# LTD. & OTHERS v. THE COMMERCIAL TAX OFFICER, VISAKHAPATNAM AND OTHERS

- **Citation:** [1964] 4 S.C.R. 99
- **Court:** Supreme Court of India
- **Decided:** 1964
- **Bench:** B. P. Sinha, s. K. DAS, P. B. Gajendragadkar, A. K. Sarkar, K. N. WANcHoo, M. HmAYATULLAH, K. C. DAs GUPTA, J. C. Shah, N. Rajagopala Ayyangar Jj
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/ltd-others-v-the-commercial-tax-officer-visakhapatnam-and-others-3198
- **Pages:** 92

## Headnote

Fundamental Right, Enforcement of-Corporation, if a citizen
entitled to
claim
fundamental
rights-Constitution of India,
Arts. 19(1)(f) and (g), 32.
The State Trading Corporation of India is a private lirnited com·
pany registered under the Indian Co1npanies Act, 1956, with its he.ad
Office at Delhi and its entire capital is contributed by the Govern·
ment of India. The Sales-tax Authorities of the States of Andhra
Pradesh and Bihar sought to assess the Corporation to sales tax
under their respective Sales Tax i\cts and issued notices of demand.
Thi'.: Corporation claiming to be an Indian citizen filed petitions
under Art. 32 of the Constitution for quashing the said proceedings
on the ground that they infringed its fundamental rights under Art.
19(1) (f) and (g) of the Constitution. Preliminary objections having
been taken by the respondents to the maintainability of the said
petitions, the Constitution Bench hearing the matters referred the
t\vo following questions for decision by the special bench~
"(1) Whether the State Trading Corporation, a companyregistered under the Indian Companies Act, 1956, is a citizen
within the meaning of Art. 19 of the Constitution and can ask
for the enforcement of fundamental rights granted to citizens
under the said article; and (2) whether the State Trading Corporation is, not\vithstanding the formality of incorporation under
the Indian Companies Act, 1956, in substance, a department
and organ of the Government of India with the entirety of its
capital contributed by
Government; and
c.an
it claim to
enforce fundamental rights under Part III of the Constitution
against the State as defined in Art. 12 thereof.
Held, (DAs GuPTA and SHAH JJ., dissenting) that the answer
to the first question must be in the negative.
Per
S1NHA,
C. J., S. K. DAs,
GAJENDRAGADKAR,
SARKAR,
WANCHOO and Ayyangar JJ. There can be no citizens of India not
mentioned in Part II of tho Constitution or by the Citizenship
Act, 1955.
These provisions are
wholly exhaustive and contemplate only natural persons.
Part III of the Constitution makes a clear distinction betwcc:n
fundamental rights available to "any person" and those guaranteed
/uly, 26.
1963
The Stat<
Trading Corporation of India
Ltd. & Others.
v.
The Commercial Tax Officer,
Visakhapatnam
and Others.
100
SUPREME COURT REPORTS
[1964]
to "all citizens", indicating thereby that under the Constitution all
c1t1.zens are persons but all persons are not citizens
Part II of. the Constitution relating to 'citizenship' is clearly
inapplicable to juristic persons and the provisions of the Citizen·
ship Act, 1955, enacted by Parliament under Art. 11 of the Constitution, show that such persons are outside the purview of the
Act.
It cannot therefore, be said that either Part II of the ConSti·
tution or the Citizenship Act, 1955, confers the right of citizen·
ship or recognises
as
citizen any person other than a natural
person.
They do not contemplate a corporation as a citizen.
In none of the relevant decisions this Court gave its considered judgment on the present issues and the question now raised
are open questions.
Chiranjit Lal Chowdhuri v. Union of India [1950] S.C.R. 869,
Dwarkadas Srinivas of Bombay
v.
The 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, considered.
'Nationality' and 'citizenship' are not synonymous.
A corporation can claim nationality which is ordinarily determifled by
the plac.e of it.5 incorporation.
But while nationality detennines
the civil right.5 of a natural or artificial person, particularly wit.i.
reference to international law,
citizenship is intimately connected
with civic rights under municipal law.
All citizens are, therefore,
nationals of a particular State and enjoy full political rights but
all nationals arc not citizens and do not have full political rights.
It was not correct to say that the word 'citizen' in Art. 5 was
not as wide as in Art. 19 of the Constitutio

## Text

_Characters 0–39,501 of 221,189. This is a partial read: ask again with offset=39501 for what follows._

-
4 S.C.R.
SUPREME COURT REPORTS
99
THE STATE TRADING CORPORATION OF INDIA
1963
LTD. & OTHERS
v.
THE
COMMERCIAL TAX
OFFICER,
VISAKHAPATNAM AND OTHERS
(.B. P. SINHA, c. J., s. K. DAS, P. B. GAJENDRAGADKAR,
A. K. SARKAR, K. N. WANcHoo, M. HmAYATULLAH, K. C.
DAs GUPTA, J. C. SHAH and N. RAJAGOPALA AYYANGAR JJ.J
Fundamental Right, Enforcement of-Corporation, if a citizen
entitled to
claim
fundamental
rights-Constitution of India,
Arts. 19(1)(f) and (g), 32.
