1

SVKM’S

JITENDRA CHAUHAN COLLEGE OF LAW, VILE PARLE (MUMBAI).

TOPIC OF THE PROJECT –

LEGAL PERSONALITY IN THE LIGHT OF JURISPRUDENCE

SUBJECT –

JURISPRUDENCE LAW

NAME –

YASHI TANSUKH JAIN

DIVISION AND ROLL NO. –

C – 136

SUBMITTED TO –

DR. SHARMILA GUGHE

 2

ACKNOWLEDGMENT

In the accomplishment of this project successfully, many people have bestowed upon me
their blessings, guidance and support, I take this opportunity to express my gratitude to all of
them.

Primarily, I express my sincere thanks to, Dr. Priya Shah ,Principal, Jitendra Chauhan
College of Law for constant guidance and encouragement throughout my ongoing academic
course.

I express deep and sincere gratitude to Professor Dr. Sharmila Gughe whose guidance,
valuable suggestions, very constructive instructions and kind supervision have contributed
immensely to the evolution of my ideas on this project.

Lastly, I will be forever grateful for the support extended by my parents, friends and
classmates and for being immensely helpful in various phases of completion of the project.
 3

TABLE OF CONTENTS

SR NO. PARTICULARS PG NO.

1. Introduction 4
 Definition of Person 4

 Meaning of Personality 4

2. Kinds of Person 5
 Natural 5

 Legal 5

 Legal Personification of Non-Human Beings 5

3. Kinds of Legal Person 7
 Corporations 7

 Institutions 7

 Funds or Estate 7
4. Explaining Corporation as Legal Person 7
5. Kinds of Corporation 8
 Corporation Aggregate 8

 Corporation Sole 8

6. Theories of Corporate Personality 8

 Fictitious Theory 8

 Realistic Theory 9

 Symbolistic or Bracket Theory 9

7. Various types of Legal Personality 10
8. Case laws relating to corporate personality 12
9. Concept of Lifting of Corporate Veil 13
10. Conclusion 14
11. Bibilography 15
 4

INTRODUCTION

The word “person” is derived from the Latin word “persona” which meant a mask worn by
actors playing different roles in the drama. Until the sixth century the word was used to
denote the part played by a man in life. Thereafter, it began to be used in the sense of a living
being capable of having rights and duties. Many writers have restricted the use of term
personality to human being alone, because it is only they, who can be subject matter of rights
and duties and, therefore, of legal or juristic personality. But it must be stated that the term
personality has a far wider connotation in law and includes Gods, angels, idols and
corporations etc, although they are not human beings. On the contrary, there may be living
persons in olden times such as slaves, who were not treated as persons in the eyes of law,
because they were not capable of having rights and duties and the slavery is now completely
abolished in all civil societies of the world. 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 to his heirs and successors and his legal personality completely lost.

Definition of person

"A person is any being whom the law regards as capable of rights or duties" (Salmond).1

In law, there may be men who are not "persons". Thus, for instance, formerly, slaves with
destitute of legal personality in a system which regarded them as incapable of rights or
liabilities. Like cattle, they looked upon as things and the objects of rights, not persons and
the subject of any rights. Conversely, there are in law persons were not men or women. A
joint-stock company, for example, is a distinct person in the eyes of law, though not a human
being. Under the Indian Penal Code, the word 'person' includes any company or association,
or body of persons, whether incorporated or not.

"So as far as legal theory is concerned, a person is any being whom the law regards as
capable of rights or duties. Any being that is so capable is a person, whether a human being
or not, and no being that is not capable is a person, even though he be a man. Persons are the
substances of which rights and duties are the attributes. It is only in this respect that persons
possess juridicial significance, and this is the exclusive point of view from which personality
receives legal recognition."(Salmond)2

Meaning of personality

1
http://www.legalservicesindia.com/article/2316/Meaning-and-Kind-of-Person.html

2
http://www.legalservicesindia.com/article/2316/Meaning-and-Kind-of-Person.html
 5

Personality is a very vague and wide term and it has a variety of meanings. It is derived from
the Greek word persona. Persona meant the (Greek) actor's mask through which his voice
must be sounded. Later on, it came to be used for those who could play part in the legal
drama, those who could bear rights and duties.

