The State Trading Corporation of India Ltd. and Others v. The Commercial Tax Officer, Visakhapatnam and Others

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Not extracted

Decision Date: 26 July 1963

Coram: Bhuvneshwar P. Sinha, S.K. Das, P.B. Gajendragadkar, A.K. Sarkar, K.N. Wanchoo, M. Hidayatullah, K.C. Das Gupta, J.C. Shah, N. Rajagopala Ayyangar

In this case the Supreme Court of India considered the petition titled The State Trading Corporation of India Ltd. and Others versus The Commercial Tax Officer, Visakhapatnam and Others, which was decided on 26 July 1963. The author of the judgment was Justice Bhuvneshwar P. Sinha and the bench comprised Justices Bhuvneshwar P. Sinha, S. K. Das, P. B. Gajendragadkar, A. K. Sarkar, K. N. Wanchoo, M. Hidayatullah, K. C. Das Gupta, J. C. Shah and N. Rajagopala Ayyangar. The petitioner was identified as The State Trading Corporation of India Ltd. and others, while the respondents were The Commercial Tax Officer, Visakhapatnam and others. The judgment date is recorded as 26/07/1963 and the bench is again listed as Sinha, Bhuvneshwar P. (CJ) together with Justices Das, S. K., Gajendragadkar, P. B., Sarkar, A. K., Wanchoo, K. N., Hidayatullah, M., Gupta, K. C., Shah, J. C., Ayyangar and Rajagopala. The citation of the decision is 1963 AIR 1811 and 1964 SCR (4) 89. The accompanying citator information includes references such as R 1964 SC1451 (10), R 1965 SC 40 (4, 6, 23), F 1966 SC1436 (5), R 1967 SC 295 (17), OPN 1967 SC1318 (4), RF 1970 SC 82 (5), RF 1970 SC 564 (7), R 1971 SC 870 (7, 13), RF 1973 SC 106 (11), MV 1975 SC1331 (127, 177), R 1975 SC1737 (2), R 1981 SC1368 (7), RF 1983 SC 937 (12), F 1988 SC1708 (13), D 1989 SC1713 (10). The relevant statutory provision is identified as the enforcement of fundamental rights by a corporation if it is a citizen, under Articles 19(1)(f) and (g) of the Constitution of India and Article 32. The headnote explains that the State Trading Corporation of India is a private limited company incorporated under the Indian Companies Act, 1956, with its head office in Delhi and its entire share capital contributed by the Government of India. The sales‑tax authorities of the States of Andhra Pradesh and Bihar sought to assess the corporation for sales tax under the respective State Sales Tax Acts and issued notices of demand. The corporation, claiming to be an Indian citizen, filed petitions under Article 32 of the Constitution seeking quashing of those proceedings on the ground that they infringed its fundamental rights under Article 19(1)(f) and (g). The respondents raised preliminary objections challenging the maintainability of the petitions, and the Constitution Bench that was hearing the matters referred two questions for determination by the special bench. The first question asked whether the State Trading Corporation, a company registered under the Indian Companies Act, 1956, qualifies as a citizen within the meaning of Article 19 of the Constitution and can therefore seek enforcement of the fundamental rights granted to citizens under that article. The second question examined whether, despite its formal incorporation under the Companies Act, the corporation is in substance a department or organ of the Government of India, given that its entire capital is contributed by the Government, and whether it may invoke fundamental rights under Part III of the Constitution against the State defined in Article 12. The Court held, with Justices Das Gupta and Shah dissenting, that the answer to the first question must be negative. The majority opinion, delivered by Chief Justice Sinha together with Justices S. K. Das, Gajendragadkar, Sarkar, Wanchoo and Ayyangar, concluded that a corporation cannot be regarded as a citizen for the purposes of Article 19 and therefore cannot claim the protection of the fundamental rights that are available only to citizens.

The Court observed that the Constitution and the Citizenship Act, 1955, speak only of natural persons as citizens of India and that these provisions are exhaustive, deliberately excluding any juristic persons. It explained that Part III of the Constitution distinguishes clearly between fundamental rights that are available to “any person” and those that are guaranteed specifically to “all citizens,” thereby indicating that while every citizen is a person, not every person qualifies as a citizen. The Court further noted that Part II of the Constitution, which deals with citizenship, is expressly inapplicable to juristic persons, and that the provisions of the Citizenship Act, 1955—enacted by Parliament under Article 11 of the Constitution—demonstrate that corporations lie outside the scope of that Act. Consequently, the Court held that neither Part II of the Constitution nor the Citizenship Act, 1955, confers citizenship or recognizes any entity other than a natural person as a citizen, and that the provisions do not envisage a corporation as a citizen. The Court also observed that none of the earlier decisions of this Court had directly addressed the precise issues raised in the present petitions, and therefore the questions remained open for determination. The Court referred to the earlier cases of Chiranjit Lal Chowdhuri v. Union of India [1950] S.C.R. 869, Dwarkadas Srinivas of Bombay v. Sholapur Spinning & Weaving Co. Ltd. [1954] S.C.R. 674, and Bengal Immunity Co. Ltd. v. State of Bihar [1955] 2 S.C.R. 603, noting that those authorities had considered related aspects but not the specific question of corporate citizenship. The Court clarified that the concepts of “nationality” and “citizenship” are not synonymous; a corporation may claim nationality based on its place of incorporation, but nationality governs civil rights in the context of international law, whereas citizenship is closely linked with civic rights under domestic law. Accordingly, the Court stated that all citizens are nationals of a particular State and enjoy full political rights, but not all nationals are citizens, and therefore not all enjoy full political rights. The Court rejected the proposition that the term “citizen” in Article 5 is narrower than its use in Article 19, and it also rejected the view that Part II of the Constitution, together with the Citizenship Act, deliberately omitted juristic persons from the concept of citizenship. The Court explained that whenever the Constitution confers a right to be exercised by a citizen, it uses the expressions “any citizen” or “all citizens” in clear contrast to rights that are meant for all persons, whether citizens, aliens, natural or juristic. Accordingly, there is no basis to assume that the word “citizen” in Article 19 carries a different meaning from that used in Part II of the Constitution. The opinion of Justice Hidayatullah, speaking for himself and others, was that both questions before the bench should be decided in favour of the respondents. The Court further noted that before independence India had no law of citizenship; under the British Nationality Act, 1948, Indians became Commonwealth citizens or British subjects without a separate Indian citizenship and were considered potential citizens of India. The Indian Constitution subsequently created a scheme for citizenship that applied only to certain natural persons, and the Citizenship Act, 1955, explicitly excluded persons other than natural persons from citizenship.

The Court observed that it was inaccurate to claim that corporations possessed citizenship before the Constitution came into force. Such entities enjoyed only those privileges that municipal legislation expressly granted them. The nature and legal personality of an incorporated company arise from a legal fiction; this personality commences at the moment of incorporation, at which point the individuals who subscribe to the memorandum of association or become members form a body corporate. However, the status of these members does not merge into a single corporate status, and even if every member is an Indian citizen, the company itself does not become a citizen of India. The Court referred to the authorities G. E. Railway v. Turner (1872) L.R. 8 Ch. App. 152, Salomon v. Salomon & Co. (1897) A.C. 22 and Janson v. Driefontein Consolidated Mines Ltd. (1902) A.C. 484 to support this principle. It noted that the seven freedoms guaranteed by Article 19(1) are intended for citizens of India, and that the Constitution, by employing the broader term “person” in other provisions, clearly intended to exclude corporations from the definition of citizen. The decision in Chiranjit Lal Chowdhuri v. Union of India [1950] S.C.R. 869 was cited to illustrate this intent. Furthermore, the Court rejected the applicability of United States Supreme Court precedents that treat corporations as citizens of the state of incorporation for federal jurisdiction, emphasizing that such diversity of citizenship does not exist in India. Because a corporation is a separate legal entity, the veil of incorporation cannot be pierced to attribute the citizenship of its members to the corporation for the purpose of invoking Article 19. Consequently, the State Trading Corporation was held not to be a citizen either individually or as a collective of Indian citizens; its Indian nationality could not be equated with the citizenship of natural persons, and the term “citizen” in Article 19(1)(f) and (g) applies solely to natural persons. The Court further described the State Trading Corporation as effectively a department of Government operating behind a corporate façade.

Justice Das Gupta then addressed the first question, answering it in the affirmative. He reiterated that the Court has consistently held that constitutional interpretation must adopt a broad, liberal approach rather than a strictly grammatical or mechanical one. A syllogistic or formulaic method must be avoided, especially when interpreting the Constitution, and the aim should be to discern the intention of the Constitution‑makers by examining the substance of the provision and giving effect to that intention where possible. Accordingly, the Court concluded that when the Constitution’s framers used the word “citizen” in Article 19, they intended that at least a corporation formed entirely of Indian citizens should enjoy the fundamental rights enumerated therein. No provision in the Constitution bars the extension of the benefits of Articles 19(1)(f) and (g) to all Indian citizens, even when they organize themselves as a corporation. The Court cited State of Bombay v. R. M. D. Chamarbaughwala, I.L.R. Bom. 680, and reiterated the principle from Chiranjit Lal Chowdhuri v. Union of India to support the view that the constitutional text does not prevent granting these rights to corporations wholly composed of Indian citizens.

The Court noted several authorities that were relevant to the discussion, namely Union of India reported in S.C.R. at page 869, Express Newspapers (P) Ltd. v. Union of India reported in S.C.R. at page 12, Bengal Immunity Co. v. State of Bihar reported in the 1955 volume 2 of S.C.R. at page 603, and Bombay Dyeing Manufacturing Co. Ltd. v. State of Bombay reported in the 1958 volume of S.C.R. at page 112. After considering the material, the Court held that the first part of the second question should be answered in the negative, whereas the second part of that same question should be answered in the affirmative. Justice Shah, speaking for the Court, explained that when the meaning of expressions in a fundamental document such as the Constitution is being ascertained, a mechanical approach is not permissible. He emphasized that the Constitution represents the declaration of the will of the people and therefore must be interpreted liberally rather than in a narrow or doctrinaire manner. The proper method, he said, requires that interpretation be carried out in line with the true purpose and intent disclosed by the language, understood in its natural signification, taking into account the setting and the dynamic character of the Constitution, which is intended to fulfil the aspirations of the people. He further defined citizenship as the status by which the members of a juridical society invest the holder with all the rights and privileges enjoyed by its nationals, while also imposing corresponding duties upon the holder. Nationality, he explained, links a person to a State and guarantees that person’s rights in international affairs. He observed that although every citizen is a national, not every national necessarily qualifies as a citizen. To illustrate this point, the Court referred to the case of Virginia L. Minor v. Reese Happersett, reported at 21 Wall. 162, 88 U.S. 627.

The judgment proceeded to examine the position of a corporation under English common law, which forms the foundation of Indian jurisprudence. Under that legal tradition, a company or a corporate aggregate is regarded as a national of the State in which it is incorporated and is endowed with a legal personality created by the law of that land. This personality enables the corporation to exercise rights and to be entitled to broad protection. The Court cited several English decisions to support this view, including Janson v. Driefontein Consolidated Mines Ltd. reported in the Law Reports at (1902) A.C. 492, Attorney‑General v. Jewish Colonisation Association reported at (1901) 1 K.B. 133, Generali v. Salim Cotran reported at (1932) A.C. 288, Gasque v. Commissioner of Inland Revenue reported at (1940) 2 K.B. 36, and Kuenigl v. Donnersmark reported at (1955) 1 Q.B. 515. Turning to Indian law, the Court observed that a juridical person in India is capable of exercising, to the fullest extent, a large majority of the civil rights that natural persons may enjoy as citizens. Any incapacity of a corporation to exercise certain rights, the Court held, arises from the nature of its legal personality and the constitutional framework, not from any special restriction imposed upon it. The Constitution, as evident from various other Articles, affords corporations the same wide protection that it provides to natural persons. Consequently, unless the language or the scheme of the Constitution is compulsive, it is impossible to assign a limited meaning to the term “citizen” that appears in Article 19(1). The Court warned that to assert that Articles 5, 6 and 8 together with the law made under Article 11 are exhaustive, thereby implying that no citizen could exist except those expressly covered by those provisions, would assume that there were no citizens in India before the Constitution. Such an assumption, the Court said, is not supported by either the language of the Constitution or the historical evolution of the nation. The legislative history, the Court observed, shows that British subjects of Indian origin were regarded as citizens in British India, indicating a continuity of citizenship that predates the Constitution.

The Court observed that before the Constitution there was no statute in India indicating that a corporate aggregate could not be a citizen, and that British subjects of Indian origin had citizen status under British rule. Although the Court had not expressed a definitive opinion, it had consistently presumed that corporate aggregates were entitled to claim protection under Article 19(1) as citizens, citing cases such as Chiranjit Lal Chowdhuri v. Union of India, Bengal Immunity Company Ltd. v. State of Bihar, State of Bombay v. R. M. D. Chamarbaughwala, and State of West Bengal v. Union of India. In numerous decisions the Court had assumed, without dispute, that a company was a citizen of India and could enforce fundamental rights under Articles 19(1)(f) and 19(1)(g). The Court noted that because a company enjoys important fundamental rights under various other constitutional provisions, and is recognized as a person capable of holding and disposing of property and conducting business, commerce and intercourse, the term “citizen” in Article 19 could not be confined to natural persons. However, the Court clarified that a corporation is distinct from its shareholders, and even if all shareholders are Indian citizens, the corporation’s claim to citizenship cannot be based solely on that fact, as such reasoning would produce anomalous results, referring to Salomon v. Salomon and Co. Ltd. The Court disapproved the view expressed in State of Bombay v. R. M. D. Chamarbaughwala. It held that whether a corporation is an agent or servant of the State must be decided on the facts of each case. In the absence of any statutory provision, a commercial corporation, even if wholly or partially controlled by a Government department, will ordinarily be presumed not to be a servant or agent of the State; but when the corporation performs essentially governmental, not commercial, functions, an inference will readily be drawn that it is an agent of the Government, citing Tamlin v. Hannaford and rejecting the applicability of Bank Voor Handel En Scheepvaart N.V. v. Administrator of Hungarian Property. The Court further stated that there is no justification for holding that a department or organ of the Union or a State, even if it is a citizen, cannot enforce fundamental rights against the State as defined by Article 12. The judgment concerned original jurisdiction writ petitions numbered 202 to 204 of 1961, filed under Article 32 of the Constitution for enforcement of Fundamental Rights. Counsel for the petitioners appeared on behalf of the petitioners in all the petitions, while counsel for the State of Andhra Pradesh represented the respondents in petitions 202 and 203, and counsel for the respondents appeared in petition 204.

Counsel for the respondents in Petition No. 204 of 1961 appeared, followed by counsel for Intervener No. 1, counsel for the State of Punjab together with counsel for Intervener No. 2, counsel for Intervener No. 3, counsel for the State of Gujarat together with counsel for Intervener No. 4, and counsel for the State of Rajasthan together with counsel for Intervener No. 5. The judgment was delivered on 26 July 1963. Chief Justice Sinha, joined by Justices S. K. Das, Gajendragadkar, Sarkar, Wanchoo and Ayyangar, authored the principal opinion, while Justice Hidayatullah issued a separate opinion. Justices Das Gupta and Shah each delivered dissenting opinions. The Court noted that two specific questions had been referred to the Special Bench by the Constitution Bench for resolution. The first question concerned whether the State Trading Corporation of India Ltd., a company incorporated under the Indian Companies Act 1956, qualified as a “citizen” within the meaning of Article 19 of the Constitution and therefore could invoke the fundamental rights guaranteed to citizens under that article. The second question examined whether, despite its statutory incorporation, the State Trading Corporation functioned in substance as a department or organ of the Government of India, with all its capital supplied by the Government, and consequently whether it could claim the standing to enforce fundamental rights under Part III of the Constitution against the State as defined in Article 12. These questions arose as preliminary objections to the maintainability of the writ petitions filed under Article 32. The Court briefly set out the facts necessary to understand the controversy. The petitioners, comprising the State Trading Corporation of India Ltd. and K. B. Lal, then Additional Secretary, Ministry of Commerce and Industries, Government of India, sought a writ of certiorari or any appropriate writ, direction or order to quash certain proceedings initiated by or under the authority of the respondents. The respondents were the Commercial Tax Officer, Visakhapatnam; the State of Andhra Pradesh; and the Deputy Commissioner of Commercial Taxes, Kakinada. These proceedings involved assessments of sales tax under the Andhra Pradesh Sales Tax Act. Writ petitions 202 and 203 of 1961 involved the same petitioners against the aforementioned respondents. In Writ Petition 204 of 1961, the petitioners contended against the Assistant Superintendent of Commercial Taxes, I/c Chaibasa Sub‑Circle, Bihar; the Deputy Commissioner of Sales Tax, Bihar, Ranchi; and the State of Bihar. Thus, while the petitioners were identical in all three matters, the respondents varied: the State of Andhra Pradesh and its two officers in the first two petitions, and the State of Bihar and its two officers in the third.

In this case the first petitioner was a private limited company that had been incorporated under the Companies Act of 1956 and that maintained its registered office in New Delhi, having been formed in May 1956. The second petitioner was identified as a shareholder of that company. Both petitioners, described in the record as 8‑2 S.C. India/64, asserted that they were Indian citizens because every shareholder of the company was an Indian citizen. Sales‑tax assessment proceedings were initiated against them and, during the course of those proceedings, demand notices were issued. For the purpose of deciding the two questions that were referred to the Court, it was unnecessary to set out the detailed contents of the assessments or the specific grounds on which the petitioners contested them. It was sufficient to note that the petitioners claimed Indian citizenship and contended that the assessments and the subsequent tax demands infringed their fundamental rights under Article 19 of the Constitution.

When the matter was first opened before the Constitution Bench, counsel for the respondents raised preliminary objections that were framed as the two questions already listed in the proceedings. The Bench observed that those two questions were of considerable constitutional importance and therefore should be placed before a larger Bench for determination. Accordingly, the matter was referred to the Chief Justice, and a larger Bench was constituted to consider the questions. At the very outset of the arguments the Court indicated that it would render its decision only on the preliminary questions, and that the merits of the controversy would be left for determination by the Constitution Bench at a later stage.

Before turning to the arguments of counsel, the Court found it appropriate to set out the relevant constitutional provisions. Part III of the Constitution contains the chapter on Fundamental Rights. Certain fundamental rights are granted to “any person,” while other rights are available only to “all citizens.” For example, the right to equality before the law and equal protection of the laws within the territory of India is guaranteed to any person under Article 14. The protections against ex post facto laws, double jeopardy, and self‑incrimination are afforded to all persons under Article 20, as are the safeguards of life and personal liberty under Article 21 and the protections against arrest and detention in certain cases under Article 22. Similarly, freedom of conscience and the right to freely profess, practice and propagate religion are guaranteed to every person. Article 27 provides that no person shall be compelled to pay any tax for the promotion or maintenance of any particular religious denomination. Article 28 guarantees that every person has the liberty to attend or not attend religious instruction or worship in certain educational institutions. Finally, Article 31 states that no person shall be deprived of his property except by authority of law, and that compulsory acquisition or requisition of property may occur only in accordance with law.

These provisions, taken in general terms and without delving into the specific limitations and qualifications laid down in the Constitution, constitute the fundamental rights that are available to any person irrespective of whether the person is a citizen, an alien, a natural person or an artificial person.

The judgment explained that the Constitution distinguishes between fundamental rights that are available to any person, whether a citizen, an alien, a natural person or an artificial person, and those rights that are guaranteed only to citizens. It noted that Article 15 forbids the State from discriminating against any citizen on grounds of religion, race, caste or similar criteria, and also prohibits the State from imposing any disability in respect of the matters enumerated in that article. Article 16 secures equality of opportunity in public employment for all citizens, while allowing reservations in favour of backward classes. The Court observed that Article 18(2) imposes an absolute prohibition on any citizen of India from accepting any title from a foreign State, and that a non‑citizen may accept such a title only with the President’s consent if that person holds an office of profit or trust under the State, as provided in Article 18(3).

Turning to Article 19, which is the focus of the present controversy, the judgment listed the rights guaranteed to all citizens. Clause (a) guarantees freedom of speech and expression; clause (b) guarantees the right to assemble peaceably and without arms; clause (c) guarantees the right to form associations or unions; clause (d) guarantees the right to move freely throughout the territory of India; clause (e) guarantees the right to reside and settle in any part of the territory of India; clause (f) guarantees the right to acquire, hold and dispose of property; and clause (g) guarantees the right to practice any profession, or to carry on any occupation, trade or business. Each of these rights is subject to the limitations or restrictions specified in clauses (2) to (6) of Article 19.

