ORDER M.P. Menon, J. 1. This is an application filed by the Official Liquidator, under S.460(4) of the Companies Act, 1956 read with rule (9) of the Companies (Court) Rules, 1959 for direction in relation to a matter arising in the winding up of the Palmland Corporation (P) Limited. 2. The company was ordered to be wound up on 1st June 1973. Even before that by an order dated 29th January 1973, this Court had appointed the Official Liquidator as the provisional liquidator. In the course of attempting to take possession of its assets, it was found that in some offices of the company, the books of another concern known as the 'Palmland Educational Trust' were being maintained and kept. In some places the offices of the company were functioning in buildings or rooms let out to the trust, and in some places, it was the other way round. The directors of the two were treating the company and the trust as 'sister concerns'; they were even agreeable to the trust being treated as an agent of the company. It appears that there were two other 'sister concerns', one called 'Palmland Coimbatore' and another called 'Palmland Trading Company, Madurai'. On a report and a request for directions by the Liquidator, this Court directed him on 8th February 1973 to take possession of all the assets of the concerns said to be associated with the company, subject to the condition that objections, if any, would be considered and disposed of later. 3. On further enquiries, the Liquidator came to learn that the trust was a society registered under the T. C. Literary, Scientific and Charitable Societies Registration Act (Act XII of 1955), and that practically the same set of persons were in management of the company and the trust. The affairs of the two appeared to be so mixed up and inter connected that prima facie, at any rate, the Liquidator thought that the trust was only a cover for the activities of the company in another form and that in reality the assets of the trust were the assets of the company itself. 4. It was under the above circumstances that Application No. 187/73 initially came to be filed by the Liquidator on twenty-seventh June 1973. 4. It was under the above circumstances that Application No. 187/73 initially came to be filed by the Liquidator on twenty-seventh June 1973. The first prayer was to declare that the trust formed part of the assets of the company and to invest the Liquidator with powers to defend the suits filed in the name of the trust. The second was to stay further proceedings in certain suits filed by the trust and then pending in various courts, and also to stay the proceedings in O.P. No. 19/73 of the District Court, Trichur, which was a petition for dissolving the trust. Respondent No. 9 claiming to be a creditor of the company intervened and opposed the application. It appears that at the preliminary hearing, my learned brother, Viswanatha Iyer, J. who heard the matter, was intrigued by the circumstance that a charitable trust was carrying on the same kuri business as the company, with very little charity around and with the same set of persons managing them. Observed the learned Judge:- "...... it looks as though the two are one concern and the legal form of the two by themselves do not conclude the matter. The realities of the matter have to be looked into. To show that the trust is an agent, there may not be any express agreement for it. It is a matter of inference from facts. The way in which the business of the trust was carried on as disclosed by the accounts and other records may establish the real connection between the two. Number of circumstances may also have to be looked into. The question of lifting the veil by which the trust is clothed is a matter for which there must be proper pleading also." Suffice it to say that Viswanatha Iyer, J. felt that the matter required further examination. The liquidator was therefore given time to amend the pleadings and implead the trust, by order dated third December 1976. 5. The additional facts disclosed by the amendment are the following: Though housed in the same premises, the company and the trust were having separate staff, with separate registers of employment and Acquittance Rolls. The company was paying its staff from its funds, and the trust was paying its employees from its own funds. Separate account books for the company and the trust were being maintained. The company was paying its staff from its funds, and the trust was paying its employees from its own funds. Separate account books for the company and the trust were being maintained. Clear evidence whether the staff of one concern were doing the work of the other was not forthcoming, but according to the Ex Manager, subscriptions due to the company were sometimes collected by employees of the trust and vice versa. But the amounts were always being credited separately and there was no mixing up in this regard. However, the surplus funds of the Trust were always in the hands of the company, shown as 'advances from the trust', but re-transferred to the trust whenever it needed additional funds. There was no evidence to show that company funds were being utilised to settle the claims against the trust. The kuri agreements, credits, debits, etc., were all separate. Generally speaking, the staff of both the concerns were working in the same office, but