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 15th
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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