CA Intermediate · Corporate and Other Laws · Preliminary

Meridian Agro Pvt Ltd, a company with a paid-up share capital of Rs 3 crore, is wholly owned by Mr. Raghav Iyer, who holds all the shares through his nominee. A supplier argues that Raghav should personally pay the company's trade dues because he controls everything. What is the correct legal position under company law?

A company is a separate legal person distinct from its members, so its trade dues are its own liability. Holding all the shares does not make Raghav personally liable unless the court lifts the veil for fraud or misuse of the corporate form.

1. ARaghav is personally liable because a company with a single real owner has no separate existence
2. BThe company is a separate legal person, so the dues are its own liability, and Raghav is not liable merely because he holds all shares unless fraud or misuse of the corporate form is shownCorrect
3. CRaghav is liable to the extent of his unpaid share capital only, and this applies automatically to every creditor
4. DThe supplier may recover directly from Raghav because he is the sole shareholder, and the court need not lift the veil