The State Trading Corporation of India is a private lirnited com·
pany registered under the Indian Co1npanies Act, 1956, with its he.ad
Office at Delhi and its entire capital is contributed by the Govern·
ment of India. The Sales-tax Authorities of the States of Andhra
Pradesh and Bihar sought to assess the Corporation to sales tax
under their respective Sales Tax i\cts and issued notices of demand.
Thi'.: Corporation claiming to be an Indian citizen filed petitions
under Art. 32 of the Constitution for quashing the said proceedings
on the ground that they infringed its fundamental rights under Art.
19(1) (f) and (g) of the Constitution. Preliminary objections having
been taken by the respondents to the maintainability of the said
petitions, the Constitution Bench hearing the matters referred the
t\vo following questions for decision by the special bench~
"(1) Whether the State Trading Corporation, a companyregistered under the Indian Companies Act, 1956, is a citizen
within the meaning of Art. 19 of the Constitution and can ask
for the enforcement of fundamental rights granted to citizens
under the said article; and (2) whether the State Trading Corporation is, not\vithstanding the formality of incorporation under
the Indian Companies Act, 1956, in substance, a department
and organ of the Government of India with the entirety of its
capital contributed by
Government; and
c.an
it claim to
enforce fundamental rights under Part III of the Constitution
against the State as defined in Art. 12 thereof.
Held, (DAs GuPTA and SHAH JJ., dissenting) that the answer
to the first question must be in the negative.
Per
S1NHA,
C. J., S. K. DAs,
GAJENDRAGADKAR,
SARKAR,
WANCHOO and Ayyangar JJ. There can be no citizens of India not
mentioned in Part II of tho Constitution or by the Citizenship
Act, 1955.
These provisions are
wholly exhaustive and contemplate only natural persons.
Part III of the Constitution makes a clear distinction betwcc:n
fundamental rights available to "any person" and those guaranteed
/uly, 26.
1963
The Stat<
Trading Corporation of India
Ltd. & Others.
v.
The Commercial Tax Officer,
Visakhapatnam
and Others.
100
SUPREME COURT REPORTS
[1964]
to "all citizens", indicating thereby that under the Constitution all
c1t1.zens are persons but all persons are not citizens
Part II of. the Constitution relating to 'citizenship' is clearly
inapplicable to juristic persons and the provisions of the Citizen·
ship Act, 1955, enacted by Parliament under Art. 11 of the Constitution, show that such persons are outside the purview of the
Act.
It cannot therefore, be said that either Part II of the ConSti·
tution or the Citizenship Act, 1955, confers the right of citizen·
ship or recognises
as
citizen any person other than a natural
person.
They do not contemplate a corporation as a citizen.
In none of the relevant decisions this Court gave its considered judgment on the present issues and the question now raised
are open questions.
Chiranjit Lal Chowdhuri v. Union of India [1950] S.C.R. 869,
Dwarkadas Srinivas of Bombay
v.
The 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, considered.
'Nationality' and 'citizenship' are not synonymous.
A corporation can claim nationality which is ordinarily determifled by
the plac.e of it.5 incorporation.
But while nationality detennines
the civil right.5 of a natural or artificial person, particularly wit.i.
reference to international law,
citizenship is intimately connected
with civic rights under municipal law.
All citizens are, therefore,
nationals of a particular State and enjoy full political rights but
all nationals arc not citizens and do not have full political rights.
It was not correct to say that the word 'citizen' in Art. 5 was
not as wide as in Art. 19 of the Constitution or that Part II
of the Constitution supplemented by the provisions of the Citizenship
Act,
which
deals
\vith citizens,
deliberately
left
out
of
account
citizenship
in
relation
to
JUnsttc
persons.
f
(
When the Constitution confers any particular right to be enjoyed
f
by a citizen it uses the words "any citizen" or "all citizens" in
clear contradistinction to those rights which are to be enjoyed
by all, whether citizens or alien!!, natural or juristic persons.
There i.5 no reason to think that the word 'citizen' in Art. 19
is used in a different sense from that in which it is used in Part II
of the Constitution.
..l
Per HrDYATULLAH J.-Both the questions must be ans\vered
in favour of the respondent!!.
Before inOependence there was no law of citizenship in India.
Under the British Nationality Act, 1948, Indians became Commonwealth citizens or British subjects without citizenship and were
regarded as JX>!ential citizens of India. The Indian Constitution
made provision for citizenship under which certain natural per~
sons alone could be citizens of India and the Citizenship Act,
r
1955, excluded persons other than natural persons from citizenship ..
-
-
4 S.C.R.
SUPREME COURT REPORTS
101
It is not correct to say that corporations were citizens before
the Constitution.
They enjoyed only such privileges under the
municipal law which that law expressly conferred on them.
The nature and personality of an incorporated company have
their origin in a fiction of law. This personality arises from the
moment of incorporation and from that date the persons subscrib~
ing to the memorandum of association or joining as members
becon1e a body corporate.
