9911796707
TMI Blog2012 (9) TMI 1256X X X X Extracts X X X X X X X X Extracts X X X X ..... in the business of manufacturing and sale of passenger and freight elevators. 3. Petitioner is a private limited company incorporated on 29.11.2010 in the name and style Surya Elevators Escalators India Private Limited . Mr. Venugopal Reddy and Mrs. Meena Pothireddy are the Directors of the petitioner-company. The petitioner is engaged in the business of manufacturing and sale of elevators and escalators. 4. Respondent No.3 initiated proceedings under Section 22(1)(i) of the Act against the petitioner before the second respondent for a direction to change the name of the petitioner, by filing the application on 13.11.2011, on the ground that the petitioner-company s name is registered through inadvertence. The petitioner herein filed objections to such application before the second respondent. 5. In the meanwhile, respondent No.3 instituted the suit in O.S.No.5275/2011 for injunction alleging passing off . In the said suit, relief of permanent injunction restraining the petitioner from using the trade/brand name Surya is prayed for on the ground that respondent No.3 is the sole owner of the said trade/brand name Surya . Application for temporary injunction was filed by respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Meena Pothireddy is the wife of Mr. C. Surendranadha Reddy and Mr. Venugopal Reddy is the brother-in-law of Mr. C. Surendranadha Reddy. Mr. C. Surendranadha Reddy individually issued No Objection Certificate dated 8.12.2010 to Mr. Venugopal Reddy for incorporation of the petitioner in the name and style of Surya Elevators and Escalators India Private Limited and accordingly the petitioner was registered/incorporated inadvertently inasmuch as respondent No.3 had not issued No Objection Certificate in favour of the petitioner-company. 8. After hearing both the parties, the second respondent has passed the impugned order directing the petitioner to change its name within a period of three months from the date of the impugned order. 9. Mr. Naganand, learned senior counsel appearing for the petitioner submitted that the second respondent has totally misdirected himself in exercise of the statutory power under Section 22 of the Act; the object of Section 22 is to remove confusion when names are similar and not to provide an adjudicatory forum for settlement of disputes inter-se particularly when a competent Civil Court is seized of the matter; there are innumerable companies using gener ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e trust reposed on him; Mr. C. Surendranadha Reddy without the knowledge and consent of the Board of third respondent-company, issued No Objection Certificate on 8.12.2010 to the Registrar of Companies to incorporate the petitioner-company in the name and style of Surya Elevators and Escalators India Private Limited , which has been started by none other than Mr. C. Surendranadha Reddy s wife and his brother-in- law; Mr. C. Surendranadha Reddy, the former Director of respondent No.3 has acted detrimental to the interest of respondent No.3 by issuing No Objection Certificate with mala fide intention; having come to know that No Objection Certificate is issued by Mr. C. Surendranadha Reddy, the third respondent in order to protect the interest and intellectual property of respondent No.3 removed Mr. C. Surendranadha Reddy from the Board in an Extraordinary General Meeting of members held on 22.1.2011 after issuing a special notice under Section 284(2) of the Act. Thereafter, the third respondent-Board passed a resolution to make an application to the Central Government in order to protect the corporate name or trade name. Questioning the order passed by the Civil Court in O.S.No.5275 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which are: i) The third respondent-company is incorporated on 6.10.2005, whereas the petitioner is incorporated subsequently, i.e., on 29.11.2010. ii) The third respondent-company had two Directors from the date of incorporation. They are Mr. C. Surendranadha Reddy and Mr. K. Arunachalam. iii) After removal of Mr. C. Surendranadha Reddy, Mr. K. Arunachalam continued as the Managing Director of respondent No.3-company. Mrs. Rajani Challachemala Subramanyam was appointed as an Additional Director of respondent No.3-company. The said appointment of Additional Director is not challenged before the Company Law Board, Chennai, as is clear from Annexure-C. iv) Mr. C. Surendranadha Reddy, prior to his removal from respondent No.3-company, unilaterally gave No Objection Certificate on 8.12.2010 for incorporation of the petitioner-company starting with the name Surya Elevators and Escalators or such other similar name. The other Directors of respondent No.3-company did not join hands with Mr. C. Surendranadha Reddy while issuing No Objection Certificate in favour of the petitioner- company. v) The petitioner-company has two Directors namely, Mrs. Veena Pothireddy and Mr. Venugopal Reddy, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty of any of the Directors and can be used only by respondent No.3-company. It was mutually agreed between the Directors that, either directly or indirectly they should not use the company s name or any other similar name or incorporate a new company with the word Surya as the third respondent-company already built up the brand image in that name. Ultimately, the Directors of respondent No.3-company by passing the resolution agreed not to start any business or venture, which was being carried on by the company and also not to use the word Surya in any business to be carried on by them or their family members in future without the written consent of the other Directors. It was further resolved that any future formation of the company or any form of organization with the name Surya either directly or indirectly by any of the Directors or their relatives can be done only with the unanimous resolution of the Board. 14. From the above, it is clear that both the then Directors of respondent No.3-company including Mr. C. Surendranadha Reddy had decided not to use the brand name Surya in any business to be carried on by them or by their family members without the written consent of othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficate is issued in favour of the Directors of the petitioner-company to float new company with the brand name Surya . Thus, the petitioner-company got the brand name Surya pursuant to the fraud played by Mr. C. Surendranadha Reddy, the then Director of respondent No.3- company. In this view of the matter, Mr. Uday Holla, learned senior counsel appearing for respondent No.3 is justified in arguing that the petitioner should be non-suited inasmuch as the fraud vitiates everything. 