The Court further observed that the rights in clauses (a) to (e) are particularly applicable to natural persons, whereas the rights in clauses (f) and (g) may be enjoyed equally by natural persons and juristic persons. It also cited Article 29(2), which provides that no citizen shall be denied admission to any educational institution maintained by the State on grounds of religion, race, caste, language or any combination of those factors. The judgment acknowledged that this brief summary of the fundamental rights under Part III of the Constitution omits other rights or prohibitions that pertain to groups, classes or associations, which are not directly relevant to the case.

Finally, the Court stressed that, irrespective of whether a person is a citizen or a non‑citizen, or whether the person is natural or juristic, Article 32 guarantees the right to move the Supreme Court by appropriate proceedings for the enforcement of the respective rights.

The judgment observed that the Constitution intentionally created a clear distinction between fundamental rights granted to “any person” and those guaranteed to “all citizens.” In other words, while every citizen is a person, not every person qualifies as a citizen under the Constitution. The Court then addressed the legal meaning of the term “citizen,” noting that the Constitution itself does not provide a definition for the term. Part II of the Constitution, which concerns citizenship, comes into force at the commencement of the Constitution. Part II, in general terms, stipulates that citizenship may arise by birth, by descent, by migration, or by registration. According to Article 5, any person who has domicile in the territory of India becomes a citizen of India if the person was born in India, or if either of the person’s parents was born in India, or if the person had been ordinarily resident in India for at least five years immediately before the Constitution commenced.

Article 6 provides that a person who migrated to India from the territory now included in Pakistan shall be deemed a citizen of India if the person satisfies the conditions set out in clauses (a) and (b)(i) of that article. Furthermore, a person who does not fall within the scope of clause (a) or clause (b)(i) but who has migrated to India and has been registered in accordance with clause (b)(ii) shall also be deemed a citizen of India. Article 8 extends citizenship by deeming a person of Indian origin, who resides outside India, to be a citizen of India if that person has been registered as such by an accredited diplomatic or consular representative of India in the country of residence.

The Court noted that persons who fall within the ambit of Articles 5, 6 and 8 may nevertheless be excluded from Indian citizenship if they have migrated from India to Pakistan, as prescribed in Article 7, or if they have voluntarily acquired the citizenship of a foreign State, as prescribed in Article 9. In summary, these provisions of Part II of the Constitution relating to “citizenship” apply only to natural persons and are expressly inapplicable to juristic persons.

Article 11 of the Constitution vests Parliament with the authority to regulate citizenship through legislation. Acting under that authority, Parliament enacted the Citizenship Act of 1955 (Act LVII of 1955). The Court affirmed that the language of this statute makes clear that a juristic person falls outside the scope of the Act, which deals with the acquisition and termination of Indian citizenship. The Constitution, through Part II, initially defined who were Indian citizens at the commencement of the Constitution. Since the Constitution does not contain provisions governing the acquisition, termination, or other aspects of citizenship after its commencement, Parliament was required to enact supplemental legislation, which resulted in the Citizenship Act. The Court concluded that both the constitutional provisions of Part II and the Citizenship Act apply solely to natural persons and do not confer citizenship upon, nor recognize, any juristic person as a citizen of India.

The Act defines the term “person” in section 2(1)(f) as excluding any company, association or body of individuals, whether incorporated or not. Consequently, the provisions that follow in the Act—section 3 on citizenship by birth, section 4 on citizenship by descent, section 5 on citizenship by registration, section 6 on citizenship by naturalisation and section 7 on citizenship by incorporation of territory—cannot apply to a juristic person. In other words, neither the Constitution’s Part II on citizenship nor the Citizenship Act confers the status of citizen upon, or recognises as a citizen, any entity other than a natural person. This conclusion follows directly from an examination of the relevant constitutional provisions and the language of the Citizenship Act. Nevertheless, the petitioners argued that this Court had previously taken a different view, and that some High Courts had adopted a contrary position, which the Court now set out to examine. In the case popularly known as the first Sholapur case, Chiranjit Lal Chowdhuri v. The Union of India, Justice Mukherjea, speaking for the majority, observed at page 898 that the fundamental rights guaranteed by the Constitution are available not only to individual citizens but also to corporate bodies, except where the wording of a provision or the nature of the right clearly indicates that it is intended solely for natural persons. He added that an incorporated company could therefore approach the Court for enforcement of its fundamental rights. While those observations appear to support the petitioners’ contention that juristic persons may enjoy fundamental rights as citizens, they do not resolve the specific controversy. In that case a shareholder of the Sholapur Spinning and Weaving Company filed an application under article 32 of the Constitution seeking a declaration that the impugned Act was void and also seeking a writ of mandamus to enforce his fundamental rights against the Government and the company’s directors. It is unnecessary to repeat the entire factual background because it is clear that the corporate entity itself was not the petitioner; the relief was sought solely by an individual shareholder. Moreover, the company opposed the petition under article 32. The observations quoted from the judgment were therefore obiter dicta and did not arise for determination by the Court. The discussion then moves to the second Sholapur case, reported as Dwarkadas Shriniwas of Bombay v. The Sholapur Spinning & Weaving Co. Ltd., also cited as 1950 S.C.R. 869. In the first Sholapur case, the Court had been approached under article 32 by an individual shareholder, as described above, for enforcement of his alleged fundamental rights, and that petition was dismissed by a majority judgment. The second case arose from a suit brought by a preference shareholder in a representative capacity on behalf of himself and other preferential shareholders, seeking a declaration that the law challenged in the earlier case was ultra vires. In that proceeding the Court held that the impugned law effectively deprived the company of property within the meaning of article 31 of the Constitution without compensation, thereby violating the company’s fundamental rights under article 31(2). This indicated that the Court’s analysis was based on article 31, which is not limited to citizens and refers to the property of “any person.” Nonetheless, there are passages in that judgment that can be read to support the respondents’ view.

In the first proceeding, an individual shareholder had invoked the jurisdiction of the Supreme Court under Article 32 of the Constitution to obtain a declaration that his alleged fundamental rights were being infringed. The Court, by a majority decision, dismissed that petition. The second proceeding originated from a suit filed by a preference shareholder who acted in a representative capacity both for himself and for other preferential shareholders. That suit sought a declaration that the statute contested in the earlier case was ultra vires. In that judgment the Court held that the impugned statute effectively deprived the company of its property within the meaning of Article 31 of the Constitution without providing any compensation, thereby violating the company’s fundamental rights under Article 31(2). Consequently, the Court’s analysis was based on an examination of the provisions of Article 31, which are not restricted to citizens alone but extend to the property of “any person.’’

While delivering the judgment, Mahajan J. examined the scope and effect of the constitutional provisions contained in Part III, with particular reference to Articles 19 and 31. He observed that Article 31 deals with the private property of persons residing in the Union of India, whereas Article 19 is confined to citizens as defined in Article 5. Mahajan J. further noted that because the two articles address different fields, it would be unreasonable to argue that both grant the same freedoms to citizens while leaving the protection of property for “all other persons’’ only to Article 31. He concluded that if both articles covered identical subject matter, the Constitution would not have needed two separate articles on the same issue. These observations appear to support the argument that Article 31 refers to the property of “persons’’ and that Article 19 concerns the fundamental rights of citizens as described in Part II of the Constitution.

Bose J., in his portion of the judgment, made a related observation at page 732. He explained that Article 19(1)(f) confers a specific fundamental freedom on all citizens of India—the freedom to acquire, hold and dispose of property. He characterised Article 31(1) as a corollary to that freedom, stating that once property has been acquired it cannot be taken away except by authority of law. Bose J. emphasized that Article 31 is broader than Article 19 because it applies to everyone, not only to citizens. He clarified that while Article 19(1)(f) permits a law to prohibit non‑citizens from acquiring or holding property, it does not allow a similar restriction on citizens. In the absence of such a law, non‑citizens may also acquire property, and they cannot be deprived of it any more than citizens, except pursuant to authority of law.

In this case, the Court observed that although the earlier remarks might appear to support the respondents’ argument that a corporation could be treated as a citizen, those observations were not made expressly concerning the issue now presented, namely whether a corporation may claim citizen status. The earlier case did not raise that question because the company involved was not seeking any relief. Moreover, the Court noted that even if a company wished to obtain relief under Article 31 of the Constitution, it could do so without possessing the status of a citizen. The Court referred to the decision in The Bengal Immunity Company Limited v. The State of Bihar, where the appellant company had invoked Article 226 of the Constitution before the High Court to obtain certain reliefs against the Bihar Sales Tax Act. In that matter, the Supreme Court, through the observations of Acting Chief Justice S.R. Das at page 618 and Justice Venkatarama Ayyar at pages 765‑766, refrained from deciding whether a corporation could be a citizen and instead granted relief to the company while leaving the question open. This precedent demonstrates that the present question remains unresolved and that the Supreme Court has not yet delivered a definitive judgment on the matter. Consequently, the Court found it unnecessary to discuss decisions of the Madras, Bombay and Calcutta High Courts, as their rulings could not be decisive without a clear pronouncement from the Supreme Court. Accordingly, the Court undertook a fresh examination of the legal position, beginning from the premise that the issue is still open. After reviewing the relevant constitutional provisions and the Citizenship Act, the Court concluded that neither the Constitution nor the Citizenship Act envisions a corporation as a citizen. Counsel appearing for the petitioners argued that Part II of the Constitution, which deals with citizenship, is irrelevant because it does not define the term “citizen” nor address the full concept of citizenship, and made a similar claim regarding the Citizenship Act. Both sides agreed that the constitutional and statutory provisions discussed do not refer to juristic persons. Nevertheless, counsel contended that the legal position must be reassessed in light of pre‑existing law, specifically the common law, which they asserted is preserved by Article 372 of the Constitution. To support this view, reference was made to Halsbury’s Laws of England, Volume 6, third edition, pages 113‑114, paragraph 235, which states that upon incorporation a company becomes a legal entity whose nationality or domicile is determined by its place of registration. Additional reference was made to Volume 9 of the same work, page 19, paragraphs 29‑30, which further elucidates this principle.

In the discussion the Court observed that the notion of nationality applies to corporations and that such nationality is determined by the country in which the corporation is incorporated. Accordingly, a corporation that is incorporated in England acquires British nationality regardless of the personal nationalities of its shareholders or members. With respect to domicile, the Court explained that the place of incorporation also fixes the corporation’s domicile, and that domicile remains attached to the corporation for the entire duration of its existence. The Court then referred to the decision in Janson v. Driefontain Consolidated Mines (1902) A.C. 1, 484, 497, 501, 505, which endorses the proposition that a company may be treated as a national of the country of its incorporation even though the shareholders themselves may possess a different nationality. The Court stated that it was unnecessary to cite further authorities because the principle is already clear: a corporation may claim a nationality that is ordinarily determined by the location of its incorporation. Nevertheless, the Court noted that a question remained as to whether the terms “nationality” and “citizenship” could be used interchangeably. It explained that “nationality” relates to the relationship a person or entity has under international law, whereas “citizenship” pertains to the legal relationship under domestic law. In this view, nationality governs the civil rights of a person—whether natural or artificial—especially in the international arena, while citizenship is closely linked to civic rights within the municipal legal system. Consequently, the Court observed that every citizen is a national of a particular State, but not every national necessarily enjoys the status of citizen of that State. It further clarified that citizens are those individuals who possess full political rights, distinguishing them from nationals who may lack full political rights yet remain domiciled in the State, as explained in P. Weis’s work on nationality and statelessness (pages 4‑6) and in Oppenheim’s International Law, Volume 1 (pages 642, 644). The Court then rejected the argument advanced on behalf of the petitioners that the term “citizen” in Article 5 of the Constitution is narrower than the same term used in Article 19. While acknowledging that both the Constitution and the Citizenship Act of 1955 do not expressly refer to juristic persons, the Court found it difficult to accept the contention that the expression “citizen” in Part II of the Constitution is not synonymous with the expression in Part III. The Court emphasized that Part II, together with the Citizenship Act (LVII of 1955), addresses “citizens” and it would be inaccurate to claim that the law deliberately omitted juristic persons from the concept of citizenship. Finally, the Court adopted a more reasonable interpretation, observing that whenever a right is intended to be enjoyed by a citizen of India, the Constitution expressly uses the phrasing “any citizen” or “all citizens,” thereby distinguishing such rights from those that are available to all persons irrespective of citizenship status, including both natural and juristic persons.

In the United States of America, the equality clause of Article 14 was expressed as extending to “any person.” In contrast, the protections against discrimination on the basis of denomination under Article 15 and the guarantee of equal opportunity in public employment under Article 16 were intentionally limited to citizens only. The United States Constitution itself provides further illustration. It states that “Corporations Citizens of the United States within the meaning of this article must be natural and not artificial persons; a corporate body is not a citizen of the United States” (page 965). The term “persons” has been the subject of historic debate concerning whether the framers of the Fourteenth Amendment meant solely natural persons or substituted “persons” for “citizen” to shield corporations from oppressive state legislation. The Supreme Court, as early as the Granger cases of 1877, upheld various state statutes without questioning the status of railway corporations that sought to invoke due‑process protections. The Court affirmed that a corporation cannot be deprived of its property without due process of law, and although earlier rulings held that the liberty guaranteed by the Fourteenth Amendment applied to natural rather than artificial persons, a newspaper corporation was nevertheless upheld in 1936 when it challenged a state law that infringed upon press liberty. Regarding natural persons, the due‑process clause protects all human beings irrespective of race, colour, or citizenship (page 981). The judgment has already referenced, in broad terms, Senate Document No. 170 of the Eighty‑second Congress edited by Edward S. Corwin, which outlines that Part III of the Constitution confers certain rights on “all persons” while reserving other fundamental rights for “citizens” alone. Consequently, it is unnecessary to repeat each specific provision. It suffices to observe that the framers of the Constitution were fully aware of the distinction between the expressions “any person” and “any citizen.” When the Constitution enumerated the freedoms in Article 19(1)(a)‑(g) as available to “all citizens,” it deliberately excluded non‑citizens, a category that includes both aliens and artificial persons. Supporting this view, Martin Wolff, in his work Private International Law, observes that “It is usual to speak of the nationality of legal persons, and thus to import something that we predicate of natural persons into an area in which it can be applied by analogy only. Most of the effects of being an ‘alien’ or a ‘citizen’ of the State are inapplicable in the field of corporations; duties of allegiance or military service, the franchise and other political rights do not exist” (page 308). Apart from these considerations, the Court noted that another facet of the controversy required attention, as arguments had been raised concerning the broader implications of the distinction between persons and citizens.

The petitioners argued that the Constitution’s distinction between “persons” and “citizens” should not be understood as a distinction between natural persons and juristic persons. They maintained that the term “persons” was intended to include every citizen and every non‑citizen, whether a natural or an artificial person, and that the framers of the Constitution had deliberately excluded artificial persons from the scheme because the pre‑existing law concerning them was left untouched. The petitioners found it difficult to accept the proposition that the framers, who had taken great care to state in precise language the fundamental rights to be enjoyed by “citizens” and the rights available to all “persons,” could have omitted a clear indication of which classes of persons were meant to fall within the expression “citizens.”

On the opposite side, the Court observed that the provisions of Part III of the Constitution itself gave a clear indication that the drafters were fully aware of the distinction made in the Constitution of the United States of America, where the Fourteenth Amendment, Section 1, expressly set out the contrast between the privileges or immunities of United States citizens and the life, liberty, or property of any person, while also defining who the citizens of the United States were. That section read: “All persons born or naturalised in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.” The Court noted that this passage made the distinction between “persons” and “citizens” unmistakably clear.

The Court then considered the matter from another perspective. Article 19 of the Constitution declared that “all citizens” were entitled to the freedoms listed in clauses (a) to (g). The Court emphasized that each of those freedoms was made available to “all citizens” without qualification. The provision did not say that the freedoms would be limited to particular classes of citizens. Consequently, if a corporation were held to be a citizen within the meaning of Article 19, the Court reasoned, the corporation would be entitled to all the rights enumerated in clauses (a) to (g). However, the Court pointed out that certain rights, especially those in clauses (b), (d) and (e), could not logically apply to a corporation. Therefore, the rights of citizenship envisioned in Article 19 were not fully appropriate to a corporate body. In other words, the rights that flow from citizenship and the rights that arise from a corporation’s nationality or domicile were not identical.

From this analysis, the Court concluded that the framers of the Constitution had, in fact, omitted juristic persons from consideration when they drafted Part II of the Constitution dealing with “citizenship.” The omission suggested that the Constitution’s provisions on citizenship were intended to apply only to natural persons.

In the Constitution, a clear distinction was drawn between the terms “persons” and “citizens” in Part III. Part III, which enacts the fundamental rights, was drafted with great precision. It limited rights such as the freedom of speech and expression, the right to assemble peaceably, and the right to practice any profession to “citizens” alone, while it allotted more general rights, for example the right to equality before the law, to “all persons”. Because of this careful drafting, the Court found it unnecessary to revisit the historical question of whether any citizens of India existed before the Constitution came into force. The Court observed that, although corporations may possess a nationality determined by the country in which they are incorporated, such nationality does not automatically confer citizenship upon them. The Court was convinced that Part II of the Constitution, when it addresses citizenship, refers solely to natural persons. This interpretation was reinforced by the Citizenship Act, which, after the Constitution became operative, limited citizenship expressly to natural persons. Consequently, the Court could not accept any argument that citizens might exist outside the definitions provided in the entire text of Part II of the Constitution or the whole text of the Citizenship Act. The Court held that these two provisions together exhaustively define who may be a citizen of India: Part II governs those who were citizens at the moment the Constitution commenced, and the Citizenship Act governs those who acquire citizenship thereafter. Accordingly, the Court concluded that only natural persons can be citizens under the Constitution. The Court further noted that even if corporations are regarded as nationals for purposes of international law, this status does not transform them into citizens under Indian municipal law or the Constitution. The Court also rejected the contention that the word “citizen” in Article 19 was intended to have a different meaning from that employed in Part II. For these reasons, the Court answered the first of the two referred questions in the negative. Because the first question was answered negatively, the Court deemed it unnecessary to address the second question, which would have arisen only if the first had been answered positively. The Court directed that the matters be returned to the Bench for a full hearing on the merits, and that the costs of the hearing before the special Bench be decided by the Bench that ultimately hears and resolves the controversy. Two questions had been referred to the Bench for opinion: (1) whether the State Trading Corporation, a company registered under the Indian Companies Act 1956, is a citizen within the meaning of Article 19 of the Constitution and may seek enforcement of the fundamental rights granted to citizens under

In this matter the Court examined two principal questions. The first question was whether the State Trading Corporation, a company incorporated under the Indian Companies Act of 1956, qualified as a citizen within the meaning of Article 19 of the Constitution and therefore could invoke the fundamental rights granted to citizens under that article. The second question concerned whether, despite the formalities of incorporation, the corporation was in substance a department and organ of the Government of India, its entire share capital having been contributed by the Government, and consequently could claim enforcement of the fundamental rights contained in Part III of the Constitution against the State as defined in Article 12.

The factual background revealed that the Commercial Tax Officer of Visakhapatnam had assessed the State Trading Corporation for sales tax and had issued a demand for payment of that tax. By way of a petition filed under Article 32 of the Constitution, the corporation challenged the assessment, asserting that the assessed order and the tax demand infringed its fundamental rights under Article 19(1)(f) and Article 19(1)(g). Those sub‑clauses respectively guarantee every citizen the right to acquire, hold and dispose of property, and the right to practice any profession, or to carry on any occupation, trade or business. The corporation maintained that it was a citizen for the purpose of applying those sub‑clauses, a position that was disputed by the State of Andhra Pradesh.

The State of Andhra Pradesh argued that the corporation, being an artificial person, could not be deemed a citizen because the term “citizen” in Article 19 referred exclusively to natural persons. The State further contended that the corporation, as a department of the Government, could not invoke the protection of Article 19 against an action of the State itself. In response, counsel for the petitioner submitted that the Constitution did not expressly define the word “citizen,” and that Part II dealing with citizenship addressed only natural persons and was therefore not exhaustive. Counsel also noted that the Citizenship Act of 1955 defined “person” in a way that excluded artificial persons such as corporate aggregates, but argued that this definition was likewise not exhaustive.