But they cannot be said to pool their
status and even if all of them are citizens of India, the Company
does not become a citizens of India.
G. E. Rly. 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, referred to.
The seven freedoms guaranteed by Art. 19(1) are for the
citizens of India.
The Constitution in using the \Vord "person",
a \Vord of larger import, in some other places makes its intention
to exclude corporations clear.
Chiranjit Lal Chowdhuri v. Union of India, [1950] S.C.R. 869,
explained.
The precedents of the Supreme Court of the United States
\.vhich hold that corporations are citizens of the State of incorporation for purposes of federal jurisdiction cannot be followed in
India. The diversity of citizenship which has led to such rulings
does not exist in India. As a corporation is a separate entity from
its 1nembers, it is not possible to pierce the veil of incorporation
to determine the citizenship of its members in order to give the
corporation the benefit of Art. 19.
The State Trading Corporation is not, therefore, a citizen
either by itself or as the aggregate of Indian citizens. Its Indian
nationality is not to be confused with citizenship of natural per~
'r
sons and the word 'citizen' in Art. 19(1) (£) and (g) can refer
to no other than natural persons. The State Trading Corporation
is really a department of Government behind the corporate veil.
Per DAs GUPTA J.-The first question must be answered in
the affirn1ative.
r
It has been repeatedly laid down by this Court that in interpreting the Constitution a broad and a liberal and not merely
the grammatical view should be taken. A syllogistic or mechanical
approach has always to be avoided, more so when interpreting
the Constitution.
The attempt should be to reach the intention
of the Constitution makers by examining the substance and give
effect to that intention, if possible.
So judged, it is clear that the Constitution makers when they
~
used the word 'citizen' in Art. 19 had the intention that at least
a corporation constituted wholly by citizens of India would get
1963
The State
Trading Corporation of India
Ltd. & Others.
v.
The Commercial Tax Officer,
Visakhapatnam
and Others.
1963
The State
Trading Corporation of India
Ltd. & Others.
v.
The Commercial Tax Officer,
Visakflapatnam
and Others.
102
SUPREME COURT REPORTS
[1964]
the benefit of the fundamental rights enshrined in that Article.
There is nothing in the Constitution that stands i:i the way of
giving all citizens of India, whether forming a corporation or not,
the benefit of Arts. 19(1) (£) and (g).
State of Bombay v. R. M. D. Chamarbaughwala, I.L.R. [1955]
Born. 680, Chiranjit Lal Chowdhuri v. Union of India, [1950]
S.C.R. 869, Express Newspapers (P) Ltd. v. Union of India, [1959]
S.C.R. 12, Bengal Immunity Co. v. State of Bihar, [1955] 2 S.C.R.
603 and Bombay Dyeing Manufacturing Co. Ltd. v. State of Bombay, [1958] S.C.R. 1122, referred to.
The first part of the second question should be answered in
the negative and the second part in the affirmative.
Per SHAH J.-In ascertaining the meaning of expressions used
in a vital document like the Constitution of a nation, a mechani·
cal approach is impermissible.
The Constitution is the declara·
tion of the will of the people and should be interpreted liberally
and not in a narrow
or
doctrinaire spirit.
Such interpretation
should be in accordance with the true purpose and intent as disclosed by the phraseology understood in its . natural signific.ation
in the light of its setting and its dynamic character which is intended to fulfil the aspirations of the people.
Citizenship means the members of a jural society investing the
holder with all the rights and privileges enjoyed by its nationals
and subjecting him to corresponding duties.
Nationality links a
person to a State and ensures his rights in international affairs.
While a citizen is a national, every national is not always a citizen.
Virginia L. Minor v. Reese Happersett, 21 Wal!. 162: 88 U.S.
627, referred to.
Under the English Common Law which formed the foundation of the Indian jurisprudence, a company or a corporation aggregate is a national of the State in which it is incorporated and
is clothed with a personality given by the law of the land, capable
of exercising rights and entitled to protection abroad.
Janson v. Driefontein Consolidated Mines Ltd. L. R. (1902)
A.C. 492, Attorney-General v. fewish Colononization Association ..
(1901) 1 K.B. 133, Generali v. Salim Cotran, L.R. (1932) A.G.
288, Gasque v. Commissioner of Inland Revenue, L.R, (1940)
2 K.B. :30 and Kuenigl v. Donnersmark, L.R. (1955) 1 Q.B. 515,
referred to.
So also in India a juridical person is c.apable of exerc1s1ng
to the fullest extent a large majority of civil rights which natural
persons may exercise as citizens, its inc.apacity to exercise other
rights arises from the nature of its personality and constitution and
not from any special restriction imposed upon it. The Constitution, as is apparent from various other Articles, aff6rded the widest
protection to corporation as it did to natural persons.
Unless
(
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4 S.C.R.
SUPREME COURT REPORTS
103
therefore, the language or the scheme of the Constitution is compulsive, it is impossible to put a limited connotation on the ex~
pression 'citizen' occurring in Art. 19(1).
