The Sales-tax Authorities of the States of Andhra Pradesh and state sought-after to assess the Corporation to excise below their several excise Acts and issued notices of demand. The Corporation claiming to be Associate in Nursing Indian national filed petitions below Art. thirty-two of the Constitution for quashing the aforementioned proceedings on the bottom that they infringed its elementary rights below Art. 19(1) (f) and (g) of the Constitution. Preliminary objections having been taken by the respondents to the maintainability of the aforementioned petitions, the Constitution Bench hearing the matters referred the 2 following queries for the call by the special bench: [comprised nine judges]. “(1) whether or not the State commercialism Corporation, an organization registered below the Indian firm’s Act, 1956, could be a nation among which means of Art. nineteen of the Constitution and might fire the social control of elementary rights granted to voters below the aforementioned article; and (2) whether or not the State commercialism Corporation is, withal the formality of incorporation below the Indian firm’s Act, 1956, in substance, a department, organ of the govt. of the Asian country with all of its capital contributed by Government; and might its claim to enforce elementary rights below half III of the Constitution against the State as outlined in Art. 12
The State commercialism Corporation had approached the court for the issue of special writs against agencies of the state governments supported excise that was targeted on the corporation. The petition was to establish the facts in Article thirty-two of the Constitution that permits the Supreme Court to issue special orders for the social control of the rights of voters. The question on whether or not the State commercialism Corporation that could be a company that’s registered below the Indian firm’s Act, 1956 is often considered a national and might look for the social control of the elemental rights of voters Associate whether or not the STO is an organ of the govt. and might request for the social control of the rights of voters against a state as below half III of the constitution of the Asian country.
Facts of the Case
• The petitioner, “The State commercialism Corporation of Asian country Ltd”, a non-public company registered below the businesses Act, 1956 claimed it to be Associate in Nursing Indian national. The Petitioners have filed an official document petition below Article thirty-two before the Hon’ble Supreme Court of India against the infringement of elementary Right to Freedom warranted below Articles 19(1)(f) and 19(1)(g) of the Indian Constitution. The official document petition was filed because of the excise Assessment proceedings initiated by the excise Authorities of states particularly, Andhra Pradesh and state and resulting issue of notice stringent such tax from the petitioner company.
• The petitioner sought-after to quash the proceedings and therefore, filed an official document petition. The petitioners have additionally claimed themselves to be a Government Company.
• On the opposite hand, the respondent, the business Tax Officer of Vishakhapatnam raised preliminary objectives on Indian citizenship and nature on the government Company of the petitioner.
1) whether or not the State commercialism Corporation, an organization registered below the Indian firm’s Act, 1956, could be a nation among which means of Art. nineteen of the Constitution and might fire the social control of elementary rights granted to voters below the aforementioned article.
2) whether or not the State commercialism Corporation is, withal the formality of incorporation below the Indian firm’s Act, 1956, in substance, a department Associate in Nursing an organ of the govt. of the Asian country with all of its capital contributed by Government; and might its claim to enforce elementary rights below half III of the Constitution against the State as outlined in Art. twelve of the Constitution.
Fundamental Right, Enforcement of-Corporation, if a citizen
is entitled to claim fundamental rights-Constitution of India, Arts. 19(1)(f) and (g), 32.
- Durga Prasad V Baldeo; 1880
Durga Prasad had constructed some shops at the market with the promise of paying commissions on the sales made from the shop. Baldeo had spent some money on the improvement of the condition of the market on the authority of the government. The issue of consideration was brought before the court.
The court nullified the agreement because of the lack of a consideration which must be as desired by the promissory.
- Bates v. Standard Land Co.
The question of the distinction between the personality of a person and that of a company was brought before the court.
It was held that members of the board of directors constitute the pillars of the company by which the company can only act or take decisions through them.
Contentions of the Appellant
The learned counsel for the appellant argued that
• There is not any thorough dealing of “citizenship” among half II of the Indian Constitution or the Citizenship Act, 1955.
• Nationality is set on the premise of the place of the incorporation of the corporate.
