Lifting the Veil: Imagination and the Kingdom of God

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The case concerned claims of certain unsecured creditors in the liquidation process of Salomon Ltd., a company in which Salomon was the majority shareholder, and accordingly, was sought to be made personally liable for the company’s debt. Hence, the issue was whether, regardless of the separate legal identity of a company, a shareholder/controller could be held liable for its debt, over and above the capital contribution, so as to expose such member to unlimited personal liability. RULING IN SALOMON V SALOMON PUBLIC INTEREST- The Courts may lift the veil to protect public policy and prevent transactions contrary to public policy. The Courts will rely on this ground when lifting the veil is the most ‘just’ result, but there are no specific grounds for lifting the veil. Thus, where there is a conflict with public policy, the Courts ignore the form and take into account the substance. Statutory Provisions For Lifting The Veil- However, the theories failed to articulate a real-world approach which courts could directly apply to their cases. Thus, courts struggle with the proof of each prong and rather analyze all given factors. This is known as "totality of circumstances". [43] Notably, similar to most legal principles, the overarching rule of SLP applies with exceptions, where the courts may look through the veil to reach out to the insider members, known as “ lifting or piercing of the corporate veil“. 15 Some of the earliest instances where the English and Indian Courts disregarded the principle established in Salomon’s case are:

unity of interest and ownership": the separate personalities of the shareholder and corporation cease to exist, Lindgren, Kevin E.; R. B. Vermeesch (1995), Business Law of Australia, Butterworths, ISBN 0-409-30675-4 By contrast with the limited and careful statutory directions to ‘lift the veil’ judicial inroads into the principle of separate personality are more numerous. Besides statutory provisions for lifting the corporate veil, courts also do lift the corporate veil to see the real state of affairs. Some cases where the courts did lift the veil are as follows: Section 159 r/w 156- It is the duty of every existing director to intimate his Director Identification Number to the company or all companies wherein he is a director within one month of the receipt of the same from the Central Government. If any director of a company contravenes, such dir Assmann, Jan (1997). Moses the Egyptian: The Memory of Egypt in Western Monotheism. Harvard University Press. ISBN 978-0-674-58738-0.Further in Lee v. Lee’s Air Farming Ltd. [iii], it was held that there was a valid contract of service between Lee and the Company, and Lee was therefore a worker within the meaning of the Act. It was a logical consequence of the decision in Salomon’s case that one person may function in the dual capacity both as director and employee of the same company. Court of Appeals said that can lift the veil for a sham/facade company or if there is and agency relationship. But the corporate veil cannot be lifted on the basis of a single economic unit argument or in the interests of justice. Not actually lifting the veil, not saying that we are entity merely saying that one entity is bound by the actions of the other.

There have been cases in which it is to the advantage of the shareholder to have the corporate structure ignored. Courts have been reluctant to agree to this. [35] The often cited case Macaura v Northern Assurance Co Ltd [36] is an example of that. Mr Macaura was the sole owner of a company he had set up to grow timber. The trees were destroyed by fire but the insurer refused to pay since the policy was with Macaura (not the company) and he was not the owner of the trees. The House of Lords upheld that refusal based on the separate legal personality of the company. Tata Engineering and Locomotive Co. Ltd. State of Bihar [xvii]– In this case, it was stated that a company is also not allowed to lay claim on fundamental rights on the basis of its being an aggregation of citizens. Once a company is formed, its business is the business of an incorporated body thus formed and not of the citizens and the rights of such body must be judged on that footing and cannot be judged on the assumption that they are the rights attributable to the business of the individual citizens. It is an axiomatic principle of English company law that a company is an entity separate and distinct from its members, who are liable only to the extent that they have contributed to the company's capital: Salomon v Salomon [1897]. The effect of this rule is that the individual subsidiaries within a conglomerate will be treated as separate entities and the parent cannot be made liable for the subsidiaries' debts on insolvency. Furthermore, it can create subsidiaries with inadequate capitalisation and secure loans to the subsidiaries with fixed charges over their assets, despite the fact that this is "not necessarily the most honest way of trading". [22] The rule also applies in Scotland. [23]On a similar note, in the most recent judgment of Prest v Petrodel 25, Sumption J. confined the lifting of veil to only two situations, namely, (a) the “concealment principle”, akin to the sham or façade exception; and (b) the “evasion principle”, being the fraud exception. 26 Deciding not to pierce the corporate veil on the facts, this case once again reinstated the Salomon rule. Conclusion C Alting, 'Piercing the corporate veil in German and American law - Liability of individuals and entities: a comparative view' (1994–1995) 2 Tulsa Journal Comparative & International Law 187

Immanuel Kant connected the motif of Isis's veil with his concept of the sublime, saying, "Perhaps no one has said anything more sublime, or expressed a thought more sublimely, than in that inscription on the temple of Isis (Mother Nature)." According to Kant, the sublime evoked both wonder and terror, and these emotions appeared frequently in the works of late 18th and early 19th-century authors using the motif of the veil. The ecstatic nature of ancient mystery rites themselves contributed to the focus on emotions. [19] Friedrich Schiller, for instance, wrote an essay on Egyptian and Jewish religion that mostly copied Reinhold's work but put a new emphasis on the emotional buildup that surrounded the mysteries. He said it prepared the initiate to confront the awe-inspiring power of nature at the climax of the rite. Similarly, a frontispiece by Henry Fuseli, made for Erasmus Darwin's poem The Temple of Nature in 1803, explicitly shows the unveiling of a statue of Isis as the climax of the initiation. [12] AVOIDANCE OF WELFARE LEGISLATION- Avoidance of welfare legislation is as common as avoidance of taxation and the approach of the Courts in considering problems arising out of such avoidance is generally the same as avoidance of taxation. It is the duty of the Courts in every case where ingenuity is expended to avoid welfare legislation to get behind the smokescreen and discover the true state of affairs. P.W. Ireland, ‘The Rise of the Limited Liability Company’ (1984) 12 International Journal of the Sociology of Law 239.Another interpretation of Isis's veil emerged in the late 18th century, in keeping with the Romantic movement that was developing at the time, in which nature constitutes an awe-inspiring mystery rather than prosaic knowledge. [11]