2010 (7) TMI 272 - HC - Companies Law

Court affirms government's power to order company name change under Companies Act, 1956.

The court upheld the Central Government's authority under the Companies Act, 1956 to direct a company to change its name based on resemblance with another ... Rectification of Name of company - directing the petitioner under section 22(1)(b) of the Act to delete the word 'Pharmaplan' from its existing name and change its name to some other name within three months from the date of the said order Held that:- Mr. Chandra is right in his contention that the powers of the Central Government under section 22 of the Act are wider inasmuch as there is no need to examine whether there is a likelihood of deception or confusion. It is enough to examine if the name registered too nearly resembles another registered name. Respondent No. 2 has been able to show that both names too nearly resemble each other. This Court is unable to find anything perverse in the conclusion arrived at by respondent No. 1. Respondent No. 2 had indeed made out a case under section 22(1)(b) of the Act for a direction to the petitioner to change its name by removing the word 'Pharmaplan', within a period of three months. Issues:Petitioner aggrieved by order to change company name under Companies Act, 1956. Dispute over similarity of names with another company. Jurisdiction of civil court vs. Central Government under Companies Act. Interpretation of guidelines for company names. Compliance with order to change company name.Analysis:The petitioner challenged an order directing them to change their company name under the Companies Act, 1956. The dispute arose when respondent No. 2 filed a representation seeking a name change, alleging similarity between the names. The court noted that the names 'cGMP Pharmaplan P. Ltd.' and 'NNE Pharmaplan India Ltd.' had a significant resemblance due to the common coined word 'Pharmaplan.' The court applied guidelines stating that if the dissimilar portions of the names are removed, the remaining identical word is crucial in determining similarity. The court found that the two names structurally and phonetically closely resembled each other, justifying the direction to change the name.The judgment highlighted the distinction between the jurisdiction of civil courts in passing-off suits and the Central Government's authority under the Companies Act. While a civil court examines deceptive similarity, the Central Government focuses on whether names too nearly resemble each other. The court emphasized that the Central Government's powers under section 22 of the Act are broader, requiring only a resemblance test without assessing likelihood of confusion. In this case, respondent No. 2 successfully demonstrated that the names were too similar, justifying the name change direction.The court dismissed the petitioner's argument that the Central Government exceeded its jurisdiction, citing a previous judgment that upheld the Central Government's authority to determine name resemblance. The court found no error in the Central Government's decision and upheld the direction to change the company name. However, the court extended the time for compliance with the order by two months. Ultimately, the petition and pending applications were dismissed, affirming the direction to change the company name while allowing additional time for compliance.