Introduction

The company is an organization of people, having its separate legal existence. In conducting its
business the company has to abide by the law of the Land. Sometimes, these laws may result in
depriving the company of the freedoms that are required to carry on its business. So, the
question arises that whether the company is guaranteed the basic rights as enshrined under Part
III of the constitution, which are available to the individuals.
In Chiranjit Lal Chowdhuri v. Union of India 1 , the court observed that the fundamental
rights guaranteed by the Constitution are available not merely to individual citizens but to
corporate bodies as well except where the language of the provision or the nature of the right
compels the inference that they are applicable only to natural persons.
So, an incorporated company, therefore, can come up to this court for enforcement of its
fundamental rights and so may the individual shareholders to enforce their own; but it
would not be open to an individual shareholder to complain of an Act which affects the
fundamental rights of the company except to the extent that it constitutes an infraction of
his own rights as well. This follows logically from the rule of law that a corporation has a
distinct legal personality of its own with rights and capacities, duties and obligations separate
from those of its individual members. As the rights are different and inhere in different legal
entities, it is not competent to one person to seek to enforce the rights of another except where
the law permits him to do so.
This observation of the court was by way of an obiter rather than a ratio. But still, gives an idea
that the rights of corporation/company can be enforced, if the language permits.
This observation helps us to understand the enforcement of the rights of the company with
respect to those Fundamental Rights that are available to person. But whether the rights
available to citizens only, can be availed by the company or not is the point of actual
discussion.
In this project, an attempt has been made to discuss position of the company in claiming
the rights available only to the citizens under Art. 19 of the Indian Constitution.

Whether Company a citizen?

The Supreme Court for the first time discussed that whether company is a citizen within the

1
Chiranjit Lal Chowdhuri v. Union of India, AIR 1951 SC 41

1
meaning of Art. 19 or not in State Trading Corporation v. The Commercial Tax Officer2
The Sales-tax Authorities of the States of Andhra Pradesh and Bihar sought to assess the
Corporation to sales tax under their respective Sales Tax Acts and issued notices of demand.
The Corporation claiming to be an Indian citizen filed petitions under Art. 32 of the Constitution
for quashing the said proceedings on the ground that they infringed its fundamental rights under
Art. 19(1) (f) and (g) of the Constitution.
A preliminary objection was taken by the respondent to the maintainability of the petition. the
Constitution Bench hearing the matters referred the following question for decision by the
special bench: Whether the State Trading Corporation, a company registered under the
Indian Companies Act, 1956, is a citizen within the meaning of Art. 19 of the
Constitution and can ask for the enforcement of fundamental rights granted to citizens
under the article 19.
The court held that the word citizen has not been defined by the Constitution. Part II of the
Constitution deals with 'Citizenship', at the commencement of the Constitution. Part II, in
general terms, lays down that citizenship shall be by birth, by descent, by migration and by
registration. Persons coming within the purview of Arts. 5, 6 & 8, as aforesaid, may still not be
citizens of India if they have migrated from India to Pakistan, as laid down in Art. 7, or if they
have voluntarily acquired the citizenship of any foreign State.
Thus, the provisions of the Constitution in Part II relating to 'Citizenship and they are
clearly inapplicable to juristic persons.
By Art. 11, the Constitution has vested Parliament with the power to regulate, by legislation, the
rights to citizenship. In the exercise of the said power the Parliament has enacted the Citizenship
Act, 1955. The act provides for acquisition and termination of Indian citizenship. The definition
of the word "person" in s. 2(1)(f) of this Act says that the word "person" in the Act "does not
include any company or association or body of individuals, whether incorporated or not".
Hence, all the subsequent provisions of the Act relating to citizenship have nothing to do with a
juristic person. Thus, it is absolutely clear on a reference to the provisions of the statute that a
juristic person is outside the purview of the Act.
Thus the court on an examination of the relevant provisions of the Constitution and the
Citizenship Act, reached the conclusion that they do not contemplate a corporation as a
citizen.

