2018 (7) TMI 2165 - HC - Companies Law

Deposit of permission fees for transfer/sub-lease of the sub-leasehold of the writ petitioner - change of name by Company - HELD THAT - Both Annexures P/20 and P/27 which treat a due change in the name of a company incorporated under the Companies Act 1956 to be a creation of a new entity or at the very least a reason for lifting the corporate identity to see the manner in which the shareholders have changed are bad in law and arbitrary and illegal and contrary to the law of the land and thus public policy and show non-application of mind to the matters of record and they are so unreasonable that no reasonable man on the face of the same facts could have come to the same conclusion. Thus they are also perverse within the meaning of law. They are therefore quashed. Furthermore any attempt to treat the writ petitioner under its old name and the changed name as two different entities would be bad in law and wholly without jurisdiction and in violation of Section 23 of the Companies Act 1956 as interpreted authoritatively and must be struck down and quashed. As a consequence any demand made by the respondents or any of them or those claiming there under to obtain permission fees for any fresh deed of rectification to change the name of the sub-lessee in the deed of sublease or rectification deed of 2005 or 2012 to the changed name of the writ petitioner or as processing fees for mutation of the said changed name must be held to be equally without jurisdiction and impermissible on the part of the respondents or any of them. The respondents and each of them including the respondents No. 1 2 3 4 and 5 and each of them are commanded to record the change of name of BNKe Solutions Private Limited to the changed name of the writ petitioner Gopi Vallabh Solutions Private Limited (the petitioner No. 1) without payment of any permission fee as demanded - Petition allowed.

Issues Involved:
1. Legality of the demand for permission fees for the change of the company's name.
2. Interpretation and application of Sections 21 and 23 of the Companies Act, 1956.
3. Allegations of structural changes in the company post name change.
4. Requirement of a new sub-lease deed due to the name change.
5. Violation of natural justice and principles of corporate veil.

Detailed Analysis:

1. Legality of the Demand for Permission Fees:
The writ petitioners challenged the demands made by the respondents for permission fees for the transfer/sub-lease of the sub-leasehold due to the company's name change. The court found that the change of name from BNKe Solutions Private Limited to Gopi Vallabh Solutions Pvt. Ltd. did not affect the company's rights as a sub-lessee. The demand for permission fees was based on an incorrect interpretation of the law, as the change of name does not constitute a transfer of leasehold rights.

2. Interpretation and Application of Sections 21 and 23 of the Companies Act, 1956:
Sections 21 and 23 of the Companies Act, 1956 were crucial in this case. Section 21 allows a company to change its name by special resolution and with the approval of the Central Government. Section 23 states that the change of name does not affect any rights or obligations of the company. The court emphasized that the change of name does not create a new entity and does not require a new sub-lease deed. The statute makes it clear that the rights of the company remain unaffected by the name change.

3. Allegations of Structural Changes in the Company Post Name Change:
The respondents alleged that there were structural changes in the company's Articles of Association after the name change, suggesting the formation of a new company. However, the court found that these allegations were not substantiated with specific details and were not communicated to the writ petitioner. The court held that the change in the Articles of Association did not imply the creation of a new company and did not justify the demands made by the respondents.

4. Requirement of a New Sub-Lease Deed Due to the Name Change:
The respondents argued that a new sub-lease deed was required due to the name change, treating it as a transfer of leasehold rights. The court rejected this argument, stating that the change of name under the Companies Act, 1956 does not necessitate a new sub-lease deed. The court quashed the demands for permission fees and processing fees for mutation, declaring them illegal and arbitrary.

5. Violation of Natural Justice and Principles of Corporate Veil:
The court noted that the respondents did not provide a reasoned order or a speaking order addressing the writ petitioner's representation. The court emphasized that lifting the corporate veil requires specific allegations of fraud, wrongdoing, or public inconvenience, none of which were present in this case. The court referenced authoritative precedents, including New Horizons Limited v. Union of India and State of Uttar Pradesh v. Renusagar Power Co., to support the principle that a change of name does not affect the corporate identity or create a new entity.

Conclusion:
The court quashed the demands for permission fees and processing fees for the name change, declaring them illegal, arbitrary, and contrary to the law. The respondents were directed to record the change of name without any additional fees. The writ petition was allowed, and the respondents were instructed to act on the communication of the order.

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