17. Fraud and collusion vitiate even the most solemn proceedings in any civilized system of jurisprudence. It is a concept descriptive of human conduct. In Black s Legal Dictionary, fraud is defined as an intentional perversion of truth for the purpose of inducing another in reliance upon it to part some valuable thing belonging to him or surrender a legal right. Section 17 of the Indian Contract Act defines fraud as an act committed by a party to a contract with intent to deceive another. The fraud arises from a deception committed by disclosure of incorrect facts knowingly and deliberately to invoke exercise of power and procure an order from an authority or tribunal. 18. At this stage, it is beneficial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efault in complying with any direction given under clause (b) of sub-section (1), the company, and every officer who is in default, shall be punishable with fine which may extend to one thousand rupees for every day during which the default continues. . From the above, it is clear that no company shall be registered by a name which is identical with or too nearly resembles the name by which a company in existence has been previously registered. Such name is deemed to be undesirable by the Central Government. If in the opinion of the Central Government, through inadvertence or otherwise the company is registered and if the subsequently registered company is identical with or too nearly resembles the name by which a company in existence has been previously registered, then, the registration of the subsequently registered company shall be directed to be changed by the Central Government. 19. According to the Black s Law Dictionary (8th edition, 2004) the principle of Ejusdem Generis is where general words follow an enumeration of persons or things, by words of a particular and specific meaning, such general words are not be construed in their widest extent, but are to be held as apply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be relevant in construing its memorandum and to see what its main object is. Under Company Law, a company by registering its name gains a monopoly of the use of that name. Even if the company is not registered, the Court will restrain a projected new company which was intended to carry on the same business as the unregistered company and to bear a name so similar to its name. A company on discovering that another company has been or is about to be registered under the same or similar name as itself may have a common law right to prohibit the new comer from the use of that name. The company which has registered itself should need to enjoy the benefit of goodwill created by that company. It is not necessary to prove any fraudulent intention on the part of the petitioner herein. It is sufficient to exercise power under Section 22 of the Act if the name adopted by the petitioner- company is identical with or too nearly resembles the name by which a company in existence is previously registered. 22. The Department of Company Law Administration has formulated certain guiding instructions/guidelines for deciding cases of making a name available for registration under the Act. Though such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 in the name and style Surya Elevators and Escalators India Private Limited . As aforementioned, one of the Directors of erstwhile company alone issued No Objection Certificate for incorporation of the petitioner-company despite specific resolution passed by the Board of third respondent-company that none of the two Directors should without the consent of another shall issue No Objection Certificate for starting another company under the same or similar name. It is also not in dispute that the petitioner-company has got two Directors, namely, Smt. Veena Pothireddy and Mr. Venugopal Reddy, who are the wife and brother-in- law respectively of Mr. C. Surendranadha Reddy. It is also not in dispute that the name and object of the petitioner as well as third respondent are same or similar. The petitioner-company is engaged in the same business as that of the third respondent- company. To determine the question involved under Section 22 of the Act, it is not necessary for the Court to decide as to whether the petitioner has got intention to deceive the clientele of the third respondent or public at large. The jurisdiction of the Court in such matters rests on the determination of questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Certificate . Since no enquiry in that regard need to be held, it seems, no enquiry was held by the Registering Authority at the time of registration as to find out whether No Objection Certificate is actually issued or not by the third respondent. The very fact that the petitioner has relied on such No Objection Certificate at the time of its registration, itself clearly reveals that the petitioner was of the definite opinion that the name of the petitioner too nearly resembles the name of respondent No.3-company in existence which has been previously registered. Moreover, curiously or fairly the petitioner herein has not taken definite stand either before the second respondent or in this writ petition that its name does not resemble the third respondent. This itself would go to show that the petitioner also feels that its name too nearly resembles the existing company i.e., respondent No.3. If the petitioner was of the opinion that the said company is not identical with or does not too nearly resemble the existing company, i.e., respondent No.3, it would not have ventured to obtain No Objection Certificate from one of the Directors of respondent No.3. 25. As aforementioned, Mr. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r as per law. 27. May be, the name Surya is akin to Sun God. The contention of the petitioner that 1500 companies are registered in the name of Surya cannot be accepted in the matter on hand, inasmuch as no single company is said to have been registered in Karnataka with the name Surya Elevators . It seems, one company is registered in Maharashtra under the said name. It is open for the third respondent to take action against such company, if it so chooses. Merely because another company is registered in Maharashtra State by which respondent No.3 is not aggrieved, the petitioner cannot be allowed to take advantage of the same. More over, it is contended on behalf of respondent No.3 that Surya Elevators Private Limited registered in Maharashtra State is doing business only in Maharashtra State and that respondent No.3 has planned to initiate action against the said company also. As aforementioned, none of the companies having the name of Surya manufacture elevators/lifts/escalators in Karnataka, except the third respondent as on the date of its registration. The next company which is registered for the purpose of manufacturing the elevators is the petitioner-company, that too under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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