Personality in the philosophic sense means the rational substratum of a human being. In law it
means a right and duty bearing unit. Personality should be distinguished from humanity.
Humanity means only the natural human beings but personality has a technical meaning and
it includes inanimate objects also. Thus personality is wider than humanity. Sometimes,
humanity and personality coincide and sometimes, they do not. In the same way there are
legal persons who are not human beings, such as an idol or a corporation.

KINDS OF PERSONS

Persons are of two kinds – Natural and legal.

Meaning of Natural Person

A natural person is a being. A natural person is legally defined as a living human being, to
whom 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 must be satisfied by a 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.

Meaning of Legal Person

"A legal person is any subject matter other than a human being to which the law attribute
personality." (Salmond). A legal person is thus any being, real or imaginary, to whom the
law attributes personality by way of a legal fiction where there is none in fact. There are
persons in law, but not in fact. They are also described as fictitious, juristic, or artificial
persons, as for instance a company.

Legal personification of non human beings.

The extension of the conception of personality beyond the class of human beings is one of the
most noteworthy feats of legal imagination. Personification conduces so greatly to the
simplicity of thought and speech that its aid is invariably accepted, and the thing personified
is called the Corpus Animus of a fictitious personality.
 6

Although it is true to a great extent that the legal personality involves personification, the
converse is not true. Personification is mere artifice of speech, whereas legal personality is it
definite legal conception. In common parlance, one speaks of the estate of a deceased as if it
were a person, owes debt and is a creditor, but the law does not recognize legal personality in
such a case. The rights and liabilities devolve upon the heirs and executors and not upon the
estate. In other cases, a group of persons is personified as a single person, even though the
law recognizes no body corporate, e.g a firm is a collection of individuals who have formed
it, this is personification, but there is no personality. One talks to the judges as the Court, of
the jurors as the jury, yet the jury is not the corporation, though personified for the sake of
convenience. Legal persons, being arbitrary creations of law, may be of as many kind as the
law pleases. e.g, corporations are undoubtedly legal person, and the registered trade unions
and the friendly societies are also called legal persons, though not regarded as corporations.

Natural Person vis-à-vis Legal person

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.
 7

5. There are different varieties of legal persons, viz. Corporations, Companies,

Universities, President, Societies, Municipalities, Gram panchayat, 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.

KINDS OF LEGAL PERSONS

Legal Personality is broadly divided into 3 varieties, by reference to the different kind of
things which the law selects for personification.

(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)3, 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
https://indiankanoon.org/doc/1591887/
 8

EXPALINING CORPORATION AS A LEGAL PERSONALITY

Definition

A corporation is a group or series of persons which, by a legal fiction, is regarded and treated
as a person.

Kinds of corporation

Corporation Aggregate

It is a group of co-existing persons. Corporations aggregate have several members at a time.

Examples are a registered company, and a municipal corporation. Such a corporation
example, a company is in law something different from its members. The property of the
company is not the property of the shareholders. The debts and the liabilities of the company
are not attribute in law to its members. A shareholder may enter into a contract with the
company, for the two persons are entirely distinct from each other.

Corporation sole.

Corporation sole consists of an incorporated series of successive persons. Corporation sole

has only one member at a time. Examples are the Sovereign, the Postmaster General, the
Solicitor of the treasury, the Secretary of the State for War, the Attorney General of India, the
Advocate General of Maharashtra and so on.

In the case of corporations sole, the element of legal fiction involved is that the law assumes
that, in addition to the natural person administering for the time being the duties and affairs of
the office, there is mystical being who is in law the real occupant of the office and who never
dies or retires. The living official is merely an agent or representative through whom this
legal person perform his functions. The human official comes and goes, but this offspring of
the law remains forever.

THEORIES OF CORPORATE PERSONALITY

There are many theories relating to the legal personality of a corporation, the 3 main are the
following,

1) The fictitious theory

2) The realistic theory
3) The bracket theory or the symbolist theory

The fictitious theory

 9

According to this theory, a corporation is a group of persons which by a legal fiction is

regarded and has treated itself, as a person. The personality of a corporation is fictitious being
which is quite distinct from, and stands over, its corpus, namely, shareholders or members.
The fictitious being is without a soul or body, not visible, save to the eye of law, as in the
case of a company.

The realistic theory

According to realistic theory, a corporation is nothing more, in law or infact, than the
aggregate of its members conceived as a unity, and this organisation of human beings is a real
person possessed of a real will of its own and capable of actions and of responsibility. The
realistic theory maintains that the corporation has a real psychic personality recognised, and
not created, by the law.