attending to their respective work only. Where buildings were taken on rent by the company it was the company which was paying rent; and where the tenant was the trust, the rent was its responsibility. The building at Ernakulam (alone) had been let out jointly to the company and the trust, and the two were sharing the rent. The main business of the trust was also in kuries, though some business in 'Easy purchasing schemes' were also there. The trust had also been giving some educational aid to students. Seals of both the company and the trust were seen affixed in some of the books, but there was nothing to indicate that this was anything more than the result of both the seals being available in the same office. The statutory return of the company were being filed with the Registrar of Companies while those of the trust were being submitted to the District Registrar, Trichur as required by Act 12 of 1955. The Chartered Accountants had reported that accounts were being separately maintained and that the two were not being treated as one. 6. Instead of the original prayer for declaring the trust as an asset of the company, the amended prayer was to declare the real relationship between the company and the trust. 7. The former Secretary of the Company was examined as the Liquidator's witness and Exts. A-1 to A-27 were marked. 6. Instead of the original prayer for declaring the trust as an asset of the company, the amended prayer was to declare the real relationship between the company and the trust. 7. The former Secretary of the Company was examined as the Liquidator's witness and Exts. A-1 to A-27 were marked. According to P.W. 1, one Mr. Krishna Iyer was the Manager of both the company and the trust. The trust was formed for charitable purposes and for getting exemption from income tax. Charity was confined to giving of scholarship or financial assistance to some students of the Engineering and Medical Colleges. In places where the company had bank accounts, all collections were credited to such accounts; and where the trust alone had such accounts, company collections were also being credited thereto. But they were being separately accounted for in the books of the company and the trust. Substantial sums belonging to the trust were being retained by the company as advances, without any payment of interest, though there was no decision by the trust to advance amounts to the company. The company was using trust funds in the above fashion for its business, but the trust had had no occasion to similarly use company funds. It was untrue to suggest that the company was using the device of a trust to carry on its business. The company was not a member of the trust; it had invested no moneys in the trust in any manner, for any purpose. At all times, the trust was a creditor to the company. Of the 14 shareholders of the company only four were members of the trust. Ten shareholders of the company had had nothing to do with the trust; and three members of the trust had had nothing to do with the company also. The trust had seven members, each contributing Rs. 100. Income tax assessments, profit and loss accounts, etc., were at all times separate. 8. The oral and documentary evidence thus showed that the two concerns were two separate legal entities, formed under two different enactments, and treated separately for tax and accounting purposes. Structurally, the two were different, though the management of both were in the hands of the same persons, and both were carrying on the same business. The charitable activities of the trust were only nominal or minimal. But the company had invested nothing in the trust. Structurally, the two were different, though the management of both were in the hands of the same persons, and both were carrying on the same business. The charitable activities of the trust were only nominal or minimal. But the company had invested nothing in the trust. Its funds were not being utilised for the trust; in fact, it was always the other way round. Substantial sums belonging to the trust were being used by the company in its business, without payment of interest. The question is whether, on the above facts, it is possible to tear the veil, as counsel for the Liquidator wants, and hold that the company and the trust are in effect the same and that the assets of the trust are really the assets of the company. 9. If there is any one principle firmly entrenched in the regions of company law, it is that a company is a legal entity distinct from its members, and that it is not an agent or alias for its shareholders. The property of a company does not belong to its members, it is not a trustee of its properties for them. Even if a person has sole control over its affairs, his acts are not its acts. A company is often described as an artificial person with a legal personality of its own, and the fundamental attribute of this corporate personality is that it is capable of enjoying rights and being subject to duties which are not the same as those enjoyed or borne by its members. It may appear to be elementary to state that a corporation is not, like a partnership or family, a mere collection or aggregation of individuals; but there have been attempts to temper the rigidity of this rule to the needs of different fact situations, to ignore the form so as to arrive at the substance, and to discover the economic reality behind the veil, when the corporate existence was used as a cloak for fraud or for other conduct shocking to the judicial consciousness. It may therefore be useful to refer to the flow of case law on the subject, in as brief a manner as possible, before deciding whether the facts of the present case constitute an acceptable invitation for embarking upon an adventure in unveiling. 