RECTIFICATION OF COMPANY’S NAME

Section 16 of the Companies Act, 2013 (‘Act’ for short) provides the procedure for rectification of the name of company. According to this section, if, through inadvertence or otherwise, a company on its first registration or on its registration by a new name, is registered by a name which, -

• in the opinion of the Central Government, is identical with or too nearly resembles the name by which a company in existence had been previously registered, whether under this Act or any previous company law, it may direct the company to change its name and the company shall change its name or new name, as the case may be, within a period of 3 months from the issue of such direction, after adopting an ordinary resolution for the purpose;
• on an application by a registered proprietor of a trade mark that the name is identical with or too nearly resembles to a registered trade mark of such proprietor under the Trade Marks Act, 1999, made to the Central Government within 3 years of incorporation or registration or change of name of the company, whether under this Act or any previous company law, in the opinion of the Central Government, is identical with or too nearly resembles to an existing trade mark, it may direct the company to change its name and the company shall change its name or new name, as the case may be, within a period of 3 months from the issue of such direction, after adopting an ordinary resolution for the purpose.

 If a company is in default in complying with any direction given under sub-section (1), the Central Government shall allot a new name to the company in such manner as may be prescribed and the Registrar shall enter the new name in the register of companies in place of the old name and issue a fresh certificate of incorporation with the new name, which the company shall use thereafter.

In Refex Industries Limited Versus Regional Director, Northern Region, Ministry of Corporate Affairs & Anr. - 2026 (2) TMI 543 - DELHI HIGH COURT, the Petitioner Company was incorporated under the Companies Act, 1956 on 13.09.2002 in Tamil Nadu, under the name 'Refex Refrigerants Private Limited' and was converted into a public company on 30.03.2006, under the name - 'Refex Refrigerants Limited'. Thereafter, on 22.11.2013, the Petitioner Company's name was changed to 'Refex Industries Limited'. The Petitioner Company is a specialist manufacturer and re-filler of refrigerant gases in India and is widely acclaimed in the industry.

The Respondent No. 2 is a company incorporated in Punjab under the Act on 27.01.2017 under the name ‘Refex Hotels Private Limited’.

On 27.04.2018, the Petitioner Company filed an application in Form No. RD-1 under Section 16(1)(b) of the Act before the Regional Director, Northern Region, Ministry of Corporate Affairs seeking rectification of Respondent No. 2 company's name ‘Refex Hotels Private Limited’ on the ground that same includes the word 'REFEX', which is identical to the Petitioner's registered trade mark 'REFEX'. 

The Regional Director dismissed the said application filed by the writ petitioner on the ground that even though the petitioner is the owner of the trade mark ‘REFEX’, the second respondent is running a different business than the petitioner and falls under a distinct class under the Trade Marks Act, 1999. The petitioner, being aggrieved against the order of Regional Director, filed the present writ petition before the High Court.

The petitioner submitted the following before the High Court-

•  the impugned order has been passed in violation of the provisions of Section 16 of the Act.
• The Respondent No. 2's Company name - Refex Hotels Private Limited - is identical with and contains the Petitioner's registered trademark 'REFEX' bearing trade mark no. 1559466 in Class 1 w.e.f. 17.05.2007.
• The petitioner incorporated 6 other companies having the same name.
• The name of the company of Respondent No. 2 is identical with the name of the petitioner and its other 6 companies.
• The Respondent No.2 Company has been incorporated with the name 'REFEX' without seeking the consent of the Petitioner.
• It is well established that a name of the company is undesirable if it resembles a registered trademark of a previous existing company, irrespective of the nature of business carried out by the rival entities. 
• The petitioner approached the High Court after 4 years from the date of receipt of the order from the Regional Director on 11.09.2018, for seeking relief of setting aside of the impugned order.

The petitioner prayed the High Court for quashing of the impugned order passed by the Regional Director.

The Respondent No. 2 submitted the following before the High Court-

• The Petitioner is operating in the refrigerant gases industry, which falls under Class 1 of the Trade Marks Rules, 2002, whereas Respondent No. 2 operates in the hospitality industry, which falls under Class 43 of the said Rules.
• Since the nature of industries in which the Petitioner and Respondent No. 2 are working are different, there is no scope for confusion.
• The name 'Refex Hotels Private Limited' was chosen in good faith and reflects the nature of Respondent No.2's business in the hospitality industry. 
• There are several companies registered under the name which includes the word 'REFEX'.

The Regional Director opposed the writ petition on the ground that the writ petition was filed after a lapse of 4 years from the impugned order and the petitioner failed to provide any justification for his case.

The petitioner filed a rejoinder. The petitioner contended that the legislative intent was not to allow 2 businesses in the same field to have identical name. There are other group companies, which are promoted by the Petitioner Company's promoter, whose names are identical to the name of the Petitioner Company.

The High Court heard the submissions of the parties to the writ petition. The High Court observed that the word 'REFEX' is the prominent and distinctive part of the names of both the Petitioner and Respondent No. 2. The two names are structurally and phonetically identical. If a name is identical with or too nearly resembles the name of an existing company, which has been previously registered, it would be deemed to be undesirable and such a name would be liable to be rectified. The Respondent No. 2 had averred that there are several other companies on the register with the word ‘REFEX’ as a part of the corporate name; however, no details of these other companies have been placed on record. This ground raised by Respondent No. 2 is, therefore, unsubstantiated. The Petitioner, on the other hand, has contended that it is only the Petitioner’s group companies, which use the word ‘REFEX’ as a part of the corporate name.

In view of the above the High Court set aside the impugned order dated 23.08.2018 passed by Respondent No. 1 and the Respondent No. 2 is directed to change its name to any other name, which is not identical to or resembles the name of the Petitioner or any other existing company within 4 weeks from today. The Respondent No. 2 and its directors are also directed to ensure that Respondent No. 2 changes its name. Respondent No. 1 is directed to issue appropriate directions to Respondent No. 2 for due compliance of these directions.