Trace Your Case

Categories
Corporate Personality and Lifting of Corporate Veil

Salomon v. Salomon [1897] A.C. 22

ISSUE:

Whether regardless of the separate legal identity of a company, a shareholder could be held responsible for its debt, over and above the capital contribution, so as to make such member personally liable for the company’s debt or not?

RULE:

“The motives of those who took part in the promotion of the company are absolutely irrelevant in discussing what those rights and liabilities are” and the legal fiction of a “Corporate Veil” between the company and its owners and controllers was created firmly.

The appellant was the Principal and earned excessive money by this business thus he owed to indemnify the company’s debt

Subscribe to Read More.
Login Join Now
Categories
Corporate Personality and Lifting of Corporate Veil

Prest v. Petrodel Resources Limited [2013] UKSC 34

ISSUE:

How to ensure that, particularly in cases of divorcing spouses and in single-man companies, company law could not be used as a tool to conceal assets or avoid liability in relation to those assets, whilst maintaining the integrity of the Salomon principle?

Whether the court could pierce the corporate veil?

RULE:

Piercing of corporate veil cases should be true exceptions to the case of Salomon v. Salomon such that where a person who owns and controls a company is said in certain circumstances to be identified with it in law by virtue of that ownership and control.

Subscribe to Read More.
Login Join Now
Categories
Corporate Personality and Lifting of Corporate Veil

Vodafone International Holdings BV v. Union of India (2012) 6 SCC 613

ISSUE:

Whether the Indian revenue authorities had the jurisdiction to tax an offshore transaction of transfer of shares between two non-resident companies whereby the controlling interest of an Indian resident company is acquired by virtue of this transaction?

RULE:

Indian revenue authorities do not have jurisdiction to impose tax on an offshore transaction between two non-residents companies where in controlling interest in a (Indian) resident company is acquired by the non-resident company in the transaction.

Subscribe to Read More.
Login Join Now
Categories
Corporate Personality and Lifting of Corporate Veil

State of Rajasthan v. Gotan Lime Stone Khanji Udyog Pvt. Ltd

ISSUE:

Whether an illegal transfer of mining lease was involved?

Whether transformation of partnership into company and transfer of lease rights to such company has to be seen with the next transaction of transfer of the entire shareholding to a third company for a price?

Whether on this basis the State is justified in cancelling the lease which the High Court has quashed?

RULE:

The Court opined that the partnership firm holding leasehold rights has successfully transferred the said rights to a third party for consideration in the form of share price which is nothing but the price for the sale of mining lease which is not allowed and for which no permission has been granted and which is patently illegal.

Subscribe to Read More.
Login Join Now
Categories
Corporate Personality and Lifting of Corporate Veil

State of U.P. & Ors v. Renusagar Power Co. & Ors. (1988) 4 SCC 59

ISSUE:

Whether Hindalco and Renusagar should be treated as one concern and the consumption of energy by Hindalco must be regarded as consumption by Hindalco from its own source of generation?

RULE:

The principle of lifting the corporate veil was applied and it was examined if the person generating and consuming energy were the same and the corporate veil should be lifted or not. In this case, Hindalco and Renusagar were inextricably linked up together. Renusagar had, in reality, no separate and independent existence apart from and independent of Hindalco. Consumption of energy of Hindalco was consumption of Hindalco from its own source of generation.

Subscribe to Read More.
Login Join Now