To say that Arts. 5, 6 and 8 and the law made under Art. 11
are exhaustive and there can be no citizen except those expressly
covered thereby is to assume that there were no citizens in India
before the Constitution, an assumption which
is
not warranted
either by the language of the Constitution or the history of our
national evolution. The legislative history shows that British subjects of Indian origin held the status of citizens in British India
and there was no statute before the Constitution which indicated
even indirectly that a corporation aggregate could not be a citizen.
Although this Court did not make any definite expression
of opinion, it has consistently assumed that corporations aggregate
are entitled to claim pr?tection under Art. 19( 1) as citizens.
Chiranjit Lal Chowdhuri v. Union of India. [1950] S.C.R. 869,
Bengal Immunity Company Ltd. v. State of Bihar [1955] 2 S.C.R.
603, State of Bombay
v.
R. M. D. Chamarbaughwala, [1957]
S.C.R. 874 and State of West Bengal v. Union of India, [1964]
1 S.C.R. 371, referred to.
In numerous cases in this Court
it
was assumed, without
contest, that a company is a citizen of India and competent to
enforce fundamental rights under Art. 19(1)(f) and (g) of the
Constitution.
Case law referred to.
In view of the fact that a company is invested with important
fundamental rights under various other Articles of the Constitution and it is recognised as a person capable of holding and disposing of property and carrying on business, commerce and intercourse, it could not
be
held that the expression 'citizen' in
Art. 19 was intended to be restricted to a natural person.
A corporation is, however, distinct from its £hare"-holders and
even if all the share-holders are Indian Citizens, its claim to citizenship ·cannot be founded on that ground for that would lead to
anomalous results.
Salomon v. Salomon and Co. Ltd.
L.R. ( 1897)
A.C. 22,
relied on.
State of Bombay, v. R.M.D. Chamarbaugwala, l.L.R. [1955]
Born. 680, disapproved.
The question 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 acting
on its behalf, even if it is controlled wholly or partially by a
Government department, will be presumed not to be a servant
or an agent of the State.
Where, however,
the
corporation is
performing in substance Governmental, and not commercial, fun_.
ctions, an inference will readily be made that it is an agent of
the Government.
1963
The State
Trading Corporation of India
Ltd. & Others.
v.
The Commercial Tax Officer,
V isak hapatnam
and Others.
1963
The State
Trading Corporation of India
Ltd. 6· Others.
v.
The Commercial Tax Officer
Visakhapatnam
and Others.
Sinha C. f.
104
SUPREME COURT REPORTS
[1964]
Tamlin v. Hannaford, L.R. (1950) 1 K. B. 18, referred to.
Bank Voor Handel En Scheepvaart N. V. v. Administrator.
of Hungarian Property, L.R. (1954) A.C. 584, held inapplicable.
There i!I no warrant for the proposition that a department or
an organ of the Union or the State, if it is a citizen, cannot enforce fundamental rights against the State as defined by Art. 12
of the Con!titution.
ORIGINAL JuR1so1cT10N : \Vrit Petitions Nos. 202-204 of
1%1.
Writ Petition under Art. 32 of the Constitution of India
for enforcement of Fundamental Rights.
M. C. Setalvad, G. S. Pathak, B. Parthasarthy, B. Dutta,
/. B. Dadachanji, 0. C. Mathur and f?.avinder Narain, for
the Petitioners (in all the petitions).
D. Narasarju,
Advocate-General
for the State of
Andhra Pradesh and T. V. R. T atachari, for the respondents (in Petitions Nos. 202 and. 203 of 1961 ).
V. K. Krishna Menon, Anil Kumar Gupta, R. K.
Garg, D. P. Singh, M. K. Ramamurthi and S. C. Agarwala,
for the respondents (in Petition No. 204 of 1961).
A. Ranganadham Chetty and A. V. Rangam, for Intervener No. 1.
S. M. Sikri, Advocate-General for the State of Punjab
and Gopal Singh, for Intervener No. 2.
B. Sen, M. K. Bannerji and P. K. Bose, for Intervener
No. 3.
/. M. T hakore, Advocate-General for the State of
Gujarat and K. L. Hathi, for Intervener No. 4.
G. C. Kasliwal, Advocate-General for the State of
· Rajasthan, S. K. Kapur and K. K. Jain, for Intervener
No. 5.
· July 26, 1963.-The Judgment of Sinha C. J., S. K. Das,
Gajendragadakar, Sarkar, Wanchoo and Ayyangar JJ. was
delivered by Sinha, C. J. Hidayatullah J., delivered a separate opinion. Das Gupta and Shah JJ. delivered separate
dissenting opinions.
SINHA C.J.-The following questions have been referred to the Special Bench by the Constitution Bench before which these cases came up for hearing :
(1) whether the State Trading Corporation, a company registered under the Indian Companies Act,
(
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t
~ S.C.R.