The reconciliation of fictitious theory and the realistic theory of the personality of the
corporation.

Though of these two theories, the fictitious theory of the corporation is more acceptable yet
there are some judicial decisions which hold to the contrary. Example it was held that
unlimited company can commit an offence, such as the offence of conspiracy to defraud in
spite of the fact that it can form its intention only through its human agents. The implication
of this decision is that the corporation, though it has no mind of well of its own can be guilty
of an offence involving mens rea, but at the same time such mens rea can be entertained by
the company only through which human agents. This result can be achieved by the
application of Doctrine of Lifting the Corporate Veil.

In conclusion, one might agree with Dr. Sethna and say that the personality of the corporation
is neither truly real or truly fictitious therefore it is quasi real or quasi fictitious.

The bracket theory

The bracket or the symbolist theory was developed by Jhering. Basically, this theory is quite
similar to the fictitious theory. It postulates that only human beings can have interest and
rights of a legal person. According to Jhering, the corporate personality is merely an
economic device to simplify the task of coordinating the legal relations of a corporation.
Hence, whenever necessary the law should look behind the corporate entity to discover the
real state of affairs which is, in fact the application of the doctrine of lifting the corporate
veil.
 10

VARIOUS OTHER TYPES OF LEGAL PERSONALITY IN INDIA

Karta

The position of the Karta in a Hindu coparcenary is an example of corporate personality. In

coparcenary system although each member of the joint Hindu Family has some rights and
duties and even though it is a single familial unit, a Joint Hindu Family does not have a
separate legal identity and is not a juristic person. It is not capable of holding property and the
law does not attribute any personality to a Joint Hindu Family. The Karta is overall head of
the joint family who manages the entire family property. He has a right to alienate the
property and other members of the family are under his control. He can sue and be sued on
the behalf of the joint family. In juristic terms, he is a corporation sole having a double
capacity, i.e., as a natural person he is the eldest member of the family and as a legal person
he is in the capacity of the Karta of the Joint Family.

Hindu Idols

According to the long established theory which was founded upon the religious customs of
the Hindus, a Hindu idol is a ‘juristic entity’ having a ‘juridical status’ and it has the power to
sue and being sued. But juridical person in the idol is not the material image but the image
develops itself into a legal person when it is consecrated by the Pran Pratistha ceremony.
According to Hindu law and various decisions of the courts, the position of idol is that of a
minor and a manager is appointed to act on idol’s behalf. Like a minor, an idol cannot
express itself and like a guardian, manager has some limitations under which he has to act
and perform its duties. According to this rule, Shri Guru Granth Sahib is also a juristic
person. But other religious texts such as Gita, Quran, Bible are not considered to be juristic
persons.

The Union of India and the State Governments

The Union of India and the States have also been recognized as corporate entities under
Article 300 of the Constitution of India. Article 300 relating to Suits and proceedings is as
follows:

(1) The Governor of India may sue or be sued by the name of the Union and the Government
of a State may sue or be sued by the name of the State and may, subject to any provisions
which may be made by Act of Parliament or of the Legislature of such State enacted by virtue
of powers conferred by this Constitution, sue or be sued in relation to their respective affairs
in the like cases as the Dominion of India and the corresponding Provinces or the
corresponding Indian States might have sued or been sued if this Constitution had not been
enacted
 11

(2) If at the commencement of this Constitution

(a) any legal proceedings are pending to which the Dominion of India is a party, the Union of
India shall be deemed to be substituted for the Dominion in those proceedings; and

(b) Any legal proceedings are pending to which a Province or an Indian State is a party, the
corresponding State shall be deemed to be substituted for the Province or the Indian State in
those proceedings.

The President of India as also the Governor of the State is a corporation sole like British
Crown. The Ministers of Union or State Government are not legal or constitutional entity and
therefore, they are not corporation sole. The reason being that they are appointed by the
President or the Governors and are ‘officers’ within the meaning of Articles 53 and 154 of the
Constitution. Article 53(1) say that the executive power of the Union shall be vested in the
President and shall be exercised by him either directly or through officers subordinate to him
in accordance with the Constitution. Similarly, Article 154(1) say that the executive power of
the State shall be vested in the Governor and shall be exercised by him either directly or
through officers subordinate to him in accordance with the Constitution.

