2024 (11) TMI 1290 - HC - Companies Law

Rejection of Application filed by Petitioner for rectification/change in the name of the Respondent No. 4 Company - Section 16 (1) (b) of the Companies Act, 2013 - HELD THAT - Section 16 of the Companies Act gives the power to the Central Government through the Office of the concerned Regional Director hereinafter referred to as RD to rectify the name of a company. Sub-Section (1) of Section 16 of the Companies Act contemplates two circumstances under which the name of a company can be rectified. If such name resembles the name of an existing company or is identical to the name of an existing company, the RD may suo moto under the provisions of Section 16 (1)(a) of the Companies Act issue directions to a company to change its name, which directions require compliance within three months. A Coordinate Bench of this Court in a case CGMP Pharmaplan (P) Ltd. v. Regional Director, Ministry of Corporate Affairs 2010 (7) TMI 272 - HIGH COURT OF DELHI has while explaining this provision, relied on a Judgment of the Division Bench in Montari Overseas Ltd. v. Montari Industries Ltd. 1995 (12) TMI 268 - HIGH COURT OF DELHI to explain that the powers of a Civil Court while examining and determining in a passing off action, if one name is confusingly deceptive or similar to another name, is independent of the jurisdiction of the Regional Director in respect of registering of a company s name. It was however held that the Regional Director cannot approach the case, as it would in a trademark dispute. In the facts of the present case, both the parties have claimed ownership and rights over the mark Panchhi and have disputed each other's submissions. Admittedly, both Petitioner and Respondent No. 4 form part of the same extended family. Both are also engaged in legal proceedings in various fora including against each other in relation to the impugned trademark and other intellectual property related rights. The Impugned Order refers to these disputes, however, it goes on to give a finding of ownership on the mark Panchhi , which cannot be sustained. In the present case, the parties are two entities which are from the same lineage, which are embroiled in disputes over the intellectual property of a brand. The Regional Director while deciding an Application under Section 16 of the Companies Act cannot undertake an examination of the marks as the Intellectual Property Division of a Court would. It cannot also decide the ownership of a mark while deciding such an Application under Section 16 of Companies Act, where these are disputed contentions. The same is not the subject matter of jurisdiction of the Regional Director under the Companies Act. The Impugned Order is set aside - Petition disposed off.

Summary

Issues:
The judgment involves issues related to the rejection of an application for rectification/change in the name of a company under Section 16 of the Companies Act, 2013, ownership of a trademark, jurisdiction of the Regional Director, and the powers of the Central Government in directing a change of company name.

Analysis:

Issue 1: Rejection of Application for Rectification/Change in Company Name
The petitioner sought a writ to quash an order rejecting their application for rectification/change in the name of a company under Section 16 of the Companies Act, 2013. The impugned order by Respondent No. 2 refused the application based on the petitioner not being recognized as the owner of the trademark, which was considered a trademark dispute between the parties. The court noted that the Regional Director's powers are limited to rectifying company names under specific circumstances outlined in the Companies Act.

Issue 2: Ownership of Trademark
Both parties claimed ownership of the trademark 'Panchhi,' leading to disputes and extensive litigations. The court emphasized that the Regional Director cannot determine ownership of a trademark while deciding on a name rectification application under the Companies Act. The judgment highlighted that the Regional Director's jurisdiction does not extend to resolving trademark ownership disputes, which are typically addressed by the Intellectual Property Division of a court.

Issue 3: Jurisdiction of the Regional Director
The court clarified that the Regional Director's role under Section 16 of the Companies Act is limited to rectifying company names to prevent confusion among consumers. The judgment emphasized that the Regional Director should not delve into trademark ownership disputes or conduct examinations of trademarks, tasks reserved for specialized intellectual property forums.

Issue 4: Powers of the Central Government
The judgment referenced previous cases to explain the Central Government's powers in directing a change of company name under the Companies Act. It highlighted the distinction between civil court jurisdiction in passing-off actions related to deceptive names and the Regional Director's role in ensuring company name distinctiveness. The court underscored the importance of preventing confusion among companies with similar or identical names.

In conclusion, the court set aside the impugned order, allowing both parties to pursue appropriate legal proceedings if necessary. The judgment emphasized the need for clarity in trademark ownership disputes and the distinct roles of different legal forums in resolving such conflicts.