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TMI Blog2010 (2) TMI 1283X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground that the official respondents have a legal obligation to hold that the company cannot be registered in the said name, as within the meaning of Section 20 of the Companies Act, the name too nearly resembles the trademark of the writ petitioner that on coming to know about the incorporation of the 7th respondent company, the petitioner had and issued a legal notice to the second respondent, the firm represented by the petitioner as Managing Partner issued a legal notice to effect the change of name of the company - ensure that the change of name is not registered with an undesirable name - whether third respondent ought not to have decided the application of change of name without hearing the aggrieved parties? - HELD THAT:- Application for change of name has to be considered in the light of Section 20 and the procedure to be adopted is given in the guidelines issued by the department of company affairs, which has spelt out detailed guidelines to be followed. This Court has come to a conclusion that there has been violation of principles of natural justice and the decision making process which ultimately culminated in the impugned certificate of incorporation is err ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2008. 2. Facts:- M/s.Accura Weldrods, hereinafter referred to as the firm, was a registered partnership firm, which came into being pursuant to a deed of partnership dated 10.04.2000 and the respondents 4 and 5 were its partners. The firm was reconstituted by a deed dated 14.05.2003, by which the petitioner was admitted as one of the partners and the fifth respondent retired from the partnership firm. Pursuant to a deed of retirement dated 22.06.2008, the fourth respondent retired from the firm and the partnership was reconstituted by a deed of reconstitution dated 22.06.2008, consisting of the petitioner and his wife Tmt. G.Karpagam as partners. A Memorandum of agreement for non-compete and usage of trade mark registration was entered into between the petitioner and his wife as parties of the first part, the partnership firm as party of the second part and the fourth respondent as party of the third part. A deed of assignment dated 04.07.2008 was executed by the fourth respondent in favour of the petitioner and his wife, trading as a registered partnership firm. The dispute which has resulted in this writ petition appears to have commenced, when the fourth and fifth respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Trade Marks Act and name of Accura Fine Fusions is also registered and he has retired from the partnership M/s.Accura Weldrods and still is one of the partner of M/s.Accura Fine Fusions, hence, he decided to change the name of the company from Accura Weldrods India Private Limited into Accura Electrods India Limited. A Special resolution is said to have been passed by the company on 13.10.2008. Thereafter, the fourth respondent in the capacity of Managing Director of Accura Weldrods India Private Limited appears to have addressed a letter to the third respondent stating that they have received a notice from the petitioner, who was the erstwhile partner of the fourth respondent in a firm called Accura Weldrods and that the fourth respondent has relinquished all his right and entitlements to the continuing partners and for better understanding and to avoid legal proceedings, they have unanimously decided to change the name as Accura Electrods India Private Limited enclosing the special resolution dated 13.10.2008. It is thereafter, the impugned certificate of incorporation consequent upon the change of name came to be issued by the third respondent on 24.10.2008. 3. This Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eldrods India Private Limited and such claim has been accepted and the name of the company has been changed as Accura Electrods India Private Limited and therefore nothing survives in the writ petition. Therefore, it is contended that the proposed 7th respondent is not a proper or necessary party. It is relevant to note that the fourth respondent has filed a counter affidavit in M.P.No.3/2010, in which it is stated the companies are different from the share holders and the share holders have no right with reference to the name or the manner in which the name of the company is used and that the fourth and fifth respondents, who have right only to receive notice of meetings, receive divident, receive his or her share of assets as dividend if the company is wound up and are not necessary parties to the present Writ Petition. It is further stated no order can be passed against the person, who is not a party. Therefore, the fourth respondent appears to have raised a contention that unless the company is made a party no relief could be granted against it. In fact precisely for this reason the writ petition came to be dismissed by this Court earlier by order dated 20.08.2009. However, whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 5. Therefore in order to give a binding adjudication to the matter, I deem it appropriate that the proposed 6th and 7th respondents are not only necessary parties to the writ petition, but they are also proper parties. Hence, M.P.No.1/2010 and M.P.No.2/2010 are ordered and the two companies are impleaded as 6th and 7th respondent in writ petition. 6. The learned counsel appearing for the petitioner would assail the correctness of the impugned certificate of incorporation on the ground that the official respondents have a legal obligation to hold that the company cannot be registered in the said name, as within the meaning of Section 20 of the Companies Act, the name too nearly resembles the trademark of the writ petitioner that on coming to know about the incorporation of the 7th respondent company, the petitioner had and issued a legal notice to the second respondent, the firm represented by the petitioner as Managing Partner issued a legal notice to effect the change of name of the company. The various documents executed by the fourth respondent at the time of his retirement from the firm were also enclosed along with the same. However, the official respondents without act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... change the name of the company as the seventh respondent, only after the petitioner's legal notice dated 29.08.2008. The learned counsel would further submit that the official respondents failed to take into consideration the petitioner's representations and without affording an opportunity the impugned certificate of incorporation has been given in favour of the seventh respondent. The learned counsel relied on the guidelines issued by the department of company affairs for deciding cases for availability of names. By placing reliance on guideline No. 17 18 as well as illustrations given under clause 18 of the guideline, would submit that the action of the official respondents is wholly illegal. 