Case Laws
Acts
Notifications
Circulars
Classification
Forms
Manuals
Articles
News
D. Forum
Highlights
Notes
🚨 Important Update for Our Users
We are transitioning to our new and improved portal - www.taxtmi.com - for a better experience.
⚠️ This portal will be discontinued on 31-07-2025
If you encounter any issues or problems while using the new portal,
please
let us know via our feedback form
so we can address them promptly.
Home
2019 (11) TMI 1458 - HC - Companies LawAttachment of property - Lifting of attachment effected by the execution Court - whether the execution court was justified in holding that the claim petition filed by M/s. Nippon Infra Project (P) Ltd is liable to be allowed? - HELD THAT - It is significant to note that the suit was resisted before the trial court by M/s. Infra Housing Pvt. Ltd. represented by its Director Sri.George. E George. When it is evident that the Director of the judgment debtor company is also one of the Directors of the claim petitioner company having rights over the properties held by the company obviously the principle of lifting the corporate veil is not only permissible but also is absolutely necessary to find out the real state of affairs to execute the decree legally obtained by the decree holder who invested money to purchase an apartment. If the intention of the Directors who formed the Companies was to avoid legal consequences or to defeat the interests of public or another person/customer or to cover the existence of liabilities or obligations imposed by law the theory of lifting of corporate veil has to be made applicable so as to protect the interests of the persons who approach the court seeking for a valid relief. When there was failure to comply with the terms of the agreement entered into by the parties the suit was filed and a favourable decree was obtained by the decree holder. So the facts of the case would show that the intention of the judgment debtor company was to evade the reasonable or valuable right of one of its customers by hiding behind the veil and raising a contention that the claim petitioner is not liable to compensate its customer as it is a separate corporate entity. A case is made out by the decree holder to execute the decree by attachment sale of the assets of the claim petitioner company and that the corporate personality cannot be used to evade or resist the obligation imposed by law. Therefore applying the principle of lifting of corporate veil the property owned by the claim petitioner company is definitely liable to be attached for realization of the decree debt legally obtained by the decree holder a customer. The finding of the court below that the corporate veil cannot be lifted as the judgment debtor is engaged in housing projects whereas the claim petitioner is engaged in construction of commercial buildings a separate entity is liable to be set aside and the attachment of the property effected earlier by the court below is to be restored for realization of the decree debt - the attachment of the property effected in the execution petition is restored - appeal allowed.
|