SUPREME COURT REPORTS
105
1956, is a citizen within the meaning of Art. 19
of the Constitution and can ask for the enforcement of fundamental rights granted to citizens
under the said article; and
(2) whether the State Trading Corporation is, notwithstanding the formality of incorporation under
the Indian Companies Act, 1956, in substance a
department and organ of the Government of India
with the entirety of its capital contributed by Government; and can it claim to enforce fundamental
rights under Part III of the Constitution against
the State as defined in Art. 12 thereof.
The questions were raised by way of preliminary objections
to the maintainability of the Writ Petitions under Art. 32
of the Constitution.
As the whole case is not before us, it is necessary to
state only the following facts in order to appreciate how
the controversy arises. The State Trading Corporation of
India Ltd., and K. B. Lal, the then Additional Secretary,
Ministry of Commerce and Industries, Government of India,
moved this Court under Art. 32 of the Constitution for
quashing by a writ of certiorari or any other appropriate
writ, direction or order, certain proceedings instituted by
or under the authority of the respondents,-( 1) The Commercial Tax Officer, Visakhapatnam ; (2) the State of
Andhra Pradesh; and (3) the Deputy Commissioner of
Commercial Taxes, Kakinada. Those proceedings related
to assessments of sales tax under the provisions of the
Andhra Pradesh Sales Tax Act. Writ Petitions 202 and 203
of 1961 are between the parties aforesaid. In Writ Petition
204 of 1%1, the parties are the petitioners aforesaid against
(1) the Assistant Superintendent of Commercial Taxes,
I/c Chaibasa Sub-Circle, Bihar State;
(2) the Depmy
Commissioner of Sales Tax, Bihar, Ranchi; and (3) the
State of Bihar. Thus, the petitioners are the same in all
the three cases, but the respondents are the State of Andhra
Pradesh and its two officers in the first two cases and the
State of Bihar and its two officers in the third case.
The first petitioner is a private limited company registered under the Indian Companies Act, 1956, with its
h~d office at New Delhi, in May, 1956. The second petitioner is a shareholder in the first petitioner company. The
8-2 S. C. India/64
1963
The State
Trading Corporation of India
Ltd. & Others.
v.
The Commercial Tax Officer,
Visakhapatnam
and Others.
Sinha C. /.
1963
.The State
Trading Corpo-
·. ration of India
Ltd .. & Others.
v.
The Commercial Tax Officer,
V isak hapatnam
and Others.
Sinha C. /.
106
SUPREME COURT REPORTS
[1%4]
two petitioners claim to be Indian citizens as all its shareholders are Indian citizens. Proceedings were taken for
assessment of sales tax, and in due course of those proceedings demand notices were issued. It is not necessary for
the purposes of deciding the two points referred to us to
set out the details of the assessments or the grounds of
attack raised py the petitioners. It is enough to say that the
petitioners claim to be Indian citizens and contend that
their fundamental rights under Art. 19 of the Constitution
had been infringed as a result of the proceedings taken
and the demands for sales tax made by the appropriate
authorities. When the case was opened on behalf of the
petitioners in this Court, before the Constitution Bench,
counsel for the respondents raised the preliminary objections which have taken the form now indicated in the two
questions, already set out. The Bench rightly pointed out
.that those two questions were of great constitutional importance and should, therefore, be placed before a larger
Bench for determination. Accordingly they referred the
matter to the Chief Justice and this larger Bench has been
constituted to determine those questions.
At the very outset of the arguments, we indicated tl1at
we shall give our decision only on the prelinlinary questions and that die decision of the controversies on their
· merits will be left to the Constitution Bench.
Before dealing with the arguments at the Bar, it is
.convenient to set out the relevant provisions of the Constitution. Part III of die Constitution deals with Fundamental Rights. Some fundamental rights are .available to
"any person", whereas other fundamental rights can be
:available only to "all citizens". "Equality before the law"
or "equal protection of the laws" within the territory of
India is available to any person (Art 14). The protection
.against die enforcement of ex-post-facto laws or against
double-jeopardy or against compulsion of_self-incrimination
is available to all persons (Art. 20); so is the protection of
life and personal liberty under Art. 21 and protection
against arrest and detention in certain cases, under Art. 22.
:Similarly, freedom of conscience and free profession, prac-
;tice and propagation of religion is
guaranteed to all
persons. Under Art. 27, no person shall be compelled to pay
.any taxes for the promotion and maintenance of any
.
(
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'
4 S.C.R.
SUPREME COURT REPORTS
107
particular religious denomination. All persons have been
guaranteed the freedom to attend or not to attend religious
instructions or religious worship in certain educational
institutions (Art. 28). And, finally, no person shall be
deprived of his property save by authority of law and no
property shall be compulsorily acquired or requisitioned
except in accordance with law, as contemplated by Art.
31. These, in general terms, without going into the details
of the limitations and restrictions provided for by the
Constitution, are the fundamental rights which are available to any person irrespective of whether he is a citizen
of India or an alien or whether a natural or an artificial
person. On the other hand, certain other fundamental
rights have been guaranteed by the Constitution only to
citizens and certain disabilities imposed upon the State
with respect to citizens only.
