2015 (5) TMI 1262 - HC - Companies Law

Jurisdiction - power of respondent No.2 u/s 22 of the Companies Act to direct the appellant Company to delete the word VARDHAMAN from its existing name - HELD THAT - The power under Section 22 of the Companies Act is an independent power provided to the Central Government and the remedy of filing suit for injunction restraining the defaulting company from using its registered trade name and mark is a different remedy available to the aggrieved company. The learned Single Judge while relying upon a judgment of the Karnataka High Court in Surya Elevators and Escalators India Private Limited Bangalore Vs. Union of India and others 2012 (9) TMI 1256 - KARNATAKA HIGH COURT has rightly held that remedy under Section 22 of the Companies Act was not barred once the respondent Company had taken remedy of common civil law. Under Section 22 of the Companies Act the Central Government has no jurisdiction to grant injunction against the use of an undesirable name by a company whereas in a suit for permanent injunction the Court cannot pass an order as could be passed under Section 22 of the Companies Act by the Central Government directing the offending company to delete the registered trade mark of the previously registered company from its name. The jurisdiction of the Central Government under Sections 20 and 22 of the Companies Act and the jurisdiction of the Civil Court operate in two different fields - Thus there are no force in the first contention raised by learned counsel for the appellant Company. The second contention raised by learned counsel for the appellant Company that in the facts and circumstances of the case by its conduct waiver or acquiescence the respondent Company be estopped from getting the word VARDHAMAN deleted from the existing name of the appellant Company is also not sustainable. The third contention raised by learned counsel for the appellants is also without any substance. Whether in a given case the act and conduct of registration of a company with a particular name is undesirable or not is a question of inference. On the basis of the proven fact the said inference can be drawn. Therefore the contention that in the order passed by respondent No.2 it was not recorded that the act of the appellant Company in using the registered trade mark of the respondent Company was undesirable has no effect. In the facts and circumstances of the instant case it has been proved that the appellant Company got itself incorporated with the name M/s Vardhaman Crop Nutrients Private Limited which was identical to the already incorporated respondent Company; that VARDHAMAN was already registered trade mark of the respondent Company; and that both the companies are dealing in the same business - On the basis of these facts inference could have been drawn that the act of the appellant Company was undesirable. Thus there are no force in this contention. In support of the fourth contention that there are 401 different Companies registered under the Companies Act with the Registrar of Companies with the name VARDHAMAN learned counsel for the appellants has drawn our attention to the list of 401 Companies annexed with the writ petition as Annexure P-22. This contention is also devoid of any merit because out of this list only the appellant and the respondent Company are engaged in the business of manufacturing and marketing Class I fertilizers water soluble fertilizers and micro nutrients - In the present case the respondent Company had filed application under Section 22 of the Companies Act only against the appellant Company. On that application respondent No.2 after satisfying himself that registration of the appellant Company is undesirable directed the appellant Company to delete the word VARDHAMAN from its existing name. Thus there are no illegality in the said direction issued by respondent No.2. There are no merit in the instant appeal - appeal dismissed.

Issues Involved:

1. Jurisdiction of the Regional Director under Section 22 of the Companies Act, 1956.
2. Alleged waiver or acquiescence by the respondent company.
3. Requirement of a finding that the appellant's use of the trade mark was "undesirable."
4. Existence of other companies with similar names.

Detailed Analysis:

1. Jurisdiction of the Regional Director under Section 22 of the Companies Act, 1956:

The appellant company argued that the Regional Director (respondent No.2) lacked the jurisdiction to direct the deletion of "VARDHAMAN" from its name, asserting that the respondent company should have sought relief through a common law suit for injunction. The court found no merit in this argument, emphasizing that Section 22 of the Companies Act provides the Central Government with an independent power to direct a newly registered company to change its name if it is identical with or too nearly resembles a registered trade mark of an existing company. This power operates independently of the remedy available through a civil suit for injunction under common law.

2. Alleged Waiver or Acquiescence by the Respondent Company:

The appellant claimed that the respondent company had waived its rights or acquiesced to the use of the trade mark "VARDHAMAN" by entering into a marketing agreement on 03.08.2009. The court rejected this contention, noting that the registered trade mark "VARDHAMAN" had been in use by the respondent company since 1991. The court referred to Section 33 of the Trade Marks Act, which provides that acquiescence must be for a continuous period of five years to bar the proprietor from taking action. In this case, the application for rectification was filed within five years of the alleged acquiescence, negating the appellant's claim of waiver.

3. Requirement of a Finding that the Appellant's Use of the Trade Mark was "Undesirable":

The appellant contended that respondent No.2 did not explicitly record a finding that the use of the trade mark by the appellant was undesirable. The court dismissed this argument, explaining that the inference of undesirability could be drawn from the established facts: the appellant's name was identical to the respondent's, the trade mark "VARDHAMAN" was registered, and both companies operated in the same business domain. Thus, the act of the appellant company was deemed undesirable.

4. Existence of Other Companies with Similar Names:

The appellant argued that there were 401 companies registered with the name "VARDHAMAN," asserting that it was unfair to single out the appellant. The court found this argument unconvincing, as only the appellant and the respondent company were engaged in the same business of manufacturing and marketing fertilizers and nutrients. The court noted that the right to challenge under Section 22 of the Companies Act lies with the aggrieved company, and in this case, the respondent company had specifically raised the issue against the appellant.

Conclusion:

The court upheld the order of respondent No.2, directing the appellant company to delete "VARDHAMAN" from its name, as the registration was found undesirable due to the identical nature of the businesses and the registered trade mark held by the respondent company. The appeal was dismissed, granting the appellant company three months to comply with the order.

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