Thus, they are not personally liable for their acts or omissions nor are they directly liable in a
Court of law for their official acts. It is the State whether the Centre or the federated unit
which is liable for the tort or the breach of contract committed by a Minister in his official
capacity.

Partnership Firm and Company

Partnership firm is not a legal person in the eye of law. There is no legal entity, standing over
against the partners. The property and debts of the firm are nothing else than those of the
partners. It can neither sue nor be sued in its own name. The member partners cannot contract
with their partnership firm because a man cannot contract with himself.

Unlike a partnership firm which has no existence apart from its members, incorporated
company has a distinct legal or juristic existence independent of its members. Under the law,
a corporation or a company is a distinct entity (legal persona) existing independent of its
members. An incorporated company exists as a complete being by virtue of its legal
personality and is often described as an artificial person in contrast with a human being who
is a natural person. A company being a legal entity by itself, is separate and distinct from its
promoters, shareholders, directors, officers or employees and as such, it is capable of
enjoying rights and being subjects to duties which are not the same as those enjoyed or borne
by its members. It may sue or be sued in its own name and may enter into contracts with third
parties independently and the members themselves can enter into the contract with the
company.

RBI: The Reserve Bank of India has a corporate existence because it is an incorporated body
having an independent existence.
 12

A Fund dedicated for a Religious Purpose: it was also of the nature of a legal person. It had
certain rights and received certain protection from law, such as the property dedicated to a
math.

Registered Societies: Societies registered under Societies Registration Act, 1860 are also
held to be legal persons.

Trade Union: Registered trade unions are considered as juristic persons.

Institutions like Church, University, Library etc.: these are considered as juristic persons.

CASE LAWS RELATING TO LEGAL PERSONALITIES

1. Independent corporate existence is one of the most important advantages of

incorporation. Unlike a partnership, which has no legal existence apart from its
partners, a company is a distinct legal person in the eyes of law. By incorporation, a
company is vested with a distinct corporate personality, which is distinct from the
members who compose it. A wellknown illustration of this legal principle is the
decision of the House of Lords in (Saloman v. Saloman Co. Ltd (1877 Appeal
Cases,22)4. The judgment of the case – A company is a separate legal entity distinct
from its members and so insulating Mr. Saloman, the founder of a Saloman Company
Ltd. from personal liability to the creditors of the company he founded. The court also
upheld firmly the doctrine of corporate personality, as set out in the Companies Act,
so that creditors of an insolvent company could not sue the company’s shareholders to
pay up outstanding debts.
2. About legal person, the Supreme Court has expressed the view that a legal person is
any entity other than a human being to which law attributes personality, it was stated
that : Let us be clear that the jurisprudence bearing on corporations is not a myth but
reality and not an illusion or fictitious construction of the law. It is a legal person.
Indeed, a legal person is any subject matter other than a human being to which law
attributes personality. This extension, for good and sufficient reasons, of the
conception of personality is one the most noteworthy feats of the legal persons
invented by the law and invested with the variety of attributes so as to achieve certain
purpose sanctioned by the law. ( Som Prakash Rekhi v. Union of India, (1981) SCC
449)5

4
https://en.wikipedia.org/wiki/Salomon_v_A_Salomon_%26_Co_Ltd

5
https://blog.ipleaders.in/article-12-of-the-indian-constitution-definition-of-state/#:~:text=Union%20of
%20India%20(1981),acquired%20by%20the%20Central%20Government.
 13

3. In another case it was stated : Thus, it is well settled and confirmed by the authorities
on jurisprudence and courts of various countries that for a bigger thrust of socio
political scientific development, evolution of a fictional personality to be a juristic
person become in evitable. This may be any entity, living, inanimate object or thing.
It may be religious institution or any such useful unit which may impel the courts to
recognize it. This recognition is for sub serving the needs and Faith of the society. A
juristic person, like any other natural person is in the law also conferred with rights
and obligations and is dealt with in accordance with the law. In other words, the entity
acts like a natural person but only through a designated person, whose acts are
processed within the ambit of law. (Shiromani Gurudwara Prabanak Committee
v. Som Nath Das, (2000) 4 SCC 146)6 it was stated by Supreme Court that the
historical background and sanctity of Guru Sahib held it to be juristic person.
4. Company is not a citizen. However, an incorporated company or a group recognised
as juristic entity is not necessarily a citizen of India though all the members
constituting it may be Indian Citizens. It has been held in (S.T Corporation of India
v. Commercial Tax Officers, AIR 1963 SC 1811)7
5. In (Farrar v. Farrar Ltd. 14 (1889) 40 Ch. D. 395)8 it was held that a sale by a
person to corporation of which he is a member is not either in form, or in substance as
sale by a person to himself, the idea is that the corporate body is distinct from the
persons composing it. A sale by a member of a corporation to the corporation itself is
in every sense, valid in equality as well as in law.

