Meaning of the Doctrine of Lifting the Corporate Veil - companies act 2013

Posted on 28-03-2016        By ADMIN

Meaningof the Doctrine of Lifting the Corporate Veil - companies act 2013 cs notes
Lifting te corporate veil means disregarding the corporate personality andlooking behind the real person who are in the control of the company. In otherwords, where a fraudulent and dishonest use is made of the legal entity, theindividuals concerned will not be allowed to take shelter behind the corporate personality.In this regards the court will break through the corporate veil.

According tothe definition of Black Law Dictionary," the piercing the corporate veilis the judicial act of imposing liability on otherwise immune corporateofficers, Directors and shareholders for the corporation's wrongfulacts."

Aristotle said, when one talks of lifting status of an entitycorporate veil, one has in mind of a process whereby the corporate isdisregarded and the incorporation conferred by statute is overridden other thanthe corporate entity an act of the entity.
When the principle is involved, it is permissible to show that the individualhinding behind the corporation is liable to discharge the obligations ignoringthe concept of corporation as a legal entity. InDDA v. Skipper Construction Co.Pvt. Ltd.the Supreme Court referred to the principle of lifting corporate veil.The concept of corporate entity was evolved to encourage and promote trade andcommerce but not to commit illegalities or to defraud people. The corporateveil indisputably can be pierced when the corporate personality is found to beopposed to justice, convenience and interest of the revenue or workman oragainst public interest.

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