• Moreover, since the company structure of the corporate was such ninety-eight of its capital was funded by the govt. of Asian country and registered within the name of the President and also the Governor and also the remaining a pair of within the name of 2 joint secretaries within the Ministry of Commerce and Industries, it’s a Government Company Associate in Nursing an Indian national because of the firm’s majority shareholders area unit Indians.
Contentions of the Respondent:
The learned Counsel for the respondents argued that.
• The petitioner doesn’t fall among the compass of the term “citizen” as provided below Article nineteen of the Indian Constitution as firms don’t seem to be recognized as voters below the Citizenship Act, 1955 or within the Constitution of the Asian country.
• The petitioner’s company can’t be aforementioned to be a government company just because of the govt. of Asian country contributes to the bulk of the fund.
• Chief Justice Sinha (on behalf of majority)-The Hon’ble apex Court drawing a crystal clear distinction between “nationality” and “citizenship” expressed that a nation is a national however all nationals don’t seem to be voters and, nationality is often claimed by an organization under the place of its incorporation however as way because the citizenship is bothered, it can’t be no inheritable just by incorporation at a specific place.
• Chief Justice Sinha (on behalf of majority)- The apex Court negated the distinctive side of citizenship between half II (Citizenship) and half III (Fundamental Rights)of the Indian Constitution. Moreover, the court additionally spoke regarding however some elementary Rights area unit certain to “any person” inclusive of voters, aliens, natural or legal persons, et al specifically to “all citizens”.
• Chief Justice Sinha (on behalf of majority) – The Court has additionally highlighted the very fact that when careful perusing of Article nineteen that advocates the proper to freedom that features right to assemble peacefully and while not arms, right to maneuver freely throughout the territory of India and also the right to reside and settle in any a part of the territory of India, a conclusion is often drawn that these said rights can’t be enjoyed by an organization and therefore, it’s can’t be known as a “citizen” below Article nineteen.
• Justice Hidayatullah (majority; extra viewpoint)- The court additionally expressed that an organization doesn’t become a nation simply because of the standing of its member’s area unit Indian. the corporate encompasses a separate legal temperament distinct from its members.
• Justice monarch (dissenting opinion) – The term “person” and “citizen” might also embrace legal persons together with firms.
• Justice Das Gupta (adopted middle ground between the bulk and negative opinion) – to work out that the corporate could be a national or not, the company veil should be pierced/ raised to grasp the citizenship of its shareholders.
• The 9 Judges bench once and for all negated the likelihood of treating firms as voters whereas implementing Article 19 of the Constitution.
The Hon’ble Apex Court whereas crucial this explicit case- highlighted, emphasized and etched out an important distinction between “nationality” and “citizenship”; whereas the previous encompasses a wider connotation and is employed as a broad term within the international arena and also the latter restricts to the domestic sphere and has restricted scope. even though these 2 terms still be used synonymously however there’s a distinction at the core.
Another vital side that the apex court mentioned was that no provisions of the constitution area unit black and white and there exists a gray space whereby an excellent scope for interpretation lies. for example, within the gift case wherever Article nineteen is certain to all the voters in Asian country however to not firms that area unit thought-about as legal persons, because solely when studying its sub-parts, one might logically conclude that an organization or the other legal person cannot have rights just like the right to assemble peacefully and while not arms, etc.
This judgment in 1963 could be a precedent because; it continues to carry connotation even nowadays. it’s Associate in Nursing incontestable undeniable fact that legal persons like firms don’t seem to be thought-about voters, however, could also be nationals of a country; not entitled to rights that “citizens” are presented with as a result of they’re not natural however artificial legal persons having separate legal personalities of their own. However, there are a unit times that need to pierce the veil and recognize the $64000 persons behind the operating of a man-made body, and hence, the idea of the lifting of the company veil is intended meticulous
[i] State Trading Corporation of India Limited and Others v. Commercial Tax Officer, Visakhapatnam and others 1963 AIR 1811 1964 SCR (4) 89.