10. In the celebrated case of Salomon v. Salomon and Co. It may therefore be useful to refer to the flow of case law on the subject, in as brief a manner as possible, before deciding whether the facts of the present case constitute an acceptable invitation for embarking upon an adventure in unveiling. 10. In the celebrated case of Salomon v. Salomon and Co. ((1897) AC 22) the House of Lords emphatically underlined the principle that a company has a different and independent existence from its members, even when it is shown that in reality, there is only one person behind the legal cover with a few dummies set up by him, just to meet the statutory requirement. Salomon, who had a business of his own, converted it into a limited company, with himself and his wife and children as members. He held 20,001 out of the 20,007 shares issued, and the company purchased the business from Salomon for a fanciful price, the price being satisfied by debentures giving Salomon a charge over all the company's assets. The company soon ran into financial difficulties. The then holder of the debentures appointed a receiver and the company went into liquidation. The assets were sufficient to discharge the debentures, with nothing left for the unsecured creditors. They naturally objected to priority being given to the debentures, and the question arose whether they were valid when originally issued to Salomon. Vaughan Williams, J. held that the company was a mere alias, agent, trustee or nominee for Salomon who remained the real proprietor of the business and the whole arrangement was contrary to the intendment of the Companies Act. The Court of Appeal confirmed this view, adding that there was a fraud on the policy of the Act, but the House of Lords unanimously reverted the decision. It was held that the company was validly formed since the Act required only seven members holding at least one share each, and that it was not necessary that they should have substantial holdings or independent minds or wills. Either the company was there in which case it was a legal entity by itself and the business belonged to it and not to Salomon. If it was not there, there was no one to be treated as the agent of others. Either the company was there in which case it was a legal entity by itself and the business belonged to it and not to Salomon. If it was not there, there was no one to be treated as the agent of others. Lord Macnaghten said: "The company is at law a different person altogether from the subscribers.................; and though it may be that after incorporation the business is precisely the same as it was before, and the same persons are managers, and the same hands receive the profits, the company is not in law the agent of the subscribers or trustee for them." 11. In Ebbw Vale U.D.C. v. S.W.T.A. Licensing Authority (1951 (2) KS 366) the British Transport Commission had acquired all but two of the shares of an omnibus company providing transport services, when the company applied to the Licensing Authority for permission to increase the fares. On objection being raised by the Urban District Council that the services of the company were really services provided by the Commission (and that consequently the matter had to be approved by the Transport Tribunal) it was held that the company was still a legal entity different from the Commission. The rule in Salomon's case was directly applied and it was observed: ".................... a subsidiary company is not the agent of the parent company, but is an entirely separate entity. Its acts are not the acts of the parent company and the parent company is not responsible for its acts or defaults, in the absence of special provisions in some contract between the parties" 12. The question again cropped up before the Judicial Committee of the Privy Council, less than two decades ago, in Lee v. Lee's Air Farming Ltd. ( (1961) AC 12). There a qualified pilot by name Lee had formed a company for carrying on the business of aerial top dressing. He held all but one shares in the company and was its Governing Director and Chief Pilot. The company's aircraft which he was piloting crashed and he died. His widow claimed compensation against the company alleging that at the material time he was a worker. On the instructions of its insurers, the company opposed the claim on the ground that the same person could not be the employer and employee at the same time. The company's aircraft which he was piloting crashed and he died. His widow claimed compensation against the company alleging that at the material time he was a worker. On the instructions of its insurers, the company opposed the claim on the ground that the same person could not be the employer and employee at the same time. The New Zealand Court of Appeal recognised that a director of a company may properly enter into a service agreement with his company, but felt that on the facts