An incorporated company is a juristic person having certain rights and corresponding duties in the eyes of laws. 1 That these incorporated persons are entitled to the protection of those fundamental rights in the Constitution which are as wide as to cover all ‘persons’, too is a well-settled proposition in law.2 However, the question that arises is whether a foreign juristic person has the same rights under Part III of the Constitution as a company incorporated in India which are enforceable under Articles 32 and 226.
At the outset it is important to note the restricted nature of rights available to such companies. For instance, the courts have repeatedly held that the petitioners cannot invoke the rights under Article 19 which are exclusively for ‘citizens’. In the case of Indo-China Steam Navigation Co. Ltd. vs. Jasjit Singh, Additional Collector of Customs 5, the Supreme Court of India clearly held that a company which was both- a company and a foreign company- is not entitled to claim the benefits of Article 19(1)(g) of the Constitution of India. Thus, the grounds of petitioning the courts are confined to certain provisions of the Constitution only.
Whether Articles 32 and 226 can be extended to foreign companies?
The right of a foreign national (i.e. a natural person) to file a writ petition to enforce the fundamental rights guaranteed to him by the Constitution of India, was upheld by the apex Court in the case of Louis De Raedt vs. Union of India 3 wherein, a petition was filed to enforce Article 21 of the Constitution. However, the law is far from settled in cases involving the rights of a foreign artificial person.
In Hongkong and Shanghai Banking Corporation vs. Union of India 4, the Calcutta High Court interpreted Article 226 to mean that it “does not lay down any eligibility criteria based on citizenship of the seeker of the Constitutional remedy” and that “there is no specific bar in the Constitution that prevents a Corporation incorporated outside the country to maintain a petition under Article 226 of the Constitution of India.” Therefore, the only requirement for invoking Article 226 is the breach of any legal right by any party falling under the definition of State under Article 12 of the Constitution. The same reasoning can be extended to cover the “parallel” provision asunder Article 32 which confers the same power on the Supreme Court provided the violation is of a fundamental right and not merely a legal right. Thus, a foreign corporation can file a writ petition under Art.226 as well as Art. 32.
Whether Article 14 can be invoked by foreign companies?
Article 14 is one such right which is available to all persons- foreign or domestic. Taking note of the same, the Calcutta High Court remarked the following in Erbis Engineering Co. Ltd. vs. State of West Bengal & Ors:
“…the word “person” includes “any company”. Thus the definition of “person” is wide enough to encompass a foreign company which has been permitted to establish business in the country by the authorities”
In interpreting so, the Court relied primarily on two sources- firstly, Article 367 and secondly, intent of the framers of the Constitution. While relying on the former, it noted that the definition of the word ‘person’ under the General Clauses Act, 1897 can be resorted to, under Article 367, for the purposes of interpretation. Pursuant to the same, under S. 3(42) ‘person’ is inclusive of a company. In using the latter, it noted the following:
“This distinction between a citizen and a ‘person’ was engrafted in our Constitution by its framers with a specific intent- to grant certain fundamental rights to its citizens and to grant certain rights to a person.”
Therefore, on these grounds, a corporation is entitled to the protection of Article 14 and thus capable of enforcing the same by moving a writ petition under Article 32 of the Constitution.
The fall back exception to invoking Art. 14 for foreign companies
Even though foreign companies have been afforded protection under Art. 14, innumerable petitions by such companies have failed to yield the desired results, leading to the general misconception as to the application of Fundamental Rights to these companies.
In cases like Cosmo Tours and Travels & Others vs. Union of India and others 6 and the Power Measurement Ltd. vs. U.P. power corporation ltd 7, the incorporated entities tried invoking Article 14 to get the rights under Article 19. This primarily means that the companies tried to use Article 14 as a means to enforce the rights under Article 19 of the Constitution of India. This attempt has been criticized by the Courts leading to the dismissal of several petitions seeking to do the same.
To illustrate, suppose the Union government passes a law prohibiting foreign companies from engaging in a certain sector in India citing security or strategic reasons; the companies so affected can allege a violation of Art. 14 as they have been discriminated as against their Indian counterparts. However, the said plea cannot sustain itself in a court of law given the aforementioned fall-back principle as they have been discriminated from pursuing their commercial interests in the country, the freedom of which has been denied to them under Art. 19 of the Constitution. Therefore, in this case, the fall- back principle allows the government to maintain economic sovereignty over the sector concerned.
Conclusion
Therefore, to summarize, a foreign juristic person can file a petition under Articles 226 and 32 to enforce the fundamental rights which are available to all citizens. However, the same cannot be used to invoke the rights that are denied to it under Article 19. Notwithstanding the principles aforementioned, the deafening silence of the Supreme Court on this matter is intriguing. The fall-back exception, given by the Delhi High Court and reiterated by the Allahabad High Court, needs an authoritative backing of the apex court given the interest evinced by foreign companies in India.
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1) R. W. M. DIAS. (Second edition of Dias and Hughes on Jurisprudence) London: Butterworths. 1964. Lxxii and 533 and 22
2) The State Trading Corporation of India Ltd And Ors Vs The Commercial Tax Officer, Vishakhapatnam 1963 AIR 1811, 1964 SCR (4) 89.
3) Louis De Raedt vs. Union of India 1991 SCR (3) 149
4) https://indiankanoon.org/doc/1648745/
5) Indo-China Steam Navigation Co. Ltd. vs. Jasjit Singh, Additional Collector of Customs AIR 1964 SC 1140
6) https://indiankanoon.org/doc/20777720/
7) Power Measurement Ltd. vs. U.P. Power Corporation Ltd., 2003 (2) AWC 1642
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This article is written by Aneesh Johnson and Anurag Shah of Christ University, Bangalore.
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