Princess Preet Kaur Kalra, Student at Symbiosis Law School, Hyderabad
ABSTRACT
A corporation has a distinct personality, discrete from its owners, supervisors, and representatives. The concept of separate legal personality is, in fact, the fundamental premise upon which the whole law of companies is founded. But this concept is often misused by the contracting parties as a veil to hide from the criminal liability or legal obligation. The author of this paper makes an attempt to highlight legal concerns involving the criminal conduct of corporations. The paper delves into the concept of ‘mens rea’ as well as the convincing conditions that lead the courts to overlook the structure of the corporations and lift the corporate veil. The concept of “lifting of the corporate veil” works as a constraint on anybody seeking to profit from their illegal conduct by posing as the corporation and performing acts that are otherwise held as illegal or are prohibited by the law. Generally, the courts do not make decisions of lifting the corporate veil and dilute the principle of separate entity. Whenever they make the decision to remove the veil of incorporation to punish the people who misused the principle of separate legal personality, it is usually done in the interest of the public or the members of the company. Various notable cases like the extensively discussed “State of U.P. v. Renusagar Power Company” are also discussed in the paper in order to establish legal requirements and factors to remove the veil of incorporation and to analyse the judges’ minds to know on what basis they decide to give up on one legal standard for another. Liability of the parent company for the wrongdoings of its subsidiary which is another important aspect of imposing criminal liability is also discussed through the “E.I.D. Parry Ltd. v. S.A.E. Ltd.” It summarises the major elements of the judgement to determine whether the parent company should be held responsible for its subsidiary’s wrongdoings. The paper makes an attempt to describe the conditions under which the corporate veil may be removed by the court. The paper comes to a close with a concise overview of the observations and the perspective of the author on them.
Keywords: Corporate veil, Company, Solomon’s case, Separate Legal Personality, Incorporation
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