Page 2633 - 2637 DOI: https://doij.org/10.10000/IJLMH.

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INTERNATIONAL JOURNAL OF LAW

MANAGEMENT & HUMANITIES
[ISSN 2581-5369]
Volume 6 | Issue 3
2023
© 2023 International Journal of Law Management & Humanities

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 2633 International Journal of Law Management & Humanities [Vol. 6 Iss 3; 2633]

Fundamental Rights and Citizenship of a

Company in India: An Overview
ADITI SINHA1

ABSTRACT
This article has been categorized into three broad components. Firstly, the constitutional
law perspective of fundamental rights conferred to corporations in India primarily based
on the concept of citizenship in India. Secondly, the judicial precedents set by the Indian
Courts in deciphering the constitution and figuring out which fundamental rights are
available to a business enterprise included in India is discussed chronologically. Thirdly, a
dive into the status of corporations in relation to availability of fundamental rights to them
in the United States. This paper as a result seeks to evaluate the fundamental rights
available to businesses from a case study point of view.
Corporate bodies are separate legal personality able to owning assets, getting into
contracts, and to sue and be sued. But those corporate bodies being artificial and not
natural entities, important questions frequently arise whether companies are entitled to
identical fundamental rights assured by means of the Constitution or other conventions as
provided to natural persons. This is a reflection paper that seeks to explain whether
companies possess fundamental rights and citizenship just like the rest of us.
Keywords: Citizenship, fundamental rights, companies.

I. INTRODUCTION
With the boom of company form of commercial enterprise, the businesses began yielding a lot
of political and financial power in the 19th century and early twentieth century that legal
theorists had to reconsider company concept in context of the volume to which nation might
exercise authority over such bodies. It is on this context many theories had been developed.

The “grant theory” or “concession concept” provides that corporation is an artificial entity
included under a charter and for this reason its power is constrained to the charter. 2Any
organisation legally owes its existence to the State that finally approves the charter for its
incorporation. This idea has relevance in restriction of companies like East India Company
which was incorporated under a charter issued by the Queen in Europe. It was also quite

1
Author is a student at St Joseph's College of Law: affiliated by Karnataka State Law University, India.
2
Virginia Harper Ho, Theories of Corporate group: Corporate Identity Reconceived, Seton Hall Law
Review,Volume 42 (2012) Issue 3

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 2634 International Journal of Law Management & Humanities [Vol. 6 Iss 3; 2633]

prevalent in United States till 19th century and observed in the judicial decision makings back
then.

Around 1850s, the States issued charters for incorporation to many companies and thus the
privilege of incorporation of a company ceased to exist.

Thus companies, in view of the “free incorporation” movement, were seen as real entity and
important questions have been debated with the aid of the theorist that if incorporation ceases
to be a privilege whether or not state simply then has right to regulate corporations .The
proponents of the real entity concept said that as companies would be formed at will and they
might conduct business as they desire and dissolve at their own will too, companies ceased to
be the special creatures of the Government and they claimed identical privileges as all other
individuals and corporations is the legacy of “real entity concept” that can be traced in present
day corporate codes, judgements and common law.

II. THE CONSTITUTIONAL ASPECT

Fundamental rights are enshrined in part 3 of the constitution of India. the rights between
citizens and a person are different. Some rights are only available to the citizens Whereas others
are available to all. the articles such as Article 14 talk about equality before the law, article 20
about the protection in respect of conviction of offences, Articles 21 and 22 discusses about
protection of life and personal liberty and protection against arrest and detention in certain cases,
article 25,27 and 28 with respect to the right to freedom of religion, payment of taxes for
promotion of religion and freedom to attendance at religious instruction at the educational
institution. These are the rights that are even available to non-citizens.

On the other hand, some articles like article 15 that focuses on prohibition of discrimination on
grounds of religion, race, caste, sex and place of birth, article 16 that is equality of opportunity
in terms of employment article 19, 29 and 30 with respect to right to freedom the protection of
minority interest and the right of minority to establish and administer institutions respectively.
Thus, it has been made explicitly clear Indian Constitution about which articles are applicable
to citizens or other persons. This is an important point to be noted in order to determine which
fundamental rights are applicable to companies in general.

Citizenship is enshrined in part two of the Indian Constitution. The citizenship Act of 1955 has
provided five ways in which citizenship is acquired namely- citizenship by birth3, by descent4,

3
Section 3 of The Citizenship Act, 1955
4
Section 4 of The Citizenship Act, 1955

© 2023. International Journal of Law Management & Humanities [ISSN 2581-5369]

 2635 International Journal of Law Management & Humanities [Vol. 6 Iss 3; 2633]

by registration5, naturalization6 and by incorporation of territory7. This Act has excluded any
person except natural persons from the ambit of citizenship. Therefore, companies are not
considered to be citizens of India. The Judiciary has interpreted the question whether companies
are entitled to fundamental rights that are held by shareholders of the company.