Counsel for the petitioner further asserted that corporations aggregate had been recognised as citizens prior to the Constitution and the Citizenship Act, and that they continued to enjoy the privileges of citizenship, including the guarantee contained in Article 19. To support this view, counsel emphasized that corporations possess a nationality and argued that in this context the terms “nationality” and “citizenship” bore the same meaning. Counsel relied on an obiter observation of Justice Mukherjea in Chiranjit Lal Chowdhuri v. Union of India, wherein the judge observed that fundamental rights were available not merely to individual citizens but also to corporate bodies, except where the language of the provision or the nature of the right compelled a reading limited to natural persons. Counsel also cited other cases in which corporations had claimed the protection of Article 19 without any objection being raised, and urged that the word “citizen” be interpreted liberally to include a corporate aggregate composed solely of Indian citizens. Regarding the second question, counsel maintained that a company possessed an existence independent of its members, reinforcing the argument that the corporation could claim the protection of fundamental rights against the State.

Mr. Setalvad argued that the fundamental rights guaranteed by the Constitution are not limited solely to individual citizens. He said that, except where the wording of a specific provision or the character of the right clearly indicates that it applies only to natural persons, corporate bodies may also claim those rights. Accordingly, an incorporated company may approach this Court to enforce its fundamental rights, and individual shareholders may also invoke their own rights. However, he maintained that an individual shareholder could not challenge a law on the ground that it affects the company’s fundamental rights unless the same law also infringes the shareholder’s personal rights.

Mr. Setalvad further referred to other judgments in which, although the precise issue had not been decided, several corporations had invoked the protection of Article 19 and faced no objection. He concluded that the term “citizen” should be interpreted broadly so as to include a corporation that consists solely of Indian citizens. On the second point, he asserted that a company possesses an existence that is independent of its members, and therefore the State Trading Corporation cannot be equated with its shareholders or with the Government because the corporate veil must not be pierced. He warned that India comprises many States and cautioned that one State’s government might suppress the commercial activities of another State’s government through legislation or executive action, leaving Article 19 as the sole effective safeguard. He submitted that the Constitution could not have intended that while every individual citizen enjoys protection, a group of citizens would, merely by incorporation, forfeit the benefits guaranteed by Article 19.

The Court observed that the matter before it involved an incorporated company. It noted that the legal personality of an incorporated company arises from a legal fiction and that this personality must be clearly understood before deciding whether the word “citizen” in the Constitution, and specifically in Article 19, includes an incorporated company. Unlike an unincorporated association, which lacks a separate existence and is not distinguished by law from its members, an incorporated company has a distinct legal existence recognized as a separate legal person. This new legal personality is created at the moment of incorporation; from that point onward, the individuals who subscribe to the memorandum of association and any later members are regarded collectively as a body corporate, also described as a corporation aggregate, and the entity operates as an independent legal person. However, the Court stressed that the members who form the incorporated company do not combine their personal status or personality into that of the company. Even if all the members are Indian citizens, the company does not become an Indian citizen, just as a marriage does not transform a married couple into a married person. The personal status of the members bears little relation to the legal persona of the incorporated company, and the corporation’s persona is not a simple aggregate of the members’ personas either in law or in substance.

The Court observed that a corporation does not possess a physical form; it exists only as a legal abstraction, a description once given by Lord Selborne in the case of G. E. Rly. v. S. C. India and later reiterated by Lord Macnaghten in the celebrated decision of Salomon v. Salomon & Co., where he described the company as a distinct legal person separate from the subscribers to its memorandum of association. This separation becomes evident when one remembers that a company cannot be charged with offences such as perjury, bigamy or capital murder. The Court noted that because the corporate personality is a creature of legal fiction, it is subject to natural limitations, a point highlighted by Palmer in his twentieth edition of Company Law on page 130 and succinctly captured by counsel in R. v. City of London when he asked, “Can you hang its common seal?” The Court conceded that, on occasion, the law permits the corporate veil to be lifted, but indicated that such matters would be addressed later. It then referred to an English rule that a company or incorporated corporation possesses a nationality determined by the law of the country in which it is incorporated. Accordingly, counsel for the petitioner, Mr Setalvad, began his argument by citing obiter dicta from Janson v. Driefontein Consolidated Mines Ltd., including Lord Macnaghten’s observation that the corporation “was to all intents and purposes in the position of a natural born subject of the late South African Republic,” Lord Davey’s comment that the respondent company was “technically an alien and became, on the breaking out of hostilities between this country and South African Republic, an alien enemy,” and Lord Brampton’s statement that the company “must clearly be treated as a subject of the Republic notwithstanding the nationality of its shareholders.” Counsel contended that there is no distinction between the terms “nationality” and “citizenship,” asserting that the two words are synonymous. He relied on a passage from Weis on Nationality and Statelessness in International Law (1956), pages 4‑5, which explained that the term citizenship has historically been used synonymously with nationality in states following the Roman conception, whereas in feudal‑type states citizenship denotes community membership rather than political status. The passage further observed that in republican states, including common‑law jurisdictions such as the United States, the term “citizen” has replaced “subject of the King,” and therefore in those states “nationality” and “citizenship” should be regarded as synonymous. On the basis of this reasoning, counsel argued that all incorporated corporations acquire the nationality of the state whose law governs their incorporation, that nationality is equivalent to citizenship, and consequently, that incorporated companies are citizens.

In this case the Court observed that some submissions argued that, because corporations possess the nationality of the State in which they are incorporated, they should be regarded as citizens, and therefore the Constitution and the Citizenship Act had not removed any right of such corporations to invoke Article 19(1)(f) and (g). An alternative contention was that if every member of a corporation is an Indian citizen, then the corporation as a whole must also be a citizen, on the basis that the whole cannot differ from its parts. The Court held that both contentions rested on logical fallacies. The first argument conflated the concept of corporate nationality with the concept of natural‑person citizenship and employed the fallacy of irrelevant conclusion by attempting to show that corporations ought to be citizens because the remedy would be desirable. The second argument rested on the petition‑principle fallacy, because it presupposed the conclusion that the corporation is a citizen by asserting that the corporation’s membership consists entirely of citizens. The Court further stated that the State Trading Corporation could not be classified as a citizen either in its own right or by treating it as a mere aggregate of individual citizens. It emphasized that corporate nationality is a distinct notion that must not be confused with the citizenship of natural persons, and that the term “citizen” occurring in Article 19(1) sub‑clauses (f) and (g) refers specifically to a natural person. Moreover, the Court noted that the State Trading Corporation functioned as a department of the Government concealed behind a corporate veneer, and for these reasons the two questions presented were decided in favour of the objectors. Turning to the interpretative analysis, the Court observed that Article 19 employs the word “citizen,” whereas other provisions in Part III, such as Articles 14 and 21, employ the word “person.” Under Article 367, unless the context indicates otherwise, the General Clauses Act, 1897 governs the interpretation of the Constitution. The Constitution does not define “citizen,” and the General Clauses Act defines “person” to include any company, association, or body of individuals, whether incorporated or not. Consequently, the term “person” may bear an expanded meaning in certain parts of Part III, but this expansion is irrelevant to Article 19 because that article does not use the word “person.” The petitioners’ claim to the benefits conferred by Article 19 therefore depended on whether the word “citizen,” as actually used, could be given a similarly enlarged meaning. The Court accepted the submission that the mere use of “person” with an enlarged meaning in some provisions and the use of “citizen” in others does not, by itself, demonstrate that artificial persons are excluded from the meaning of “citizen.”

The Court observed that the distinction under consideration need not be framed strictly as a contrast between natural persons and artificial persons. Instead, the contrast could be understood as one between citizens and non‑citizens. The Court noted that the legislature might employ a word of wide meaning when a statutory benefit was intended to extend to non‑citizens, and might use the specific term “citizen” when the benefit was meant solely for citizens. While it was true that the term “citizen” could not encompass an enemy or an alien, the broader term “person” might, the Court cautioned that this observation did not resolve the core question of whether the word “citizen” could be interpreted to include a company, an association, or a body of individuals as defined in the General Clauses Act. The Court emphasized that answering this question required an examination of the connotation of the word “citizen” itself. To determine whether “citizen” in Article 19 was limited to natural persons or could also refer to corporate entities, the Court first turned to the Constitution to see whether the same word or the related term “citizenship” received any expanded meaning elsewhere. The Court counted twenty‑nine occurrences of “citizen” and six occurrences of “citizenship” in the Constitution, excluding headings of chapters and marginal notes which it deemed irrelevant to the interpretive exercise. The Court then asked whether any provision other than Article 19 meant an artificial person when it used either term. The earliest appearance of the word was in the Preamble, which declares, “We the people of India… to secure to all its citizens justice, social, economic and political liberty of thought, expression, belief, faith and worship; equality of status and of opportunity; and to promote among them all fraternity assuring the dignity of the individual and the Nation.” The Court explained that expressions such as liberty of thought, belief, faith, worship, equality of status, and dignity of the individual are concepts that naturally relate to natural persons rather than to companies, associations, or other corporate aggregates. Consequently, the Court concluded that in the Preamble the term “citizen” referred to individual human beings for whom the Constitution had been drafted.

The Court further explained that a Constitution functions as a social contract between the citizens and the administration, establishing the framework within which each side’s actions are regulated. Citing an academic definition, the Court described the Constitution as “the body of institutions and fundamental law designed to regulate the action of the administration and all the citizens.” In this sense, the Preamble, expressed in solemn language, encapsulated the substantive provisions that followed in the rest of the document. Accordingly, the Court held that the reference to “citizens” in the Preamble signified those individuals who, under the Constitution, were entitled to civic rights within the political body of India, were eligible to hold public office, and could elect their representatives to Parliament and the state assemblies. These were persons who were declared citizens at the moment the Constitution came into force, as well as those on whom the rights of citizens had been conferred and could subsequently be conferred by law. The Court therefore inferred that the constitutional usage of “citizen” consistently denoted natural persons rather than artificial entities, and that this understanding should guide the interpretation of the term wherever it appeared, including in Article 19.

In this judgment the Court observed that the Constitution of India conferred rights on individuals who were recognised as citizens, while it also afforded certain protections to non‑citizens, but the guarantee articulated in the preamble was expressly intended for citizens alone, that is, persons who enjoyed full civic rights within the political body of India. Following the preamble, the Constitution contains a distinct chapter titled “Citizenship,” which comprises seven articles. Article 5, although employing the term “person,” is interpreted by the Court as referring only to natural persons because the provision defines citizenship as belonging to every person who had his domicile within the territory of India and who satisfied one of three conditions: birth in the territory of India, birth of either parent in the territory of India, or ordinary residence in the territory of India for a period of not less than five years immediately preceding the commencement of the Constitution. The reference to the birth of a person or of his parents makes it clear that the framers intended only natural persons, since corporations do not possess a biological birth or parents. Likewise, Article 6 is read as pertaining solely to natural persons, and Articles 7, 8, 9 and 10 also speak unambiguously of natural persons, requiring no further elaboration. Article 11 grants Parliament the authority to enact laws concerning the acquisition, termination, and other matters relating to citizenship, thereby reaffirming the power assigned to Parliament by Entry 17 of List I of Schedule VII. The Court noted that the Citizenship Act of 1955 expressly excludes companies and similar entities from its provisions. While the power under Article 11 could, in theory, raise the question of whether Parliament might later decide to confer citizenship on corporations, institutions, trusts, funds, ships or aeroplanes, the Court emphasized that, until such legislation is enacted, there is no indication in Part II of the Constitution that the terms “citizen” and “citizenship” were meant to encompass any artificial persons.

The Court further examined the use of the word “citizen” in the fourth part of the Constitution, which is labelled “Directive Principles.” The term appears twice: in Article 39, where it is qualified by the words “men and women,” and in Article 44, where the State is instructed to endeavour to secure a uniform Civil Code for all citizens. In both instances, the qualification shows that the Constitution contemplates only natural persons, since it would be incongruous to envisage a uniform Civil Code applying to corporations. Moreover, the Constitution makes citizenship a prerequisite for holding several high public offices, including the President, the Vice‑President, Governors, members of Parliament, members of State Legislative Assemblies, and judges of the Supreme Court and High Courts. The provision further states that members of Parliament and Legislatures must cease to be members if they cease to be citizens of India or acquire the citizenship of another country. Because these offices are inherently personal and cannot be occupied by a corporation or any other artificial entity, the Court concluded that the expressions “citizen” and “citizenship” in these contexts refer unequivocally to natural persons.

In this case the Court observed that Article 326 provided that every citizen who had attained the age of twenty‑one possessed a vote, a provision that clearly applied only to a natural person. The Court then turned to Part III of the Constitution, which was entitled “Fundamental Rights,” and examined the language used in Articles 15 and 16. In those articles the term “citizen” unmistakably referred to a natural person, because the enumeration of religion, race, caste, sex, descent, place of birth and residence described characteristics of a human being. Article 18, which dealt with titles, was likewise understood to apply to individuals, since titles were normally conferred upon persons rather than on corporate entities. Likewise, Article 29(1) granted to citizens residing in the territory of India the right to preserve their distinct language, script or culture; the Court held that this right could only be exercised by natural persons. Article 29(2) guaranteed admission to educational institutions to citizens, and the Court noted that the entrant could only be a natural person and not a corporation. From this detailed examination the Court concluded that in thirty‑four separate occurrences the words “citizen” and “citizenship” were used in reference to natural persons and not to artificial persons.

The Court then identified the outstanding question concerning the thirty‑fifth occurrence, namely whether the expression might be intended to include corporations aggregate. To answer this, the Court examined Sub‑clauses (a) to (e) of Article 19 and found that they were also contemplated for natural persons. The petitioners argued that the meaning of “citizen” should be broadened for Sub‑clauses (f) and (g) because corporations are capable of acquiring, holding and disposing of property and of carrying on trade or business. They contended that when several citizens formed an incorporated company, the guarantee accorded to citizens ought not to be lost, and therefore the term should be interpreted expansively enough to encompass companies. The Court noted, however, that the previous analysis of the Constitution’s language in thirty‑four other provisions demonstrated that the framers had not intended to extend citizenship to corporations. While acknowledging that this observation was not conclusive, the Court held that if corporations could be said to possess citizenship, there would be no reason to refuse a liberal construction of Article 19(1) to grant them the benefits of clauses (f) and (g). Consequently, the Court emphasized the need to determine the general meaning of “citizen” and “citizenship” and to trace the historical development of the concept to see whether, at any time, it had ever encompassed artificial persons such as corporations. The Court observed that the Constitution did not define the term “citizen” in Article 19, and therefore its meaning in that context had to be ascertained. If the term carried the same meaning as in the other parts of the Constitution, it would denote a member of the State who was either born a citizen or had become naturalised, on whom the Constitution or a statute of Parliament conferred citizenship. The Court then posed the question whether law recognized a form of citizenship applicable to a group of persons, some of whom might be citizens and others not, and indicated that the normal meaning of the word did not admit such “bulk citizenship.”

The Court observed that, in its ordinary sense, the term does not accommodate the notion of “bulk citizenship,” which is the only way to express such a collective concept. It cited Salmond’s article “Citizenship and Allegiance” (1901‑1902) in the Law Quarterly Review, Part I, pages 270‑82, noting that the word derives from the Latin civitas and civis, and more directly from the French citoyen or citeyen. Salmond explained that from the earliest periods the idea of citizenship applied exclusively to natural persons, not to groups of persons. The Court then recounted the ancient Greek experience, referring to Aristotle’s description of Attica, where the population was organized into brotherhoods (phratriai) and clans (gene). Several brotherhoods together formed tribes (phylai). Although the entire citizen body was included within these tribes and brotherhoods, the wealthy were distinguished as members of the clans. When the clans succeeded in abolishing the monarchy, the citizenship of brotherhood members became merely nominal because they possessed no civic rights. Draconian reforms later created four wealth‑based classes, and Solon granted these classes the right to participate in the political assembly (ecclesia) and the judicial council (heliaia), thereby earning the epithet “the first champion of the people.” Nevertheless, even under Solon the notion of citizenship remained under‑developed. The first clear recognition of citizenship emerged under Cleisthenes, whose reforms redistributed the population on a geographical basis and enfranchised individuals of pure or partial Athenian descent. Although resident foreigners who had intermarried were partially acknowledged, the offspring of mixed marriages were not considered citizens until later, when citizenship ceased to depend on membership in phratries. This situation persisted until Pericles reversed the earlier liberalization, restricting citizenship to those of Athenian descent on both maternal and paternal sides. Had Pericles acted earlier, notable Athenians such as Themistocles would have been excluded from office and other civic privileges. The Court noted that it is unnecessary to pursue Athenian history further, as it is reasonable to infer that other Greek city‑states, apart from Sparta, adopted similar citizenship models. Sparta, by contrast, operated under a distinct system featuring two kings and an elected council (gerusia) chosen by citizens, which performed advisory and judicial functions. An assembly of all citizens over twenty, called the appella, elected magistrates and convened monthly. The right to vote for the gerusia and to belong to the appella was reserved for those born as spartiate. At birth, tribal heads inspected all children; those deemed weak were exposed in a ravine on Mt Taygetus, while the remainder were taken at age seven for training as citizens. The Court concluded that all Hellenic states except Sparta generally followed the Athenian pattern, while Crete perhaps exhibited Spartan influence. This historical account constitutes the earliest recognition of citizenship that must be considered in the present context.

In the discussion, the Court observed that the earliest form of citizenship recognized in Europe derived from the Spartan system, which had set a precedent for later developments. The Court then turned to the Roman conception of citizenship, explaining that Roman law employed the terms “civitas” and “civis” to denote individuals who possessed the freedom of the city and who were entitled to all political and civic privileges conferred by the government. According to Roman law, a clear distinction was drawn between a slave (servus), an enemy (hostis) who enjoyed none of these rights, and a foreigner (peregrinus) who originated from a nation that maintained peaceful relations with Rome; only Roman citizens enjoyed the full bundle of rights. The Court noted that by the time of Justinian, nearly everyone became a citizen, except for those who remained unmanumitted slaves. However, during the period of the jurist Gaius, citizenship was a privilege reserved for Romans and it carried with it the right to vote (jus suffragii), the right to hold public office (jus honorum), the right to a Roman marriage (jus connubium), and the right to engage in legal transactions (us commercium). The Court further explained that the son of a Roman citizen acquired Roman citizenship automatically, regardless of his place of birth. By contrast, a peregrinus possessed no civic rights unless he belonged to a Latin community, and separate sets of laws applied for long periods to citizens, Latins, and peregrini. The Court recorded that the first group to receive full citizen status were the Latini, after which all free subjects eventually became cives. The only peregrini who remained were foreigners and barbarians, who, like members of treacherous communities (dediticii) and persons stripped of citizenship (deportati), had no civic rights at all. From this analysis, the Court concluded that both in Greece and in Rome the notion of citizenship was attached to natural persons who possessed certain inherent civic rights that distinguished them from others. The Court observed that the basis for such privilege varied – sometimes descending from lineage, sometimes depending on wealth, status, military service, or other criteria – but at no point did the concept extend beyond natural persons. The Court emphasized that Roman law transmitted citizenship by birth to the offspring of a Roman citizen. Having examined the ancient notion of citizenship as membership in a body politic with full civic rights, the Court proceeded to describe the transformation that occurred in the Middle Ages. During that period, the Court explained, membership in the State began to assume a dual character, comprising a political status and a civil status. This dual status emerged in Central Europe under the influence of Roman law and was partly driven by the expansion of feudal vassalage, which altered the structure of societies that might otherwise have evolved into clan‑based nations, dividing them into feudal chiefdoms. The feudal lord, according to the Court, did not concern himself with a follower’s descent so long as the follower held land or performed service in accordance with the lord’s laws. While such feudal statutes did not ordinarily apply to foreigners, the Court noted that if foreigners possessed land, chattels, or rendered service, the lord was equally bound to treat them under those laws. The Court identified the principal cause of this development as the growing impact of international relations, which led to individuals being viewed in two distinct capacities: first, as subjects of a particular State, representing a political status, and second, as persons entitled to certain rights and privileges within their own State, representing a civil status.

