A company is a separate legal entity not withstanding the fact that there was only one governing director.The separate legal entity enabled a director,representing the firm,to enter into a contract of employment with himself in his individual capacity.one of the characteristics of a company is that it is an incorporated body of persons.It is constituted into a distinct and independent person in law and it is endowed with special rights and privileges.It is not like a partnership firm or a family but,the mere aggregate of its members.It is in point of law a person distinct from its members.If the members of an incorporated organisation are collected together ,we do not see the company is intangible;It exist only in contemplation of law which has no physical body.
The identity of the firm does not change with any change in the management or pattern of shareholding.The liability of the company to pay electricity arrears belonged to the period when the firm was in hands of other persons .Separate legal personality of the organisation is the important part in the Company’s Law.
Company a person for purposes of Consumer Protection Act and money lender Act
The definition of person in Section 2(1) of the consumer protection Act(CPA) would include a company by reading it with the section 3(42) of the General clauses Act.The legislative intend on the point is evidence from section 25 and section 27 of the Consumer Protection Act.the penalty provision in section 27 of the Consumer Protection Act as applicable to a company has to be taken applicable to those who are officially responsible for the conduct of the firm’s affairs.
Companies registered under the companies Act,(Companies Act 1956 or 2013),would come within the definition of the money lender under section 2(7) of the Kerala Money-lenders Act,and therefore,be bound by all the other provisions of the Act applicable to a money lender including liability to take the licence.The court found that certain institutions which were covered by the definition of persons within the meaning of that word under the General Clauses Act,1897 were excluded under the Act,but the companies were not excluded.
Compliant by a Company for Dishonor of cheque
Where a company was the recipient of the cheque which was dishonored ,it was held that the company was competent to make a complaint under Section 138 of the Negotiable Instruments Act.The money represented by the cheque was the company’s money and not that its functionaries and therefore the firm alone could file a compliant .In another similar case the complaint was filed by the manager of the company who was duly authorized for the purpose and therefore the compliant was competent.
The court noted that the definition of the company in explanation (a) to section 141 of the Negotiable Instruments Act,1881 shows that any body corporate including a firm has to be represented by some human agency in preferring a compliant before the court .The dictates of common sense,practical wisdom,prudence and experience impel the court in such a situation to allow company to present a complaint before the court represented by some persons connected with the affairs of the firm.The person connected with the affairs of the company or the firm,in the normal run of things ,may either be its manager,partner,managing partners or director or any other person authorized by a company.
Company’s right to sue for defamation and other wrongs
Incorporation brings into existence a legal person which develops into its own separate existence as a business or enterprise entities . The publication of any statement which disparages its business,defames the company at the same time.Hence the company is entitled to sue in damages for libel or slander as the case may be.In case of a firm or a trading corporation ,words calculated to reflect upon it in the or way of its property or trade or business and to injure it therein,are actionable without proof of special damage ;but if they refer only to the personal character or reputation of its officers ,then the proof of special damage is necessary.A company has right to seek damages where a defamatory material published about it affects its business. Preparation of video cassettes by the workmen of a company showing their struggle against the companies management was held to be not actionable unless it was shown that the cassette would be defamatory .The court did not restrain the exhibition of the cassette.
This is for the reason that the corporation personality is different and distinct from the individuals constituting it and the employees acting for it.A limited liability company ,no less than an individual,can maintain an action for slander without proof of special damage,where the words are calculated to injure its reputation in relation to its trade or business.It can be defamatory to allege that directors allowed the firm to continue trading at a time when it ought to have been facing insolvency.
Section 34 of 1956 Act lays stress upon the fact that the body corporate which emerges from registration shall have perpetual succession.Section 9 of the 2013 Act also states the same.The element of perpetual succession prevents the dislocation of the company by the death,bankruptcy,or lunacy of any of its members.If the partner of partnership firm dies or becomes bankrupt,the firm is dissolved,and if the surviving or continuing partners go on with the business they in law,constitute a new firm.The advantage of incorporation is that the organisation or a firm never dies.It has perpetual succession and remains in existence however often its members change,until it is dissolved by liquidation.
Right to privacy
A company or any of its body corporate ,does not enjoy a right or privacy either under the broadcasting Act 1996 or in the European convention on human rights.The court of appeal held that a company can complain about the unwarranted infringement of its privacy under the Broadcasting Act,1996.The firm have activities of a private nature which need protection from unwarranted intrusion of registration.if the firm were not protected under the Act from such activities ,it would leave a company at a disadvantages under a legislation which is designed to encourage and achieve proper standards of conduct.
In industrial tribunal proceedings the tribunal enjoys discretion wherever considered appropriate ,to protect the identity of the firm which was a defendant to a compliant.Orders restricting the publicity are not confined to protection of natural persons.It may be appropriate to make such an order in the business’s name if revealed would serve to identity the individual respondent.
Capacity for Suits:
Companies incorporated under the Act are capable of suing and been sued in their corporate names.This feature considerably facilitates legal proceedings by and against the company.The organisation’s corporate identity is not affected by any change in shareholding or membership.A suit filed by a organisation is not to be dismissed only because the ownership of the particular firm changed and it has resulted in change of name.The court also said that the change in membership of a company is no ground for dismissal of a suit bending against it.A company was not allowed to claim compensation for stress and inconvenience caused to its business where that stress and inconvenience had been suffered by the directors and employees personally.