8. Mr.T.K.Seshadri, learned senior counsel appearing for the respondents four and five would contend that the firm consists of two partners and only the petitioner has filed this writ petition and the other partner, the petitioner's wife is not a party to the writ petition and that the writ petition has not been filed by the firm. It is further submitted that the company was incorporated under the name and style as described as the sixth respondent on 21.07.2008 and the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such procedure, the petitioner cannot seek for issuance of writ of mandamus as prayed for. The learned senior counsel would further submit that since disputed questions of fact are involved in the present case, the writ petition is not the remedy and if the petitioner is aggrieved, he has to approach the civil Court. Further, it is submitted that even as per the legal notice issued by the petitioner to the official respondents on 29.08.2008 all that the petitioner wanted was change of name and the same has been complied with by passing a Special Resolution by the Company and there is nothing more to be adjudicated. The learned senior counsel by relying upon Section 22(1) would contend that the procedures contemplated under the statue having been followed a certificate of incorporation has been issued and it is completed an effective. By virtue of such registration in terms of Section 34(2), the company shall be a body corporate by name contain the memorandum capable of exercising all the functions of an incorporated company. Therefore, the learned counsel would submit that the writ petition is not maintainable and liable to be dismissed. The learned senior counsel in support of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 13.10.2008 is to change the name of the company and the fresh certificate of incorporation given with the change the name carries the same corporate identity number and the change of name dates back to 21.07.2008. Therefore, the learned counsel would submit as the official respondents have not taken into consideration the requirements of Section 20 of the Act, while effecting the change of name of the company, it has to be held that the change of name of the company is bad in law. 14. I have considered the submissions of the learned counsels for the parties and perused the materials on record. 15. The preliminary objection of the learned senior counsel appearing for the fourth and fifth respondents is that the writ petition is not maintainable for the relief prayed for by relying upon the decision of the Hon'ble Supreme Court in the case of Hope Textiles Ltd, referred supra, it is submitted that a writ of mandamus cannot be issued to compel a statutory authority to pass an order in violation of a statutory provision. The contention raised by the learned senior counsel is that the Section 22 of the Companies Act expressely provides for in the institution and disposal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts should be relevant for deciding the controversy namely the facts relating to the formation of the partnership firm its reconstitution twice, retirement of the fourth respondent and finally by reconstituting the firm with the petitioner and his wife as its partner. The controversy in the matter is that the fourth respondent is stated to have executed a deed of assignment of trademark and a non-compete agreement, deed of assignment in favour of the petitioner and the case of the petitioner appears to be that in the non-compete agreement dated 22.06.2008, the fourth respondent agreed that he or legal heirs will use the name Sunbond or trade logo SB and that he is fully aware that he has no right over the said intangible asset including the goodwill of the firm M/s.Accura Weldrods. 18. Therefore, the petitioner contentions that the fourth respondent cannot incorporate a company using name M/s.Accura Weldrods because of the documents he had executed in favour of the firm as well as the petitioner and his wife. It is to be noted that the fourth and fifth respondents applied for incorporation of the company M/s.Accura Weldrods India Private Limited, before the third respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m and Accura Weldrods has been registered under the Trademark Act and he retired form the partnership Accura Weldrods and therefore, he has decided to change the name of the sixth respondent company to M/s.Accura Weldrods India Private Limited. In my view the lis had commenced at this stage. The decision to change the name of the company from that of the Accura Weldrods India Private Limited into Accura Electrodes India Private Limited has occasioned because of the objection conveyed by the petitioner by his legal notice. It is to be noted that in the legal notice the agreement between the parties have been set out in detail, copies of 12 documents are stated to have been enclosed along with the legal notice. If that be the case, principles of natural justice would demand that the petitioner should have been put on notice prior to taking further step in the application submitted by the fourth respondent for change of name of company. However, this has not been done in the present case. Though the statute does not contemplate such a notice, when the dispute has commenced and it is brought to the notice of the authorities by one of the parties to the dispute, namely the petitioner, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the third respondent to ensure that the change of name is not registered with an undesirable name. In terms of Section 20(2) of the Companies Act a name, which is identical with or too nearly resembles a trademark, which is subject of an application for registration of any other person under the Trademarks Act 1999 is deemed to be an undesirable name within the meaning of Section 20(1). 21. Therefore, such application for change of name has to be considered in the light of Section 20 and the procedure to be adopted is given in the guidelines issued by the department of company affairs, which has spelt out detailed guidelines to be followed. Clause 18 of the guidelines would be relevant to the facts of the present case, which reads as follows:- 18. If a name is identical with or too nearly resembles the name by which a company in existence has been previously registered. [Guideline No.21 relating to Companies in Insurance sector has been partially modified. See para 5 of Circular NO.6 of 1999, dated 13.05.1999 printed hereinafter]. However, if a proposed company is to be under the same management or in the same group and likes to have a closely resembling name to an existing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me to a conclusion that there has been violation of principles of natural justice and the decision making process which ultimately culminated in the impugned certificate of incorporation is erroneous and the proper and necessary parties were not afforded an opportunity by the third respondent and that there is no record to show that while effecting the change of name and granting approval under Section 20 of the Act that the third respondent had considered the aspects as to whether the change of name is undesirable within the scope of Section 20(2) (ii) of the Companies Act. In view of the same, I am inclined to interfere in the impugned certificate of incorporation. In view of the above reasoning and the nature of relief to be granted the other issues raised by the learned senior counsel appearing for the respondents fourth and fifth as to whether the petitioner is a owner of registered mark or otherwise is not required to be considered at this stage of the matter. 24. For the above reasons, the petitioner is entitled to succeed and accordingly, the writ petition is allowed, the impugned certificate of incorporation is set aside and the matter is remanded back for fresh consi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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