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An employee Mr. Elvish Yadav signed a contract with his employer company Kingfisher Limited that he
will not solicit the customers after leaving the employment from the company. But after Mr. Elvish left ABC
Limited, he started up his own company Big Boss Limited and he started soliciting the customers of
Kingfisher Limited for his own business purposes. Kingfisher Limited filed a case against Mr. Elvish for
breach of the employment contract and for soliciting their customers for own business. Mr. Elvish contended
that there is corporate veil between him, and his company and he should not be personally held liable for
this. In this context, the company Kingfisher Limited seek your advice as to the meaning of corporate veil
and when the veil can be lifted to make the owners liable for the acts done by a company?
Most Upvoted Answer
An employee Mr. Elvish Yadav signed a contract with his employer compa...
Understanding Corporate Veil
The corporate veil refers to the legal distinction between a corporation and its shareholders, protecting individuals from personal liability for the company's debts and actions. This principle allows business owners to limit their financial risk, but there are circumstances where the veil can be lifted, exposing individuals to liability.
When Can the Corporate Veil Be Lifted?
There are several scenarios where courts may decide to pierce the corporate veil:
  • Fraud or Misrepresentation: If the company is used to commit fraud or illegal acts, courts may hold the owners personally liable.
  • Inadequate Capitalization: If a company is undercapitalized and unable to meet its obligations, owners may be held liable for debts.
  • Failure to Follow Corporate Formalities: Ignoring necessary corporate formalities may justify lifting the veil.
  • Alter Ego Doctrine: When the company is merely an extension of the individual, personal liability may arise.
  • Public Policy Considerations: Courts may lift the veil if it serves the public interest to hold individuals accountable.

Application to Mr. Elvish Yadav's Case
In Mr. Elvish Yadav's situation, Kingfisher Limited can argue that:
  • He knowingly breached the non-solicitation clause in his contract.
  • His actions directly harmed Kingfisher Limited's business interests.
  • His new company, Big Boss Limited, may act as a facade to evade personal responsibility.

If Kingfisher Limited can establish these points, the court may decide to lift the corporate veil and hold Mr. Yadav personally liable for his actions, reinforcing the importance of contractual obligations even after employment has ended.
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An employee Mr. Elvish Yadav signed a contract with his employer company Kingfisher Limited that hewill not solicit the customers after leaving the employment from the company. But after Mr. Elvish left ABCLimited, he started up his own company Big Boss Limited and he started soliciting the customers ofKingfisher Limited for his own business purposes. Kingfisher Limited filed a case against Mr. Elvish forbreach of the employment contract and for soliciting their customers for own business. Mr. Elvish contendedthat there is corporate veil between him, and his company and he should not be personally held liable forthis. In this context, the company Kingfisher Limited seek your advice as to the meaning of corporate veiland when the veil can be lifted to make the owners liable for the acts done by a company?
Question Description
An employee Mr. Elvish Yadav signed a contract with his employer company Kingfisher Limited that hewill not solicit the customers after leaving the employment from the company. But after Mr. Elvish left ABCLimited, he started up his own company Big Boss Limited and he started soliciting the customers ofKingfisher Limited for his own business purposes. Kingfisher Limited filed a case against Mr. Elvish forbreach of the employment contract and for soliciting their customers for own business. Mr. Elvish contendedthat there is corporate veil between him, and his company and he should not be personally held liable forthis. In this context, the company Kingfisher Limited seek your advice as to the meaning of corporate veiland when the veil can be lifted to make the owners liable for the acts done by a company? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about An employee Mr. Elvish Yadav signed a contract with his employer company Kingfisher Limited that hewill not solicit the customers after leaving the employment from the company. But after Mr. Elvish left ABCLimited, he started up his own company Big Boss Limited and he started soliciting the customers ofKingfisher Limited for his own business purposes. Kingfisher Limited filed a case against Mr. Elvish forbreach of the employment contract and for soliciting their customers for own business. Mr. Elvish contendedthat there is corporate veil between him, and his company and he should not be personally held liable forthis. In this context, the company Kingfisher Limited seek your advice as to the meaning of corporate veiland when the veil can be lifted to make the owners liable for the acts done by a company? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for An employee Mr. Elvish Yadav signed a contract with his employer company Kingfisher Limited that hewill not solicit the customers after leaving the employment from the company. But after Mr. Elvish left ABCLimited, he started up his own company Big Boss Limited and he started soliciting the customers ofKingfisher Limited for his own business purposes. Kingfisher Limited filed a case against Mr. Elvish forbreach of the employment contract and for soliciting their customers for own business. Mr. Elvish contendedthat there is corporate veil between him, and his company and he should not be personally held liable forthis. In this context, the company Kingfisher Limited seek your advice as to the meaning of corporate veiland when the veil can be lifted to make the owners liable for the acts done by a company?.
Solutions for An employee Mr. Elvish Yadav signed a contract with his employer company Kingfisher Limited that hewill not solicit the customers after leaving the employment from the company. But after Mr. Elvish left ABCLimited, he started up his own company Big Boss Limited and he started soliciting the customers ofKingfisher Limited for his own business purposes. Kingfisher Limited filed a case against Mr. Elvish forbreach of the employment contract and for soliciting their customers for own business. Mr. Elvish contendedthat there is corporate veil between him, and his company and he should not be personally held liable forthis. In this context, the company Kingfisher Limited seek your advice as to the meaning of corporate veiland when the veil can be lifted to make the owners liable for the acts done by a company? in English & in Hindi are available as part of our courses for CA Foundation. Download more important topics, notes, lectures and mock test series for CA Foundation Exam by signing up for free.
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