M. KATJU, R. S. TRIPATHI, JJ.

( 1 ) THIS writ petition has been filed for a writ of certiorari quashing the impugned recovery proceedings initiated against the petitioners under the U. P. Trade Tax Act.

( 2 ) HEARD learned counsel for the parties.

( 3 ) THE petitioners are the Directors of M/s Sikandrabad Chemicals Private Limited which is a limited liability Company. For the assessment year 1995-96 against the aforesaid Company under the Central Sales Tax Act a demand of Rs. 7,66,072/- was vised by the Assessing Officer and pursuant thereto the recovery proceedings were initiated against the petitioners.

( 4 ) IT is alleged by learned counsel for the petitioners Sri M. Manglik that the petitioners being directors of the Company are not personally liable to pay the dues of the Company.

( 5 ) WE have carefully considered the submissions of the parties. It is true that the legal principle is that a Company is a separate legal entity distinct from its Directors and shareholders vide solomen v. Solom and Co. Ltd. 1897 AC 22 (HL ). However, the principle of piercing the veil of corporate personality has also been evolved by the Court, vide Subhra Mukherjee v. Bharat coking Coal Ltd. 2000 (3) SCC 312, Calcutta Chromotype Ltd. v. Collector of Central Excise air 1998 SC 1651, New Horizons Limited v. Union of India 1995 (1) SCC 478, Delhi development Authority v. Skipper Construction Co. Pvt. Ltd. 1996 (4) SCC 622, CIT v. Minakshi mills AIR 1967 SC 819. Juggilal Kamapat v. CIT AIR 1969 SC 932, etc.

( 6 ) IN the Delhi Development Authority case (supra), the Supreme Court following its decision in tata Engineering and Locomotive Company Ltd. v. State of Bihar AIR 1965 SC 40 observed :

( 7 ) THE law as stated by Palmer and Gower has been approved by this Court in Tata Engineering and Locomotive Company Limited v. State of Bihar (1964) 6 SCR 895 : (AIR 1965 SC 40 ). The following passage from the decision is apposite (para 27 of AIR)"gower has classified seven categories of cases where the veil of a corporate body has been lifted. But 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 corporate personality should be lifted or not. Broadly, where fraud in intended to be prevented, or trading with enemy is sought to be defeated, the veil of corporate is lifted by judicial decisions and the shareholders are held to be persons who actually work for the corporation. "

( 8 ) IN the same decision the Supreme Court also observed that the concept of corporate entity was evolved to encourage and promote trade and commerce but not to commit illegalities or to defraud people. Where therefore, the corporate character is employed for the put pose of committing illegality or for defrauding others, the Court would ignore the corporate character and will look at the reality behind the corporate veil so as to enable it to pass appropriate orders to do justice between the parties concerned. The Supreme Court also observed quoting gowers modern Company Law- "where the protection of public interest is of paramount importance or where the company has been formed to evade obligation imposed by the law, the Court will disregard the corporate veil. "

( 9 ) IN State of U. P. v. Renusagar Power Co. 1988 (4) SCC 59 the Supreme Court observed :

"it is high time to reiterate that in the expanding horizon of modern jurisprudence, lifting of corporate veil is permissible. Its frontiers are unlimited. It must however, depend primarily on the realities of the situation. The horizon of the doctrine of lifting of corporate veil is expanding. "

( 10 ) IN Tata Engineerings case (supra) the Supreme Court observed that doctrine of the lifting of the veil thus marks a change in the attitude that the law had originally adopter towards the concept of the separate entity or personality of the Corporation. As result of the impact of the complexity of economic factors, judicial de

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