Legal interpretations from Ayodhya Verdict Part 6
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Jay Shree Ram!
These are some notes from Ayodhya
Verdict regarding legal interpretations of certain statutory provisions:
The most widely recognised artificial
legal person is the corporation in Company law.
The idea of treating a collective of
individuals as a single unit for the purposes of identification in law is as
old as human civilisation itself.
The jurisprudential concept of
treating a collective of entrepreneurs as a single unit for the purposes of
legal recognition was already well established by the time the first business
corporations came into existence and did not warrant examination by the courts.
The legal personality of the
corporation was originally granted by a positive act of the government. In
later years, as incorporation became the preferred method of doing business,
corporate personality was conferred by general statutes of incorporation which
permitted any person to incorporate a company subject to the satisfaction of
certain statutory conditions.
The choice of corpus (i.e. the
object) on which legal personality is conferred is not based on strict legal
principle but is an outcome of historical circumstances, legal necessity and
convenience. Historical circumstances require courts to adjudicate upon unique
factual situations.
Objects represent certain interests
and confer certain benefits. In the case of some objects, the benefits will be
material. The benefit may extend beyond that which is purely material. An
artificial legal person, whether a ship or a company cannot in fact enjoy these
benefits. The ultimate beneficiaries of such benefits are natural persons.
However, requiring a court, in every case, to make the distinction between the
artificial legal person and the natural persons deriving benefit from such
artificial person is inordinately taxing, particularly when coupled with the
increasing use of corporations and ships. This leads us to the third rationale
for conferring legal personality - convenience. The conferral of legal
personality on objects has historically been a powerful tool of policy to
ensure the practical adjudication of claims. By creating a legal framework, it
equipped the court with the tools necessary to adjudicate upon an emerging
class of disputes. It saved considerable judicial effort and time by allowing
judges to obviate the distinction between artificial and natural persons where
it was not relevant. The conferral of legal personality was thus a tool of
legal necessity and convenience. Legal personality does not denote human nature
or human attributes. Legal personality is a recognition of certain rights and
duties in law. An object, even after the conferral of legal personality, cannot
express any will but it represents certain interests, rights, or benefits
accruing to natural persons. Courts confer legal personality to overcome
shortcomings perceived in the law and to facilitate practical adjudication. By
ascribing rights and duties to artificial legal persons (imbued with a legal
personality), the law tackles and fulfils both necessity and convenience. By
extension, courts ascribe legal personality to effectively adjudicate upon the
claims of natural persons deriving benefits from or affected by the corpus upon
which legal personality is conferred. The corollary of this principle is that
the rights ascribed by courts to the corpus are limited to those necessary to
address the existing shortcomings in the law and efficiently adjudicate claims.
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