In the discussion, the Court explained that a person possessed certain rights and privileges within his own State, which constituted his civil status. Both the political and civil aspects derived from the person’s connection to a specific State or territory, but the Court cautioned that the term “nationality” should not be used to describe civil status. The Court noted that the word “nationality,” whether it referred to an ethnic group or to political membership of a State, originated much later in history. According to M. Cogordan in La Nationalite (page 2), the term first appeared in the Dictionnaire de l’Académie française in 1835. The Court observed that even the Code Napoleon contained provisions dealing with the status of French citizens abroad, yet it did not address the status of foreigners residing in France. The Court further stated that the concept of nationality as a criterion for determining the law applicable to an individual gained prominence after a well‑known lecture by Mancini at the University of Turin in 1851. The Court added that the development of international relations enhanced the civic rights of a citizen by granting him a political status that he could assert outside his own State. The Court pointed out that the word “nationality” has now acquired two separate meanings: a political meaning indicating membership of a State, and an ethnic meaning indicating membership of a nation. The Court clarified that, historically, citizenship also signified membership of a State, but in a municipal sense. Consequently, the Court argued that the terms “national” and “citizen” are not interchangeable, contrary to some assumptions. The Court cited United States Public Law 414 (82nd Congress, second session), section 308, which is titled “Nationals but not citizens of the United States at birth.” Referring to Weis’s work on nationality and citizenship, the Court quoted that the term “American National” has a broader meaning than “United States citizen,” a distinction that was recognized in Administrative Decision No V of the Mixed Claims Commission between the United States and Germany, as reported in Decisions and Opinions, volume I, pages 18‑19, and in the Hackworth Digest of International Law, volume III, page 5, Annual Digest 1923‑24, case No 100. Weis also provided examples of the differing usage of the two words in the constitutions of the Netherlands, Honduras, Nicaragua, and Romania. The Court noted that even the United States Immigration and Nationality Act of 1952 preserved the distinction. The Court explained that this dual status, which had created the controversy in the present case, was summarized by Lord Westbury in Udny v. Udny, who observed that political status may vary according to the laws of different countries, whereas civil status is universally governed by the single principle of domicile, which the law uses to determine civil matters such as majority, marriage, succession, and inheritance. The Court concluded that, since the Middle Ages, it had become clear that a person’s legal personality consisted of both a political status and a civil status, and that a person could possess political status without necessarily having civil status.

In this discussion the writer observed that a person could be a national without being a citizen, but that it was difficult to imagine a citizen who lacked political status. The writer explained that political status has historically been determined by two principal theories. The first theory is based on descent, known as jus sanguinis, and the second theory is based on domicile or place of birth, known as jus soli. The writer noted that European jurisdictions have generally applied the descent theory, whereas jurisdictions that follow the common law tradition have generally applied the birthplace theory to ascertain status. The writer further recalled that under Roman law the son of a Roman citizen automatically acquired Roman citizenship regardless of his place of birth, and that this same principle was recognized in Central European law. By contrast, in common‑law countries, including the United States of America, the writer said that birth within the sovereign’s territory—referred to as jus soli—conferred both political and civil status. The writer added that statutes also allowed acquisition of status through descent from a citizen or subject who lived outside the territory. The writer pointed out that statutes dating from the reign of Edward III in England expressly provided for descent as one of the modes by which a person could acquire political as well as civil status. In the United States, the writer observed, the principle of descent was likewise recognized by statute, except where the parents, although citizens, had never resided in the United States; in those cases the prevailing rule remained that birth on United States soil determined status. The writer then asserted that the concepts of citizenship and nationality are not identical, even though the terms are sometimes used interchangeably because most citizens are also nationals and most nationals are also citizens. The writer quoted a definition of citizenship from a municipal law source, stating that citizenship is a term of municipal law that denotes the possession within a particular State of full civil and political rights, subject to special disqualifications such as minority or sex, and that the conditions for acquiring citizenship are regulated by municipal law. The writer listed various disqualifications that have been applied, historically and presently, in different countries, including minority, heresy, colour, lack of settled abode, insolvency, infamy, treason and sex. The writer reflected on how the argument for citizenship might have been framed if the Constitution had adopted the view expressed by Bluntschli that politics is the concern of men. The writer concluded that both citizenship and nationality have been shaped either by descent or by birth in a particular place. The writer gave the example of several South‑American republics that reject descent as a basis for citizenship because they believe that allowing descendants of former citizens to claim citizenship privileges regardless of where they are born would permit individuals who do not reside in or contribute to the State to enjoy its benefits. The writer noted that some countries recognize both jus sanguinis and jus soli, but that each jurisdiction varies in its approach to the problem of descent. The writer added that, in certain jurisdictions, citizenship is limited to children born to a father who is a citizen and who is resident in the State.

In discussing the evolution of nationality, the Court noted that before the 1914 Act certain statutes granted British citizenship and nationality to grandchildren born abroad of natural‑born subjects, while the French Naturalization Law of 1889 recognized only children born in France of a father also born in France and children born abroad of a French father. The earlier German law adhered solely to the principle of descent but later incorporated provisions for marriage, naturalization and other bases for citizenship. Italian law, by contrast, regarded the long residence and domicile of the father in Italy as sufficient to confer nationality. The Court observed that in modern times nationality has acquired great significance, and the concepts of dual nationality and statelessness have challenged older theories; the statement that every person must possess a nationality is no longer accurate because many individuals remain stateless. The Court clarified that it does not intend to provide an exhaustive treatise on citizenship and nationality, but merely to show that from the earliest periods to the present these concepts have been treated as attributes of natural persons, and that the focus is on the applicable statutes rather than on other peoples, nations or states. When the French Naturalization Law of 1889 differed from English law, Sir James Ferguson, relying on advice from parliamentary law officers, remarked that each country was entitled to its own legislation. Consequently, the Court said it must examine how Indian citizenship has developed, identify who qualifies as a citizen, and determine the mechanisms for conferring citizenship on others. Since India was ruled by Britain for centuries, it was necessary to review the pre‑independence legal framework. The Court noted that there was no separate law of citizenship in India; the Indian Naturalization Act merely supplemented the Imperial Act and was hardly required. Under English common law the principle of jus soli was recognized, whereas English statutory law, particularly the Naturalization Act of 1870, granted British nationality to persons born in Great Britain or the Dominions, to the second generation of descent from natural‑born British subjects born abroad, and to those who acquired status by naturalization, denization or resumption. Although Clive Parry has compiled the relevant statutes, the Court indicated that a detailed citation was unnecessary for the present discussion. Finally, the Court mentioned that the British Nationality and Status of Aliens Act of 1914, later amended in 1943, defined a natural‑born British subject and listed the categories of persons considered British subjects by birth; the term “subject” was not intended in a negative sense but simply denoted a citizen, even though the feudal connotation of subjection persisted in the wording.

The Court observed that the terminology of subjection continued to linger in the language describing nationality, a relic of earlier conceptions. It noted that the British Nationality Act of 1914, as amended in 1943, introduced a major change by restricting British nationality acquired by birth to the first generation born abroad. This amendment governed the law of nationality until the British Nationality Act of 1948 was enacted. By the time the 1948 Act was passed, the situation of individuals born in Britain had undergone a dramatic transformation together with the dissolution of the British Empire. The Court explained that a new concept, termed Commonwealth citizenship, began to be recognised, and that it was evident that the various Commonwealth nations would soon pass their own statutes concerning citizenship and nationality. The 1948 Act performed two functions relevant to the present discussion. First, it set out rules by which the status of British subject would be conferred upon persons who were citizens of certain countries listed in the Act; India was one of those countries. This newly created status was described as Commonwealth citizenship. Second, the Act contained transitional provisions, including section 12(4), which read as follows: “S. 12(4):-A person who was a British subject immediately before the (late of the commencement of this Act and does not become a citizen of the United Kingdom and colonies by virtue of any of the foregoing provisions of this section shall on that date become such a citizen unless‑ (a) he is then a citizen of any country mentioned in subsection (3) of section 1 of this Act under a citizenship law having effect in that country or a citizen of Eire; or (b) he is then potentially a citizen of any country mentioned in sub‑section (3) of section I of this Act.” The Court noted that one Commonwealth country, Canada, already possessed such citizenship legislation, while other members adopted comparable laws shortly thereafter. India, however, lagged behind; its citizenship statutes only emerged through the Constitution and the Citizenship Act of 1955. During the interval from 1948 to 1950, individuals who would later become Indian citizens were regarded merely as potential citizens. Nevertheless, they possessed Commonwealth citizenship, a term that was effectively synonymous with British subject but more suitably reflected the full nationhood achieved by certain countries. Consequently, every person of Indian origin residing in British India, by virtue of section 1 of the 1948 Act, and every protected person in the Indian States, enjoyed Commonwealth citizenship. The Court emphasized that this status was intended to persist until India enacted its own citizenship legislation, and that it would continue thereafter only if a common clause preserved it, terminating if an explicit repeal of Commonwealth citizenship occurred. Under the 1948 Act, Indians became Commonwealth citizens or British subjects without citizenship and were treated as potential citizens of India. The Indian Constitution, which came into force on 26 January 1950, provided for citizenship but was not, in the sense of the British Nationality Act of 1948, a law establishing citizenship; it simply identified certain natural persons as citizens of India from that date. In the Court’s view, this created a

In this case, the Court observed that a gap existed because the scheme for Indian citizenship had not been fully completed on 26 January 1950. Although the Constitution identified who were Indian citizens on that date, the status of a British subject without citizenship—referred to as Commonwealth citizenship—could not be terminated unless a citizenship law, as imagined by the English Act of 1948, was in place. The Court quoted the observation of Clive Parry that, while the Indian citizenship scheme was pending, individuals who were potentially citizens of India but not yet citizens remained British subjects without citizenship in the eyes of the United Kingdom. The Court noted that the Indian Parliament enacted the Citizenship Act in 1955, and some commentators argue that even that statute does not satisfy the definition of the citizenship law contemplated by the English Act of 1948. However, the Court held that deciding this issue was unnecessary for the present dispute because the provisions of the 1955 Act apply only to “persons,” and the Act expressly excludes any company, association, or body of individuals, whether incorporated or not, from the definition of person. The Court explained that citizenship, whether considered from one country to another or across different periods, has always concerned natural persons. The Court cited the summary of the acquisition of citizenship and nationality given by Mervyn Jones in his book British Nationality Law, noting that the pedigree presented there leaves no room for artificial persons. Turning to the argument raised by Mr Setalvad, the Court considered the hypothetical situation that, if corporations had possessed citizenship immediately before the Constitution, they would have been classified under the English Act of 1948 as British subjects without citizenship—or Commonwealth citizens—and only potential citizens of India. Since the Constitution dealt exclusively with natural persons, its citizenship provisions did not affect the status of corporations. When the Citizenship Act of 1955 came into force, it retroactively spoke from 26 January 1950 and might have altered the position of corporations, but the statute expressly excluded them. Consequently, any citizenship that corporations might have claimed remained unchanged, leaving them as Commonwealth citizens rather than Indian citizens, because no legislation ever conferred Indian citizenship upon them. The Court rejected the basic contention that corporations ever enjoyed citizenship, emphasizing that, in the sense explained, citizenship is a concept that excludes artificial persons. The Court further noted that the argument attempting to base corporate nationality on a rule of law conflates nationality with citizenship, and that the term “nationality” in this context does not equate to the status of a citizen.

By operation of law, corporations were recognized as entities that could sue or be sued, and they were also entitled to own property, conduct trade, or carry on business. However, the mere existence of a corporation did not automatically grant it the right to approach the courts; access to the judiciary was ordinarily reserved for natural persons, not for abstract entities such as corporations. The law therefore required a specific grant of rights before a corporation could commence or face litigation. In practice, the statutes conferred upon corporations a distinct legal personality, a right to sue, and a corresponding disability to be sued. These attributes, traditionally applicable to natural persons, were extended by legislation to include corporations, thereby giving an intangible collective a unified identity and the capacity to act as a legal person. Foreign corporations were accorded the same procedural privileges under the principle of comity among nations, allowing them likewise to sue and be sued. Nevertheless, the privileges shared by corporations and natural persons did not elevate corporations to the status of citizens with all the attendant municipal rights that citizens enjoy. In effect, corporations were limited to those privileges expressly provided by municipal law. It was undeniable that the law acknowledged the existence of corporations, attributing to them a domicile, a residence, and even a nationality. The concept of corporate nationality was relatively novel, having developed significantly during the First World War, and it became relevant when applying the principle of nationality of claims before an international tribunal or when implementing treaty provisions that applied to nationals. Scholarly commentary, such as that of Starke, noted the lack of consensus on the criteria for determining corporate nationality, while other scholars like Clive Parry dismissed the notion as merely quasi‑nationality. Historically, several theories concerning corporate nationality emerged and were revisited during the First World War. Hilton Young identified four principal theories. The first theory assigned corporate nationality based on the citizenship of the corporation’s members, its majority shareholders, or the owners of the majority of its capital, treating the corporation as a mere aggregation of its constituents and offering little protection from fluctuations. Critics, notably Maitland, attacked this approach as unstable and eventually abandoned it. The second theory linked corporate nationality to the state under whose legal system the corporation was incorporated; this approach was accepted in the United States and, with modifications concerning domicile, in England, while Germany referred to it as the Grundungstheorie, or theory of place of birth. This theory, however, proved insufficient for corporations lacking explicit state authorization and was later modified in the United States through the doctrine of implied consent to extraterrestrial service. The third theory proposed that a corporation’s nationality derived from the location where it performed its acts, a view universally rejected by jurists but temporarily endorsed at the 1889 Paris Congress of Joint Stock Companies, despite its impracticality due to the possibility of concurrent actions in multiple jurisdictions. The fourth theory, which follows later in the discussion, considered the corporation’s domicile as the basis for determining its nationality.

In the discussion of corporate nationality, the Court explained that one approach measured nationality by looking at the nationality of the State that created the corporation. The United States of America had accepted this approach, while England was said to have adopted a modified version that also considered the corporation’s domicile. German scholars referred to this approach as the Grundungstheorie, meaning the theory of the place of birth. The theory was supported by well‑known academics such as Calvo, Fiore, Pineau and Weiss. However, the Court noted that this theory could not adequately address corporations that were not authorised by the State in which they were created. In the United States, the theory had been altered by developing the concept of “Implied consent to extraterrestrial service.” A second line of theory held that a corporation acquired the nationality of the place where its acts, or any of its acts, were performed. Although lawyers universally rejected this view, it had been embraced by businessmen at the Congress of Joint Stock Companies held in Paris in 1889. Under that theory, nationality could be changed at will, creating obvious difficulties when a corporation acted simultaneously in several countries. A third theory, which the Court described as the fourth overall, linked corporate nationality to the corporation’s domicile, meaning the location of its permanent home. This theory was influenced by the work of Von Bar, who argued that juristic persons could not be nationals by blood or by soil, but could be nationals by domicile. Chief Justice Taney summarised this position by stating that “a corporation must dwell in the place of its creation and cannot migrate to another sovereignty,” a principle that was cited in Bank of Augusta v. Erle. The Court observed that a corporation’s domicile could be established on several bases: the territory of the sovereign that created it, the charter or other constitutive documents, the place where it carried out its functions, or the genuine centre of its administrative business. These differing concepts had given rise to a variety of theories. English law historically treated nationality as dependent on domicile and initially regarded a corporation as a national of the State where it was incorporated. Yet a review of corporate law history showed that this view had varied over time, as indicated in the citation [1839] 13 Pet. 519, 588‑10 L. Ed. 274. The notion of domicile in English common law was originally adopted for purposes of jurisdiction and applicable law. It was held that a corporation’s domicile was fixed at the place of its formation and could not be altered, although Lord St. Leonards expressed a contrary opinion in Carron Iron Co. v. McLaren. At the same time, it was recognised that a corporation could have a residence that might change, and under certain statutes a corporation could even have more than one residence. According to English common law, a corporation incorporated under English law possessed British nationality regardless of the nationality of its members, and any corporation not holding British nationality was classified as an alien corporation. Moreover, the Court noted that many European jurisdictions, particularly France, based corporate nationality on the location of the “siege social,” meaning the seat or centre of control.

The Court explained that the term “siege social” refers to the seat or centre of control of a corporation. Both the domicile theory and the “siege social” theory encountered difficulties during the First World War. Under English common law, the leading authority on the matter was the case of Janson v. Driefontein (2). The Court recalled that decision, which held that a company possessed the nationality of the country whose laws provided for its incorporation and that the nationality of the shareholders did not determine the company’s nationality. Once a company’s nationality was fixed in that way, the corporation was treated as a national, an alien, or an enemy depending on whether the circumstances were peacetime or wartime. The Court noted that this view was altered by the experience of the First World War.

In the later case of Daimler Co. Ltd. v. Continental Tyre and Rubber Co. (Great Britain) Ltd. (3), the Court described the factual background: all of the respondent’s shares except one were owned by a German corporation, and all of its directors were German, although the respondent itself was incorporated in Great Britain. The Court observed that if the rule that nationality follows incorporation were applied rigidly, the respondent would retain British nationality and could not be regarded otherwise. Instead, the House of Lords applied the principle of effective control to determine the company’s nationality. The matter had previously been heard by the full Court of Appeal, and the authorities cited were (1) [1952] 5 H.L.C. 416, (2) [1902] A.C. 484, and (3) [1916] 2 A.C. 307. The Court recorded that the principle of effective control was upheld, although Buckley L. J. dissented. The majority view was later confirmed by the full strength of the House of Lords. Lords Shaw and Parmoor expressed the view that enemy character depended on whether the company was incorporated in an enemy country. By contrast, the majority—Lords Halsbury, Mersey, Kinnear, Atkinson, Parker and Sumner—held that enemy character depended on the location of the effective control of the company.

Lord Parker then set out six propositions summarising the law. First, a company incorporated in the United Kingdom is a legal entity created by statute, possessing the status and capacity conferred by law; it is not a natural person with mind or conscience. In the words of Buckley L. J., “It can be neither loyal nor disloyal. It can be neither friend nor enemy.” Second, such a company may act only through agents who are properly authorised, and while it conducts business in this country through agents authorised and residing in this country or in a friendly country, it is prima facie regarded as a friend and all subjects of His Majesty may deal with it as such. Third, the company may nonetheless acquire an enemy character if its agents or the persons who in fact control its affairs, whether authorised or not, reside in an enemy country, or wherever they reside, are aligned with the enemy, take instructions from the enemy, or act under enemy control. In that situation, any person who knowingly deals with the company is deemed to be trading with the enemy.

The Court explained that the character of a company is separate from the character of its individual shareholders, and that this distinction is particularly clear in times of peace, when every shareholder may freely exercise and enjoy the rights that the law confers upon him by virtue of his status as a shareholder. The Court then observed that, in a similar manner, a corporation that is registered in the United Kingdom but that conducts its business in a neutral country through agents who are properly authorised and who reside either in that neutral country or in the United Kingdom, is to be regarded at first glance as a “friend” of the State. However, the Court added, such a corporation may, by the actions of its agents or by persons who are in de facto control of its affairs, acquire an enemy character. The Court further stated that a corporation that is registered in the United Kingdom but carries on its business in an enemy country must be treated as an enemy. The Court referred to the House of Lords decision on this point as an instance of judicial legislation dealing with the notion of “enemy character,” and it affirmed that the decision indeed created a rule of law on that subject. The Court noted, however, that this theory has not been accepted universally. It pointed out that the theory was criticised by Sir Arnold McNair in the 1923‑24 British Year Book of International Law, page 44, and by Mr Ralph A. Norem in the American Journal of International Law, volume 24, page 310. The Court then turned to the position in the United States, observing that in the United States a corporation is regarded as a domestic corporation of the State in which it was incorporated or under the laws of the State that incorporated it, and that some States have enacted statutes to that effect. While several European nations were revising their approaches, the United States continued to follow the same theory, and the Supreme Court observed that Congress had expressly adopted a policy of disregarding stock ownership as a test of enemy character, meaning that the United States did not attempt to pierce the corporate veil. The Court added that England moved away from the domicile theory toward the continental “siege social” theory, but that France, Germany, Italy and Belgium went further. The Court cited the French Cour de Cassation decision in Société Conserve Lenzburg, in which the court held that it was entitled “to go to the bottom of things and ascertain whether a corporation was really French or not.” The Court reproduced the 1916 circular issued by the French Minister of Justice, which explained the French approach in the following terms: “Les formes juridiques dont la société est revêtue, le lieu de son principal établissement, tous les indices auxquels s’attache le droit privé pour déterminer la nationalité d’une société, sont inopérants, alors qu’il s’agit de fixer, du point de vue du droit public, le caractère réel de cette société. Elle doit être assimilée aux sujets de nationalité ennemie dès que notoirement sa direction ou ses capitaux sont en totalité ou en majeure partie entre les mains de sujets ennemis, car, en pareil cas, derrière la fiction du droit privé se dissimule vivante et agissante la personnalité ennemie elle‑même.” The Court concluded this passage by translating the French wording, noting that the juridical form of a corporation, the location of its principal establishment and all the indicia used by private law to determine a corporation’s nationality are irrelevant when public law is used to ascertain the corporation’s true character; a corporation must be treated as an enemy national whenever its management or its capital is wholly or largely in enemy hands, because behind the private‑law fiction lies the living and operative enemy personality itself.

