Case: The Tata Engineering &amp; Locomotive Co. Ltd. &amp; Others Vs. The State of Bihar &amp; Others

their fundamental rights are infringed and it is a truism to say that this Court as the guardian of the fundamental rights of the citizens will always attempt to safeguard the said fundamental rights but having regard to the decision of this Court in the State Trading Corporation of India Ltd., AIR 1963 SC 1811 we do not see how we can legitimately entertain the petitioners plea in the present petitions, because if their plea was upheld, it would really mean that what the corporations or the companies cannot achieve directly, can be achieved by them indirectly by relying upon the doctrine of lifting the veil. If he corporations and companies are not citizens, it means that the Constitution intended that they should not get the benefit of Art. 19. It is no doubt suggested by the petitioners that though Art. 19 is confined to citizens, the Constitution-makers may have thought that in dealing with the claims of corporations to invoke the provisions of Art, 19, Courts would act upon the doctrine of lifting the veil and would not treat the attempts of the corporations in that behalf as falling outside Art, 19. We do not think this argument is well-founded. The effect of confining Art. 19 to citizens as distinguished from persons to whom other Articles like 14 apply, clearly must be that it is only citizens to whom the rights under Art. 19 are guaranteed. If the legislature intends that the benefit of Art. 19 should be made available to the corporations, it would not be difficult for it to adopt a proper measure in that behalf by enlarging the definition of citizen prescribed by the Citizenship Act passed by the Parliament by virtue of the powers conferred on it by Articles 10 and 11. On the other hand, the fact that the Parliament has not chosen to make any such provision indicates that it was not the intention of the Parliament to treat corporations as citizens. Therefore, it seems to us that in view of the decision of this Court in the case of the State Trading Corporation of India Ltd., AIR 1963 SC 1811 the petitioners cannot be heard to say that their shareholders should be allowed to file the present petitions on the ground that, in substance, the corporations and companies are nothing more than associations of shareholders and members thereof. In our opinion, therefore, the argument that in the present petition we would be justified in lifting the veil cannot be sustained.29. Mr. Pakhivala sought to draw a distinction between the right of a citizen to carry on trade or business which is contemplated by Art. 19 (1) (g) from his right to form associations or unions contemplated by Art. 19 (1) (c). He argued that Art, 19 (1) (c) enables the citizens to choose their instruments or agents for carrying on the business which it is their fundamental right to carry on. If citizens decide to set up a corporation or a company as their agent for the purpose of carrying on trade or business, that is a right which is guaranteed to them under Art, 19 (1) (c). Basing himself on this distinction between the two rights guaranteed by Art, 19(1) (c). Basing himself on this distinction between the two rights guaranteed by Art. 19 (1) (g) and (c) respectively, Mr. Palkhivala somewhat ingeniously contended that we should not hesitate to lift the veil, because by looking at the substance of the matter, we would really be giving effect to the two fundamental rights guaranteed by Art, 19 (1). We are not impressed by this argument either. The fundamental right to form an association cannot in this manner be coupled with the fundamental right to carry on any trade or business. As has been held by this Court in All India Bank Employees Association v. National Industrial Tribunal (Bank Disputes) Bombay, 1962-3 SCR 269 : (AIR 1962 SC 171 ) the argument which is thus attractively presented before us overlooks the fact that Art. 19, as contrasted with certain other articles like Arts. 26, 29 and 30 guarantees rights to the citizens as such, and associations cannot lay claim to the fundamental rights guaranteed by that Article solely on the basis of their being an congregation of citizens, that is to say, the right of the citizens composing the body. The respective rights guaranteed by Art, 19 (1) cannot be combined as suggested by Mr. Palkhivala, but must be asserted each in its own way and within its own limits; the sweep of the several rights is no doubt wide, but the combination of any of those two rights would not justify a claim such as is made by Mr. Palkhivala in the present petitions. As soon as citizens form a company, the right guaranteed to them by Art. 19 (1) (c) has been exercised and no restraint has been placed on that right and no infringement of trial right is made. Once a company or a corporation is formed, the business which is carried on by the said company or corporation is the business of the company or corporation and is not the business of the citizens who get the company or corporation formed or incorporated, and the rights of the incorporated body must be judged on that footing and cannot be judged on the assumption that they are the rights attributable to the business of individual citizens. Therefore we are satisfied that the argument based on the distinction between the two rights guaranteed by Art. 19(1) (c) and (g) and the effect of their combination cannot take the petitioners case very far when they seek to invoke the doctrine that the veil of the corporation should be lifted. That is why we have come to the conclusion that the petitions filed by the petitioners are incompetent under Art. 32, even though in each of these petitions one or two of the shareholders of the petitioning companies or corporation have joined.