where the deceased was the governing director and in whom was vested the full government and control of the company, it was difficult to hold that he was a servant, because no one could combine in himself ''the duty both of giving orders and obeying them''. But the Privy Council disagreed, and Salomon's case ((1897) AC 22) cited to emphasise that the company, as a legal entity, could have validly entered into a contract of service with its director. In answer to the argument that Lee had tried to over-reach the company by appointing himself as Chief Pilot and imposing on it the obligation to insure his life, Lord Morris of Borth-y-Guest said: "Always assuming that the company was not a sham, then the capacity of the company to make a contract with the deceased could not be impugned merely because the deceased was the agent of the company in negotiation. The deceased might have made a firm contract to serve the company for a fixed period of years. If within such period he had retired from the office of the Governing Director and other directors had been appointed, his contract would not have been affected. The circumstance that in his capacity as a shareholder he could control the course of events would not in itself affect the validity of his contractual relationship with the company ............ In their Lordship's view, it is the logical consequence of the decision in Salomon's case that one person may function in dual capacities." 13. Thus, ever since Salomon's case, the principle of separating the company from its members has never been seriously doubted; but judicial inventiveness, challenged by the nature of the problems thrown up by economic realities, has sometimes attempted to relax the bond of precedents, albeit indirectly, when such bonds threatened to suffocate the course of justice. Thus, ever since Salomon's case, the principle of separating the company from its members has never been seriously doubted; but judicial inventiveness, challenged by the nature of the problems thrown up by economic realities, has sometimes attempted to relax the bond of precedents, albeit indirectly, when such bonds threatened to suffocate the course of justice. Efforts of this kind have been made mostly in cases where the relationship between a parent company and its subsidiaries are involved. In Smith, Stone and Knight v. Birmingham Corporation (1939 (4) All. ER 116) some tests were formulated for examining whether a subsidiary is carrying on its own business, or the parent company's business; but while so doing, Atkinson, J., struck a note of caution that it would ultimately be a question of fact in each case. The facts of Re F.G. (Films) Ltd. (1953 (1) All. ER 615) are interesting. An American company called Films Group Incorporated financed the making of a film entitled "Monsoon" in India, to the extent of about 80,000, through a British company known as F.G. (Films) Ltd. This company had a capital of only 100, divided into one hundred shares of 1 each, ninety of which were held by the President of the American company (Mr. Judd) who, along with two other British subjects, were the directors of the British company. The British company had no place of business, apart from the registered office, and it did not also employ any staff. When it applied for registering the "Monsoon" as a British film, the Board of Trade refused on the ground that it was not established that the applicant had actually and substantially "undertaken" the arrangements necessary for the making of the film. In the opinion of the Board, the applicant had only acted as an agent or nominee of the American Company. Vaisey, J., confirmed the Board's decision in the following words: "It seems to me to be contrary, not only to all sense and reason, but to the proved and admitted facts of the case, to say or to believe that this insignificant company undertook in any real sense of that word the arrangements for the making of this film. Vaisey, J., confirmed the Board's decision in the following words: "It seems to me to be contrary, not only to all sense and reason, but to the proved and admitted facts of the case, to say or to believe that this insignificant company undertook in any real sense of that word the arrangements for the making of this film. I think that its participation in any such undertaking was so small as to be practically negligible, and that it acted, in so far as it acted at all in the matter, merely as the nominee of and agent for and American company ...... The suggestion that this American company and Mr. Judd were merely agents for the applicants is, to my mind, inconsistent with and contradicted by the evidence, and a mere travesty of the facts, as I understand them and hold them to be. The applicants' intervention in the matter was purely colourable. They were brought into existence for the sole purpose of being put forward as having undertaken the very elaborate arrangements necessary for the making of this film and of enabling it thereby to qualify as a British film." The decision, it may be noticed, rests on two foundations: one, the finding that the applicant had not really and substantially 'undertaken' the arrangements for making the film, as required by the Cinematograph Films Act, and two, on the view that it was only an agent of the American company brought into existence for a colourable purpose. The case thus furnishes an illustration where the principle of agency was invoked to prevent the use of corporate personality for the evasion of statutory regulations; the legal form was not permitted, as in Lee's case, to triumph over the substance. 