The Court observed that legal forms, the location of a company’s principal establishment and all the indicia that private law ordinarily employs to determine a corporation’s nationality become ineffective when the analysis is undertaken from the standpoint of public law in order to discover the corporation’s true character. It further held that a corporation must be counted among enemy nationals whenever its direction or its capital is wholly or substantially in enemy hands, because in such a situation the fiction created by private law conceals the active personality of an enemy. The Cour de Cassation justified this approach by stating that the corporation was a “personne interposee” under which an enemy conducted business. The German doctrine also shifted, moving from the concept of “der Mittelpunkt des Geschaftes” to the notion of “Geschaftssitz,” that is, from the centre of the enterprise to the “seat” of real control. Accordingly, the corporation was said to have its seat where the “brain” of the entity operated rather than where its centre of exploitation lay. Italy subsequently adopted the same test. Belgium codified the new principle in clear language in Act 172 of 23 May 1913, which declares that any society whose principal establishment is in Belgium is subject to Belgian law even though its constitutive act was passed in a foreign country. After the First World War, the Mixed Arbitral Tribunals applied both the control theory and the domicile theory depending on the composition of each tribunal; some decisions were based on control while others were grounded in domicile. Numerous additional tests exist, such as the test of beneficial interest, substantial ownership or responsibility, but the Court deemed it unnecessary to describe those in detail. It noted that the control theory is losing ground and that there is growing support for the view that the juridical life of a corporation should ultimately determine its nationality. Scholars such as Herr Marburg and M. Mazeaud have pointed out that the purpose of this body of law is less to fix a corporation’s nationality than to ascertain its enemy character. Likewise, writers including Dicey, Cheshire, Foote and Farnsworth have argued that the notion of corporate nationality is relevant principally in wartime and carries more significance in public international law than in municipal law. In peacetime, the domicile of a corporation—an idea, as Lord Westbury explained, that creates a legal relationship between an individual and a particular country—functions as a permissible legal fiction. A corporation resembles a natural person with respect to domicile, except that an individual may choose his domicile whereas a corporation’s domicile is fixed at its place of birth. The law of the country of birth grants the corporation the rights it deems practicable, and foreign corporations enjoy those rights subject to any special provisions.

In this discussion the Court observed that the ordinary rules governing corporate existence yield to public‑policy considerations when the question is whether a corporation’s assets might be employed for enemy purposes. Accordingly, the Court referred to the leading decision in the Daimler case, where the origin of the control theory was explained by stating that the acts performed by a company’s organs—its directors, managers, secretary and other officers—when carried out within the scope of their authority are to be treated as acts of the company itself. The Court noted that these officers are regarded as the “brain” of the corporation and that the corporation is deemed to be functioning whenever its brain functions.

The Court then contrasted the legal position in times of peace with that in times of war. It explained that during peace a corporation is permitted to own property and to conduct business because municipal law expressly authorises such activities, and foreign corporations may also enjoy these benefits either by virtue of specific provisions in the municipal law or by the doctrine of comity among nations. However, the Court emphasized that the situation changes fundamentally during war. In wartime the law of nationality becomes a tool for identifying enemy character rather than a mechanism for recognising nationality in either a political or municipal sense.

Addressing the analogy between individuals and corporations, the Court cited Mr. Vaughan Williams, who argued in an article (49 L.Q.R. 334) that it is unnecessary “to ride … the analogy to death” (see [1916] 2 A.C. 307, 340). The Court further referred to the summary of English law offered by Mervyn Jones in the revised edition of British Nationality Law, which observes that a corporation is a juridical person but cannot be a subject at common law because allegiance is a personal bond limited to individuals. Jones added that corporations have never been recognised as statutory British subjects or as citizens of the United Kingdom and its colonies.

Oppenheim, writing in International Law (Lauterpacht Edition) p. 642 n. 3, was quoted as stating that the nationality of corporations is principally a question of private international law, and that public‑policy considerations decisively shape each State’s approach to the issue. The Court reiterated that citizenship is determined by municipal law, citing the same author’s observation on p. 643 that “it is not for International Law but for Municipal Law to determine who is, and who is not, to be considered a subject.” Hyde, in the second edition of International Law Vol. 2, page 1066, was also cited for the proposition that citizenship, distinct from nationality, is a creation of domestic law and refers to the rights a State elects to confer on certain individuals who are also its nationals.

Finally, the Court highlighted the practical argument against treating corporations as citizens advanced by M. Niboyet, whose view was reiterated by Mr. Vaughan Williams. Niboyet noted in his Manual of Private International Law that when a country computes its total number of citizens, it does not include corporations of that nationality. The Court recalled that Lord Atkinson, speaking for the majority in the Daimler case (with the exception of Lord Halsbury), expressed the opinion that “the question of the residence of” a corporation should not be conflated with the nationality of its shareholders, thereby reaffirming the distinction between corporate nationality and citizenship.

In considering the corporate entity separate from its shareholders, the Court observed that a company cannot be identified so completely with its shareholders, or even with the majority of them, that the shareholders’ nationality automatically becomes the company’s nationality. The Court noted that Indian law contains only two statutes that deal with citizenship and that no statute addresses the nationality of corporations. The Constitution and the Citizenship Act are framed to apply only to natural persons, and the Citizenship Act expressly excludes corporations from its provisions. Although the chapter on fundamental rights does not disregard corporations as the United States Constitution does, the Constitution uses the term “person” in some provisions, which is defined by the General Clauses Act to include corporations, while it uses the term “citizen” in other provisions. The Court remarked that the word “citizen” could have been given a special definition for Articles 19(1)(f) and (g), but Parliament has not done so, and there is no basis for assigning a distinct meaning to “citizen” in those clauses. The Court further explained that the fact that corporations may, in certain contexts, be said to possess nationality does not make them citizens. As counsel for the petitioner correctly pointed out, ships and aircraft are also recognized as having nationality under international law, yet they are not treated as citizens under municipal law. The question of which corporations, if any, should be regarded as possessing Indian nationality is one that must be answered only when the issue actually arises, and the Court declined to decide whether the provisions of the Companies Act relating to foreign companies provide any guidance on this point.

The Court emphasized that even if a corporation were found to have Indian nationality, such a finding would not automatically confer upon it the rights that are reserved for citizens. The Court accepted that the State Trading Corporation of India is incorporated in India and therefore is not a foreign company under the Companies Act. However, when the veil of incorporation is lifted, it becomes clear that the entire share capital is subscribed by the Government of India, the shareholders consist of the President of India and two Secretaries to Government acting in their official capacities, and the corporation’s management functions as a governmental activity for the benefit of the nation. Consequently, the Court conceded that the corporation may, in an abstract sense, possess Indian nationality and that it cannot acquire an enemy character. Nevertheless, the Court held that such a corporation is not a “national” in the sense of being an individual member of the nation. For purposes of a national census, corporations are not counted as nationals. The argument that one should simply replace the word “citizen” with the word “national” therefore does not succeed. The Court affirmed that while the existence of corporations as legal entities is recognized, the rights they enjoy are limited to those expressly conferred upon them by law, and they cannot claim the full spectrum of rights that accrue to citizens, nor can they hold public office, become members of Parliament or State Legislatures, or enjoy the other political rights reserved for individual citizens.

The Court explained that a corporation cannot obtain a franchise or gain entry into educational institutions because it is not a citizen in the true sense of the word, and because its “nationality,” although relevant under public or private international law, treaties, conventions and protocols, has no effect in municipal law except where municipal law expressly provides for such an effect. The Court stressed that this observation does not imply that corporations receive no protection under the Constitution of India. Unlike the Constitution of the United States, the Indian Constitution does not ignore corporations. The General Clauses Act, which is used to interpret the Constitution, defines the term “person” to include corporations. Consequently, the Constitution employs the word “person” in several provisions where the same term applies equally to natural persons and to corporations. For example, Article 14 guarantees equality before the law, Article 20 provides protection with respect to convictions for offences, Article 27 secures freedom as to the payment of taxes for the promotion of any particular religion, and Article 31 deals with compulsory acquisition of property. In contrast, the seven freedoms enumerated in Article 19(1) are expressly granted to “citizens.” Although one could easily argue that the word “citizen” might be read to include corporations that possess Indian nationality for the purpose of the clauses of Article 19(1), the Constitution has not been interpreted in that manner. The Court noted that the third part of the Constitution defines terms such as “the State,” “the law,” “laws in force,” “estate” and “rights,” and that the expression “law in force” is defined twice with different meanings. It questioned whether the framers deliberately left the term “citizen” vague to allow a broad, liberal interpretation, but observed that attempts by the United States Supreme Court to assign an artificial meaning to “citizen” have been widely regarded as constitutional amendment. The Indian Constitution, the Court held, was careful to use the broader term “person” in some places while restricting “citizen” elsewhere, indicating an intention that the freedoms of Article 19(1) protect individuals recognized by the polity as citizens, not abstract entities such as corporations. The Court referenced earlier observations of Chief Justice Mukherjea, which state that a corporation receives protection only where the constitutional language expressly includes corporations; otherwise the provisions are intended solely for individuals. While acknowledging that the United States Supreme Court has at times held that “citizen” includes corporations and that some smaller foreign constitutions expressly mention corporations, the Court dismissed the relevance of those foreign provisions, noting that they cannot be used to rewrite the Indian Constitution. The Court also cited Willis, who observed that in the United States the rights and liabilities of corporations have been shaped through judicial interpretation of the Constitution, a development that arose partly because of the diverse citizenship issues present in that jurisdiction.

In discussing the United States precedent, the Court observed that the word ‘citizen’ has not been interpreted to include corporations in other articles. Since that precedent was heavily relied upon, the Court briefly referred to it. The Court noted that the Constitution of the United States of America did not originally address corporations, which made the language difficult in some contexts. The Supreme Court therefore filled the gap through what the Court called ‘judicial legislation.’ The Court explained how this was accomplished. It recalled the statement of Chief Justice Taney and the attitude of Congress and the Supreme Court toward the nationality of corporations. A prevailing view held that nationality follows the place of incorporation and cannot be altered. This geographical theory, together with the dual citizenship of the State and the United States, created certain problems. Corporations were consistently treated as citizens of the State in which they were incorporated, but not as citizens of the United States. The citizenship of the State was accepted for the purpose of exercising the judicial power of the United States. At this point, the Court listed several relevant constitutional provisions: Art. I Sec. 8 “Congress shall have power … to establish an uniform rule of naturalization.” Art. III Sec. 1 “The judicial power of the United States shall be vested in one Supreme Court, and in such inferior courts as the Congress may from time to time ordain and establish.” Art. III Sec. 2 “The judicial power shall extend to controversies between a State and citizens of another State; between citizens of different States; between citizens of the same State claiming lands under grants of different States; and between a State, or the citizens thereof, and foreign states, citizens or subjects.” Art. IV Sec. 2 “The citizens of each State shall be entitled to all privileges and immunities of citizens in the several States.” Amendment XIV Sec. I “All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside… No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty or property without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.” The Court then stated that the Supreme Court has held that a corporation is a citizen of the State of incorporation for the purpose of federal jurisdiction based on diversity of citizenship. Although Art. I Sec. 8 and Amendment XIV speak of natural persons, the Court said the term ‘citizen’ was given a broader meaning in cases involving controversies between citizens of different States, over which only federal courts have jurisdiction. The Court observed that without this development, the national courts could not claim jurisdiction when the defendant was a corporation, but the Supreme Court, through gradual steps, created a fictional jurisdiction. The Court concluded that the evolution of the law in this area has been notable.

The Court noted that rather than attempt a personal summary, it would quote a passage from Willis, Constitutional Law of the United States, page 850. The quoted passage explained that initially a corporation was not considered a citizen for any purpose and therefore could not be brought before the federal courts on the basis of diversity of citizenship. The passage continued that a later case involved a corporation whose all shareholders were citizens of the state of incorporation while the plaintiff was a citizen of another state; the Court then looked behind the corporate veil to the shareholders and granted federal jurisdiction because diversity of citizenship existed among the parties. In a subsequent decision some shareholders were citizens of a state different from that of the corporation’s incorporation and also different from the state of the opposing litigant. To prevent loss of federal jurisdiction, the Court ruled that, for diversity purposes, all shareholders of a corporation would be conclusively presumed to be citizens of the chartering state. The passage further observed that this rule was later modified to create an exception when the shareholder himself was the plaintiff. Finally, the passage stated the contemporary view that courts treat the corporation itself as a citizen of the state in which it is incorporated for the purpose of diversity jurisdiction.

In addition, the Court cited an extract from St. Louis & San Francisco Ramawy Co. v. James (1) to summarise the Supreme Court’s position. The extract declared an indisputable legal presumption that a state corporation, when either suing or being sued in a United States circuit court, is composed of citizens of the state that created it. The doctrine originally relied on the factual assumption that state corporations consisted of citizens of their chartering state, an assumption that could be challenged by allegation and thereby jeopardise federal jurisdiction. After considerable litigation, the Court settled that the presumption of citizenship is a rule of law that cannot be defeated by contrary allegation or evidence. The Court expressed satisfaction with that resolution. The Court then observed that some states have begun to erode this presumption by conditioning the right to do business within the state on incorporation in that state. The Court explained that this approach is permissible because the Supreme Court, in the 1896 decision reported at 161 U.S. 545, 562‑563, rejected the claim that corporations possess citizenship for purposes of the privileges and immunities clause. The Court also referenced Corwin’s commentary in The Constitution and What It Means Today, eleventh edition, page 166, which affirmed that the term “citizens” does not include corporations, and consequently a corporation chartered elsewhere may conduct local business only under conditions imposed by the state, provided those conditions do not contravene constitutional protections.

The Court observed that the Constitution protects a corporation’s rights, including the right to engage in interstate commerce, the right to seek redress in the national courts, and, once it is admitted into a State, the right to receive treatment that is equal to that afforded to corporations chartered by that State. It further noted that jurisprudence in the United States has recognized corporations as “persons” for the purposes of the Fourteenth Amendment, thereby granting them the benefit of equal protection of the laws. However, the Court cited Corwin’s observation that a foreign corporation is entitled to equal treatment with corporations chartered by a State provided that the foreign corporation submits to the jurisdiction of that State.

The Court then turned to the United States Nationality Act of 1940, explaining that the statute defined a “national” as a person who owed personal allegiance to a State within the United States, expressly excluding corporations because, according to Justice Buckley, a corporation cannot be loyal or disloyal. For purposes of international law, the Court explained, a corporation may be treated as a national only when it suffers illegal treatment by a foreign power in an international context. The Court pointed out that treaties such as those concluded between Great Britain and the United States in 1783 and 1794, as well as the Treaty of Guadalupe Hidalgo between the United States and Mexico, protect the position of corporations. It added that other sources, including Hyde and various international documents, treat corporations as persons for certain treaty‑based provisions, and that commercial treaties are often interpreted to include corporations within language that originally referred to natural persons. Nevertheless, the Court stressed that even in the international arena corporations do not enjoy the same status as natural persons or nationals; as Hyde observed, a corporation is not, in a technical sense, to be regarded as a national of a State and consequently lacks many privileges that are available to natural persons.

Finally, the Court considered whether the United States Supreme Court’s precedent on corporate citizenship should be followed in India. The Court expressed the view that adopting such a precedent would amount to a purposeful exercise of judicial legislation, which the Court found difficult to justify in the Indian context. The Court listed several reasons for this conclusion: (a) India has a single system of citizenship and does not recognize citizenship of individual States; (b) India operates a single, unified court system rather than separate courts with distinct jurisdictions; (c) The Indian Constitution, while not ignoring corporations, does extend certain fundamental rights prima facie to corporations; (d) Citizens who are members of a corporation can enforce rights under Article 19(1)(f) and (g) on behalf of the corporation, and although a corporation may not enforce those rights directly, its citizen members can do so, thereby benefiting the corporation; (e) No legal doctrine in India has ever recognized a corporation as a citizen; and (f) Absent a presumption created by law that corporations—whether composed solely of citizens or of both citizens and non‑citizens—are citizens of India, each inquiry would be forced to examine the particular composition of the corporation, a principle that lacks a clear basis when the corporation’s membership is diverse.

In this case the Court observed that when a corporation is composed of both citizens and non‑citizens of India, each time an inquiry must be undertaken into the make‑up of the corporation and no clear principle existed upon which citizenship could be assigned in the presence of such mixed composition. Consequently the Court held that the State Trading Corporation could not be treated as a citizen for the purpose of invoking the rights guaranteed under Article 19(1)(f) and Article 19(1)(g). The next issue before the Court was whether the State Trading Corporation should be regarded as a department or organ of the Government despite its formal incorporation as a company. The respondents, on behalf of the corporation, argued that if the corporate veil were pierced, the right to claim the provisions of Article 19(1)(f) and Article 19(1)(g) would be seen to be asserted by three individuals who were unquestionably Indian citizens – namely the President of India and the two secretaries. The opposing side contended that the corporate veil could not be pierced at all, and that even if it were pierced, what lay behind the veil would be the Government of India itself. The Court noted that none of the shareholders held their shares for personal benefit, that none of them had actually paid for the shares bearing their names, and that the administration of the corporation’s affairs, although technically that of a company, was in reality a concern of the Government of India. It further observed that both the legal and beneficial ownership of the corporation vested in the Government of India. The Court explained that there were not two separate veils – one revealing the shareholders and another revealing the Government – but rather a single veil, and if any veil were to be lifted, it would have to be removed in one step. The Court quoted Martin Wolff’s description of this situation, stating that it is common for a state to create a separate legal entity for commercial purposes, which in law appears distinct from the state, but when the veil of personality is pierced the entity is essentially identical with the state, citing examples of many companies under state control where the state holds all or practically all of the shares. The Court then affirmed that if a corporation is to be treated as a separate entity from its members rather than merely an association of individuals, the veil should not be torn aside. It observed that in the United States corporations in which the State owns the stock do not enjoy state immunity. Because of these complications, the United States Supreme Court had resolved the question of federal jurisdiction in cases involving diversity of citizenship by adopting an irrebuttable presumption that the shareholders of a corporation incorporated in a particular State are citizens of that State, and consequently that the corporation itself is a citizen of that State. The Court characterized this as a “fiction upon a fiction” and expressed the view that Indian law did not permit the raising of such an irrebuttable presumption of citizenship for every member of a corporation.

In this case, the Court observed that there existed an irrebuttable presumption, comparable to that applied in the United States, which treated every member of a corporation in India as an Indian citizen for purposes of determining the corporation’s citizenship. The Court noted that if such a presumption could not be raised, the question of a corporation’s citizenship would become a factual issue that required investigation. The Court examined whether the conclusion that a corporation must be regarded as an Indian citizen could be drawn merely because all of the persons who comprised the corporation were found to be Indian citizens. This line of reasoning had been adopted in an early United States decision, Bank of the United States v. Deveaux, reported in 1809 at 5 Cranch 61, 3 L. Ed. 38. In that decision, Chief Justice Marshall, while acknowledging that a corporation was an “invisible,” “intangible,” and “artificial” entity and therefore not a citizen in the ordinary sense, held that because the Constitution dealt in general terms and not in detailed specifics, the purpose and object of corporate law gave the artificial person a corporeal quality. Consequently, the Chief Justice concluded that a corporation possessed the character of a citizen if the individuals who composed it possessed that character.

The Court then turned to the authority of the Daimler case, wherein Lord Parker appeared to state that the established law in the United States endorsed the view that a court could look behind the corporate veil to ascertain the nature of the individuals forming the corporation. However, the Court cited Farnsworth’s commentary in “The Residence and Domicile of Corporations” (page 311), which supported Dr. Schuster’s position expressed in “The Nationality of Trading Corporations” (2 Grotius Society 1916, page 195), indicating that Lord Parker’s statement was inaccurate. Farnsworth also quoted Garner’s “International Law in the World War” (Volume I, page 227), which reproduced the opinion of the Federal Judge in Fritz‑Schultz Jr. Co. v. Raines & Co., reported in 1917 at 166 N.Y. S. 567. In that opinion, the judge asserted that the authority established in United States v. Deveaux had been considerably limited, if not overturned, by later cases, and that contemporary courts in the United States firmly adhered to the doctrine that the members of a corporation were conclusively presumed to be citizens of the same State as the corporation itself. Justice Lehman later remarked that the statements of Lord Reading and Lord Parker in the Daimler case, which suggested that the United States Supreme Court had settled the principle that a court may look behind the corporate name to determine the character of the individuals comprising it, were plainly inaccurate. The Court also referenced the decision in St. Louis & San Francisco Railway Co. v. James, which similarly supported Dr. Schuster’s view.

