A tea estate was transferred to a company by a group of 8 people who were the sole shareholders of the company. The consideration for this transfer was a sum of £ 43,320. This consideration was payable in shares and debentures of the company taken at par. The shareholders of the company refused to pay the as valorem duty, payable on every such conveyance. The shareholders claimed that the transfer if property was from to themselves under a different name and as they are the only shareholders of the company. Due to this reason the shareholders did not pay the tax amount.

Issue:

• Whether the document carrying put a particular transfer is a conveyance as defined in Clause 9 of Section 3 of the Stamp Act and Article 21 of Schedule 1?

Judgement
The High Court of Calcutta held that Kondoli tea company is a separate legal entity from its individuals, capable of lasting beyond their lifetimes. Regardless of who the shareholders of the company were, the company is a separate legal entity and transfer of ownership of the property of the shares in their individual capacities was just as much of a conveyance as the shareholders of the company are different people. The court ordered the shareholders to pay the ad volorem duty on the said transfer of property from them to the company.

Legal Principal used:
Lifting of the Corporate Veil
The principle of "lifting the corporate veil" refers to disregarding the legal distinction between a company and its shareholders, allowing courts to look beyond the company's separate legal entity to hold the people behind the company responsible for its actions. Generally, a company is treated as a separate legal entity from its shareholders, as established in the landmark case of Salomon v. Salomon & Co Ltd (1897). However, Indian courts have recognized several circumstances under which the corporate veil can be lifted.

Indian law primarily allows the corporate veil to be lifted in cases of fraud, improper conduct, or to prevent the misuse of the company's legal entity for illegal or unjust purposes. The Companies Act, 2013 does not explicitly define lifting of the corporate veil, but provisions such as Section 34 and Section 35 allow for holding directors and officers personally liable for misstatements in prospectuses and fraudulent business practices.

Landmark Indian cases such as Delhi Development Authority v. Skipper Construction and Gilford Motor Co Ltd v. Hornehave affirmed the principle that the corporate veil can be pierced to prevent fraud or when the corporate structure is used to evade legal obligations.

Courts have also applied this principle in cases involving tax evasion, misrepresentation, or when the company is merely an "alter ego" of its shareholders. Indian courts have emphasized that the corporate veil can be pierced only in exceptional situations, ensuring that companies do not misuse their separate legal status for unethical purposes. This balance ensures the sanctity of a company's separate legal entity, while also safeguarding against abuse of the corporate structure.

Separate legal entity
A separate legal entity is a concept in corporate law that recognizes a company as a distinct legal person, separate from its owners, shareholders, and directors. This means the company has its own rights, obligations, and liabilities, distinct from those of its members.

Key characteristics of a separate legal entity:

• Ownership of property: The company can own property in its own name, separate from the property of its members.
• Contractual capacity: The company can enter into contracts in its own name, and these contracts are binding on the company, not its members.
• Legal proceedings: The company can sue and be sued in its own name.
• Perpetual succession: The company has a continuous existence, unaffected by changes in its membership or ownership.

The Companies Act, 2013 explicitly recognizes the concept of a separate legal entity. While the Act does not define the term directly, it is implicit in various provisions that treat companies as distinct legal persons.

• Section 4: Defines a company as "an artificial person created by law."
• Section 14: Deals with the rights and liabilities of a company, recognizing its separate legal personality.
• Section 15: Discusses the corporate veil, which is a legal principle that protects the separate legal entity of a company.

The concept of a separate legal entity is crucial for the functioning of companies. It provides them with a distinct legal identity, enabling them to engage in business activities, own property, and enter into contracts without personal liability for their members. However, there are certain circumstances where the corporate veil can be lifted, allowing courts to hold individuals responsible for the company's actions, typically in cases of fraud, improper conduct, or evasion of legal obligations.

Reasoning
The Kondoli rea company limited is a separate legal person separate bod and a conveyance to the kandoli tea company of property which was the property of its shares in their individual capacity was just as a mere conveyance, a transfer of the property as if the shareholders in the Company had been totally different persons. The company is a separate body even though the conveying parties are the shareholders of the Company, it was a sale and transfer of the property.