14. Another illustration of courts going by the substance, and not by the form, is furnished by Re London Housing Society's Trust Deeds (1940 Ch. 777), where a provident society converted itself into a company and the question arose whether the pension fund established by the society and which vested in its trustees could continue for the benefit of the employees of the company, after the society had ceased to exist. Farwell, J. held that the only practical way of dealing with such a question was to treat the two legal entities (i.e., the society and the company) as "the same thing in different costume for this purpose". Farwell, J. held that the only practical way of dealing with such a question was to treat the two legal entities (i.e., the society and the company) as "the same thing in different costume for this purpose". What is important here to notice is that the costume was swept aside only for a limited purpose. 15. Turning to more recent cases, one deserving notice is Littlewoods Mail Order Stores v. I.R.C. ( 1969 (1) WLR 1241 ). Littlewoods (the company) was carrying on business from a large shop and offices in London. In 1947, the building was bought by a charitable society, and they let it out to the company for 99 years at a rent of 23,444 per year. This was a small rate of return for the capital outlay; and when money value went down with further inflation, the company and the society put through a deal in 1958 which was advantageous to both. The society transferred the freehold in the premises to F.M. Co., Ltd., a wholly owned subsidiary of the company. The transferees let the building to the society for 22 years and 10 days at a nominal rent of 6 per year, and the society granted an under-lease to the company for 22 years, the annual rent being 42,450. In short, the company which had a 99 years lease at 23,444 per year surrendered the same and took instead another lease for 22 years at 42,450 with the prospects that after 22 years, it could have the freehold itself in hand through the subsidiary. The whole plan was put through by executing six deeds more or less simultaneously. The society got the advantage of a higher rent for 22 years free of tax, as it was a charity, and the company could claim deduction from their profits for the full rent they paid. These advantages were obviously at the expense of the revenue; and the revenue was of the view that the whole of the annual rent of 42,450 was not deductible as trade expenses. Part of it i.e., the difference between the 1958 rate and the earlier one, was paid to acquire a capital asset (the freehold), according to them. Ploughman, J. decided in favour of the company, but on appeal by the Crown, the Court of Appeal took a different view. Part of it i.e., the difference between the 1958 rate and the earlier one, was paid to acquire a capital asset (the freehold), according to them. Ploughman, J. decided in favour of the company, but on appeal by the Crown, the Court of Appeal took a different view. Lord Denning, M. R. turned down the plea that following Salomon's case, the separate and independent legal existence of F.M. Co., Ltd., should be recognised and respected. It was observed: "The doctrine laid down in Salomon v. Salomon and Co., has to be watched very carefully. It has often been supposed to cast a vail over the personality of a limited company through which the courts cannot see. But that is not true. The courts can and often do draw aside the veil. They can, and often do, pull off the mask. They look to see what really lies behind. The legislature has shown the way with group accounts and the rest. And the courts should follow suit." Sachs and Karminski, LJJ recognised the rule that for tax purposes, the parent and subsidiary companies were to be treated as separate legal entities, but held that the true nature of the transactions had to be considered before deciding as to how, on the principles of proper commercial accounting the two segments of the overall annual payment were to be allocated. So examined, it was found that 19,006 out of the annual rent of 42,450 was being spent for the purpose of acquiring a capital asset "which happened to have been put into the ownership" of F.M. Co. It was an expenditure to secure the advantage of an enduring benefit for the tax payer, and not for the trade purposes of the relevant years only. The decision of Ploughman, J., was thus unanimously reversed. 