Legal Person versus Natural Person

Think of a cricket club. Its players are human beings: they bat, marry, vote and grow old. The club never holds a bat, yet it owns the ground, employs the coach, owes money for the kit, can be fined by the board and wins the trophy. Players come and go; the club goes on for a century, and when it signs a contract a human secretary holds the pen. The players are natural persons; the club, if incorporated, is a legal person. Both carry rights and duties, but they begin, act, end and are punished differently. Note 33 explains legal personality in general; this note sets the two kinds side by side.

1. The Two Kinds of Person

For analytical jurists personality is a matter of capacity, not nature. Salmond: 'So far as legal theory is concerned, a person is any being whom the law regards as capable of rights and duties. Any being that is so capable is a person, whether a human being or not, and no being that is not so capable is a person, even though he be a man.' Natural persons are human beings whose personality the law recognises. Legal persons, also called juristic, artificial or fictitious persons, are entities on which the law confers personality: corporations, institutions, funds dedicated to purposes and, in Hindu law, idols. Holland called them natural and artificial persons.

Statutes often use person more widely. Under s.3(42) of the General Clauses Act, 1897, person includes any company or association or body of individuals, whether incorporated or not, and the criminal law had a similar definition (formerly Section 11 IPC). Such definitions decide who a statute covers; they do not make an unincorporated association a juristic person.

2. Humans Who Were Not Persons

Salmond's words 'even though he be a man' reflect history. In Roman law a slave was a thing (res), unable to hold property or sue. In medieval English law a man who entered a religious order or was attainted of felony suffered civil death: he was treated as dead in law. Natural personality is thus a status the law grants to human beings; modern law grants it to every human being without exception.

3. The Edges of Natural Personality

The unborn child. Under s.20 of the Hindu Succession Act, 1956, a child in the womb at the intestate's death who is later born alive inherits as if born before the death. Under s.13 of the Transfer of Property Act, 1882, property may be transferred for the benefit of a person not in existence at the date of transfer, subject to a prior interest created by the same transfer, if the interest extends to the whole remaining interest of the transferor. Causing miscarriage is an offence (formerly Section 312 IPC). These protections depend on live birth or protect the public interest; they do not make the foetus a full person.

The dead. Personality ends at death, but the law protects the body (decent burial), the estate (the will is carried out) and the reputation: under Explanation 1 to the defamation provision (formerly Section 499 IPC), imputing anything to a deceased person may be defamation if it would harm his reputation were he living and is intended to hurt his family or near relatives. Salmond treats these as duties owed to the living, not rights of the dead.

Minors and persons of unsound mind are full persons with limited capacity. They are not competent to contract (ss. 11 and 12 Contract Act), and in Mohori Bibee v Dharmodas Ghose (Privy Council, 1903) a minor's mortgage was held void; but they can own, inherit and sue through a guardian or next friend.

Animals are protected but not generally persons. In Animal Welfare Board of India v A. Nagaraja (Supreme Court, 2014), the jallikattu case, the Court read the Prevention of Cruelty to Animals Act, 1960 with Art. 51A(g) and spoke of the five freedoms of animals, but did not make animals general right-bearing legal persons.

4. The Kinds of Legal Person

In SGPC v Som Nath Dass (Supreme Court, 2000) the Guru Granth Sahib, not the Gurdwara building, was held a juristic person. In Masjid Shahid Ganj v SGPC (Privy Council, 1940) the mosque was not treated as a juristic person able to sue. At the frontier, New Zealand's Te Awa Tupua (Whanganui River Claims Settlement) Act, 2017 made a river a legal person; the Uttarakhand High Court's declaration in Mohd. Salim v State of Uttarakhand (2017) that the Ganga and Yamuna are legal persons was stayed by the Supreme Court; and in Thaler v Comptroller-General of Patents (UK Supreme Court, 2023) an AI could not be an inventor, which must be a natural person.

5. The Key Differences

Creation, end and capacity

A natural person's personality begins at birth and ends at death; the law recognises facts it does not create. A legal person begins by an act of law (incorporation, statute, charter or judicial recognition) and ends by dissolution (winding up, striking off, repeal); meanwhile it has perpetual succession. Having no body or mind, it acts only through human agents, and its capacity is limited by its constitution and its nature: a company cannot marry, vote or be imprisoned.

Criminal liability

The old jibe, usually traced to Lord Chancellor Thurlow, was that a corporation has no soul to be damned and no body to be kicked. Modern law answers by attribution: the acts and mind of the company's directing mind and will are treated as its own, and fines replace imprisonment.

Attribution runs one way. In Sunil Bharti Mittal v CBI (Supreme Court, 2015) a chairman could not be made an accused merely because of his position: a director answers for the company's offence only if he took part in it or a statute makes him vicariously liable.

Fundamental rights

Rights guaranteed to any person, such as equality under Art. 14, extend to companies; rights confined to citizens, such as the Art. 19 freedoms, do not, since a company is not a citizen (State Trading Corporation v CTO, 1963). In TELCO v State of Bihar (1965) the Court refused to lift the veil so that a company could claim through its citizen shareholders. But in R.C. Cooper v Union of India (1970) a shareholder whose own rights were impaired by bank nationalisation could challenge it: the test is whether the individual's rights are affected.

The corporate veil

A natural person cannot hide behind anyone; a legal person's separateness can be abused, so courts lift the veil exceptionally. In LIC v Escorts Ltd. (1986) the Supreme Court allowed it where a statute requires it, where fraud or improper conduct is intended, or where associated companies are really one concern; in DDA v Skipper Construction Co. (1996) it treated a developer, his family and their companies as one to answer for a fraud on buyers (Note 33).

6. The Two Compared

7. The Theories in Brief

A natural person needs no theory: the human being exists before the law recognises him. A legal person does, and the theories in Note 33 answer what stands behind the corporate name. The fiction theory (Savigny): nothing, it is a legal pretence. The concession theory: personality exists only so far as the State grants it. The bracket theory (Jhering): the members are the real persons. The purpose theory (Brinz): ownerless property dedicated to a purpose. The realist theory (Gierke; Maitland in England): a real group person which the law recognises. Kelsen dissolves the contrast: every person, natural or juristic, is a personification of legal norms, so the difference is one of degree.

8. Evaluation

The distinction is practical rather than metaphysical. The law creates legal persons when a group, fund or office must be treated as one unit able to own, contract, sue and be punished. The real questions are functional: which rights a legal person should have, how to fix liability on something without a body, and when to look through the form to the humans behind it. The debates about rivers and AI ask the same questions, and the answer always turns on who will answer for the new person's duties.

9. Frequently Asked Questions

Q. What is the difference between a natural person and a legal person?
A. A natural person is a human being whose personality the law recognises from birth to death. A legal person, such as a company, LLP, the State or an idol, is an entity on which the law confers the capacity to hold rights and bear duties; it is created and dissolved by law and acts only through human agents.

Q. Is a minor a person in law?
A. Yes, a full natural person with limited capacity: he cannot contract (Mohori Bibee, 1903), but can own property, inherit and sue through a guardian or next friend.

Q. Can a company be sent to prison?
A. No, but it can be prosecuted and fined. Standard Chartered Bank (2005) allowed the fine alone where imprisonment and fine are both mandatory, and Iridium (2011) held a company liable for mens rea offences through its directing mind.

See also: Note 33 (legal personality), Note 34 (liability), Note 12 (Kelsen), Note 45 (fundamental rights), Note 28 (rights and duties).