not only the parson but also the patron who nominates him and the bishop who
appoints him, could not. It placed exploitation and enjoyment at too great a remove. Instead,
an idea that had been creeping towards the light during the fifteenth century was finally
pressed into service, and the parson was deemed the owner, not in his own right, but as a kind
of corporation, called a ‘corporation sole’.
What this meant, in practice, was that the parson could enjoy and exploit what wealth there
was but could not alienate it. But what it meant in theory was that the church belonged to
something that was both more than the parson but somewhat less than a true corporation.
That it was more than the parson was shown by the fact that full ownership, to do with as he
pleased, did not belong to any one parson at any given time; that it was less than a corporation
was shown by the fact that when the parson died, ownership did not reside in anybody or
anything else, but went into abeyance. Essentially, the corporation sole was a negative idea. It
placed ultimate ownership beyond anyone. It was a ‘subject less right, a fee simple in the
clouds’. It was, in short, an absurdity, which served the practical purpose of many absurdities by
standing in for an answer to a question for which no satisfactory answer was forthcoming.[35]
The idea of the corporation sole gave legal fictions a bad name; the corporation sole was a
frivolous idea, which implied that the personification of things other than natural persons was
somehow a less than serious matter. It was not so much that absurdity bred absurdity, but that
it accustoms us to absurdity, and all that that entails. Finally, however, the idea of the
corporation sole was serious because it encouraged something less than seriousness about
another office than parson. Although the class of corporations sole was slow to spread, it was
found serviceable by lawyers in describing at least one other person, or type of person: the
Crown. To think of the Crown as a corporation sole, whose personality is neither equivalent to
the actual person of the king nor detachable from it, is ‘clumsy’. It is in some ways less clumsy
than the use of the concept in application to a parson. The central difficulty, that of ‘abeyance’
when one holder of the office dies, is unlikely to arise in this case: when a parson dies there
may be some delay before another is appointed, but when a king dies there is considerable
incentive to allow no delay, whatever the legal niceties. Nor is it necessarily clumsier than
other, more famous doctrines: it is no more ridiculous to make two persons of one body than it
is to make two bodies of one person It makes a ‘mess’ of the idea of the civil service by allowing
it to be confused with ‘personal’ service of the king; it cannot cope with the idea of a national
debt ; it even introduces confusion into the postal service (by encouraging the view that the
Postmaster-General is somehow freeholder of countless post offices). It also gets things out of
proportion, for just as it implies that a single man is owner of what rightly belongs to the state,
so it also suggests that affairs of state encompass personal pastimes.
The problem with absurd legal constructions is not simply that serious concerns may be
trivialised, but also that trivial matters may be taken too seriously, which is just as time-
consuming. ‘So long as the State is not seen to be a person [in its own right], we must either
make an unwarrantably free use of the King’s name, or we must be forever stopping holes
through which a criminal might glide.’
Therefore a corporation sole can be defined as a corporation sole consists of one person and his
or her successors in some particular office or station, who are incorporated by law in order to
give them certain legal capacities and advantages which they would not have in their natural
person.
The Crown first came to be identified as a corporation sole at a sinister time, during the reign of
Henry VIII. In most important respects, as touching on the fundamental questions of politics,
the British state had long been afforded its own identity as a corporation aggregate, distinct
from the persons of any individuals who might make it up at any given moment. The British
state had a secure national debt, which had been owed for some time by the British
‘Public’, and the British public had been relatively secure since the end of the seventeenth
century in the rights that it had taken from the Crown. The problems, such as they were, were
problems of convenience and not of freedom. But precisely because the idea of the Crown as a
corporation sole remained tied up in the domain of private law, it illustrated the gap that
existed in England between legal and political conceptions of the state. The fact that the Crown
was still understood as a corporation sole implied that there was some distinction to be drawn
between matters of basic political principle and mere questions of law. This was
unsustainable. It was not simply that it was not clear on what basis this distinction could
conceivably rest – it was impossible, after all, to argue that the corporation sole was useful in
matters of law, since it had shown itself to be so singularly useless. It was also far from clear
where to draw the line Maitland devotes considerable attention to the problems that the
British Crown was experiencing at the turn of the twentieth century in understanding its
relationship with its own colonies. That they were its ‘own’, and had begun their life as pieces
of property, meant that there was a legal argument for seeing them still as the property of the
Crown, which was itself seen still as the corporate personality of Her Majesty the Queen. This
was convoluted, unworkable and anachronistic. It was also ironic. It meant that in what was
obviously a political relationship the supposedly dominant partner was still conceived as an
essentially private entity, and therefore restricted by the conventions of private law; while the
colony itself, which had begun life as a chartered corporation created by the Crown, was able to
use that identity as a corporation aggregate to generate a distinct identity for itself as “one
body corporate and politic in fact and name”.
3.2 Corporate Aggregate