Article 15 prohibits the
State from discriminating against any citizen on grounds
on! y of religion, race, caste, etc., or from imposing any
disability in respect of certain matters referred to in the
Article.
By Art. 16, equality of opportunity in matters
of public employment has been guaranteed to all citizens,
subject to reservations in favour of backward classes. There
is an absolute prohibition against all citizens of India from
accepting any title from any foreign State, under Art.
18(2), and no person who is not a citizen of India shall
accept any such title without the consent of the President,
while he holds any office of profit or trust under the State
{Art. 18(3)]. And then we come to Art. 19 with which
we are directly
concerned in the present controversy.
Under this Article, all citizens have been guaranteed 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;
(£) to acquire, hold and dispose of property; and
(g) to practise any profession, or to carry on any
occupation, trade or business.
Each one of these guranteed rights under els. (a) to (g)
is subject to the limitations or restrictions indicated in ck.
1963
The State
Trading CorportJtion of India
Ltd. & Others.
v.
The Commer·
cial Tax Officer,
Visakhapatnam
Mid Others.
Sinha C. /.
1963
The State
Trading Corporation of India
Ltd. & Others.
v.
The Commercial Tax Officer,
Visak. hapatnam
and Others.
-
Sinha C. f.
108
SUPREME COURT REPORTS
(1964]
(2) to ( 6) of the Article. Of the rights guaranteed to all
citizens, those under els. (a) to ( e) aforesaid are particularly apposite to natural persons whereas the freedoms
under els. ( f) and (g) aforesaid may be equally enjoyed
by natural persons or by juristic persons. Art. 29(2) provides that no citizen shall be denied admission into any
educational institution maintained by the State or Stateaid on grounds only of religion, race, caste, language or
any of them. This short resume of the fundamental rights
dealt with by Part III of the Constitution and guaranteed
either to 'any person' or to 'all citizens' leaves out of account other rights or prohibitions which concern groups,
classes or associations of persons, with which we are not
immediately concerned.
But irrespective
of whether a
person is a citizen or a non-citizen or whether he Is a
natural person or a juristic person, the right to move
the Supreme Court by appropriate proceedings for the
enforcement of their respective rights has been guaranteed
by Art. 32.
It is clear on a consideration of the provisions of Part
III of the Constitution that the makers of the Constitution
deliberately and advisedly made a clear distinction between fundamental rights available to 'any person' and
those guaranteed to 'all citizens'. In other words, :di
citizens are persons but all persons are not citizens, under
the Constitution.
The question
next arises: What is the legal significance of the term "citizen"? It has not been defined by
the Constitution. Part II of the Constitution deals with
'Citizenship', at the commencement of the Constitution.
Part II, in general terms, lays down that citizenship shall
be by birth, by descent, by migration and by registration.
Every
person who has
domicile in the . territory
of India shall be a citizen of India, if he was
born in the territory of India or either of whose parents
was so born or who has been ordinarily · resident in
the territory of India for not less than five years immediately preceding the commencement of the Constitution (Art. 5). Secondly, any person who has migrated to
the territory of India from the territory included in Pakistan shall be deemed to be a citizen of India, if he satisfied
the conditions laid down in Art. 6(a) and 6(b) (i). Any
{
f
1
-
.
4 s,c.R.
SUPREME COURT REPORTS
IO')
person who does not come within the purview of Art. 6(a)
and 6(b)(i), but who has migrated to India and has
been registered, as laid down in Art. 6(b}(ii}, shall also
be deemed to be a citizen of India. Similarly, a person of
Indian origin, residing outside India, shall be deemed to
he a citizen of India if he has been registered as such by
an accredited diplomatic or consular representative of
India in the country where he has been residing (Art. 8).
Persons coming within the purview of Arts. 5, 6 & 8, as
aforesaid, may still not be citizens of India if they have
migrated from India to Pakistan, as laid down in Art. 7,
or if they have voluntarily acquired the citizenship of any
foreign State (Art. 9). Those, in short, are the provisions
of the Constitution in Part II relating to 'Citizenship',
and they are clearly inapplicable to juristic persons.
By
Art. 11, the Constitution has vested Parliament with the
power to regulate, by legislation, the rights to citizenship.
It was in exercise of the said power that Parliament has
enacted the Citizenship Act (L VII of 1955). It is absolutely clear on a reference to the provisions of this
statute that a juristic person is outside the purview of the
Act. This is an act providing for acquisition and termination of Indian citizenship. The Constitution in Part II,
as already indicated, has determined who are Indian citizens at the commencement of the Constitution. As the
Constitution does not lay down any provisions with respect to acquisition of citizenship or its termination or other
matters relating to citizenship, after the commencement
of the Constitution, this law had to be enacted by way of
legislation supplementary to the provisions of the Constitution as summarised above. The definition of the word
"person" in s. 2(l}(f} of this Act says that the word
"person" in the Act "does not include any company or
association or body of individuals, whether incorporated
or not". Hence, all the subsequent provisions of the Act
relating to citizenship by birth (s. 3}, citizenship by descent (s. 4), citizenship by registration (s. 5), citizenship
by naturalisation ( s. 6) and citizenship by incorporation
of territory ( s. 7) have nothing to do with a juristic person.
