The Companies Act, 1956
34. Effect of registration.
(1) On the registration of the memorandum of a company, the Registrar shall certify under his hand that the company is incorporated and, in the case of a limited company that the company is limited.
(2) From the date of incorporation mentioned in the certificate of incorporation, such of the subscribers of the memorandum and other persons, as may from time to time be members of the company, shall be a body corporate by the name contained in the memorandum, capable forthwith of exercising all the functions of an incorporated company, and having perpetual succession and a common seal, but with such liability on the part of the members to contribute to the assets of the company in the event of its being wound up as is mentioned in this Act.
(i) In the expanding horizons of modern jurisprudence, lifting of corporate veil is permissible and its frontiers are unlimited; State of Uttar Pardesh v. Renusagar Power Co., AIR 1988 SC 1737.
(ii) The corporate veil may be lifted where a statute itself contemplates lifting the veil, or fraud or improper conduct is intended to be prevented, or a taxing statute or a beneficent statute is sought to be evaded or where associated companies are inextricably connected as to be, in reality, part of one concern; Life Insurance Corporation of India v. Escorts Ltd., (1986) 59 Comp. Cas. 548: 1986 (1) Com LJ 91: AIR 1986 SC 1370.
(iii) A company registered under the Companies Act is a legal person, separate and distinct from its individual members. Property of the company is not the property of the shareholders. Director of a company is merely its agent for the purpose of management; Rustom Cavasjee Cooper v. Union of India, (1970) 40 Comp. Cas. 325: 1970 (1) Comp LJ 244: AIR 1970 SC 564.
(iv) The shareholder of a company is not the owner of its assets; he has merely an interest in the company measured by a sum of money for the purpose of liability and a right to participate in the profits of the company subject to the contract contained in the articles of association. Director of a company is merely its agent for the purpose of management; Rustom Cavasjee Cooper v. Union of India, (1970) 40 Comp. Cas. 325: 1970 (1) Com LJ 244: AIR 1970 SC 564.
(v) The Court is entitled to lift the mask of corporate entity if the conception is used for tax evasion or to circumvent tax obligation or to perpetrate fraud; Juggilal Kamlapat v. Commissioner of Income Tax, 1969 (2) Com LJ 188: AIR 1969 SC 932.
(vi) An incorporated company has a separate existence and the law recognizes it as a legal person separate and distinct from its members. A new legal personality emerges from the moment of incorporation but the members who form the incorporated company do not pool their status or their personality; State Trading Corporation of India v. The Commercial Tax Officer, (1963) 33 Comp. Cas. 1057: AIR 1963 SC 1811.