Revisiting “Sham” as a Ground for Piercing the Corporate Veil

[Ashwin Murthy and Sathvik Chandrasekhar are 4th year students from NALSAR University of Law] The doctrine of piercing the corporate veil was clarified in India with the landmark case of Balwant Rai Saluja v Air India (2013), recognising that the veil should rarely be lifted. Balwant directly relied upon the UK case of Prest v Petrodel which similarly narrowed the scope of such piercing (read more here), however with key differences in the language. While in Prestit was held that the corporate veil could be pierced when “a person is under an existing legal  obligation or liability or subject to an existing legal restriction which he deliberately evades or whose enforcement he deliberately frustrates by interposing a company under his control” (para 35), in Balwant such piercing could only be allowed when “it is evident that the company was a mere camouflage or sham deliberately created by the persons exercising control over  the…

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