1998 (2) TMI 463 - HC - Companies Law

Summary

Issues:
Jurisdiction of Regional Director to issue order under section 22 of the Companies Act, 1956.

Analysis:
The case involved a dispute between a writ petitioner and respondent companies over the use of the name 'Kalpana.' The question was whether the Regional Director had the authority to issue an order dated 30-6-1997 under section 22 of the Companies Act, 1956. The petitioner argued that the Regional Director lacked the power to decide the matter, especially when the issues were pending in a civil suit. The respondent companies contended that the High Court had no jurisdiction to interfere unless there was a procedural irregularity or violation of natural justice. They cited relevant case laws to support their position.

Legal Provisions:
Sections 20, 21, and 22 of the Companies Act, 1956 were crucial to the case. Section 20 prohibits the registration of companies with undesirable names, while section 22 deals with the rectification of a company's name if it resembles an existing company's name. The petitioner's counsel argued that under section 22(b), the Central Government could direct a company to change its name if it closely resembled an existing company's name.

Arguments:
The petitioner's counsel contended that the Regional Director's order was invalid as the authority did not have the power to make such a decision. They emphasized that the matter was sub judice in a civil suit, making the order premature and non-binding. On the other hand, the respondent companies' counsel argued that the High Court should not intervene unless there was a procedural irregularity or violation of natural justice, citing relevant case laws to support their stance.

Judgment:
The Court held that the Regional Director had jurisdiction to issue the order under section 22 of the Companies Act, 1956. The Court noted that all disputed facts were pending adjudication in the civil suit, and there was no apparent illegality or error in the Regional Director's order. The Court declined to interfere with the Regional Director's decision, emphasizing that it could not delve into matters of evidence. Consequently, the writ application was dismissed, and no costs were awarded. Additionally, the prayer for a stay of the order's operation was refused.