III. JUDICIAL INTERPRETATION

One of the first cases with respect to the fundamental rights of companies in independent India
was First Sholapur spinning and weaving company case8. The shareholders of this company
challenged the Solapur spinning and weaving company (emergency provisions) Act 1950 and
opined that the said Act was not within the legislative competency of the Parliament and thus
infringed fundamental rights under article 14, 19(1)(f) and 31. The court established the
principle of separate legal personality and distinguished individual shareholders from the
company. Therefore, such an infringement can only be claimed if fundamental rights of the
shareholders are harmed too.

The court acknowledged the distinction between natural and juristic persons and held that the
company can come forward to enforce the fundamental rights except where the nature of the
right itself conveys that it is only applicable to natural persons.

The same decision was reiterated in the case of Jupiter general Insurance Company vs
Rajagopalan and others.9

In the second Sholapur spinning and weaving company case, the representatives petition was
allowed by the court which was filed by preference shareholders. The court found that the
impugned ordinance does violate the fundamental right of the company under article 31(2). The
difference between persons as referred in article 31 and citizens as referred to in Article 19 was
emphasised by the court. It was held that the scope of both the articles cover different fields.
Shareholder can enforce his rights under article 19 and company can enforce its rights under
article 31.

The Bombay High Court gave a different view and stated that it depends on the nature of the
right. When it is such that it cannot be confined only to natural persons, then it can be concluded
that a company has an equivalent right as a natural person. This court allowed a petition for
violation of fundamental rights under article 19(1)(g) by the company named RMD

5
Section 5 of The Citizenship Act, 1955
6
Section 6 of The Citizenship Act, 1955
7
Section 7 of The Citizenship Act, 1955
8
1951 AIR 41 1950 SCR 869
9
AIR 1952 P H 9

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Chamarbaugwalla and held that such a company is a citizen of India and has every right to
continue trade and commerce in India.

Case- Everett Orient Line Incorporated vs Jasjit Singh and others10:

The Calcutta High Court followed the precedent set by the Supreme court in the second
Sholapur case. The petition dismissed the petition and set aside the arguments by the company
on confiscation of smuggled goods that was not known to the petitioner and fine under article
19. The court held that the company is incorporated outside India and therefore cannot avail the
rights under article 19 guaranteed only to citizens.

Case- State Trading Corporation of India Ltd& others vs Commercial tax officer,
Vishakhapatnam and others11:

This writ was filed in the Supreme court under article 32. The contention was with respect to
whether the State Trading Corporation incorporated under the Companies Act, 1956 is a citizen
of India within the meaning of article 19 and possessed fundamental rights that are guaranteed
to citizens under this article. The Supreme court clearly stated that corporate institutions are
juristic persons and cannot be regarded as citizens. It may possess Indian nationality due to its
incorporation within India. Such corporate institutions are entitled to civil rights provided under
international law and no other rights guaranteed only to citizens of India.

● Freedom of speech and expression to companies:

Case- Bennett Coleman and company12:

The Supreme Court opined that “the fundamental rights of the shareholders are not lost when
they come together and associate themselves to form a company.”

Law Commission 101st report:

Corporations are artificial entities and do not qualify as citizens of the country. However, there
are four categories of entities that can avail the protection under article 19(1((a)- Newspaper,
magazine companies, production and distribution of movies and institutions acting as
universities involved in publications.

IV. UNITED STATES OF AMERICA

Case- Santa Clara County vs Southern Pacific Railroad13:

10
AIR 1932 Cal 303
11
1963 AIR 1811, 1964 SCR (4) 89
12
1973 AIR 106, 1973 SCR (2) 757
13
118 U.S 394 6 S .Ct 1132

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As soon as the 14th amendment came into existence, the judiciary in the States became proactive
and several corporate constitutional rights began to be recognized.

The court recognized that the 14th amendment grants equal protection to companies as well as
to natural persons under the equal protection clause.

Following this judgement, a number of verdicts were given that entitled companies to the due
process guaranteed under the 14th amendment. The court also extended the right to jury trials in
criminal matters to companies under the 6th amendment as well as right to free speech to
companies under the 1st amendment.

Case- United vs Federal Election Commission14

The Supreme court rejected the Bipartisan Campaign reform Acts’s prohibitions that was
against unions and corporations as the Act violated the rights guaranteed by the 1st amendment
of those who raised private money.

V. CONCLUSION
Corporate bodies are vital for the state’s economy. They are not only vital for commercial
development but additionally offer employment opportunities. Major parts of our daily lives is
encouraged by a few or other corporate interests. So, it is essential to comprehend that if a
corporate body whilst at fault for not performing its responsibilities may be held responsible
and punished under numerous laws like Indian Penal Code, the Companies Act, etc. It is also
essential that such our bodies have fundamental rights essential for its very own functioning.

Earlier there was a big clash concerning Article 19(f) and Article 31 as they were not furnished
to artificial entities, even though now they are available to them in the form of constitutional
rights. In an identical way, either the Fundamental rights that are crucial for companies must be
made available to them, by providing them the status of a citizen or otherwise as a constitutional
right.

*****

14
558 U.S A310 130 S. Ct. 876

© 2023. International Journal of Law Management & Humanities [ISSN 2581-5369]