The separate personality of a company is a statutory privilege and it must be used for legitimate business purposes only. Where a fraudulent and dishonest use is made of the legal entity, the individuals concerned will not be allowed to take shelter behind the corporate personality. The court will break through the corporate shell and apply the principle/doctrine of what is called the lifting of corporate veil. The court will look behind the corporate entity and take actions as though no entity separate from the members existed and make the members or the controlling persons liable for debts and obligations of the company.
The corporate veil is lifted when in defence proceedings, such as for the evasion of tax, an entity relies on its corporate personality as a shield to cover its wrong doings. [BSN(UK)Ltd. v. Janardan Mohandas Rajan Pillai[1996]n86 Com Cases 371 (Bom)].
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