Having considered these authorities, the Court held that in India it was not permissible to pierce the corporate veil in order to ascertain the citizenship of the individual members and then to grant the corporation the benefit of Article 19. The Court reasoned that even if the veil were pierced and the corporation were found to be identical with the Government, it would be difficult to provide any relief unless the State could be regarded as its own citizen. Moreover, the Court concluded that an irrebuttable presumption regarding the citizenship of a corporation could not be raised, and that the citizenship of the members could not be used to automatically confer citizenship on the corporation for the purposes of Article 19.

The judgment first addressed the issue of whether the corporation’s members could be treated as citizens for the purposes of Article 19. The Court explained that it had already supplied detailed reasons in response to the initial question presented for determination. It observed that if the analysis were confined to the corporate entity itself, the logical consequence would be that Article 19 applies only to natural persons. The Court then summarized its earlier discussion by quoting a passage from Ducat v. Chicago (1), as cited by Farnsworth on page 310 and endorsed by the United States Supreme Court. The passage states: “The term citizen can be correctly understood in no other sense than that in which it was understood in common acceptation when the Constitution was adopted, and as it is universally explained by writers on government, without exception. A citizen is of the genus homo, inhabiting, and having certain rights in some State or district… these privileges attach to him in every State into which he may enter, as to a human being—as a person with faculties to appreciate them, and enjoy them, and not to an intangibility, a mere legal entity, an invisible artificial being, but to a man, made in God’s image.” The Court noted that it was unnecessary to refer to earlier decisions of this Court because the precise question had not been framed in this manner before. It added that even the observations of Mukherjea J., as he then was, were obiter dicta. The Court further observed that in most cases an individual member of a corporation also joins the corporation in a petition seeking enforcement of fundamental rights, as is the situation in the present matter, and that the Court has traditionally been content to leave the issue at that stage.

Turning to other authority, the Court referred to the case of Joseph Kur‑ (1) (1868) 48 111. 172. Villa Vellukunnel v. Reserve Bank of India (1), which had been heard by this Court with Palai Bank Ltd. as one of several parties. No objection had been raised to Palai Bank’s competence to invoke the benefit of Article 19. The main proceeding, decided together with another case, was an appeal from a judgment of Raman Nayar J. in winding‑up proceedings against Palai Bank, reported in I.L.R. (1961) Kerala 166. Those proceedings were properly instituted under the Banking Companies Act. The central question before the Court was whether a provision of the Banking Companies Act that empowered the Reserve Bank to determine whether a banking company should be wound up was ultra vires because it removed the court’s jurisdiction to decide that matter. By a majority decision, the Court held that the provision was not unconstitutional and that it was within Parliament’s authority to prescribe the stage at which judicial intervention should commence, not within the purview of the courts that become involved once the judicial process has begun under the statute. The Court indicated that this issue could be resolved in an appeal where, alongside the corporation, other interested parties were present. Concluding its discussion, the Court expressed that it harbored no apprehension regarding corporations in general, including those in which the State holds all or a majority of the shares, affirming that such entities remain within the protective scope of the Constitution.

The judgment began by observing that the Constitution affords extensive protection, prohibiting discrimination, forbidding taxation without legislative authority, restraining any curbs on freedom of trade, commerce or intercourse, and barring compulsory acquisition of property. It further held that the constitutional guarantees are sufficient, and if additional protection were required any citizen who is a member of the corporation could invoke Article 19(1)(f) and (g). The Court noted that, in most circumstances, the corporation would enjoy the benefit of those provisions. Consequently, there was no reason to fear that corporations would be at the mercy of State governments, and on that basis the answer to the question presented was held to be against the State Trading Corporation.

Justice Das Gupta then expressed the view that the State Trading Corporation of India is entitled to the fundamental rights guaranteed by Article 19(1)(f) and (g) of the Constitution, treating the corporation as a citizen of India for that purpose. The petitioner’s claim to these rights rested upon the fact that all of its members are citizens, a proposition that the respondent did not dispute. Nonetheless, the respondent objected to the petitioner's claim on the ground that the corporation is an artificial person, a legal entity distinct from the natural persons who comprise its membership, and therefore cannot be a citizen of India either under the Constitution or under the Citizenship Act of 1955, which was enacted in accordance with the Constitution.

The respondent further cautioned against conflating nationality with citizenship. While it accepted that the corporation, having been incorporated in India under the Companies Act, is a national of India, the respondent argued that incorporation does not automatically confer citizenship. Being a national, the respondent said, places the corporation in no better position than any other natural or artificial person who is not a citizen when it comes to the enjoyment of fundamental rights.

The Court observed that the Constitution, when creating fundamental rights, granted some rights to all persons—specifically Articles 14, 20, 21, 22, 23, 24, 25, 26, 27, 28 and 30—whereas other rights were conferred only on citizens, namely Articles 15, 16, 19 and 29. The term “citizen” itself is not defined in the Constitution, leaving the framers’ intention regarding the inclusion or exclusion of corporations from citizen‑based rights ambiguous. The respondent pointed out that before addressing fundamental rights, the Constitution deals with citizenship in Articles 5 through 11. It was argued that these articles do not appear to contemplate an artificial person, such as a corporation, being a citizen in its corporate capacity.

The principal provision on citizenship defines a citizen of India as a person who (i) was born within the territory of India, (ii) was born abroad to parents, one or both of whom were themselves born in India, or (iii) has ordinarily resided in India for at least five years immediately before the Constitution came into force. Articles six and seven address specific situations involving persons who migrated to India from Pakistan, while article eight concerns the citizenship rights of persons of Indian origin who live outside India. Article nine states that, notwithstanding the provisions of articles five, six or eight, any person who voluntarily acquires the citizenship of a foreign state ceases to be a citizen of India. Article ten deals with the continuity of citizenship, subject to any law that Parliament may enact, and article eleven expressly authorises Parliament to make any law relating to the acquisition, termination and other matters of citizenship. The Court agreed with the respondent’s submission that these constitutional articles do not reasonably suggest that an artificial person, such as a corporation, could be regarded as a citizen. The Court also observed that the Citizenship Act of 1955, enacted by Parliament under the authority granted by article eleven, expressly excludes “any company or association or body of individuals, whether incorporated or not” from its benefit. Consequently, a corporation is not a citizen under the 1955 Act, nor does it become a citizen through the constitutional provisions on citizenship. From this viewpoint, one could readily conclude that articles five to eleven do not confer citizenship on a corporation, that the Citizenship Act does not confer citizenship on a corporation, and that no other Indian law confers citizenship on a corporation; therefore, the corporation would not be a citizen for the purposes of fundamental rights. The respondent argued that this reasoning should terminate any further inquiry. The Court, however, could not accept that conclusion. It emphasized that interpreting the Constitution requires a broad and liberal approach rather than a strictly grammatical or mechanical analysis. While a syllogistic or mechanical method of interpreting statutes is generally to be avoided, the Court stressed that such caution is even more essential when construing the Constitution. The proper task is to discern the purpose of the Constitution‑makers by examining the substance of the provisions and giving effect to that purpose where possible. The Court noted that there had been some discussion by counsel regarding the existence of Indian citizenship before the Constitution, but it found that pursuing that historical controversy would not aid the present analysis.

In his observation, the Court expressed that it was not useful to prolong the controversy over the Constitution’s intention regarding citizenship, yet he felt compelled to examine the issue. He noted that the Constitution, when addressing citizenship, did not appear to intend that any pre‑Constitution citizenship should continue after the Constitution came into force. He argued that, had the framers wished to preserve an earlier form of citizenship, they would have inserted a clear provision to that effect. Because such a provision is absent, it is difficult to sustain the view that citizenship existing before the Constitution automatically survived thereafter. He further rejected the proposition that a company incorporated in India, merely by being a national of India, must also be a citizen of India. He emphasized that nationality and citizenship are distinct concepts, recalling the well‑established principle that every citizen is a national, but not every national is a citizen. The remaining question, he said, was whether the Constitution’s drafters, when granting certain fundamental rights to citizens, intended that citizens who organized themselves into a corporation would forfeit those rights. To illustrate the consequences of a strictly legalistic approach, he described a hypothetical scenario. He explained that a person identified as A, who is a citizen of India either under the Constitution or the Citizenship Act, enjoys the fundamental right under Article 19 to acquire, hold, and dispose of property. If A conducts business with another citizen, B, both may approach the courts to enforce that same fundamental right. The situation remains unchanged if A and B, together with additional individuals, engage in a joint venture without forming a company; even where seven or more persons collaborate, they may collectively file an application and seek judicial enforcement of their Article 19 right while engaged in the same business. In each of these cases, the claim of each individual to the fundamental right cannot be defeated merely because other citizens have joined the claim. However, the Court observed that the moment two or more individuals, each a citizen in his own right, decide to constitute a private company, or when seven or more citizens form a public incorporated company, a new problem arises. The newly created company, being an artificial legal person and not a citizen, would be excluded from the fundamental right that the individual members could otherwise claim. The Court pointed out that long before the Constitution became effective in 1950, much of India’s trade and industry was carried on through corporations. Most of those corporations were, and continue to be, composed of persons who are unequivocally citizens of India under the constitutional provisions. Consequently, applying a rigid legalistic view that a corporation, despite being an artificial person, cannot be a citizen for the purpose of any fundamental right would effectively deny the substantial portion of Indian industry and commerce, which is conducted by Indian citizens, the protection of the rights guaranteed under Article 19(1)(f) and (g).

In this case, the Court observed that to exclude a corporation formed by Indian citizens from the protection of Articles 19(1)(f) and (g) would effectively deny a substantial, perhaps the majority, of Indian industry and commerce the valuable safeguard that those fundamental rights provide. The Court noted that while it is true that an inconvenient or regrettable result cannot, by itself, justify a forced or strained interpretation of a constitutional provision, it is both permissible and proper to examine the consequences of a proposed construction in order to discover the purpose intended by the Constitution‑makers. The Court therefore examined what the framers intended when they enacted Articles 19(1)(f) and (g). Those provisions create a right that is meant to greatly benefit trade and industry, but the framers deliberately limited that benefit to citizens of India. They were well aware that a large portion, if not most, of the trade and industry carried out by Indian citizens is conducted through corporations that those citizens have formed. At the same time, the framers also knew that, in law, a corporation is a separate legal entity from its members, and consequently the State might argue that such corporations, even though wholly owned by citizens, are not entitled to the fundamental rights. The Constitution‑makers’ overarching concern was to improve the economic condition of the country, a purpose that is evident throughout the Constitution. The Court therefore asked why the framers did not expressly declare that corporations composed entirely of Indian citizens would be deemed citizens for the purposes of Articles 19(1)(f) and (g). The answer, the Court held, becomes clear when one recognizes that the framers were aware of the United States experience, where courts, faced with similar questions, did not hesitate to “tear the veil” of corporate personality and grant corporations composed of state citizens certain rights of citizenship, despite the corporation’s artificial nature. It is reasonable, the Court concluded, to think that the Indian Constitution‑makers trusted Indian courts to adopt a comparable approach, looking beyond the artificial veil to the composition of the corporation when deciding whether the corporation should enjoy fundamental rights. Accordingly, the Court affirmed that the Constitution‑makers, by using the term “citizen” in Article 19, intended that at least a corporation whose members are all Indian citizens should receive the benefit of the rights guaranteed by Articles 19(1)(f) and (g). The Court further stated that adopting any other view would insult the intelligence and understanding of those who drafted the Constitution.

The Court observed that nothing in Article 19 prevents a corporation whose members are all citizens of India from enjoying the rights guaranteed by that article. The well‑settled legal principle that a corporation is a separate legal entity from its members does not, in the Court’s view, create any real obstacle to giving effect to the constitutional intention. While the doctrine of corporate personality is firmly established, the Court declined to let this doctrinal certainty blind it to the broader rule of interpretation that seeks to fulfill the purpose of the law‑makers, unless the language of the Constitution makes such fulfillment impossible. Accordingly, the Court found nothing in the constitutional text that bars the application of Article 19(1)(f) and (g) to a corporation formed entirely by Indian citizens. The Court did not need to decide whether the Constitution‑makers also intended to extend those rights to a corporation in which the majority of the shareholding belonged to Indian citizens, as that question was unnecessary for the present case. The view that a corporation composed solely of Indian citizens is entitled to the rights in Article 19 was previously adopted, and correctly so, by the Bombay High Court in State of Bombay v. R.M.D. Chamarbaughuala. The Court also noted a relevant passage of dicta by Justice Mukherjea in Chiranjit Lal Choudhuri v. Union of India & others, wherein he stated that fundamental rights are available not only to individual citizens but also to corporate bodies, except where the wording or the nature of the right clearly confines it to natural persons. In that case the Court had to consider alleged infringements of rights under Articles 31, 14 and 19(1)(f). Although Justice Mukherjea’s remarks may not constitute a binding decision on the precise issue before us, they indicate that he saw no difficulty in extending Article 19(1)(f) to the Sholapur Spinning and Weaving Company, whose shareholders were Indian citizens. The Court further pointed out that, in the thirteen years since the Constitution came into force, numerous decisions of this Court and various High Courts have granted corporations whose members were Indian citizens the special rights accorded to citizens. In several of those cases the question of whether a corporation could be considered a citizen for the purpose of fundamental rights was raised but left unanswered, illustrating the prevailing acceptance of the principle.

In this case the Court noted that relief based on fundamental rights specially conferred on citizens has previously been granted to corporations, and it listed several authorities to illustrate that point. The cases cited included The Express Newspapers (Private) Ltd. v. Union of India, reported in I.L.R. [1955] Bom. 680 and also in [1950] S.C.R. 869; The Bengal Immunity Co. v. State of Bihar, reported in [1955] S.C.R. 603; and The Bombay Dyeing & Manufacturing Co. Ltd. v. State of Bombay, reported in [1958] S.C.R. 1122. After reviewing those precedents, the Court concluded that the first question referred to the Special Bench should be answered in the affirmative. Regarding the second question, the Court agreed with the conclusion of the learned brother Shah J., namely that the State Trading Corporation is not, in substance, a department or organ of the Government of India. Because the reasoning supporting that conclusion was fully accepted, the Court expressed no intention to discuss the matter further. Consequently, for the reasons already mentioned, the Court answered the two questions as follows: first, the State Trading Corporation, provided that it consists wholly of citizens of India, may invoke the fundamental rights granted to citizens under Article 19(1)(f) and Article 19(1)(g) of the Constitution; second, the State Trading Corporation is not a department or organ of the Government of India and therefore may claim to enforce the fundamental rights contained in Part III of the Constitution against the State as defined in Article 12.

Shah J. explained that on May 18, 1956, the State Trading Corporation of India Ltd., hereinafter referred to as “the Company,” was incorporated as a private limited company under the Indian Companies Act, 1956, with an authorized capital of five crore rupees divided into five hundred thousand shares of one rupee each. Of the subscribed capital, ninety‑eight per cent was contributed from the funds of the Government of India and was held in the name of the President of India, while the remaining two per cent was held in the names of two Joint Secretaries in the Ministry of Commerce and Industries. On February 12, 1961, the Commercial Tax Officer of Visakhapatnam assessed the Company for sales tax in the sum of rupees five lakh seventy‑nine thousand one hundred ninety‑eight rupees and seventeen paise, and issued a notice demanding payment of that amount. The Company, together with Mr. K. B. Lall, Joint Secretary, Ministry of Commerce and Industries, subsequently filed a petition before this Court seeking a writ to quash both the assessment order and the notice of demand, contending that the assessment and the demand infringed, among other rights, the fundamental rights guaranteed under Article 19(1)(f) and Article 19(1)(g). During the hearing, counsel for the Commercial Tax Officer and the State of Andhra Pradesh argued that the petition was not maintainable because the Company was not a “citizen” within the meaning of Article 19 of the Constitution, and further contended that, even if it were a citizen, the Company constituted “an organ, department or instrumentality” of the Government of India and consequently lacked competence to enforce any fundamental right against the State.

In this case, the Court observed that the matter required consideration by a larger Bench and therefore set out two questions for that larger Bench to answer. The first question asked whether the State Trading Corporation, a company registered under the Indian Companies Act 1956, qualified as a citizen within the meaning of Article 19 of the Constitution and could therefore seek enforcement of the fundamental rights that the article confers on citizens. The second question asked whether, despite being incorporated under the Companies Act, the State Trading Corporation could be treated in substance as a department or organ of the Government of India, given that the whole of its capital was contributed by the Government, and whether it could then claim to enforce the fundamental rights guaranteed in Part III of the Constitution against the State as defined in Article 12. The Court clarified that, at this stage, it would not address any right that the second petitioner, K. B. Lall, might have to maintain the petition, because the questions presented concerned only the right of the Company to invoke the protection of Article 19(1)(f) and (g) of the Constitution.

Article 19 guarantees certain basic freedoms to Citizens and provides that “All citizens shall have the right—(a) to freedom of speech and expression; (b) to assemble peaceably and without arms; (c) to form associations or unions; (d) to move freely throughout the territory of India; (e) to reside and settle in any part of the territory of India; (f) to acquire, hold and dispose of property; and (g) to practise any profession, or to carry on any occupation, trade or business.” The exercise of these freedoms is subject to restrictions laid down in clauses (2) to (6). Because these freedoms are expressly guaranteed to citizens, the Court identified the preliminary issue as whether the Company can be regarded as a citizen and, on that basis, claim the protection of the rights to acquire, hold and dispose of property and to engage in any trade, occupation or business. The Company’s contention that it is not a ‘citizen’ within the meaning of Article 19 was supported by two main arguments. First, the argument noted that before 26 January 1950 there was no law on citizenship in India and that Articles 5 to 10 of the Constitution, for the first time, declared only natural persons as citizens. The Citizenship Act 1955, enacted under the power conferred by Article 11, also limits citizenship rights to natural persons. Consequently, a company formed after the Constitution’s commencement, which is not a citizen under the Citizenship Act 1955, would be incompetent to enforce the rights it claims, since Articles 5 to 11 constitute a complete code on citizenship and an artificial person does not fall within the categories listed in Articles 5, 6 and 8, nor does it qualify under the Citizenship Act 1955. The second argument advanced that citizenship postulates allegiance to the State and a duty to serve in civil administration or defence, duties that an artificial person cannot perform, thereby precluding it from being regarded as a citizen. The Court noted that this line of reasoning follows the traditional concept of citizenship.

It was observed that allegiance to the State, which a citizen owes, includes a duty to serve when required in civil administration and to participate in the defence forces for the maintenance of peace or the defence of the State during an emergency. Because an artificial person cannot owe allegiance nor render such services, it cannot be regarded as a citizen. This line of reasoning follows the traditional concept of citizenship. Counsel for the Company, however, argued that citizenship is a status that a person who possesses full civil and political rights under the municipal law of a State enjoys, and that such rights may exist for both natural and artificial persons. In order to determine the meaning of the term “citizen” used in article 19, which is not defined in the Constitution or in the General Clauses Act, the Court noted that it is first useful to examine the overall scheme under which the diverse fundamental rights are declared and guaranteed by Part III of the Constitution, and to consider the extent of protection afforded against infringement of those rights.

The Court further explained that the Constitution employs different expressions to identify the beneficiaries of particular rights. By articles 14, 20(1), 20(2), 20(3), 21, 22(1), 22(2), 22(4), 25(1), 27, 28(3) and 31, certain fundamental rights are declared in favour of “persons.” By articles 16(1), 16(2), 26(1), 26(2), 19(1) and 29(2), “citizens” are the recipients of the fundamental rights guaranteed therein. Some rights are granted to groups such as denominations, sections, minorities or institutions, for example articles 26, 29(1), 30(1) and 30(2); these groups are, by nature, collections of individuals. Other articles, such as 17, 23(1), 24 and 28(1), impose prohibitions aimed at removing evils like untouchability, human trafficking, forced labour, child hazardous employment and religious instruction in educational institutions. The Court stressed that the expression “citizen” appearing in Chapter III has a narrower meaning than “person.” Article 367 of the Constitution, read with section 3(42) of the General Clauses Act, defines “person” to include any company, association or body of individuals, whether incorporated or not. While the inclusion of “persons” might suggest that rights were intended for both artificial and natural entities, this presumption is not uniformly correct. In articles 25(1), 28(3) and possibly article 20(3), the use of “person” in relation to the character of the right conferred indicates that only natural persons may benefit. Moreover, articles 15(1) and 15(2) prohibit the State from discriminating between citizens on grounds of religion, race, caste, sex or place of birth; articles 16(1) and 16(2) guarantee equality of opportunity to citizens in public employment; and article 18(2) restricts citizens from accepting titles from any foreign State. In those provisions, the term “citizen” appears to refer exclusively to natural persons, though this observation does not conclusively determine the meaning of “citizen” in article 19.