THE CONCEPT OF LIFTING THE CORPORATE VEIL

What is corporate veil?

A legal concept that separates the personality of a corporation from the personalities of its
shareholders, and protects them from being personally liable for the company’s debts and
other obligations, as it was discussed above in the case of (Saloman v. Saloman)

What is lifting of corporate veil?

At times it may happen that the corporate personality of the company is used to commit
frauds and improper or illegal acts. Since an artificial person is not capable of doing anything
illegal or fraudulent, the façade of corporate personality might have to be removed to identify
the persons who are really guilty. This is known as ‘Lifting of Corporate Veil’.
6
https://indiankanoon.org/doc/1478973/

7
https://indiankanoon.org/doc/1591887/

8
https://www.jstor.org/stable/24864289
 14

The veil can be lifted when it becomes necessary to know the character of a corporate person,
or when a corporation has been created to avoid some legal obligation, or when the device of
corporate personality is used to perpetuate fraud, as to evade tax, or when it is used to evade a
statute or to delay creditors, or when it is necessary to promote justice or to obviate
inequitable results.

Case Laws

1. In (Diamler Co. v. Continental Tyre Co.(1961 2 A.C. 307)9 the House of Lords
lifted the veil of legal personality of a company as all its shareholders and directors
were from enemy nation( Germans, during the World War 1).
2. In (U.S.A v. Lehigh Valley Rail Road Co. 220 N.S 257)10 the court pierced the veil
of legal personality where a railway company attempted to evade a statute which
forbids the transportation of coal by the person who was mining it by acquiring all the
shares of a coal company whose coal it was transporting.
3. (Santanu Ray v. Union of India)11, it was held that in case of economic offences a
court is entitled to lift the veil of corporate entity and pay regard to the economic
realities behind the legal facade. In this case, it is alleged that the company had
violated section 11(a) of the Central Excise and Salt Act, 1944.

CONCLUSION

From the discussion on jurisprudence theories of corporate personality, it is observed that

main arguments lie between the fiction and realist theories. The fiction theory claimed that
the entity of corporation as a legal person is merely fictitious and only exist with the
intendment of the law. On the other hand, from the realist point of view, the entity of the
corporation as a legal person is not artificial or fictitious but real and natural. The realist also
contended that the law merely has the power to recognize a legal entity or refuse to recognize
it but the law has no power to create an entity.

Referring to the English company law case law, it can be seen that in most cases, the court
adopted the fiction theory. (Salomon v A Salomon Co Ltd) is the most obvious example. It
is also observed that fiction theory provide the most acceptable reasoning in justifying the
circumstances whereby court lifted the corporate veil of corporation. If the entity of the
corporation is real, then the court would not have the right to decide the Circumstances where
there is separate legal entity of the corporation should be set aside. No human being has the
9
http://www.legalservicesindia.com/article/2316/Meaning-and-Kind-of-Person.html

10
http://www.legalservicesindia.com/article/2316/Meaning-and-Kind-of-Person.html

11
https://indiankanoon.org/doc/1549927/
 15

right to decide circumstances whereby the entity of another human being should be set aside.
Only law has such privilege.

Nonetheless, the realist contention that the corporation obtain its entity as a legal person not
because the law granted it to them but because it is generated through its day to day
transaction which are later accepted and recognized by law also seem acceptable.

BIBILOGRAPHY

1. THE ELEMENTS OF JURISPRUDENCE – N.H JHABVALA (2019 EDITION).

2. www.indiankanoon.org
3. www.wikipedia.com
4. https://www.jstor.org/stable/24864289
5. http://www.legalservicesindia.com/article/2316/Meaning-and-Kind-of-Person.html
6. www.ipleaders.in