Corporation by Prescription

Corporation by Prescription

Akhara Panchaiti (of Sri Sat Guru Nanak Nirwan Panch) gave loan to a borrower in the year 1889. The said Akhara Panchaiti filed suit for sale of the mortgaged property.

The trial Court dismissed the suit on the ground that it is not a corporation and it has no legal status to file such a suit. The District Court, in its appeal, confirmed the Trial Court judgment.

Hence the Akhara Panchaiti filed the Second Appeal before the Allahabad High Court.

They claimed that the Akhara Panchaiti was a corporation by prescription and entitled to sue in its corporate name.

Akhara Panchaiti is an association formed by the followers of Guru Nanak, who flourished in the 15^th Centurary. Certain of his followers are stationary. They carry on money dealings and acquire immovable property and distribute food and clothing to other followers of Guru Nanka who wander over the country, or they otherwise dispose of their income in charity.

Such an association might be a an association under the Civil Law, but is not a Corporation under the English Law.

Corporations, by the Civil Law seem to have been created by the mere act and voluntary association of their members, provided such convention was not contrary to law, for then it was illicitum collegium (illegal association). It does not appear that the Prince’s consent was necessary to be actually given the foundation of them.  

In England, however, ‘the Sovereign’s consent is absolutely necessary to the erection of any corporation, either impliedly or expressly given. Such consent is presumed in the case of ‘corporations by prescription’, that is corporations ‘which have existed as corporations from a time whereof the memory of man runneth not to the contrary, and therefore are looked upon in law to be well created.

For though the members thereof can show no legal character of incorporation, yet in cases of such high antiquity the law presumes there once was one, and that by the variety of accidents which a length of time may produce the charter is lot or destroyed.

The corporation contemplated by the Code of Civil Procedure Code is a corporation as known in English law, that is, a corporation created with the express consent of the Sovereign or of such antiquity that the consent of the Sovereign may be presumed.

In this case, it is not proved that the Akhara Panchaiti was founded with the sanction of the ruling authority. Further the antiquity of the association is not make it a corporation by prescription.

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