Separate Legal Personality: Salomon V. Salomon And Its Application In India
Vikrant Singh, S.R.M School of Law
ABSTRACT
Every first-year student of company law eventually runs into the same idea, stated in some form or another: a company is not the people who own it. It sounds almost too simple to matter, and yet this single idea, that a company, once incorporated, becomes a legal person in its own right, distinct from its shareholders and directors, quietly underpins nearly the entire modern commercial world. Limited liability, venture investing, group corporate structures, even the willingness of a small trader to risk starting a business at all, rest on this one foundational fiction. This article traces that idea back to its most famous source, the House of Lords' decision in Salomon v. Salomon & Co. Ltd., and follows it into Indian law, where it has been absorbed into statute and repeatedly tested by the courts. It also looks at the doctrine's necessary counterweight, the lifting of the corporate veil: the narrow set of situations in which Indian courts have refused to let the corporate form be used as a shield for fraud or evasion. The purpose of this article is not merely descriptive. It attempts to show why the doctrine has survived more than a century of commercial change, where it has been stretched, and where Indian courts have drawn the line between respecting corporate personality and refusing to be fooled by it.
Keywords: Separate legal personality, Salomon principle, corporate veil, Companies Act 2013, incorporation, limited liability, shareholder liability, lifting the veil.