16. While the above reflects judicial willingness to thwart the parent-subsidiary combination using the corporate cover for defrauding revenue, the later decision of the Court of Appeal in DHN Food Distributors Ltd. and others v. Borough of Towar Hamlets (1976 (3) All. ER 462) stands on a somewhat different footing. No question of a company or companies attempting to defraud anyone or of using the veil for any illegal purpose had arisen in that case, DHN was a company formed for carrying on business in groceries. ER 462) stands on a somewhat different footing. No question of a company or companies attempting to defraud anyone or of using the veil for any illegal purpose had arisen in that case, DHN was a company formed for carrying on business in groceries. In order to purchase premises from which to trade, certain borrowing arrangements were made with a bank. In 1954, the premises were purchased by the bank in the name of "Bronze", one of its subsidiaries, and Bronze contracted to sell it to DHN who had in the meanwhile occupied it and had started trading. The vehicles used in the business belonged to a subsidiary of DHN. In 1966, DHN arranged funds from another source; and in order to save stamp duty 6n a conveyance by Bronze, it was decided to purchase the shares of Bronze from the bank, and DHN repaid the loan to the bank. The legal title thus remained in Bronze which had by that time become another subsidiary of DHN, but DHN continued to enjoy the property. In 1969, the local authority acquired the premises and paid compensation to Bronze, but DHN's claim for compensation for "disturbance" was negatived on the ground that it was only a licensee of Bronze, with no interest in the land, legal or equitable. Before the Court of Appeal, three points were raised on behalf of DHN first that they had an equitable interest in the land; second, they had at least an irrevocable licence; and third, the corporate veil should be lifted and DHN held to be the owners. Lord Denning, M. R. declined to accept the first point, but accepted the second. Both DHN and Bronze had the same directors, and DHN were really in a position to carry on the business in the premises as long as they liked but for the compulsory purchase. The directors of Bronze could not have turned themselves out as directors of DHN; and a contract whereby Bronze granted an irrevocable licence to DHN to carry on business on the premises could thus be implied. On the question of lifting the veil, it was observed that in spite of the difference in legal personalities, "They should not be treated separately so as to be defeated on a technical point. They should not be deprived of the compensation which should justly be payable for disturbance. On the question of lifting the veil, it was observed that in spite of the difference in legal personalities, "They should not be treated separately so as to be defeated on a technical point. They should not be deprived of the compensation which should justly be payable for disturbance. The three companies should, for present purposes, be treated as one ........" Goff and Shaw LJJ concurred, holding that DHN had an equitable interest. The effect of the conveyance in favour of Bronze in 1964 was to create a resulting trust in favour of the Bank, and that equitable interest became vested in DHN when they repaid the bank. Goff L.J. also thought that the case was one in which the corporate veil could be pierced, but the observations in this regard were cautious: "I wish to safeguard myself by saying that so far as this ground is concerned, I am relying on the particular facts of this case. I would not at this juncture accept that in every case where one has a group of companies one is entitled to pierce the veil, but in this case, the two subsidiaries were wholly owned; further, they had no separate business operations whatsoever; thirdly, in my judgment, the nature of the question involved is highly relevant, namely whether the owners of this business have been disturbed in their possession and enjoyment of it." Neither Lord Denning M. R. nor Goff L.J. rested the decision entirely on the basis of lifting the veil; an irrevocable licence was found by one, and an equitable interest by the other, so that the doctrine of lifting the veil was pressed into service only as an alternate ground. And even then, qualifications like "for present purposes" and "in the nature of the question involved", were carefully added. 17. Scanning the decisions referred to above, and some others cited by counsel on either side, the best that could be said is that respect for the corporate personality as underlined in Salomon's case is still the dominant current, although there are some under-currents drawing towards what may be called the substance of the matter as distinct from the form, or the economic reality behind the facade. The emerging picture is somewhat hazy, and no decision throws up a general principle. The emerging picture is somewhat hazy, and no decision throws up a general principle. Courts have always frowned upon fraud; and in that way, it is understandable that they have not been allowing the corporate form to be used for the purposes of fraud, or as a device to evade contractual or other legal obligations. Even in Salomon's case, the House of Lords was careful to record a finding that Salomon had played no fraud on the company (as the other share-holders were always aware of what was being done) or on his own creditors, who had been fully paid. That the corporate veil is likely to be pierced for discouraging fraud or other improper conduct, is perhaps the only general rule one could distil from the decisions. In some cases, of course, courts have held that a holding company was in fact carrying on a business through the agency of its subsidiary. In others, where 'residence' of the company was in issue, courts have locked not to the place of the company's registration, but to the way its affairs are actually managed by those behind