It is thus absolutely clear that neither the provisions of
the Constitution, Part II, nor of the Citizenship Act
aforesaid, either confer the right of ·citizenship on, or
1963
The State
Trading Corporation of India
Ltd. & Others.
v.
The Commercial Tax Officer,
Visakhapatnam
and Others.
Sinha C. f.
1963
The State
Trading Corporation of India
Ltd. & Others.
...
The Commercial Tax Officer,
Visakhapatnam
and Others.
Sinha C. /.
110
SUPREME COURT REPORTS
[1%4]
recognise as citizen, any person other than a natural person.
That appears to be the legal position, on an examination
of the relevant provisions of the Constitution and the Citizenship Act. But it was contended that this Court had
expressed itself to the contrary in certain decisions,
and some of the High Courts have also taken a contrary view, which we may now proce.ed to consider. In,
what is now known as the first Sholapur case, Chiranjit
Lal Chowdhuri v. The Union of India('), Mukherjea, J.,
speaking for the majority of the Court, made the following
observations at page 898, which seem to countenance the
contention raised on behalf of the petitioners that fundamental rights are available to juristic persons also, as to
citizens :
"The fundamental rights guaranteed by the Constitution are available not merely to individual citizens
but to corporate bodies as well except where the
language of the provision or the nature of the right
compels the inference that they are applicable only to
natural persons. An incorporated company, therefore,
can come up to this Court for enforcement of its fundamental rights .... "
Though the observations quoted above would seem to
lend countenance to the contention raised on behalf
of the petitioners, they really do not determine the controversy one way or the other. In that case, a shareholder
of the Sholapur Spinning and Weaving Company made an
application under Art. 32 of the Constitution for a declac
ration that the Act impugned in that case was void, as also
for the enforcement of his fundamental rights by a writ
of mandamus against the Government and the directors of
the company, restraining them from exercising any power
under the Act. It is not necessary to refer to the details
of the controversy in that case because it is plain that it
was not the company which was seeking the enforcement
of its fundamental rights, if any, but only a shareholder.
As a matter of fact, the company opposed the petition
under Art. 32 of the Constitution. It is manifest that the
observations quoted above were purely obiter and did not
directly arise for decision of the Court.
Then we come to the second Sholapur case, reported
( 1 ) [1950] S.C.R. 869.
-
-
)
4 S.C.R.
SUPREME COURT REPORTS
111 '
as Dwarkadas Shrinivas of Bombay v. The Sholapur Spinning & Weaving Co. Ltd.('). In the first Sholapur case,
this Court had been moved under Art. 32 of the Constitution by an individual shareholder, as aforesaid, for enforcement of his alleged fundamental rights. That petition, by
majority judgment, stood dismissed. The second case
arose out of a suit instituted by a preference shareholder,
in a representative capacity on behalf of himself and other
preferential shareholders, for a declaration that the law
which had been impugned in the previous case was ultm
vires. This Court held that the law impugned had authe>-
rised, in effect, the deprivation of the property of the company within the meaning of Art. 31 of the Constitution,
without compensation, and had thus violated the fundamental rights of the company under Art. 31 (2) of the
Constitution. It will thus appear that the decision of this
Court proceeded on an examination of the provisions of
Art. 31, which is not confined to citizens only and has
reference also to the property of "any person". But there
are observations made in the course of the judgment which
would support the view propounded on behalf of the respondents. At page 694, Mahajan J., while discussing the
scope and effect of the provisions of the Constitution in
Part III, with particular reference to Arts. 19 and 31, made
the following observations :-
"In considering Article 31 it is significant to note
that it deals with private property of persons residing
in the Union of India, while Article 19 only deals with
citizens defined in Article 5 of the Constitution. It is
thus obvious that the scope of these two articles cannot be the same as they cover different fields. It cannot be seriously argued that so far as citizens are concerned, freedoms regarding enjoyment of property
have been granted in two articles of the Constitution, while the protection to property qua all
other persons has been dealt with in Article 31
alone.
If both articles covered the same ground,
it was unnecessary to have two articles on the
same subject."
These observations would appear to support the view
that Art. 31 has reference to property of "persons" and
( 1 ) [1954] S.C.R. 674.
1963
The State
Trading Corportllion of Indio
Ltd. & Others.
v.
The Commercial Tax Officer,
V isak hapatnam
and Others.
Sinha C. f.
1963 -
The State
Trading Corp.a.
ration of {n.t/il!.
Ltd. lit Others.
v.
The Commerrial Tax Officer,
Visal(hapatnam
and Others.
Sinha C. f.
112
SUPREME COURT REPORTS
[1%4]
Art. 19 deals with fundamental Fights. of "citizens" as
described in Part II of the Constitution.
