1984 (9) TMI 242 - HC - Companies Law

Company name change doesn't dissolve entity. Suit not by non-existent entity. Amendment to reflect new name allowed.

The court held that a change of name of a company does not result in its dissolution or the creation of a new entity. The company remains the same but ... Registration of change of name and its effects thereof Issues Involved:1. Whether the suit was maintainable when filed in the name of a non-existent company.2. Whether the amendment to the cause title of the plaint was permissible.3. Interpretation of relevant sections of the Companies Act, 1956, regarding the change of company name.Issue-wise Detailed Analysis:1. Whether the suit was maintainable when filed in the name of a non-existent company:The appellant contended that the suit was not maintainable as it was filed in the name of Fibre Glass Pilkington Ltd., a company that had ceased to exist after changing its name to F.G.P. Ltd. They argued that the suit should be dismissed because the company under its old name was non-existent at the time of filing the suit. The respondent countered that the change of the company's name did not create a new entity but was merely a misdescription, and thus the suit was valid.2. Whether the amendment to the cause title of the plaint was permissible:The respondent applied for an amendment to correct the name in the cause title from Fibre Glass Pilkington Ltd. to F.G.P. Ltd. The appellant opposed this, arguing that the original suit was incurably defective and could not be amended as it was filed by a non-existent entity. The court allowed the amendment without prejudice to the appellant's contention regarding the maintainability of the suit.3. Interpretation of relevant sections of the Companies Act, 1956, regarding the change of company name:The court examined Sections 21 and 23 of the Companies Act, 1956. Section 21 allows a company to change its name by special resolution and with the approval of the Central Government. Section 23(1) states that the Registrar shall issue a fresh certificate of incorporation, making the change of name complete and effective. Section 23(3) clarifies that a change of name does not affect the rights or obligations of the company and that legal proceedings can continue in the new name. The court concluded that a change of name does not result in the dissolution of the company or the creation of a new entity; the company continues to exist under its new name.Judgment Summary:The court held that the change of name of a company does not result in its dissolution or the creation of a new entity. The company remains the same but under a new name. Therefore, the suit filed by Fibre Glass Pilkington Ltd., which had changed its name to F.G.P. Ltd., was not filed by a non-existent entity but was a case of misdescription. The amendment to the cause title to reflect the new name was permissible. The appeal was dismissed with costs, and the operation of the judgment was stayed for a fortnight with an interim order directing the stay of further proceedings in the suit during that period.