it, in order to fix up what is called the centre of management. The same method has been followed where a company is liable for crimes involving proof of mens rea. The mental state of those who in fact determine and control the affairs of the company is attributed, in such cases, to the legal abstraction called the company. Imposition of liability in misfeasance proceedings on those who are found responsible for certain state of affairs, is an another example of the veil being torn as under or overlooked; but here it is the legislature that permits such an approach. Similar is the case where liability is fastened on the members of the company where their number falls below the statutory minimum. In areas where pulling off the mask is not directly attributable to the statutory scheme, or at least prompted by it, courts have used the doctrine with extreme care and caution, often emphasising the facts of the case and the limited purpose for which it was being invoked in each. In areas where pulling off the mask is not directly attributable to the statutory scheme, or at least prompted by it, courts have used the doctrine with extreme care and caution, often emphasising the facts of the case and the limited purpose for which it was being invoked in each. Sparingly, spasmodically, a trend has however been set in motion; but as Gore Brown ( Gore Brown On Companies"- 43rd Edition.) puts it: "It is not possible to formulate any single principle as the basis of these decisions, nor are all the decisions, as to when the separate legal entity of the company must be respected or when it may be disregarded, entirely consistent with one another". Gower (Principles of Modern Company Law - 3rd Edition.) observes that notwithstanding all the attempts of courts to lift the veil, it generally remains "opaque and impassable"; and that except stating that the rigidity of Salomon is being relaxed somewhat more liberally, it is not possible to go further "in attempting to present in a rational form a development which has been essentially haphazard and irrational. Until very recently, the courts and the legal profession have failed to see the interconnection between the various situations in which the problem arises; with the result that relevant decisions concerning one situation have not been quoted in litigation concerning another". And according to Palmer (Palmer's Company Law - 22nd Edition - Vol. I), courts are more inclined to lift the veil where questions of control are in issue than where a question of ownership arises. The trend was noticed by our Supreme Court in Tata Engineering and Locomotive Co., Ltd. v. State of Bihar ( AIR 1965 SC 40 ) by observing that: "As a result of the impact of the complexity of economic factors, judicial decisions have sometimes recognised exceptions to the rule about the juristic personality of the corporation. It may be that in course of times these exceptions may grow in number and to meet the requirement of different economic problems, the theory about the personality of the corporation may be confined more and more". At the same time, it was added: "........ it would not be possible to evolve a rational, consistent and inflexible principle which can be invoked in determining the question as to whether the veil of the corporation should be lifted or not. At the same time, it was added: "........ it would not be possible to evolve a rational, consistent and inflexible principle which can be invoked in determining the question as to whether the veil of the corporation should be lifted or not. Broadly stated, where fraud is intended to be prevented, or trading with an enemy is sought to be defeated, the veil of a corporation is lifted by judicial decisions and the shareholders are held to be persons who actually work for the corporation". An attempt to crack open the corporate shall thus involve a plunge into unknown waters under conditions of poor visibility, with no charter or compass to guide, except perhaps the murky lights of the decisions already seen. If the facts are clear and the inferences compulsive, one may probably take courage in both hands and make a start. But do the facts of the present case fit in with any of the exceptions formulated? 18. The trust, it is admitted, is not a subsidiary of the company. The company had, at the material time, 14 shareholders of whom only four were members of the trust; and the remaining three members of the trust were not shareholders of the company. The company had, admittedly again, invested no funds in the trust. Nothing has also been brought out to show that the company's business was being diverted to the trust, knowingly or without design. There is no indication whatsoever that the trust could not have carried on its business, even if the company and its business were not there. Parent subsidiary relationship of complete interdependence, or of one being subservient to the other, is thus conspicuously absent. Agency in business, or even in respect of specific transactions, has not been established. No motive is alleged and no fraud is also made out. In the course of his evidence, the secretary of the company (who was also a member of the trust) no doubt stated that the trust was formed for charitable purposes and also "for getting exemption from tax". Even if this statement amounts to an admission