Corporate Veil And AI Legal Personhood: A Threat To Accountability In Indian Company Law

Harshita Gupta, O.P Jindal Global University

ABSTRACT

As artificial intelligence (AI) becomes increasingly autonomous, the question of whether AI should be granted legal personhood has sparked intense debate. While this notion may appear innovative, this paper argues that granting AI legal personhood would severely undermine corporate accountability in India, particularly under the well-established doctrine of the corporate veil. The corporate veil, protected under the Companies Act, 2013, shields shareholders from personal liability but is pierced when fraud or wrongdoing is involved. Granting AI personhood would effectively allow corporations to shift blame to AI systems, diluting the liability of directors and shareholders and complicating the pursuit of justice.

The paper meticulously examines the doctrine of the corporate veil in India and its interaction with AI personhood, exploring how such a development would conflict with both statutory provisions and judicial precedents. Through an analysis of landmark cases like State of Rajasthan v. Gotan Limestone Khanij Udyog Pvt. Ltd., this paper demonstrates how courts have consistently worked to prevent the misuse of corporate structures. Furthermore, the paper engages in a comparative analysis with the United States, European Union, and Singapore, each of which has adopted frameworks to strengthen corporate responsibility for AI systems without granting them legal personhood.

By juxtaposing the established principles of corporate liability with the potential dangers of AI legal personhood, this paper argues that India must resist this shift. Instead, the focus should remain on ensuring robust oversight and accountability for AI-driven decisions within existing corporate governance structures.