A corporate aggregate is an incorporated group of co-existing persons. Examples: all private

limited companies, all public limited companies, multi-national corporations, public undertaking
corporations.“Corporate aggregate” is a fictitious body and created by the policy of men. They
may also be called as “body’s Politique”. A corporate aggregate has several members at a time.
These are the private offices. The primary object of corporate aggregate is to do business. It is
lesser permanent than corporate sole. Similarly, corporate aggregate also shall have its own
properties, debts, with which the share holders are not concerned. The share holders are
concerned corporation / company subject to the extent of their share amount, not exceeding
that. They have their own properties. The debts of the company are not having any connection
with their own properties. The debts, profits, losses are related to the share amount only.
So the perfect definition of corporate aggregate would be -
Corporation aggregate consist of two or more persons united in a society, which is preserved by
a succession of members, either forever or till the corporation is dissolved by the power that
formed it, by the death of all its members, by surrender of its charter or franchises, or by
forfeiture. Such corporations are the mayor and aldermen of cities, the head and fellows of a
college, the dean and chapter of a cathedral church, the stockholders of a bank or insurance
company, etc.
A corporation aggregate, or body politic, or body incorporate, is a collection of many; individuals
united in one body, under a special denomination, having perpetual succession under an
artificial form, and vested by the policy of the law, with a capacity of acting in several respects
as an individual, particularly of taking and granting property, 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 upon it, either at the time of its creation, or at any subsequent period of its
existence.
So basically a corporate aggregate consists of several persons, who are' united in one society,
which is continued by a succession of members. Of this kind are the mayor or commonalty of a
city; the heads and fellows of a college; the members of trading companies, and the like. Going
by the above description of corporations aggregate, it would logically follow that every form of
concerted activity of willing individuals aimed at a particular end, would lead to their acts
coming to known through the glass of incorporation which realises their combined operations
as one single act, performed by a single personality. However, it is in this regard that the real
limits of artificial personality are discernible. The law deems only certain forms of concerted
action as eligible for recognition through incorporation; thus while joint stock companies are
recognised as incorporated bodies, associations such as partnerships, trade unions and other
organizations are not recognised as incorporated bodies for various reasons. These groups have
come to assume the term ‘unincorporated associations'.
3.3 Theories of Corporate Personality

3.3.1 The Fiction theory: This theory of corporation is said to be promulgated by Pope Innocent
IV (1243-1254). This theory is supported by many famous jurists, particularly, Von Savigny,
Coke, Blackstone and Salmond. According to this theory, the legal personality of entities other
than human beings is the result of a fiction. The famous case of Salomon v A Salomon Co Ltd is
a proof of the English court adoption of the fiction theory. In this case, Lord Halsbury stated
that the important question to decide was whether in truth an artificial creation of the
legislature had been validly constituted. It was held that as the company had fulfilled
requirements of the Companies Act, the company becomes a person at law, independent and
distinct from its members.
3.3.2 The Concession theory: Under this theory the state is considered to be in the same level
as the human being and as such, it can bestow on or withdraw legal personality from other
groups and associations within its jurisdictions as an attribute of its sovereignty. Hence, a
juristic person is merely a concession or creation of the state. Concession theory is often
regarded as the offspring of the fiction theory as it has similar assertion that the corporations
within the state have no legal personality except as it is conceded by the state. Exponents of
the fiction theory, for example, Savigny, Dicey and Salmond are found to support this theory.
Nonetheless, it is obvious that while the fiction theory is ultimately a philosophical theory that a
corporation is merely a name and a thing of the intellect, the concession theory is indifferent as
regards to the question of the reality of a corporation in that it focus on the sources of which
the legal power is derived.