that the trust was formed for saving income tax for the company, and even assuming that such an intention could have actually been carried out by such a device, there is no material at all to hold that any such evasion had actually been attempted. Even if this statement amounts to an admission that the trust was formed for saving income tax for the company, and even assuming that such an intention could have actually been carried out by such a device, there is no material at all to hold that any such evasion had actually been attempted. The Official Liquidator is also not the person who should worry about tax evasion; and the plea is not to treat the company and the trust as one, for tax purposes. Specific transactions said to be fraudulent in nature, or a case that the very formation of the trust involved a fraud on the company or its creditors or on its business, are also not anywhere in the horizon. No decided case goes to the extent of holding that two different legal entities (even when they are parent and subsidiary) should be treated as one, simply because they do the same kind of business and have some directors or members in common, or even because the persons in actual control are the same. In the Smith, Stone and Knight case (1939 (4) All ER 116) where Atkinson, J. formulated certain tests for establishing agency, the main question asked was whether the profits of the one were in effect the profits of the other. That test fails here, because the company or its shareholders (as shareholders) had no interest at all in the profits of the trust; and as will presently be noticed, even the members of the trust had no such interest. The proved facts do not also disclose 'colourable intervention' of the type noticed by Vaisey, J. in the F.G. (Films') case (1953 (1) All ER 615). Of course, the trust had allowed its funds to be used by the company in a manner which may be illegal or imprudent; but that again can only be breach of trust on one side, and not a consideration to hold that both the sides were one and the same. 19. The trust, as already noticed, was registered under the T.C. Literary, Scientific and Charitable Societies Registration Act, 1955. 19. The trust, as already noticed, was registered under the T.C. Literary, Scientific and Charitable Societies Registration Act, 1955. That Act does not provide that on registration, a society would become a body corporate with perpetual succession and a common seal; but it contains provisions sufficient to hold that a society registered thereunder comes very close to being recognised as a juridical person with most of the advantages and disadvantages of incorporation. S.8 vests the properties of the society in the trustees. S.9 provides that it can sue and be sued in the name of its office bearers or trustees; and S.10 says that the proceedings will not abate if they die or vacate office. S.11 stipulates that a decree against a society can be executed only against its properties, and not against the property of the persons who represented it in the suit. S.24 lays down that on the dissolution of a society, its surplus funds shall not be distributed among the members, but should be handed over to Government or to other societies having similar aims and objects. Under clause (6) of the Memorandum of Association of the trust, a person shall cease to be its member by resignation, removal, or death. Clause (28) prohibits payment of dividends to its members; the income and property of the trust shall be applied solely towards the promotion of its objects. Thus the trust is itself a legal entity with its members having no interest in its properties or income, or even in the surplus becoming available on dissolution. How can any one then say that simply because some members of the trust are also shareholders of the company, the properties of the trust should be treated as the properties of the company? To do so will be to fly against the clear legislative provisions, to ignore the basic character of a trust, and to permit its surplus funds being diverted for the satisfaction of the company's creditors. It is not the function of a court to defeat the objects of a trust; much less in a case like the present where the legislature has, under the provisions of S.25, appointed the court as the guardian and protector of the charity. It is not the function of a court to defeat the objects of a trust; much less in a case like the present where the legislature has, under the provisions of S.25, appointed the court as the guardian and protector of the charity. I do not think the doctrine of lifting the veil can be pushed or stretched so far as to permit a declaration that the properties of one legal entity are the properties of another, without there being any transfer in any manner known to law, or recognised in equity. Palmer, it bears repetition, has been careful in observing that corporate veils are torn away mainly in the realms of control, and not when questions of ownership arise. 20. I am not satisfied that this is a case where the declaration prayed for can be granted. I see no reason to permit or direct the liquidator to intervene in the suits relating to the trust and pending in the subordinate courts, on the sole footing that the company and the trust are the same. I dismiss this application, but without any order as to costs.