LEGAL PERSON AND DETERMINATION OF PERSONALITY OF A GOVERNMENT DEPARTMENT

LEGAL PERSON AND DETERMINATION OF PERSONALITY OF A GOVERNMENT DEPARTMENT <!--[if gte mso 10]> LEGAL PERSON AND DETERMINATION OF PERSONALITY OF A GOVERNMENT DEPARTMENT By Muhammad Zubair Abbasi, Advocate, Islamabad Even before their birth, human beings are entitled to certain rights. However, non-human beings or entities are conferred certain rights and obligations only by way of a legal fiction. Thus, through this imaginative creation of law, certain entities are regarded to have the rights and obligations of human beings. It follows that 'determination of personality of an entity is crucial, as it culminates in regarding that particular entity as a body having rights and obligations. There exists abundant case-law where it is held that a particular body or entity is not a legal person and hence its right or liability to sue or be sued is denied.1 In jurisprudential connotations, the person has been divided into two categories of natural person and legal person. The legal fiction, by which the entities or bodies other than human beings are rendered rights and obligations, is having its roots in the ancient times. Both ecclesiastic and mundane necessities played their role in the evolution of the concept of legal person. Blackstone in his book "The Laws of England" divides the corporation into ecclesiastical and lay2 and in medieval times not only the Crown but also the Pope could create corporations by grant.3 Some of the widely used connotations to the effect of person (or legal person) are juristic person, artificial person, fictitious person, moral person, legal entity, body corporate, body politic4 and corporation. The word "corporation" is derived from the Latin corpus (body), representing a "body of people", that is, a group of people having authority to operate as a single unit with a separate legal existence.5 The corporation is further divided into corporate sole and corporate aggregate. A corporation aggregate is an incorporated group of living persons ranging in number from two to more than two.6 A corporate sole, on the other hand is an incorporated series of successive persons which consists of only one member at a time. The best example of corporation aggregate is a registered company and the example of corporate sole is the office of the President.7 1. Sindh High Court in D.G, P.P.O. v. Pak Burma Traders has observed, "A suit can be filed by or against juristic persons. No suit can be filed by or against someone, who is not a person. For example, suit cannot be filed by or against a cow, a dog, a lamp post, a bicycle or a post box or even a post office. Similarly, an appeal can be filed by an aggrieved person, whether he is a party or not. But no appeal can be filed by someone, who is not a 'person', according to law..." 1991 CLC 1601 at page 1603. The leading authority on this issue is Secretary, B. & R., Government of West Pakistan and 4 others v. Fazal Ali Khan (PLD 1971 Karachi 625). 2. See Commentaries on The Laws of England, Iohn Murray, London, 1865, p. 113 3. See PLD 1990 SC 612 at page 617 4. See definition of person in Article 260 of the Constitution of Pakistan 1973. 5. Oxford Advanced Learner's Dictionary 6. The Single Member Company is a new phenomenon which can at best be regarded an exception to the age old principles of English Jurisprudence. 7. For further, details see Fitzgerald, PJ Salmond on Jurisprudence, Universal Law Publishing Co. (Pvt.) Ltd. 2002, p.308 The crucial point, in this regard, is the determination of legal personality for particular bodies or entities. In other words the query can be rephrased as "what is the criterion or test of personality?" Black's Law Dictionary defines the person as "an entity (such as a corporation) that is recognized by law as having the rights and duties of a human being. This definition purports that the core attribute of a legal person is that it is entitled to certain rights and. is liable for certain obligations or, in other words, it is regarded as a human being having rights and obligations. This attribute of having rights and obligations culminates in bestowing upon the `person' the right to invoke the jurisdiction of any court of law in case its rights are violated and conversely to stand responsible for any transgression of right or violation of law done through it or in its name. The quintessential factor in the determination of personality is the `ability to sue or to be sued in one's own name.8 The underlying idea is that a person is any being whom the law regards capable of having rights and duties. Any being that is so capable is a person, whether a human being or not, and any being that is not so capable is not a person, even though he be a human being. It is only in this respect that persons possess juridical significance, and this is the exclusive point of view from which personality receives legal recognition.9 8. Examples can be a slave in a system, which regards them as incapable of either rights or liabilities or the foreigners in a system, which does not provide them the rights or liabilities to sue or be sued in a court of law. 9. Fitzgerald, PJ Salmond on Jurisprudence, Universal Law Publishing Co. (Pvt.) Ltd. 2002, p.299. Historical Nexus The concept of corporations originated with the Romans and Greeks. The Greeks, as early as the time of Solon (638-558 B.C), permitted the incorporation of associations, inter alia, for business subject to the condition that their purposes should not be contrary to the general law of the land. The Romans, at an earlier