LexTATA ENGINEERING AND LOCOMOTIVE CO. LTD. versus STATE OF BIHAR AND OTHERS
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'j 6 S.C.R. SUPREME COURT REPORTS 885 TATA ENGINEERING AND LOCOMOTIVE CO. LTD. .,, STATE OF BIHAR AND OTHERS (P. B. GAJENDRAGADKAR, C.J .. K. N. WANCHOO, J. c. SHAH, N. RAJAGOPALA AYYANGAR ANDS. M. S!KRI JJ.) Corporation-Position of-Whether citizen-Whether petition under Art. 32 by Corporation claiminR a fundamental right guarante1d under Art. 19 competent-Doctrine of piercing the corporate veil -Exceptions to rule that Corpor.;J,',_-';i has a separate legal ~ntity Levy of Sales Tax challenged-Constitution of India, Arts. 19. 32 and 286(1} (a). The petitioners were ordered to pay salC!·tu. on account of certain transactions made by them in the State of Bihar. Their contention wu that th~ sales in question took place outside the state and hence the1 were entitled to the protection of Art. 286(l)(a). Their plea was re- jected by the Sale3-tax authoritie3 and it was held that Art. 286(1 )(a) di'd not apply to them. The peti1ioners challenged the orders of tho sales-tax authorities by writ petitions filed by them under Art. 32 of tho Constitution. A preliminary objection was taken on behalf of respondents that the petitions were not competent as those were filed by corporations or companies and -the provisions of Art. 19 did not apply to them u cor- porations were not citizens. Dismissing the writ petitions. H </J.-The petitions under Art. 32 were incompetent although in each of them one or two Of the share-holders of the petitioning compa- nies or corporations had also joined. Article 19 guarantees ri&hts to citizens as such and associations cannot Jay claim to the fundamental rights guaranteed by that Article solely on the basis of their bein& rm aggregation of citizens. Once a company or a corporation is formed. the business which is carrictl on by the said company or corporation is the business of the company or corporation and is not the busin .. of the citizens ·who got th: company or corporation formed or incor- porated and the rights of the incorporated body must be judged on that footing and cannot be judged on the assumption that they are the right& attributable to the business of individual citizens. The petitioners cannot be heard to say that their share-holders should be allowed to file tho present petitions on the grountt that in substance. the corporatiom and companies arc nothing more than association of shue-holOen and members thereof. If their contention is accepted, it would really mean that what the corporations or companies cannot achieve directly, they can achieve indirectly by relying upon the doctrine of lifting the "feil. If the corporations and companies are not citizens, (t means diat the Constitution intended that they should not aet tho l;cneftt of Art. 1'. ' 1,64 l'druary 2J 1961 Tata Engineering v. Stace 01 Biha1· 886 SUPREME COURT REPORTS The position of a corporation is that it is in law equal to a natural person and has a legal entity of its own. That entity is entirely sepa- rate from that of its shareholders. It bears its own name and has a seal of its own. Its assets are separate and distinct from those of its members. It can sue and be sueCI exclusively for its own purpose. Its creditors cannot obtain satisfaction from the assets of its members. The liability of the m~mbers or share holders is limited to the capital invested by them. The creditors of the members have no right to tho assets of the corporation. HoWever. there are some exceptions to the rule that the corporation or a company has a juristic or legal entity and the doctrine of lifting the veil of a corporation and examining its faco in substance has been applied in many cases but the same docs not apply in the present case. State of Trading Corporation of India Ltd. v. The Commercial TaE Officer & Ors. A.l.R. 1963 S.C. 1811, Smt. Ujjam Bui v. Stule of Uttar Pradesh. [1963] I S.C.R. 778, Inda-China Steam Navigation Co. Ltd. v. Additional Collector of Customr. [1964] 6 S.C.R. 594, Kailash Nath v. State of UP. A.1.R. 1951 S.C. 790, Thakur .Amar .Singhji v. State of Rajasthan, fl955l 2 S.C.R. 303. Mis. Mohanlal HarROVind v. State of Madhya Pradesh. [1955] 2 S.C.R. 509. Y. Mahahoob ShuiO v. Mysore State Transport Authority. [1960] 2 S.C.R. 146, J. V. Gokar & Co. (f) Ltd. v. Assistant Colle.ctor of Salts-tax (inspection), [1960] 2 S.C.R. 852, Universal Imports Agency v. Chit/ Controller of Imports &: Exports [1960] 1 S.C.R. 305. Stalt Trad
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