Bose J., in the course of his judgment, at page 732 observed as follows :
"Article 19(1) (f) confers a certain fundamental
freedom on all citizens of India, namely, the freedom
to acquire, hold and dispose of property. Article 31(1)
is a sort of corollary, namely, that after the property
has been acquired it cannot be taken away save by
authority of law. Article 31 is wider than Article 19
because it applies to everyone and is not restricted to citizens. But what Article 19(1)(£) means is
that whereas a law can be passed to prevent persons who are not citizens of India from acquiring and
holding property in this country no such restriction can be placed on citizens.
But in the absence of such a law non-citizens can also acquire
property in ~ndia and if they do then they cannot be
deprived of it any more than citizens, save by authority of law."
But it has got to be said that those observations, though
they may appear to support the contention raised on behalf of the respondents, were not made directly with
reference to the question now before us, namely, whether
a corporation could claim the status of a citizen. That
question did not arise in that case also because the company, as such, was not seeking any relief. Even if the
company were interested in seeking relief under Art. 31
of the Constitution, it could do so without having the
status of a citizen.
·
In the case of The Bengal Immunity Company Limited v. The State of Bihar,(') the appellant company had
moved the High Court under Art. 226 of the Constitution for certain reliefs against the provisions of the Bihar
Sales Tax Act, but this Court (per S.R. Das, Acting C.f. at
page 618 and per Venkatarama Ayyar f. at pages 765-766)
left the question open and granted relief to the company
without deciding that question. This case only serves the
purpose of showing that the question now before us was
still an open one and that this Court had not given its
( 1 ) [1955] 2 S.C.R, 603.
(
4 S.C.R.
SUPREME COURT REPORTS
113
.considered judgment on the issue now before us.
lt is, therefore, not necessary to refer to certain decisions of the Madras, Bombay and Calcutta High Courts
as they cannot be decisive one way or the other in the absence of a clear decision of this Court. We have, therefore,
to examine the legal position afresh on the footing that it is
still an open question.
On an examination of the relevant provisions of the
Constitution and the Citizenship Act aforesaid, we have
as already indicated, reached the conclusion that they do
not contemplate a corporation as a citizen. But Mr. Setalvad, appearing on behalf of the petitioners, contended that
Part II of the Constitution relating to citizenship is
not relevant for our purposes because it does not define
"'a citizen" nor does it deal with the totality of "citizenship".
It was further submitted that the same is the
position with reference to the provisions of the Citi-
"Zenship Act.
It is common ground, therefore, that the
constitutioml and the statutory
provisions
discussed
above have no reference to juristic persons. But even so,
it was contended, we have to review the legal position in
the light of the pre-existing law, i.e., the Common Law,
which it was claimed, was preserved by Art. 372 of the
Constitution. In this connection, reference was made to
Halsbury's Laws of England, Vol. 6, 3rd Edition, pages
113-114, para 235, which lays down that, on incorporation, a company is a legal entity the nationality or domicile of which is determined by its place of registration.
Reference was also made to Vol. 9 of Halsbury's Laws of
England, page 19, paragraphs 29-30, which say that
the concept of nationality is applicable to corporations
and it depends upon the country of its incorporation.
A corporation incorporated in England has a British nationality, irrespective of the nationality of its members.
So far as domicile is concerned, the place of incorporation
fixes its domicile, which clings to it throughout its existence. In this connection, reference was made to the case
of fanS'On v. Driefontain Consolidated Mines(') for the
proposition that a company may be regarded as a national
of the country where it was incorporated, notwithstanding
( 1 ) [1902] AC. 484, 497, 501, 505.
1963
The State
Trading Corporation of India
Ltd. & Others.
v.
The Commercial Tax Officer,
V isak hapatnam
and Others.
Sinha C. /.
1963
The State
Trading Corporation of India
Ltd. & Others.
r. '
The Commer:
cial Tax Officer,
Visakhapatnam
and Others.
Sinha C. /.
114
SUPREME COURT REPORTS
[1%4)
the nationality of its shareholders.
It is not necessary
to refer to other decisions, because the position is absolutely clear that a corporation may claim a nationality
which ordinarily is determined by the place of its incorporation.
But the question still remains whether
"nationality" and "citizenship" are interchangeable terms.
"Nationality" has reference to the jural relationship
which may arise for consideration under international
law. On the other hand "citizenship" has reference to
the jural relationship under municipal law. In other
words, nationality determines the civil rights of a person, natural or artificial, particularly with reference to
international law, whereas citizenship is intimately connected with civic rights under municipal law.
Hence,
all .citizens are nationals of a particular State, but all
nationals may not be citizens of the State. In other
words, citizens are those persons who have full political
rights as distinguished from nationals, who may not enjoy full political rights and are still domiciled in that
country ( vide P. Weis-Nationality and Statelessness in
International .Law, pp. 4-6; and Oppenheim's International Law, Vol. 1, pp. 642, 644).
In our opinion, it is not correct to say, as was
contended on behalf of the petitioners, that the expression
"citizen" in Art. 5 is not as wide as the same expression
used in Art. 19 of the Constitution.