date, recognised corporations which were introduced by Numa Pompilius, the second legendary King of Rome (715-672 B.C). In Briton after its conquest, the Romans established corporations and subsequently such bodies were established and recognised by English Law for various purposes; municipal, charitable, and purely private on principles adopted basically from the Roman or Civil Law.10 At the end of sixteenth century, the Crown used to give Charter for the formation of trading companies. Such Charters were issued to companies, which included East India Company, Levant Company, the Hudson's Bay Company and South Sea Company. Later the Parliament also obtained the right to create a company by passing a special Act. This method of creation of the corporation was both expensive and dilatory. Therefore it was not favorable for the trade which was flourishing with the expansion of the British Empire. Consequently, a large number of partnerships came into existence, which were partnerships by name but corporations in soul. A few trustees were to administer the management of the affairs of the partnership. The non-existence of any regulations or control by the government left the way open for the swindlers to extort money in the name of some business concern or partnership. The British Parliament in order to check this evil enacted the Bubbles Act, 1720 which totally prohibited the formation of companies thus closing the door even for legitimate companies to be formed and to carry on their business. This Act of 1720 was repealed after a century in 1825. It was the Joint Stock Companies Act, 1844 which facilitated the registration of companies, however the right to trade with limited liability was granted by Limited Liability Act, 1855.11 10. See also PLD 1990 SC 612 11. Avtar Singh Company Law by Avtar Singh, Eastern Book Company, Luchnow, 1999, p. 1 The concept that a company and its members held separate and distinguishable personalities was established at the end of the 19`" century in the famous case of Salomon v. Salomon & Co. It was held that a company is a "legal person" or "legal entity" separate from, and capable of surviving beyond the lives of its members.12 As a result of this decision, the personal property of shareholders of the company was exempted from any liability, which might arise as a result of bankruptcy or insolvency of the company, which was held to be a `separate entity'. The members or shareholders were liable only to the extent of their share. This was a landmark ruling, and although its impact may not have been appreciated at the time, it opened the doors for the formation of limited liability companies not only at national, but also at transnational levels. The resulting worldwide boom in the commercial and corporate sectors was well beyond imagination in 1897. 12. Saloman v. Saloman & Co, [1897] AC 22, in Company Law by Avtar Singh Supra note, p. 2 State as a Legal Person Political thinkers define State as an entity with four particular attributes: (i) Population; (2) Area; (3) Government; and (4) Sovereignty. The question whether the State of Pakistan is a (legal) person or not is explicitly answered by Article 174 of the Constitution of Islamic Republic of Pakistan, 1973.13 The Article 174 states as under: "The Federation may sue and be sued by the name of Pakistan and a Province may sue and be sued by the name of the Province." In the same way section 79 of the Code of Civil Procedure (Act V of 1908) provides that in a suit by or against the Government the authority to be named as plaintiff or defendant, as the case may be, shall be Pakistan in case of suit by or against the Federal Government and the Province concerned in case of a suit by or against a Provincial Government. The provisions of both the above-mentioned legislations clearly and unequivocally devolve upon the State and the Government, whether Federal or Provincial, the status of legal person, which can sue and can be sued by its name.14 The proposition to be considered after this preliminary discussion is that why and why not a Government Department be regarded as a legal person. The argument for regarding the Government Department as a legal person, without any statutory authority,15 can be its being part of the Government which is a legal person according to the Constitution as discussed above. Accordingly, the argument can be built that since a department of Government is only a smaller segment of the Government which is a legal person, therefore, the department of Government should also be regarded as a legal person. 13. The principle incorporated in this Article is not in compliance with the principle of English jurisprudence, which does not regard the State as a legal person, in fact, it is the Crown in his capacity as a body politic (or corporate sole) who is capable to sue and be sued. For details see Fitzgerald, PJ Salmond on Jurisprudence, Universal Law Publishing Co. (Pvt.) Ltd. 2002, p.321-325 14. In criminal cases, where offence is committed against the society, it is the State, which is the party against the accused, and the case is cited accordingly. 15. The statute which creates a particular body, in most cases, specifically confers the status of legal personality upon it. For example, section 3 of Pakistan Telecommunication (Re-organization) Act, 1996 uses the expressions like `Pakistan Telecommunication Authority shall be a body corporate, having perpetual succession' and `have power...to sue and be sued by its name'. The same expressions have also been used in section 3 of the National Highway Authority Act, 1991.