3.3.3 The Purpose theory: The advocates who are associated with this theory are E.I Bekker,
Aloys Brinz and Demilius. Similar to the fiction and concession theories, it declares that only
human beings can be a person and have rights. Under this theory, juristic person is no person at
all but merely as a “subject less” property destined for a particular purpose and that there is
ownership but no owner. The juristic person is not constructed round a group of person but
based on the object and purpose. The property of the juristic person does not belong to
anybody but it may be dedicated and legally bound by certain objects.
3.3.4 The Symbolist theory: This theory is also known as the “bracket” theory. It was set up by
Ihering and later developed particularly by Marquis de Vareilles-Sommiéres. Basically, this
theory is similar to the fiction theory in that it recognizes that only human beings have interests
and rights of a legal person.38 According to Ihering, the conception of corporate personality is
indispensable and merely an economic device by which simplify the task of coordinating legal
relations. Hence, when it is necessary, it is emphasized that the law should look behind the
entity to discover the real state of affairs. This is clearly in line with the principle of lifting of the
corporate veil.
3.3.5 The Realist theory: This theory was founded by German jurist, Johannes Althusius has
been most prominently advocated by Otto von Gierke. According to this theory, a legal person
is a real personality in an extra juridical and pre-juridical sense of the word. It also assumes that
the subjects of rights need not belong merely to human beings but to every being which
possesses a will and life of its own. As such, being a juristic person and as ‘alive' as the human
being, a corporation is also subjected to rights. Under the realist theory, a corporation exists as
an objectively real entity and the law merely recognizes and gives effect to its existence. The
realist jurist also contended that the law has no power to create an entity but merely having
the right to recognize or not to recognize an entity. A corporation from the realist perspective is
a social organism while a human is regarded as a physical organism. A corporation from the
realist perspective is a social organism while a human is regarded as a physical organism.

3.4 Lifting or Piercing the Corporate Veil

A corporation is cloth with a distinct personality by fiction of law, 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.
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 shell and apply the principle of what
is known as “lifting or piercing the corporate veil”. The corporate veil of a company may be
lifted to ascertain the true character and economic realities behind the legal personality of the
company. Undoubtedly, the theory of corporate entity of a company is still the basic principle
on which the whole law of corporations is based. But the separate personality of the company,
being a statutory privilege, it must always be used for legitimate business purposes only.
In New Horizons Ltd. v. Union of India and others, the appellant company when seen through
the veil covering the face of New Horizons Ltd. was found to be a joint venture created as a
result of reorganization in 1992. Sixty per cent of its share capital was owned by an Indian
group of companies and forty per cent share capital was owned by a Singapore based foreign
company. The Government had invited tenders for distribution of State largesse. The
appellant's tender was not considered on the ground that the experience of its constituents
was not the same as that of the appellant and because of inadequate experience, the
respondent's tender was accepted as they had long experience and had also offered a much
lower amount of royalty. The appellants pleaded the experience of constituents of the joint
venture company should be treated as its own experience and corporate veil should be seen
through for this purpose. Allowing the appeal, the Supreme Court ruled that the action of the
State Government in determining the eligibility of tender’s been not in consonance with the
standards or norms and was arbitrary and irrational. The Court further observed that in case of
a joint venture corporation, the Court can see through the corporate veil to ascertain the true
nature of a company. The doctrine of lifting the corporate veil is invoked when the corporate
personality is found to be opposed to justice, convenience or interest of revenue.

The principle of 'lifting the corporate veil' has found statutory recognition in certain provisions
like Sections 45, 147, 212, 247 and 542 of the Companies Act. Corporate veil is said to be lifted
when the court ignores the company and concerns itself directly with the members or
managers.
The Supreme Court in Subhra Mukherjee & Another v. M/s. Bharat Coking Coal Ltd. (BCCL) &
others has observed that the Court will be justified in piercing the veil of incorporation in order
to ascertain the true nature of the transaction as to who were the real parties to the sale and
whether it was between husbands and wives behind the facade of separate entity of the
company.
In P.N.B. Finance Ltd. v. Shital Prasad Jain, the court held that "the doctrine of piercing the
corporate veil may be invoked whenever necessary by the court in the interest of justice, to
prevent the corporate entity from being used as an instrument of fraud, and the fundamental
principle of corporate personality itself may be disregarded having regard to the exigencies of
the situation and for the ends of justice.
The doctrine of lifting the corporate veil can also be used to prevent abuse of process of Court.
Thus in Bijay Kumar Agarwal & others v. Ratanlal Bagaria & others, the Court observed that
although broadly speaking the principle of lifting the corporate veil will be available in the
statute like Companies Act, and other financial and taxing statutes etc. but admittedly one
cannot rule out the applicability of the principle elsewhere if the situations are falling under the
following categories : (a) depend upon the relevant statutory or other provisions; (b) the object
sought to be achieved; (c) the impugned conduct; (d) the involvement of the element of public
interest; (e) the effect on parties who may be affected. It, therefore, logically follows that the
doctrine of lifting the corporate veil or principle analogous thereto cannot be ruled out from
being used as a tool of judiciary in adjudicating over the dispute between two parties. Thus the
"Lifting of corporate veil' or principle analogous thereto cannot be monopoly of any particular
statute. It can well be used by the judiciary or the Court to prevent the abuse of process of
Court of Law.
 CONCLUSION