2
State Trading Corporation v. The Commercial Tax Officer, AIR 1963 SC 1811

2
 Whether Corporate Veil can be Lifted to Enforce the Rights?
In Tata Engineering & Locomotive v. State of Bihar 3, the question again came up before the
court for the enforcement of the fundamental right of the company under Art. 19 by piercing the
corporate veil.
In this case the petitioners were ordered to pay sales-tax on account of certain transactions made
by them in the State of Bihar.
The court held that the petitions under Art. 32 were incompetent although in each of them one or
two of the share-holders of the petitioning companies or corporations had also joined. Article 19
guarantees rights to citizens as such and associations cannot lay claim to the fundamental rights
guaranteed by that Article solely on the basis of their being an aggregation of citizens. Once a
company or a corporation is formed, the business which is carried on by the said
company or corporation is the business of the company or corporation and is not the
business of the citizens who got the company or corporation formed or incorporated and
the rights of the incorporated body must be judged on that footing and cannot be
judged on the assumption that they are the right attributable to the business of
individual citizens.
The petitioners cannot be heard to say that their shareholders should be allowed to file the
present petitions on the ground that in substance, the corporations and companies are nothing
more than association of shareholders and members thereof. If their contention is accepted, it
would really mean that what the corporations or companies cannot achieve directly, they can
achieve indirectly by relying upon the doctrine of lifting the veil. If the corporations and
companies are not citizens, it means that the Constitution intended that they should not get the
benefit of Art. 19.
The petitioner urged that though Art. 19 is confined to citizens, the Constitution-makers may
have thought that in dealing with the claims of corporations to invoke the provisions of Art. 19,
courts would act upon the doctrine of lifting the veil and would not treat the attempts of the
corporations in that behalf as falling outside Art. 19. The court held that this argument is not
well-founded. The effect of confining Art. 19 to citizens as distinguished from persons to whom
other Articles like 14 apply, clearly must be that it is only citizens to whom the rights under Art.
19 are guaranteed. If the legislature intends that the benefit of Art. 19 should be made available
to the corporations; it would not be difficult for it to adopt a proper measure in that behalf by

3
Tata Engineering & Locomotive v. State of Bihar, AIR 1965 SC 40

3
enlarging the definition of 'citizen' prescribed by the Citizenship Act passed by the Parliament
by virtue of the powers conferred on it. On the other hand, the fact that the Parliament has not
chosen to make any such provision indicates that it was not the intention of the Parliament to
treat corporations as citizens.

Thus the court held that the argument that in the present petitions it would be justified in
lifting the veil cannot be sustained and thus the fundamental rights available under Art. 19
to the citizens are not available to the corporations.

When Rights of Shareholder Also Effected

Upto this point of time it was clearly established that the company cannot claim the rights
available to citizens only. But this trend was changed by the decision of the court in Rustom
Cavasjee Cooper v. Union Of India 4 In this case Rustom Cavasjee Cooper held shares in the
Central Bank of India Ltd., the Bank of Baroda Ltd., the Union Bank of India Ltd., and the Bank
of India Ltd., and has accounts-current and fixed deposit -with those Banks. He was also a
director of the Central Bank of India Ltd. He challenged the validity of the Banking Companies
(Acquisition and Transfer of Undertakings) Act 22 of 1969.
The petitioners claim was that by the Act and the Ordinance the rights guaranteed to him under
Articles 14, 19 and 31 of the Constitution were impaired. He thus challenged the infringement
of his own rights and not of the Banks.
Thus the court allowing the petition held that:

"A measure executive or legislative may impair the rights of the company alone, and not of
its shareholders; it may impair the rights of the shareholders not of the Company; it may
impair the rights of the shareholders as well as of the company. Jurisdiction of the Court
to grant relief cannot be denied, when by State action the rights of the individual
shareholder are impaired, if- that action impairs the rights of the Company as well. The
test in determining whether the shareholder's right is impaired is not formal; it is
essentially qualitative; if the State action impairs the right of the shareholders- as well as
of the Company, the Court will not, concentrating merely upon the technical operation of
the action, deny itself jurisdiction to grant relief."

