Corporate Personality Vs. Corporate Abuse: A Study Of Corporate Veil In Indian Company Law
- IJLLR Journal
- Apr 17
- 2 min read
Sneha Sarothiya, B.A.LL.B. (Hons.), Jagran Lakecity University, Bhopal, Madhya Pradesh, India
ABSTRACT
The doctrine of corporate personality is a fundamental principle of company law which recognizes a company as a legal entity separate from its shareholders and directors. This principle was firmly established in the landmark case of Salomon v. A Salomon & Co Ltd and forms the basis of modern corporate law. By recognizing companies as independent legal persons, the doctrine provides several advantages such as limited liability, perpetual succession, and transferability of shares, thereby encouraging investment and economic development. However, the separate legal identity of a company may sometimes be misused by individuals to commit fraud, evade legal obligations, or conduct unlawful activities. To prevent such misuse, courts have developed the doctrine of lifting or piercing the corporate veil, which allows them to disregard the company’s separate legal personality in exceptional circumstances. This research paper examines the concept of corporate personality and analyses the circumstances under which the corporate veil may be lifted under Indian company law. The study focuses on judicial interpretations and examines important cases such as Life Insurance Corporation of India v Escorts Ltd and Balwant Rai Saluja v Air India Ltd to understand how courts balance the protection of corporate autonomy with the need to prevent abuse. The paper also highlights the challenges and inconsistencies in the judicial application of the doctrine due to the absence of a uniform legal test and the growing complexity of corporate structures. The study concludes by emphasizing the need for clearer legal guidelines and stronger regulatory mechanisms to ensure that the corporate form is not misused while preserving its economic benefits.
Keywords: Corporate personality, corporate veil, lifting the corporate veil, company law, corporate fraud, judicial interpretation, corporate governance, Indian company law.
