Piercing the corporate veil in proclamation proceedings permits attachment of shell company property used by an absconding accused.

In proceedings under Sections 82 to 84 of the Code of Criminal Procedure, 1973, the Delhi HC held that the corporate veil could be lifted where a company was shown to be a shell entity controlled by the absconding accused and used to hold properties without genuine business activity. The Court applied the narrow doctrine of piercing the corporate veil to prevent misuse of the corporate form and permitted attachment of property standing in the company's name. It also found no legal infirmity in the rejection of the petitioner's objection under Section 84. The challenge to the attachment therefore failed, and the company's property could be proceeded against under the proclamation and attachment provisions.

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Issues: Whether, in proceedings under Sections 82 to 84 of the Code of Criminal Procedure, 1973, the corporate veil could be lifted and the property of the petitioner company attached on the footing that the company was a shell entity controlled by the absconding accused.

Analysis: The petition challenged the attachment of company assets on the premise that a company is a separate legal person and that only the proclaimed person's property can be attached. The Court noted, however, that the material on record showed the company to be closely held, with the overwhelming shareholding and control resting with the absconding accused and his family, and that the entity was being used to hold properties without conducting genuine business. In such circumstances, the restrictive doctrine of piercing the corporate veil was applied to prevent misuse of the corporate form and to permit attachment of property standing in the company's name. The Court also found no legal infirmity in the rejection of the petitioner's objection under Section 84.

Conclusion: The challenge to the attachment failed; the corporate veil was rightly lifted and the company's property could be proceeded against under the proclamation and attachment provisions.

Ratio Decidendi: A company's separate legal personality may be disregarded in a narrow class of cases where the company is a mere camouflage or sham used by the wrongdoer to avoid liability, and in such cases its property may be attached in proceedings under Sections 82 to 84 of the Code of Criminal Procedure, 1973.

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