3.1 Limitations to Legal Personality

Since the Industrial Revolution, when corporations rose to power, the limitations of a legal
corporate personality have been an issue of constant debate. While the granting of personhood
can help make corporations legally responsible for their actions, it also opens the door to many
more intricate questions. For example, if a corporation has a personality separate from its
shareholders or owners, some argue that it must also have individual rights, such as the right to
vote. If granted the right to vote, however, then shareholders will in effect have the right to
vote twice: once as private individuals, and once in the personality of the corporation. As this
conflict with most voting systems, it remains a controversial issue throughout legal circles.
There are limitations to the legal recognition of legal persons. Legal entities cannot marry, they
usually cannot vote or hold public office, and in most jurisdictions there are certain positions
which they cannot occupy. The extent to which a legal entity can commit a crime varies from
country to country. Certain countries prohibit a legal entity from holding human rights; other
countries permit artificial persons to enjoy certain protections from the state that are
traditionally described as human rights.
Special rules apply to legal persons in relation to the law of defamation. Defamation is the area
of law in which a person's reputation has been unlawfully damaged. This is considered an ill in
itself in regard to natural person, but a legal person is required to show actual or likely
monetary loss before a suit for defamation will succeed.
In 2010, the United States Supreme Court rendered a decision that many legal scholars describe
as a victory for corporation rights. The decision, Citizens United v. Federal Election
Committee expanded the free speech rights of corporations by holding that it is
unconstitutional to prohibit legal persons from engaging in election expenditures and
electioneering. While critics see this ruling as tantamount to allowing corporate-sponsored
candidates in the future, proponents argue that it is unfair to grant legal personality that grants
equal responsibilities but not equal rights.
Though a company is a legal person, it is not a citizen under the constitutional law of India or
the Citizenship Act, 1955. The reason as to why a company cannot be treated as a citizen is that
citizenship is available to individuals or natural persons only and not to juristic persons. The
question whether a corporation is a citizen was decided by the Supreme Court in State Trading
Corporation of India v. Commercial Tax Officer. Since a company is not treated as a citizen, it
cannot claim protection of such fundamental rights as are expressly guaranteed to citizens, but
it can certainly claim the protection of such fundamental rights as are guaranteed to all persons
whether citizens or not. In Tata Engineering Company v. State of Bihar it was held that since
the legal personality of a company is altogether different from that of its members and share-
holders, it cannot claim protection of fundamental rights although all its members are Indian
citizens. Though a company is not a citizen, it does have a nationality, domicile and residence.
In case of residence of a company, it has been held that for the purposes of income tax law, a
company resides where its real business is carried on and the real business of a company shall
be deemed to be carried on where its Central management and control is actually located.
3.2 Conclusion

The foregoing analysis makes it abundantly clear that incorporation had great importance
because it attributes legal personality to non living entities such as companies, institutions etc.
which help in determining their rights and duties. Clothed with legal personality, these non
living personalities can own, use and dispose of property in their own names. Unincorporated
institutions are denied this advantage because their existence is not different from the
members.
Keelson 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.
 BIBLIOGRAPHY
BOOKS
1. Bix, Briann, Jurisprudence: Theory and Context, Sweet and Maxwell, London, 2006.

2. Bodenheimer, Edgar, Jurisprudence the Philosophy and Method of the Law, Universal Law
Publishing, New Delhi, 2006.
3. Dhyani S.N, Jurisprudence (Indian Legal Theory), Central Law Agency, Allahabad, 2010.
4. Ghormade Vijay, Jurisprudence & Legal Theory, Hindu Law House, Pune, 2008.
5. Holland, Thomas Erskine, K.C., The Elements of Jurisprudence, Universal Law Publishing Co. Pvt.
Ltd., New Delhi, 2006.
6. Myneni S.R, Jurisprudence, Asia Law House, Hyderabad, 2010.
7. Paranjape N.V., Studies in Jurisprudence and Legal Theory, Central Law Agency, Allahabad,
2010.
8. Paton, G.W., Text Book of Jurisprudence, Oxford University Press, New Delhi, 2007.
9. Salmond, Jurisprudence, Twelfth edition, 1966.
CASES
1. Bijay Kumar Agarwal & others v. Ratanlal Bagaria & others
2. Citizens United v. Federal Election Committee
3. Mathii Khan v. Veda Leiwai
4. New Horizons Ltd. v. Union of India and others
5. P.N.B. Finance Ltd. v. Shital Prasad Jain
6. Re Dean Cooper Dean v. Stevens
7. Saraswati v. Raja Gopal
8. State Trading Corporation of India v. Commercial Tax Officer
9. Subhra Mukherjee & Another v. M/s. Bharat Coking Coal Ltd. (BCCL) & others
10. Tata Engineering Company v. State of Bihar
11. Williams v. Williams