Thus in this case the court tried to enforce the rights of the individual shareholders even though

4
Rustom Cavasjee Cooper v. Union Of India, AIR 1970 SC 564

4
it resulted in the enforcement of the rights of the company. The presence of the company does
not act as a bar to the enforcement of the rights of the individual share-holders.

The same trend was followed by the court in Bennett Coleman v. Union of India5

The questions that fell for consideration were: whether the petitioners being companies
could invoke fundamental rights available under Art 19.
The court held that the Bank Nationalization case has established the view that the fundamental
rights of shareholders as citizens are not lost when they associate to form a company. When
their fundamental rights as shareholders are impaired by State action, their rights as
shareholders are protected. The rights of shareholders with regard to Article 19(1) (a) are
projected and manifested by the newspapers owned and controlled by the shareholders
through the medium of the Corporation. In the present case the individual rights of freedom
of speech and expression of editors, Directors and Shareholders are all expressed through their
newspapers through which they speak. Thus the court held that the locus standi of the
shareholder petitioners is beyond challenge after the ruling of this Court in the Bank
Nationalisation case. The presence of the company is on the same ruling not a bar to the grant of
relief.
Thus this case reaffirmed the decision of the court in R.C. Cooper v. Union of India and found
the company a way by which the individual shareholders exercised their fundamental right.

Analyzing the Status

From State Trading Corporation to Bennett Coleman case, it appears that the courts have
liberalized the approach of extending the rights available under Art. 19 to the companies also.
But when an in depth analysis of all these cases are looked into, we will find that in all these
case the court have taken a constant approach.
In State Trading Corporation v. CIT, the petition was filed by the corporation. The petition
was filed for the purpose of some alleged wrong taxation. Here the money taxed was of the
company. Company is an individual juristic personality having independent existence than of
its share-holders. The company is capable of holding property. So in this case the money taxed
was that of the company and not that of the individual share-holders. So actually the money
taxed was of the corporation. So it was the rights of the company that was being affected. So,

5
Bennett Coleman v. Union Of India, AIR 1973 SC 106

5
the court finding that company is not a 'citizen' within the meaning of the Art 19 cannot avail the
rights.
Next case is that of Tata Engineering & Locomotives v. State of Bihar. In this case the
company approached the court for against some tax liability on the sale made outside the state.
Here again we can see that the money that was taxed were of the company and not of the
individual shareholders.
In both these cases thought the wrong taxation was hindering in the freedom of trade, business
and occupation but it was the hindrance in the business of the company and not the hindrance in
the business of the individual members.
It is generally said that the situation changed with the decision of the court in R.C. Cooper v
Union of India. In this case the share-holder approached the court for the declaration of the
Bank Nationalization act as unconstitutional. If we carefully analyze the case, we will find that
the act was in a way hindering the right of business of the individual shareholder and not
of the company. The act was acting as a hindrance between the individual and his right of using
banking company as a tool for business rather than hindering the company's right of doing
business. Thus in this case the court by accepting the challenge enforced the right of the
individual and not of the company. So it can be seen that in this case also the court not enforced
the right of the company as done in the previous cases.
Then is the Bennett Coleman case. In this case the news print control regulations of the
government were challenged. Here again the court found that the company was a mode of
freedom of expression of the individual shareholders. It was though a restriction in a
company's business but it interfered with the rights of the individual for whom the company was
a mode of exercising its other right of freedom of speech and expression. The court thus
accepting the petition in a way enforced the rights of the individual and not of the company.
In both the cases i.e. R.C. Cooper and Bennett Coleman, the courts enforced the rights of the
individual and not of the company. If it appears that the rights of the company is also enforced
then that is incidental and not the primary effect of the court's decision.
Thus we can see that in all these decision the court does not treat the company to be the
citizen.