The Court observed that, while the term “citizen” in certain constitutional provisions such as those dealing with foreign states appears to refer only to natural persons, that interpretation does not automatically determine the meaning of “citizen” in Article 19. It emphasized that a purely mechanical approach to interpreting the Constitution would be inappropriate because the Constitution represents the collective will of the people and must be read in a broad, liberal manner rather than in a narrow or doctrinaire fashion. The Court explained that interpretation should be guided by the true purpose and intent of the provision, as reflected in the ordinary meaning of its words, the context in which they appear, and the dynamic character of the Constitution, which is meant to realize the aspirations of the populace. The Court then noted that there is little doubt that an artificial person, such as a corporation, is capable of exercising the rights listed in clauses (a), (c), (f) and (g) of Article 19(1). It added that the rights to hold property and to engage in trade or business are of great importance for artificial persons, and that a substantial portion of commercial activity in India and abroad is conducted through corporate entities. The Court considered the alternative view that only a natural person possessing certain attributes under municipal law could be deemed a citizen. Under that view, the rights guaranteed by Article 14 (equality before the law and equal protection), Article 27 (freedom from taxes for the promotion of a particular religion), Article 20(1) and (2) (prohibition of retrospective penal legislation and protection against double jeopardy), and Article 31 (protection against deprivation of property except by authority of law) would still apply to artificial persons, but the most cherished rights—specifically the rights to acquire, hold and dispose of property and to carry on trade or business—might not be protected against legislative or executive action. The Court questioned whether the Constituent Assembly, when enacting the freedoms in Article 19, deliberately intended to limit the enforcement of those rights to natural persons only, thereby excluding artificial persons from protection against the actions of lawmakers or the executive. In this context, the Court turned to the issue of whether the declaration of citizenship in Articles 5, 6 and 8 of the Constitution, together with the Citizenship Act of 1955, was intended to be exhaustive or merely to address the rights of natural persons. The Court indicated that a proper understanding of citizenship was required, and that it was necessary to examine whether the English common law foundation of Indian jurisprudence had historically conferred the status of citizen or “subject” upon artificial persons prior to the Constitution. The Court cited the observation of Waite C.J. in Virginia L. Miner v. Reese Happersett, noting that a nation cannot exist without a people, and that the concept of a political community rests on an association of persons who owe allegiance to, and are entitled to protection from, that community.

In the judgment, the Court explained that a political community, such as a nation, necessarily implies an association of persons for the purpose of promoting their general welfare. Each individual who joins that association becomes a member of the nation that is created by the collective association. The Court observed that the member owes allegiance to the nation, and in return the member is entitled to the protection of the nation. Allegiance and protection are therefore reciprocal obligations; the member provides allegiance as consideration for the protection offered by the state, and the state furnishes protection as consideration for the allegiance it receives. For the sake of convenience, the Court noted that a specific label is given to this membership so that the relationship between the person and the nation can be identified. The terms “subject,” “inhabitant,” and “citizen” have historically been employed for this purpose, and the choice among them has sometimes been influenced by the form of government in existence. The Court pointed out that the word “citizen” has become the most commonly used term, particularly in republican forms of government, and that after the United States separated from Great Britain, virtually all of the new states adopted the term in their constitutions, the Articles of Confederation, and the United States Constitution. When used in this sense, the term “citizen” is understood to convey merely the idea of membership in a nation and nothing more. The Court then quoted the Digest of International Law (J. B. Moore) Vol. III, 1906 edition, p. 273, which defined citizenship as a term of municipal law that denotes the possession within a particular state of full civil and political rights, subject only to special disqualifications such as minority or sex, and noted that the conditions on which citizenship is acquired are regulated by municipal law. Further, the Court referred to Oppenheim’s International Law (Lauterpacht) Vol. I, p. 644, which explained that in the United States the expressions “citizenship” and “nationality” are often used interchangeably, but that, as a rule, “citizen” designates persons endowed with full political and personal rights, whereas persons belonging to territories and possessions that are not among the states forming the Union are described as “nationals.” These nationals owe allegiance to the United States and are United States nationals for purposes of international law, yet they do not possess the full rights of citizenship within the United States. The passage further stated that in the British Commonwealth the citizenship of the individual Commonwealth states is the aspect that is primarily relevant to international law, while the status of “British subject” or “Commonwealth citizen” is probably relevant only under the municipal law of the countries concerned. Finally, the Court concluded that citizenship and nationality emphasize different facets of a single concept of association with or membership of a political community. Although the form and content of that association have varied historically with changes in governmental machinery, they essentially denote the relationship that a person bears to the sovereign authority. Citizenship, therefore, is the relation that a person bears to the State in its national

In the judgment, the Court observed that citizenship related to the municipal dimension of law, whereas nationality belonged to the domain of International Law and expressed the political status by which a person owed allegiance to a particular sovereign authority. The Court noted that the terms “citizen” and “national” were often used interchangeably, but they were not synonymous. Citizenship in most societies represented the highest political status within the State and denoted persons who possessed full political and civil rights. By contrast, the Court explained that some States had nationals who, although they owed allegiance, did not enjoy citizenship; such persons typically originated from colonial possessions that lay outside the metropolitan territory and therefore could not participate in the government. Even in States where the involvement of nationals in governmental machinery was either nonexistent or too weak to be effective, a national who possessed the capacity to exercise personal and political rights could nevertheless be described as a citizen. The Court further pointed out that there could be citizens in States that allowed an effective association of its citizens with the administration, yet some of those citizens might not take part in government because of reasons such as sex, minority status or personal disqualification that rendered them incompetent or unable to participate. Accordingly, the Court defined citizenship as membership of a juridical society that conferred upon the holder all the rights and privileges normally enjoyed by its nationals and imposed upon him the corresponding duties. Nationality, on the other hand, was described as the link between a person and a State that ensured that his rights could be recognised in international affairs. From this analysis, the Court concluded that every citizen was necessarily a national, but not every national qualified as a citizen. The bond that united a national and a citizen was the allegiance owed to the State, and that allegiance could arise by birth, by naturalisation or by any other accepted mode within a political society identified as a State, Kingdom or Empire.

The Court then turned to the English common‑law position on corporate nationality. It stated that, under English common law, a company or corporation aggregate was regarded as possessing the attributes that would qualify it as a national of the State in which it was incorporated. The Court emphasized that the inability of a corporation to perform obligations such as military or civil service, or to exercise the franchise, was not treated as a barrier to recognising its status as a national of its incorporation State. This principle was reflected in judicial decisions that held public corporations to be nationals of the country of incorporation irrespective of the nationality of their shareholders. Although English statute law did not expressly regulate corporate nationality, the highest tribunals had treated corporations, for certain purposes, as capable of possessing all the attributes of nationality. The Court cited the decision in Janson v. Driefontain Consolidated Mines Ltd. (1) where the House of Lords held that a company registered under the laws of the South African Republic was a national of that State. The observations of Lord Macnaghten at page 497, Lord Davey at page 498, Lord Barmpton at page 501 and Lord Lindley at page 505 were quoted to support the view that the company in that case was a national of the Republic of South Africa.

The Court referred to several earlier authorities to explain that a corporation can possess the attributes of nationality. In the case concerning a contract of insurance issued by British underwriters for cargo in transit to the United Kingdom, the court noted that the contract remained valid even though the foreign state, the Republic of South Africa, had not yet declared war. The decision in Attorney General v. Jewish Colonization Association was cited to show that a public corporation is capable of acquiring a nationality. Likewise, General v. Selim Cotrap was mentioned as another example where a public corporation was recognised as having the attributes of nationality. In Gasque v. Commissioners of Inland Revenue, Macnaughten J. observed that, by analogy with a natural person, the attributes of residence, domicile and nationality may be attributed to a body corporate under English law. He added that it is undisputed that a company incorporated under the Companies Acts acquires British nationality, although, unlike a natural person, it cannot change that nationality. The Court also relied on Kuenigi v. Donnersmarck, where it was held that a company incorporated and registered in England, having an English domicile and therefore British nationality, does not cease to be an English company subject to English law merely because it falls under enemy control. McNair J., speaking at page 535, explained that where nationality can be supplied to a juristic person by analogy, that nationality is fixed in an inalienable way by the law of the country that confers its legal personality. From these authorities the Court concluded that the personality of a corporate aggregate originates in the law of the country of incorporation and that the nationality of that country is impressed upon the corporation. Consequently, a corporation, by virtue of the law that creates it, can exercise rights, bear obligations and, by common acceptance, claim protection in the international relations of its State of incorporation.

The Court then examined whether a corporate national can be regarded as a citizen. According to Indian law, a juridical person may normally enjoy all civil rights except those that, by virtue of its constitution or the nature of the right, cannot be exercised or enforced by the corporation. A juridical person may acquire, hold and dispose of property, carry on trade or business, take up residence within the territory and form associations. It is also liable to discharge obligations that its incorporation permits. No special restrictions are placed on its activities or on the exercise of its rights in its corporate character. Thus a corporation can exercise, to the fullest extent, a large majority of the civil rights that natural persons may enjoy as citizens; any incapacity to exercise certain rights arises from the nature of its personality and constitutional limitations, not from any special legislative restriction. While it is undisputed that a corporation cannot exercise the franchise, the Court emphasized that the inability to vote does not preclude its status as a citizen for the purposes of enjoying other civil rights and protections guaranteed under the Constitution.

The Court observed that the ability to vote was not an essential condition for being a citizen. It noted that the State usually gave corporations the same protection as it did to its nationals abroad and that the State recognised the corporate form as having the capacity to enjoy rights within the country. In the area of protection, the law made no distinction between natural persons and artificial persons such as corporations. The Court then asked whether the Constitution, which extended the broadest possible protection to both corporations and natural persons against discrimination under Article 14, against deprivation of property under Article 31(1), against compulsory acquisition or requisition of property for non‑public purposes without compensation under Article 31(2), against taxes whose proceeds were earmarked for the upkeep of a particular religion or denomination under Article 27, against taxation without legal authority under Article 265, and which guaranteed freedom of trade, commerce and intercourse subject only to Part XIII, nonetheless failed to guarantee a corporation’s right to carry on trade, to acquire, hold and dispose of property, to form associations, or to choose its residence within the territory. The Court held that unless the wording or the overall scheme of the Constitution compelled such a result, it would be difficult to conclude that the term “citizen” in Article 19(1) was meant to have a narrow meaning that excluded corporations. It recalled that constitutional practice in other jurisdictions did not reject the idea of artificial persons being treated as citizens; the constitutions of the United States of Mexico (1917), El Salvador (1950) and the Spanish People all recognised corporations as citizens. The Court further noted that it was not contested before the Bar that the framers of the Indian Constitution and the Parliament of India could have expressly provided for artificial persons to be declared citizens of India. Nevertheless, counsel argued that the framers had not intended to recognise a company’s corporate character as that of a citizen. They contended that Articles 5, 6 and 8 together with the law made under Article 11, after the Constitution came into force, exhaustively defined the conferment of citizenship, and that no one could be a citizen unless the prescribed requirements were met. From that point of view, a necessary implication was that no citizens—whether natural or artificial—existed in India before the Constitution, and that only natural persons were made citizens by the Constitution and the Citizenship Act, 1955. The Court said that to test this assumption it was necessary to examine carefully the relevant constitutional provisions and the earlier statutes that preceded the Constitution. It conceded that the persons referred to in Articles 5(1), 5(b), 6 and 8 were natural persons and that the word “person” in those contexts did not include artificial persons. Finally, the Court referred to clause (c) of Article …

The Court observed that article 5 required a person to reside within the territory of India for not less than five years, and it was therefore reasonable to infer that the provision was intended to apply only to natural persons. In the same vein, the definition contained in section 2(f) of the Citizenship Act, 1955 expressly limited the operation of that Act to natural persons. Nevertheless, the Court rejected the view that, before 26 January 1950, India possessed no citizens and that citizenship rights were created for the first time by the Constitution. It held that such a view was not supported either by the wording of the constitutional text or by the historical evolution of the nation. The Court explained that, prior to 1947, the legal status of persons residing in British India was governed by the British Nationality and Status of Aliens Act, 1914. Under that law those persons were classified as British subjects and were consequently entitled, within British India, to the rights and privileges that were accorded to British nationals. Their position as British subjects, the Court noted, bore a close resemblance to the status of citizens in a republican system, because they enjoyed civil rights and, to the extent permitted by the form of government, political rights. Accordingly, if a citizen is understood as a national who, under the law of the State, may enforce the full spectrum of civil and political rights, then British Indian subjects before the Constitution possessed, within British India, a bundle of rights that would qualify them as citizens. The Court further observed that the subjects of the princely Indian States also enjoyed rights of citizenship within their respective States, and that those rights remained intact despite the stand‑still and merger agreements entered into by the rulers of those States with the Dominion of India. The purpose of the Court’s discussion was merely to demonstrate that rights analogous to citizenship existed before the Constitution was enacted, and it therefore declined to undertake an exhaustive analysis of the constitutional developments that occurred between August 1947 and 26 November 1949, which ultimately led to the establishment of the Republic of India by the former British Indian subjects and the subjects of the princely States. The Court added that, before the Indian Independence Act, 1947, the legislature possessed the authority to grant foreign individuals the status of British Indian through naturalisation, and it also sought to empower the Government of the day to refuse entry into India to foreigners or even to nationals of other British possessions. It noted that Part II of the British Nationality and Status of Aliens Act, 1914, which dealt with the naturalisation of aliens, was not extended to British India, although Parts I and III were intended to apply to all territories forming part of the British Empire, subject to section 26 of that Act. Section 26 preserved the power of colonial or Dominion governments and legislatures to legislate on matters of nationality and to protect the validity of their laws concerning the treatment of different classes of British subjects. Finally, the Court affirmed that, under the 1914 Act, a person’s place of birth within the British Empire determined his or her British nationality.

The Court explained that legislation in the Dominions and the Colonies reserved to them the authority to make provisions for naturalisation that were limited to their own territories. In 1926 the British Indian legislature enacted the Indian Naturalisation Act, 1926, which authorised the local governments to issue certificates of naturalisation to persons who applied for such status and satisfied the conditions laid down by the local government. The Act also gave the legislature the power to withdraw or cancel any certificate of naturalisation that had previously been granted. In addition, the legislature passed the Immigration into India Act, III of 1924, which empowered the Central Government to frame rules ensuring that persons who were not of Indian origin but who were domiciled in any British possession would not enjoy greater rights or privileges with respect to entry into or residence in British India than those persons of Indian domicile who were entitled to the same rights under the law and administration of their own possession. The combined effect of these statutory provisions was to recognise, subject to certain limited exceptions, the right of British subjects in India to enjoy rights that closely approximated the rights of citizenship, to confer such rights through naturalisation, and to impose restrictions on immigration into India.

The Court noted that the British Nationality Act, 1948, was enacted after the Indian Independence Act, 1947, and was not incorporated into the body of statute law applicable in India. That Act created a new statutory notion of citizenship for the various constituent units of the British Commonwealth and provided for a form of dual citizenship, whereby a person could be a citizen of the country in which their local community lived and also a citizen of the Commonwealth. The Act excluded the concept of allegiance, which had traditionally formed the basis of the status of a British subject, from the rules governing citizenship in the various Dominions, and consequently, until the enactment of similar local citizenship statutes, the status of a Commonwealth citizen was accorded to persons who were nationals of any Dominion, an expression that included India. In relation to this Commonwealth citizenship, allegiance to the British Crown was not a condition. The Court held that this brief review of the legislative history was sufficient to disprove the assumption that the status of citizenship was not recognised by the common law operative in India before 26 January 1950. In the Court’s judgment, British subjects of Indian origin possessed, for all purposes, the status of citizens in British India. That status could arise by birth and could also be conferred through naturalisation. Accordingly, if a natural person could be a citizen before 26 November 1949—the date on which Article 394 and Articles 5 to 9 of the Constitution came into force—there was no reason to suppose that artificial persons who were nationals of the British Empire and who could claim protection abroad could not also claim citizenship rights within the territory of India, when they in fact exercised all the rights and privileges that natural persons who were citizens exercised, apart from those rights that their corporate incorporation inherently limited. The Court observed that, prior to the Constitution, no statute, even indirectly, indicated that a corporate aggregate could not be a citizen.

At the time when the Constitution of the United States was proclaimed, no specific statutes defining citizenship were enacted. Nevertheless, the Constitution itself acknowledged citizenship rights through a variety of its provisions. The American Constitution recognized, even in the absence of any express statutory law, that both the individual states and the Union as a whole possessed citizens. Within the text of the United States Constitution, the word “citizen” was given different meanings in different articles. In some clauses the term was intended to refer solely to natural persons, while in other clauses it was understood to include artificial persons such as corporations. Although the original Constitution was silent on the precise scope of corporate citizenship, courts treated corporations as citizens of the state in which they were incorporated for the purpose of invoking federal jurisdiction. In the early decision of the United States Supreme Court, The Bank of the United States v. Deveaux, the Court held that a corporation was not a citizen within the meaning of Article III, Section 2. This position was later revised in The Louisville, Cincinnati & Charleston Railroad Company v. Thomas W. Letson, a case that dealt with the interpretation of the “diversity clause” in Article III, Section 2. Neither of these decisions denied that a corporation could be considered a citizen of the state of its incorporation; they merely addressed the limits of corporate citizenship under federal diversity jurisdiction.

When the Fourteenth Amendment, which forbids any state from making or enforcing laws that abridge the privileges or immunities of United States citizens, was applied, the Supreme Court limited the concept of “citizen” in that context to natural persons. This limitation is illustrated in cases such as Orient Insurance Company v. Robert E. Daggs and Bankers Trust Company v. Texas & Pacific Railway, where the Court treated only individuals as citizens entitled to the amendment’s protection. In matters governed by Article IV, Section 2, the Court also held that a corporation could not claim citizenship of any state other than the state in which it was incorporated. In Paul v. Virginia, Justice Field, delivering the opinion of the Court, observed that no reported decision in either state or federal courts had ever treated a corporation as a citizen within the meaning of the provision that guarantees “the citizens of each State shall be entitled to all the privileges and immunities of citizens of the several States.” He clarified that his observation was limited to corporate claims of citizenship in a state other than the state of incorporation. Moreover, Justice Field explained that corporate existence is a grant of special privileges to the owners, permitting them to act collectively as a single entity and, unless a specific provision states otherwise, shielding them from personal liability. Because a corporation is created solely by local law, it possesses no legal existence beyond the sovereignty that gave rise to it. Consequently, a corporation lacks an inherent right of recognition in other states and must depend on the assent of those states, which may impose any terms and conditions that the states deem appropriate for such recognition and for the enforcement of contracts.

The Court observed that a corporation’s contracts depended upon the consent of the States, and therefore the States could impose any terms and conditions they deemed appropriate on that consent. It was further noted that, under the United States Constitution, corporations had been treated as “persons” within the meaning of the Fourteenth Amendment, which meant that they could not be deprived of their property or rights without the protection of due process of law, as illustrated in Smyth v. Ames and Kentucky Finance Corporation v. Paramount Auto Exchange Corporation. The Indian Constitution, however, did not adopt the doctrine of due process as the standard for safeguarding fundamental freedoms; instead, it sought to protect those freedoms through the provisions of the Nineteenth Article. Within the Supreme Court, there had been no definitive pronouncement on whether corporations in the aggregate could enforce the fundamental freedoms enumerated in Article 19 of the Constitution, although it appeared to be widely assumed that such corporate entities were entitled to seek judicial protection against violations of the rights listed in Article 19(1). In Chiranjit Lal Chowdhuri v. The Union of India, Justice Mukherjea remarked that the fundamental rights guaranteed by the Constitution were available not only to individual citizens but also to corporate bodies, except where the language of a provision or the nature of the right clearly indicated application solely to natural persons. He explained that an incorporated company could approach the Court to enforce its own fundamental rights, and that individual shareholders could likewise enforce their personal rights, but a shareholder could not challenge a statute affecting the company’s rights unless it also infringed the shareholder’s own rights. The case involved a petition by an individual shareholder seeking a writ against the Sholapur Spinning and Weaving Company (Emergency Provisions) Act XXVIII of 1950, which dismissed the managing agents, caused the directors to vacate their offices automatically, authorized the Government to appoint new directors, limited shareholders’ voting and appointment powers, modified the procedures for passing resolutions and applying for winding up, and permitted the Government to amend the Indian Companies Act. The petitioner claimed that the Act exceeded Parliament’s legislative authority and violated the shareholders’ fundamental rights under Articles 19(1)(f), 31 and 14. The Court dismissed the petition, holding that the petitioner’s rights under Article 31(1) and (2), 19(1)(f) and 14 were not infringed. Consequently, the Court held that Justice Mukherjea’s observations could not be treated as a binding opinion establishing that all fundamental rights were enforceable by both individual citizens and corporate bodies. The issue was later revisited in two subsequent cases.