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]We do not think we can answer this question in the affirmative. No doubt, the complaint made by the petitioners is that their fundamental rights are infringed and it is a truism to say that this Court as the guardian of the fundamental rights of the citizens will always attempt to safeguard the said fundamental rights but having regard to the decision of this Court in the State Trading Corporation of India Ltd., AIR 1963 SC 1811   we do not see how we can legitimately entertain the petitioners plea in the present petitions, because if their plea was upheld, it would really mean that what the corporations or the companies cannot achieve directly, can be achieved by them indirectly by relying upon the doctrine of lifting the veil. If he corporations and companies are not citizens, it means that the Constitution intended that they should not get the benefit of Art. 19. It is no doubt suggested by the petitioners that though Art. 19 is confined to citizens, the Constitution-makers may have thought that in dealing with the claims of corporations to invoke the provisions of Art, 19, Courts would act upon the doctrine of lifting the veil and would not treat the attempts of the corporations in that behalf as falling outside Art, 19. We do not think this argument is well-founded. The effect of confining Art. 19 to citizens as distinguished from persons to whom other Articles like 14 apply, clearly must be that it is only citizens to whom the rights under Art. 19 are guaranteed. If the legislature intends that the benefit of Art. 19 should be made available to the corporations, it would not be difficult for it to adopt a proper measure in that behalf by enlarging the definition of citizen prescribed by the Citizenship Act passed by the Parliament by virtue of the powers conferred on it by Articles 10 and 11. On the other hand, the fact that the Parliament has not chosen to make any such provision indicates that it was not the intention of the Parliament to treat corporations as citizens. Therefore, it seems to us that in view of the decision of this Court in the case of the State Trading Corporation of India Ltd., AIR 1963 SC 1811   the petitioners cannot be heard to say that their shareholders should be allowed to file the present petitions on the ground that, in substance, the corporations and companies are nothing more than associations of shareholders and members thereof. In our opinion, therefore, the argument that in the present petition we would be justified in lifting the veil cannot beare not impressed by this argument either. The fundamental right to form an association cannot in this manner be coupled with the fundamental right to carry on any trade or business. As has been held by this Court in All India Bank Employees Association v. National Industrial Tribunal (Bank Disputes) Bombay, 1962-3 SCR 269   : (AIR 1962 SC 171  ) the argument which is thus attractively presented before us overlooks the fact that Art. 19, as contrasted with certain other articles like Arts. 26, 29 and 30 guarantees rights to the citizens as such, and associations cannot lay claim to the fundamental rights guaranteed by that Article solely on the basis of their being an congregation of citizens, that is to say, the right of the citizens composing the body. The respective rights guaranteed by Art, 19 (1) cannot be combined as suggested by Mr. Palkhivala, but must be asserted each in its own way and within its own limits; the sweep of the several rights is no doubt wide, but the combination of any of those two rights would not justify a claim such as is made by Mr. Palkhivala in the present petitions. As soon as citizens form a company, the right guaranteed to them by Art. 19 (1) (c) has been exercised and no restraint has been placed on that right and no infringement of trial right is made. Once a company or a corporation is formed, the business which is carried on by the said company or corporation is the business of the company or corporation and is not the business of the citizens who get the company or corporation formed or incorporated, and the rights of the incorporated body must be judged on that footing and cannot be judged on the assumption that they are the rights attributable to the business of individual citizens. Therefore we are satisfied that the argument based on the distinction between the two rights guaranteed by Art. 19(1) (c) and (g) and the effect of their combination cannot take the petitioners case very far when they seek to invoke the doctrine that the veil of the corporation should be lifted. That is why we have come to the conclusion that the petitions filed by the petitioners are incompetent under Art. 32, even though in each of these petitions one or two of the shareholders of the petitioning companies or corporation have joined.