Scribd Logo
Upload

Welcome to Scribd!

  • 64 views

    Corporate Veil Can Be Lifted in Execution Proceedings

    Uploaded by

    muskan kalra
    The Delhi High Court and Punjab and Haryana High Court have affirmed that courts can lift the corporate veil and look beyond the formal legal ownership of companies when properties have been acquired through illegal or fraudulent means. Specifically, the courts ruled that they have the power to lift the corporate veil to determine the true ownership of assets, and to satisfy judgments, when there is evidence that the corporate structure has been misused. This affirms that courts can see past the legal entity of a company to administer justice and prevent the misuse of the corporate form.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Corporate Veil Can Be Lifted in Execution Proceedings

    Uploaded by

    muskan kalra
    64 views1 page
    The Delhi High Court and Punjab and Haryana High Court have affirmed that courts can lift the corporate veil and look beyond the formal legal ownership of companies when properties have been acquired through illegal or fraudulent means. Specifically, the courts ruled that they have the power to lift the corporate veil to determine the true ownership of assets, and to satisfy judgments, when there is evidence that the corporate structure has been misused. This affirms that courts can see past the legal entity of a company to administer justice and prevent the misuse of the corporate form.

    Original Description:

    Company lasw

    Original Title

    Corporate veil can be lifted in execution proceedings

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The Delhi High Court and Punjab and Haryana High Court have affirmed that courts can lift the corporate veil and look beyond the formal legal ownership of companies when properties have been acquired through illegal or fraudulent means. Specifically, the courts ruled that they have the power to lift the corporate veil to determine the true ownership of assets, and to satisfy judgments, when there is evidence that the corporate structure has been misused. This affirms that courts can see past the legal entity of a company to administer justice and prevent the misuse of the corporate form.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    64 views1 page

    Corporate Veil Can Be Lifted in Execution Proceedings

    Uploaded by

    muskan kalra
    The Delhi High Court and Punjab and Haryana High Court have affirmed that courts can lift the corporate veil and look beyond the formal legal ownership of companies when properties have been acquired through illegal or fraudulent means. Specifically, the courts ruled that they have the power to lift the corporate veil to determine the true ownership of assets, and to satisfy judgments, when there is evidence that the corporate structure has been misused. This affirms that courts can see past the legal entity of a company to administer justice and prevent the misuse of the corporate form.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    You are on page 1of 1

    The Delhi High Court in 

    Formosa Plastic Corporation Ltd. v. Ashok Chauhan has held that


    courts are empowered to lift the corporate veil or mere cloaks where devise is employed and
    the properties have been acquired fictitiously in others names for the purpose of committing
    illegalities or for defrauding others to pass appropriate orders and dispense justice. The
    Punjab and Haryana High Court in Sai Sounds Private Limited v Kiran Contractors Private
    Limited has also affirmed this view.

    In Formosa Plastic Corporation Ltd. v. Ashok Chauhan 

    45. The question whether the assets and the properties in question are owned and/or
    possessed by Chauhan and/or the names in which they may have been acquired are fictitious
    or fraudulent or merely cloaks can be decided after parties have led evidence. The Court has
    always the power of lifting the corporate veil or mere cloaks where device is employed and
    the properties have been acquired fictitiously in others names for the purpose of committing
    illegalities or for defrauding others so as to enable it to pass appropriate orders to do justice
    between the parties concerned.

    In Sai Sounds Private Limited v Kiran Contractors Private Limited 

    11. Learned counsel for the respondent points out to me that in Jawahar Lal Nehru Hockey
    Tournament Versus Radiant Sports Management (2008) 149 DLT 749, the Delhi High Court
    was holding that there could be a case where the Court could lift the corporate veil even in
    execution proceedings of a closely held company, particularly of a private limited company
    in order to satisfy the decree and proceed against the personal assets of the Director. I am in
    respectful agreement with the proposition and hold that the scope for lifting the veil will be
    available even at the execution stage, if a fraud was being committed to defeat the process of
    court and for realization of the decree, in case of a closely held company.

    Recently the Delhi HC in Kapil Kumar Vs. M & A Designs held that;
    1 0 . In terms of the judgment in Bhandari Engineers (supra), the settled legal position is that
    before directing any Managing Director or Director of the company to file a personal
    affidavit of their assets, the Executing Court has to arrive at a finding as to whether there is
    sufficient ground for lifting the corporate veil. It is only after arriving at the finding in respect
    thereof can the affidavit of the Director/Managing Director be insisted upon. The observation
    in the said judgment reads as under:
    The execution of decrees/awards deserves special attention considering that inordinate delay
    in execution proceedings frustrates the decree-holder from reaping the benefits of the
    decree/award.
    52. If any ground for lifting of the corporate veil is made out, then all the Directors (other
    than independent/non-executive and nominee directors) of the judgment debtor Company be
    directed to disclose their personal assets and income in the format of Annexure-A.

    You might also like