Law Commission Report6

6
Hundred and First Law Commission Report(1984) pg. 18

6
 The law commission in its 101th Report suggested that the fundamental rights available to
citizens under Art 19 of the Constitution should be made available to the corporations also. The
law commission recommended an amendment in the Constitution. The law commission was of
the view that the benefits of the Art 19 should be not be just limited to the natural persons but
shall also be available to the entities that have corporate status. At the same time the provisions
should be so formulated so as to keep intact the concept of indian character, just as the natural
person are required to be the citizen of India to avail the rights. Thus the Law commission
recommended the addition of the following explanation to Art 19:
The following shall be deemed to be the citizen of India:
(a) The company incorporated in India in which the entire share capital is held by:
(i) by the citizens of India; or
(ii) by the Government; or
(iii) by any such corporation as is specified in clause (b) of the Explanation; or
(iv) by a company incorporated in India in which the entire share capital is held by citizens of India
or by the Government or by any such corporation as is specified in clause (b) of the
Explanation or by some or all of them taken together; or
(v) by some or all of them taken together.
(b) all corporations, other than companies, being corporations established by or under law for
time being in force in India.

Second Press Commission Report7

The second Press Commission recommended:
To sum up, a company is not a citizen and therefore, cannot claim the fundamental rights
enumerated under Article 19. Since many newspapers are published by companies, and a
company is not entitled to the fundamental right under Article 19, being not a citizen, we
recommend that all Indian companies, engaged in the business of communication and whose
shareholders are citizen should be deemed to be 'citizen' for the purpose of relevant clauses of
Art. 19.

Analyzing the Recommendations

These observations of in a way justify that the freedoms available under Art. 19 are limited to

7
Second Press Commission Report(1981) Vol I pg. 32

7
the citizens only. One of the reasons for doing so is that if these freedoms are provided to the
foreigners who are aliens and does not owe any allegiance to the country will misuse it. 8 This
limitation of the rights to citizen only indicates that these rights can easily be misused against
the nation. Also when a national emergency is imposed, the rights under Art. 19 are
9
automatically suspended. This all things go on showing that the rights under Art. 19 are
vulnerable and if given to wrong hands can be detrimental to the State.
Also, it can be seen that the Law Commission has focused on keeping the rights available to
indian character companies i.e. the companies whose shareholders are Indian Citizen. But in
today's world of globalization, we are witnessing the investment from foreign share-holders
also. So, these companies will be kept aloof from the purview of Art.19.
Secondly, the Press Commission wanted the company engaged in business of communication to
be given the benefit of Art 19. But it failed to appreciate the decision of the Supreme Court in
Bennett Coleman case, which established that such company is a medium of the individuals of
exercising freedom of speech and expression so the rights will be protected, no matter the right
asked for results on enforcement of the rights of the company.

Conclusion
The project was initiated keeping in mind three research questions.
1) Is the approach of the court in enforcing the rights of the company, when the rights of the
shareholders are also effected, appropriate i.e. is this approach too wide for enforcing rights
under Art 19?
2) If the courts enforce the rights of the individual shareholders, then does it result in indirect
enforcement of the rights of the company?
3) Does the word citizen used in the constitution needs to include company so that the rights
of company are directly enforced?