The Court referred to earlier decisions such as The Bengal Immunity Company Ltd v. The State of Bihar and The State of Bombay v. R.M.D. Chamarbauguvala. It noted that the High Court of Bombay, in the case of The State of Bombay v. R.M.D. Chamar‑baugwala, had held that a corporation could maintain an application alleging that a law infringed a fundamental right in order to carry on its business. The Court then cited the judgment in The State of West Bengal v. The Union of India, where Chief Justice Sinha, speaking for the majority, observed that fundamental rights were primarily intended to protect the rights of individuals as well as corporations against executive or legislative action of a governmental agency.

The Court further pointed out that the Supreme Court had, in numerous judgments, accepted without dispute that a company was a citizen for the purpose of enforcing fundamental rights under Articles 19(1)(f) and 19(1)(g) of the Constitution. To illustrate this position, the Court listed several authorities chosen at random: Bijay Cotton Mills Ltd. v. State of Ajmer (1955 I S C R 752); Messrs Kasturi and Sons (Private) Ltd. v. Shri N. Saliva‑teeswaran (1959 S C R 1); Express Newspapers (Private) Ltd. v. Union of India (1959 S C R 12); Messrs Fedco (P) Ltd. & Another v. S. M. Bilgram (1960 2 S C R 408); M/S Hathisingh Manufacturing Co. Ltd. v. Union of India (1960 3 S C R 328); Tata Iron & Steel Co. Ltd. v. S. R. Sarkar (1961 1 S C R 379); and State Trading Corporation of India Ltd. v. The State of Mysore (1963 A I R 548). These cases demonstrated the view that corporations could invoke the protections granted by the Constitution.

Nevertheless, the Court observed that several High Courts had expressed conflicting opinions. It referred to Narasaraopeta Electric Corporation Ltd. v. The State of Madras, where the Madras High Court held that Article 19(1)(f) applied only to citizens and that a company incorporated under the Companies Act did not meet the definition of “citizen” found in Article 5. That dispute was taken to the Supreme Court in Rajahmundry Electric Supply Corporation Ltd. v. A. Nageswara Rao, but the Court noted that the question of whether a corporation could enforce the fundamental right was apparently not raised in that appeal.

The Court then mentioned Jupiter General Insurance Company Ltd. v. Rajgojalan, a decision of the Punjab High Court that concluded a company could not challenge a statute on the ground that it infringed or abridged the rights conferred by Articles 19(1)(f) and 19(1)(g), because a company was not a citizen. Finally, the Court referred to Amrita Bazar Patrika Ltd. v. Board of High School and Intermediate Education U.P., a decision delivered by a single judge, indicating that the discussion on corporate standing under fundamental rights continued in subsequent jurisprudence.

In its decision, the Allahabad High Court observed that Article 5 of the Constitution applied only to natural‑born persons and not to artificial persons, and therefore a corporation could not be regarded as a citizen for the purposes of Article 19. By contrast, the Rajasthan High Court, in Maharaja Kishangarh Mills Ltd. v. State of Rajasthan (2), took a different approach. The court referred to the reasoning in the Chairanjitlal Chowdhury case (3) and concluded that the question of a corporation’s citizenship under Article 19 had been generally settled in that earlier judgment. Accordingly, the Rajasthan court held that a corporation could file a petition under Article 226 to raise a claim that its fundamental right under Article 19 had been breached.

Judicial opinions from the Calcutta High Court displayed some divergence. In Everett Orient Line Incorporated v. Jasjit Singh (4), the court held that the rights granted by Article 19 were confided solely to citizens, and therefore non‑citizens could not enforce those rights. The court further held that a company incorporated in India, being not a citizen, was unable to challenge the validity of sections 52‑A and 167(12‑A) of the Sea Customs Act on the ground that those provisions infringed Article 19(1)(g). The same principle was reaffirmed in Cherry Holsery Mills Ltd. v. S. K. Ghose (5), where the court again declared that a company could not enforce the fundamental rights contained in Article 19, as those rights were available only to citizens. However, in M/s T. D. Kumar and Brothers Private Ltd. v. Iron and Steel Controller (6), the Calcutta High Court took a more nuanced view. It held that a corporation that had ordinarily been resident in India for a period exceeding five years prior to the commencement of the Constitution could be treated as a “person” within the meaning of Article 5(c) and thus could invoke the fundamental rights of Article 19(1). Conversely, the court observed that a company incorporated after 26 January 1950 would not be deemed a citizen because the Citizenship Act expressly excludes artificial persons from the benefits of citizenship. In reaching this conclusion, the court referred to earlier decisions, including Liberty Cinema v. The Commissioner, Corporation of Calcutta, and noted that, at that time, relief had been granted to petitioners, some of whom were corporations claiming infringement of their fundamental rights. Finally, the Supreme Court, in The State of Bombay v. R.M.D. Chamarbaugtvala (2), examined whether a pre‑Constitution company could claim protection under Article 19(1)(g). Chief Justice Chagla, speaking for the bench, posed the question of whether a corporation could ever be a citizen and, if so, what constitutional attributes it would need to possess to qualify as such. He further observed that the Constitution does not define the term “citizen,” and that Article 5 is the only provision relevant to determining citizenship.

The Court observed that the only constitutional provision that mentions citizenship is Article 5, which merely identifies who was a citizen at the moment the Constitution began. Although the concept of domicile belongs to private international law, the acquisition of citizenship is created by municipal law, and only Parliament, by exercising its legislative power, can decide who qualifies as a citizen. Parliament could, if it chose, enact a law declaring that a corporation meeting certain prescribed conditions should be treated as a citizen for the purposes of Article 19(1). However, Parliament has not enacted such legislation. The Court then noted a curious inconsistency: when one examines several clauses of Article 19(1), it is difficult to maintain that the Framers of the Constitution intended those rights to apply only to natural persons and not to corporate entities. For example, clauses (f) and (g) of Article 19(1) guarantee the right to acquire, hold and dispose of property and the right to practice any occupation, trade or business. The Court asked whether it could be argued that a corporation which is Indian in every sense—its shareholders are Indians, its directors are Indians, its capital is Indian—should be denied those rights. The High Court in Assam Company Ltd. v. State of Assam entertained the claim that a corporation could invoke the protection of Article 19(1)(f). Similarly, in Reserve Bank of India v. Palai Central Bank Ltd., Justice Raman Nayar remarked that many of the rights enumerated in Article 19(1), especially those in clauses (f) and (g), are capable of being enjoyed by companies. He emphasized that the Constitution‑makers could not have been unaware of the existence of legal persons. By conferring on all “citizens” the right to form associations and unions under clause (c), it was not intended that the corporate bodies formed by those citizens be stripped of the protections afforded by clauses (f) and (g). To deny those rights to Indian corporations would, in effect, deny the same fundamental rights to the individual citizens who constitute those corporations. The Palai Central Bank matter was subsequently taken up on appeal before the Supreme Court, where the Court embarked on an extensive discussion of the complex questions raised by the claim.

The Court examined the complicated questions that had been raised in the earlier decisions reported in A.I.R. 1953 Assam 177 and I.L.R. [1961] Kerala 166, rather than disposing of the appeal on the narrow ground that the Palai Bank was not a citizen and therefore could not invoke any fundamental rights under Article 19(1)(f) and (g). The Court also referred to the decision in Joseph Kuruvilla Vellukunnel v. Reserve Bank of India (1). It was contended that only an individual who can take an oath of allegiance to the State may be a citizen, because the bond of citizenship, according to that argument, arises from the allegiance which the citizen bears to the State. The court noted, however, that municipal laws of various States require an oath of allegiance on naturalisation, yet the actual swearing of such an oath is not a condition that creates or constitutes the right of citizenship. Children of Indian citizens become citizens by birth, and the capacity to take an oath of allegiance is not prescribed as a condition of citizenship. The court observed that if allegiance may be presumed from birth and a formal oath is not required for natural persons, there is no reason why a similar presumption of allegiance could not be extended to artificial persons such as corporations.

The argument was also advanced that corporations are incapable of rendering military service or assisting in the maintenance of peace when called upon by the State. The court rejected this as a ground for denying citizenship rights, noting that incapacity to render service may arise for many reasons, including infancy, physical or mental disability, and such incapacity in a natural person does not deprive that person of citizenship rights. By reason of their constitution, artificial persons cannot render military or civil service, but that incapacity alone does not justify holding that they cannot be citizens. The court further observed that if corporations or artificial persons may be regarded as nationals of the State in which they are incorporated, and if they are permitted to exercise the functions for which they were constituted without any prohibition on enforcing rights analogous to those enforceable by natural persons, then their special character and incapacity to perform duties or exercise certain rights should not be a basis for depriving them of citizenship rights for the purpose of enforcing the fundamental rights under Article 19.

The court identified two views concerning the meaning of the term “citizen” in Article 19(1). The first view holds that a citizen includes any natural or artificial person who is entitled to all rights that can be enjoyed under municipal law by citizens. The second view limits citizenship to natural persons who, being nationals and not aliens, are competent under municipal law to exercise all rights that the State permits. The court proceeded to evaluate these perspectives in light of the earlier authorities, including A.I.R. 1962 S.C. 1371, and the principle that corporations, despite their special character and inability to perform certain duties, should not be denied the rights of citizenship required to enforce fundamental rights under Article 19.

In this case the Court explained that one view treats “citizen” in article 19 as any person, natural or artificial, who is distinguished from aliens or from persons lacking the capacity to exercise the rights guaranteed by the Constitution. According to that view the distinction depends on the ability to exercise those rights, irrespective of whether the exercising body is a human being or a corporation. The opposite view holds that only natural persons who are nationals and not aliens may be citizens, based on the assumption that an artificial person can never acquire citizenship and that citizenship belongs solely to natural persons. The Court noted that, considering the privileges and duties that nationals enjoy under municipal law—such as full political and civil rights—and observing that companies enjoy fundamental rights like equality before law, protection against unlawful deprivation of property, protection against acquisition without compensation or public purpose, protection from discriminatory taxation, and the guaranteed freedom to trade, commerce, and occupation, it would be difficult to interpret the term “citizen” in article 19 as applying only to natural persons.

The Court then turned to the alternative argument advanced by counsel for the petitioner, which relied on a Bombay High Court decision in State of Bombay v. R.M.D. Chamarbaugwala. The Court observed that the learned chief justice, citing several United States cases under article 3, section 2 of the American Constitution, had suggested that courts may “tear the corporate veil” and look behind the corporation; if all shareholders are citizens, the corporation should not be denied the fundamental rights that each shareholder enjoys under article 19(1)(g). That conclusion was said to rest on observations made by Justice Mukherjea in the Chiranjit Lal Chowdhury case. However, the Court expressed disagreement with that principle, emphasizing that a corporation is a separate legal entity distinct from its shareholders. The doctrine of corporate existence independent of shareholders, and the corporation’s capacity to exercise rights, stem from the Salomon v. Salomon & Co. Ltd. decision. Accordingly, the rights and obligations of a company differ from those of its shareholders, and while actions against the company may indirectly affect shareholders by diminishing their capital interest, such actions do not directly affect the shareholders. The corporation, in holding property and conducting business, is not merely an agent of its shareholders.

In the discussion, the Court observed that when a company is sued, the loss suffered by the shareholders is limited to a reduction in the value of their investment, but the suit does not directly injure the shareholders themselves. The Court emphasized that the company, while holding its own property and conducting its own business, is not an agent whose actions are automatically attributable to the individual shareholders. Referring to Mukherjea J.’s observations in Chiranjit Lal Chowdhury’s case, the judgment reiterated the distinction between the rights that belong to the corporate entity and the rights that belong to the persons who hold its shares. The Court stressed that even if every shareholder of a company were an Indian citizen, the company would continue to possess a separate legal personality, and any infringement of the company’s rights would not give rise to a cause of action for the shareholders individually.

The judgment then turned to the doctrine commonly described as “ripping open the corporate veil,” explaining that this principle was developed by American jurists to address cases arising under the diversity‑of‑jurisdiction clause, thereby allowing companies formed in one State to sue or be sued in federal courts of another State as if they were citizens of that State. The Court noted that if a corporation is not a citizen, it would be difficult to rely on that doctrine to attribute citizenship to the corporation on the basis of the citizenship of its shareholders, as illustrated by the cited authorities I.L.R. [1955] Bom. 680, [1950] S.C.R. 869 at 893, and L.R. (1897) A.C. 22. In other words, the corporation cannot simply inherit the fundamental rights of its shareholders by projecting their citizenship onto itself. The Court warned that attempting to enforce shareholders’ rights as though they were the corporation’s rights, a view once suggested by Chagla C.J., would encounter numerous practical difficulties. For example, the Court asked whether, in a company where a substantial minority of shareholders are non‑citizens, the Court could confer citizenship on the corporation based on the citizenship of those few shareholders in order to allow the corporation to invoke rights under Article 19. The Court further contemplated the converse scenario in which a company incorporated in India might have a majority of alien shareholders and asked whether the Court could launch an enquiry and deny the corporation citizenship simply because most of its members are foreigners. The Court pointed out that shareholdings can change over time; today alien shareholders might hold a larger portion of the equity, while tomorrow the balance could shift in favor of Indian shareholders. Consequently, it would be untenable to say that the corporation’s citizenship changes each time the composition of its shareholders fluctuates between nationals and aliens. If the place of incorporation and the location of central management do not automatically bestow citizenship on the corporation, then projecting the citizenship of the shareholders onto the corporation to claim a reflected right and to seek relief for an alleged breach of fundamental rights would be impossible. The Court observed that the first part of the second question posed in the petition essentially raised a factual issue. It further noted that, at the date of filing the petition, the State Trading Corporation was operating under the direct supervision of the Government of India, with its shareholding held in the names of the President and two Secretaries to the Government, and that the entire subscribed capital had been contributed by the Government of India.

In this case, the corporation was incorporated in the names of the President and the two Secretaries to the Government, and the whole of its subscribed capital had been contributed by the Government of India. Nevertheless, the memorandum of association identified it as a commercial body whose purpose was to organise and undertake trade generally with State Trading countries as well as with other countries. The memorandum further stated that the corporation could be entrusted by the Union Government, from time to time, with commodities for the purpose of purchase, sale and transport of those commodities in India or elsewhere in the world, and that it could carry out various acts necessary to achieve that purpose. The articles of association contained detailed provisions governing the sale and transfer of shares, the calling of general meetings, the procedures to be followed at those meetings, voting by members, the composition and powers of the Board of Directors, the issue of dividends, the maintenance of accounts and the capitalisation of profits. The corporation had not been created by any special statute or charter; it had been formed under the Indian Companies Act as a private limited company and therefore could be wound up by order of a competent court. Although the corporation functioned under the supervision of the Government of India and its directors, it did not perform any governmental functions. Because its activities were commercial, the corporation could not be regarded as a department or an organ of the Government of India. The fact that, at the time of its incorporation and subsequently, its entire shareholding was held by the President and the two Secretaries to the Government was described as an accidental circumstance rather than a defining feature of its legal nature.

The petitioners sought to rely heavily on the House of Lords decision in Bank Voor Handel En Scheepvaart N.V. v. Administration of Hungarian Property (1954) L.R. 584 to argue that the corporation was merely an agent of the Government of India. In that earlier case, after the invasion of Holland in 1940, certain gold stocks belonging to a Dutch banking corporation were transferred in London to the Custodian of Enemy Property, who sold the gold and then invested and reinvested the proceeds. Those investments were later transferred to the Administrator of Enemy Property under the mistaken belief that the assets belonged to a Hungarian national. When hostilities ended, the bank obtained a judgment to recover the proceeds of the sale together with interest and other profits. During the Custodian’s management, tax was paid to the British Treasury on the income received from the sale of the gold, and the bank claimed a right to recover an amount equal to the tax assessed on the Custodian’s income from the invested proceeds. By a majority, the House of Lords held that if the Custodian had claimed Crown immunity, it would not have been required to pay tax on that income, because the Custodian was considered a servant or agent of the Crown and the Crown, under the trading‑with‑the‑enemy legislation, possessed a sufficient interest to invoke immunity even without a beneficial interest in the income. The present Court concluded that the principle in that case did not apply to the corporation before it, noting that the question of whether a corporation, whether sole or aggregate, is an agent or servant of the State must be determined on the facts of each case. In the absence of any statutory provision, a commercial corporation acting on its own behalf, even when wholly or partially controlled by a Government department, would be presumed not to be a servant or an agent of the State.

In the earlier authority the Crown was described as a servant or agent of the Crown and, under the provisions commonly known as “trading with the enemy legislation,” it was held that the Crown possessed a sufficient interest to permit it to claim immunity from tax even when it did not have a beneficial interest in the income that arose. The Court in the present matter expressly stated that the principle articulated in that earlier case did not apply to the facts before it. The Custodian, who had been constituted as a corporation sole, was considered by the House of Lords to be entitled, in the circumstances of that case, to Crown immunity from the obligation to pay income‑tax. The Court further observed that the determination of whether any corporation, whether a corporation sole or an aggregate body, qualifies as a servant or an agent of the State must be made on a case‑by‑case basis, depending upon the particular facts that arise. In the absence of any specific statutory provision, a commercial corporation that acts in its own name—even if it is wholly or partially controlled by a Government Department—will be presumed not to be a servant or an agent of the State. The Court noted that the mere fact that a Minister may appoint the members of such a corporation, may be entitled to request information, and may supervise the conduct of its business does not, by itself, transform the corporation into an agent of the Government. However, where the corporation is, in substance, performing governmental functions rather than commercial activities, an inference may readily be drawn that it is acting as an agent of the Government.

The Court then referred to the decision in Tamlin v. Hannaford (1), in which a house had been vested, by operation of the Transport Act, 1947, in the British Transport Commission, and the question arose whether that house could be considered as owned by the Crown and administered by the British Transport Commission as an agent of the Crown. Lord Justice Denning observed that the Minister of Transport exercised extensive powers over the British Transport Commission, powers comparable to those of a person who holds all the shares in a private company. The Minister appointed the directors, who were the members of the Commission, fixed their remuneration, could demand any information he required, and was entrusted with the authority to issue general directions on matters he deemed to affect the national interest, acting as the sole judge in such matters, with the Commissioners bound to obey his directions. Notwithstanding the great extent of these powers, as recorded in L.R. (1950) 1 K.B. 18, Denning LJ concluded that the corporation could not be regarded as an agent of the Minister any more than a private company can be regarded as the agent of its shareholders or even of a sole shareholder. He further emphasized that, in the eyes of the law, the corporation is its own master, answerable in the same manner as any other person or corporation; it is not the Crown, possesses none of the Crown’s immunities or privileges, its servants are not civil servants, its property is not Crown property, and it is bound by Acts of Parliament like any other subject of the King. While acknowledging that the corporation is a public authority with public purposes, the Court stressed that it is not a government department and its powers do not fall within the province of government.

In this case, the Court considered whether a body described as a department or organ of the Union or a State could, even if it were called a citizen, invoke fundamental rights under Part III of the Constitution against the “State” as defined in Article 12. The Court first noted that even if the State Trading Corporation were treated as a department or organ of the Government of India, it was not attempting to enforce any fundamental right against the Union of India; rather it was seeking to enforce its own rights against the State of Andhra Pradesh. The Court then observed that Article 12 characterises both the Union and the State of Andhra Pradesh as “States”. Consequently, if the State Trading Corporation were to be regarded as “the State” within the meaning of Article 12 and also as a citizen, there was nothing in Article 19 that prohibited a citizen from enforcing the fundamental rights that vested in that citizen. The Court explained that the operation of Article 19 required two conditions: first, the person claiming protection must be a citizen; second, the right alleged to be infringed must be one of the freedoms listed in Article 19. When both conditions were satisfied, the Court held that the citizen, subject to the restrictions contained in Article 19, would be entitled to enforce those rights against infringement by any executive or legislative action of the Union government, the State legislature, or any local or other authority within the territory of India or under the control of the Government of India. The Court found no justification for limiting the enforcement of those rights on the ground that an agent or servant of the State, if also a citizen, could not enforce fundamental rights against another body that could likewise be characterised as a State under Article 12. Accordingly, the Court concluded that the first question presented to it should be answered in the affirmative and the first part of the second question in the negative. Regarding the second part of the second question, the Court answered that even if the State Trading Corporation were regarded as a department or organ of the Government of India, it would, as a citizen, be competent to enforce fundamental rights under Part III of the Constitution against the State as defined in Article 12.