Doctrine of lifting corporate veil would be applicable in respect of a co-operative society
It was lastly contended that the transaction was between the co-operative credit societies and the complainant members. As such, the members of the managing committee of the co-operative societies cannot be held to be personally liable in their individual capacity. Counsel for the petitioners submitted that a co-operative society, like a company, is a legal person and members of the managing committee of a society, like the directors of a company, are not personally responsible for the debts and liabilities of the society. The petitioners who were the members of the managing committees of the different co-operative credit societies, like the directors of a company, were not personally responsible for the debts of the co-operative society. The orders passed by the State Commission regarding the repayment of the deposits by the co- operative societies can be enforced against the respective co- operative societies but in any event, the orders passed by the District Consumer Forum directing the petitioners as members of the managing committee of the co-operative societies to repay the deposits was illegal. Since the decision of House of Lords in Soloman Vs. Soloman & Co. 1897 A.C. 22, the position is well established that the corporation or a company is a separate legal entity and its directors are not liable for the liabilities of the company. However, over the last century, the Courts have invented and applied the doctrine of lifting corporate veil in appropriate
cases. By lifting the corporate veil, in many cases the Courts have passed orders against the directors of the company. When and how the corporate veil is to be lifted is a matter which would be required to be decided on the facts of each case. Needless to say that the doctrine of lifting the corporate veil would be equally applicable in respect of a co-operative society where the members seek a direction or order against the members of the managing committee on the ground of fraud or other well recognised grounds.
Bombay High Court
Mandatai Sambhaji Pawar And Anr vs The State Of Maharashtra And ... on 3 May, 2011
Bench: D.G. Karnik
https://www.lawweb.in/2013/11/doctrine-of-lifting-corporate-veil.html