After analyzing the relevant case laws, The Law Commission Report and Second Press
Commission Report, I derive at the following conclusions.
It can be seen that the court has kept one of its constant stand that the company is not a 'citizen'
for the purpose of Art. 19. Thus, they are not entitled to the rights available under Art. 19. Now
8
David Cole.Are Foreign Nationals Entitled to the Same Constitutional Rights As Citizens?. 25 T. Jefferson
L. Rev. pg 367-388
9
Art. 358 Indian Constitution

8
when the question arises for the enforcement of the rights of the company, the court first views
that whether the alleged act actually affect individuals right or not. If the act effects individual
right, then the court enforces the rights of individual and the enforcement of rights of the
company in just incidental.
Though the test to determine whether the rights of the individual or of the company is effected
is uncertain but it is seen that if the court finds even a slight resemblance between the
individuals and company's right (as in Bennett Coleman case), the court go on enforcing the
right of citizen, even though the company's rights are also being enforced simultaneously.
This approach of the court while enforcing the right of the company while interpreting Art. 19
as a right of an individual citizen seem to be liberal and this approach of the court is appropriate.
The court by such enforcement of the rights is realizing the mandate of Art. 19 only and does
nothing more. Art. 19 guarantees rights to the citizen but does not bar that such right of citizen
shall not be enforced if it results in enforcement of the rights of the company. Thus, the current
liberal approach of the court in realizing the mandate of Art. 19 is appropriate.

On the face of it appears that the courts by enforcing the right of the individual shareholder are
enforcing the rights of the company indirectly. But, it is to be looked that courts categorically
tries to identify that whose right is being affected by the alleged act. If the court finds that right
of individual share-holder is being affected then the court, enforces the right. If the right of both
share-holder and company is affected then the court enforces the right. But if only the right of
the company is affected then the court debars itself from enforcing the right of the company.
This approach of the court shows that the court likes to enforce the rights of individual and not
of the company. If court find only the company's right being effected (as in State Trading
Corporation case), then it does not go further. Thus, the enforcement of the fundamental rights
of the company when fundamental rights of individual share-holder are enforced is an incidental
effect and not a deliberate indirect enforcement of company's right.

Presently the company is not taken to be citizen for the purpose of Art. 19. Based on the nature
of the rights that are available under various other Articles and under Art. 19 it seems justified
excluding company from the rights available under Art.19. For example Art. 14 states that The
state shall not deny any person equality before law.........., similarly Art. 21 states: No person
shall be deprived life or personal liberty.......... A perusal of these two provisions will bring to
light that to avail these rights the person need not to do some positive overact. It just debars the

9
State from interfering in the normal course of life of the individuals. But Art. 19 provide six
freedoms to the citizens. If State interferes with these freedoms then the law will protect the
citizen. So to realize the benefit of Art. 19, one need to do some positive overacts enjoying the
available freedom and if there is some hurdle, the law will protect it. But company is an
artificial person. It cannot act on its own to avail these freedom. So there needs to be a natural
person, dictating what freedom the company needs to enjoy. But the act will be attributed to
company. So if there is misuse of such a right, there would be a difficulty to fix the liability of
the company. Also the individuals calling the shot will start misusing the rights available under
Art.19 to further his own aim.
Also there are practical difficulties that how to fix the citizenship of a company. It may be
possible that a company is incorporated in India by the foreign citizens, then such company will
claim the rights guaranteed under Art. 19 though the shareholders can't. Thus in this way the
foreign citizens will start enforcing their rights indirectly by incorporating companies in India.
The Law Commission of India in its 101th report recommended that the rights under Art 19
should retain indian character in relation to whom it is available. This again suggests that
these rights if given to aliens are liable to be misused more, rather than to help them. So, in a
country where the doctrine of lifting the corporate veil is not clear, if such right is misused then
who will be held responsible. So, it is better that scope of Art. 19 is not expanded to the
companies.
As a concluding remark I would like to state that the current position of law is that the company
is not a citizen, the courts by enforcing the rights of shareholder are not enforcing the rights of
the company but only realizing the mandate of Art. 19. The approach of the court is not
resulting in any difficulty to the share-holder as such because whenever their right is being
affected, the presence of company does not act as a hurdle for the enforcement of the rights of
the individuals. So there is no need for inclusion of company within the definition of citizen
for the purpose of Art. 19 of the Indian Constitution.

10