The Doctrine Of Lifting The Corporate Veil: Origin, Evolution, Challenges

ORIGIN – THE DAWN OF THE DOCTRINE

The theory of separate legal personality of a company is the one which lays the foundation and is a basic principle of corporate jurisprudence in modern legal systems all over the world. This theory gives an identity to the company which is distinct from its shareholders, members, or founders, through which the company acquires the status of an artificial or a juristic person.

The fountainhead of the separate legal entity principle was established by Salomon v Salomon & Co Ltd where the House of Lords enunciated that the company at law is altogether a different person from the subscribers of the memorandum, which means that the liability of the company will not be the liability of its members. The same principle was endorsed by the Hon'ble Supreme Court of India in the case of Kondoli Tea Co. Ltd., wherein it was held that there exists a veil of incorporation between the shareholders of a company and the company itself. The same