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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.
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.
All modem times relating to personality resemble one another in one way to the other
because they are derived form the same origin.
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",
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.
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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”.
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.
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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.
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.
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
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 of Madras ” 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), "Compensation for 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.
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.
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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.
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.
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
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.
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.
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 .
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.
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.
in English law but the exceptions being far and few, the rule that no one can enter into a legal
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.
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.
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.
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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 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.
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
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
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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.
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
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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.
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.
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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
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.
• “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.
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.
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.
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.
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
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 capacity for endless duration ”.
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
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,
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.
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.
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 fa 9ade.
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.
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.
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.
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.
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.
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.
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
- J
Company V. Brown observed that a company 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
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 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 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.
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
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.
*
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.
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
/
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”.
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.
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.
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.
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" .
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.
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.
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
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.
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.
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
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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.
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.
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.
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.
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.
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.
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
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.