2019 (2) TMI 970 - HC - Companies Law

Court dismisses petition challenging application rejection under Companies Act, stresses timeliness and diligence. No fault found in Regional Director's decision.

The court dismissed the petition challenging the rejection of the application under Section 22 of the Companies Act, emphasizing the lack of diligence by ... Rectification of name of company - Registration of Trademark - application rejected on the ground that it was highly belated, and more than five years had passed from the date of incorporation of respondent no. 4 company - petitioner claims that its application was filed within a period of five years of becoming aware of the respondent no. 4 company - Section 22(1)(ii) of the Companies Act. Held that:- It is relevant to note that proviso to Section 22(1)(ii) Companies Act was included by virtue of Section 158 of the Trademarks Act, 1999 (Act 47 of 1999) with effect from 15th September, 2003 - there is a repugnancy between the provisions of Section 22(1)(ii)(b) of the Companies Act and the proviso so included. A plain reading of Clause (ii) of Sub-Section 1 of Section 22 of the Companies Act indicates that if the Central Government is of the opinion that the corporate name too nearly resembles the registered trademark of a proprietor, then such company shall, if directed by the Central Government within the 12 months of its registration, change its corporate name. Thus, undeniably, prior to 15th September, 2003, there was no obligation on the part of any company to change its corporate name if such direction was not issued by the Central Government within a period of twelve months of its first registration, or registration of its changed name. The proviso to Section 22(1)(ii) of the Companies Act clearly indicates that a proprietor of a registered trademark is not precluded from making an application within a period of five years “of coming to notice of registration of company”. Thus, this Court is of the view that the power of RD to examine such a complaint, which is not beyond the period as prescribed under the proviso, has to be inferred - The provisions of the statute must be interpreted to ascertain the intention of the legislature. In cases where there is no ambiguity in the language of the statute, the same must be literally construed. However, in another cases, it would be necessary for the Court to press into service other principles of statutory interpretation to ascertain the legislative intent. The proviso to Section 22(1)(ii) of the Companies Act is to preclude the registered proprietor of the Trademark from making an application under Section 22(1)(ii) of the Companies Act beyond the period of five years of such proprietor coming to notice of the company. It is clearly implicit from the language of the said proviso that a proprietor of a registered trademark can make an application under Section 22(1)(ii)(b) of the Companies Act within a period of five years. This is the clear intention of the legislature in including the proviso. The proviso to Section 22(1)(ii) of the Companies Act was inserted by virtue of Section 158 of the Trademarks Act, 1999 (Act 47 of 1999) with effect from 15th September, 2003. This Court is of the view that the power of the Central Government to issue a direction for change in the name of the company, even beyond the period of twelve months from the date of first registration or from the date of registration of the change of name, must be read in the provisions of Section 22(1)(ii)(b) of the Companies Act. Whether the petitioner’s application was within the time specified? - Held that:- In view of the inclusion of the proviso, the period as prescribed under the main provision ‒ Clause (b) of Section 22(1)(ii) is required to be correspondingly enhanced. If the period of five years is now read in Clause (b), the same would oblige a company to follow the directions of the Central Government for change in its name within a period of five years from the date of first registration. The basic scheme of the provisions of Section 22(1)(ii)(b) of the Companies Act cannot be altered by the proviso - The basic scheme of Clause 22(1)(ii)(b) of the Companies Act is to provide for an period of limitation for the Central Government to issue binding directions, and that period is stipulated to be twelve months from the date of registration of the name. This period has to be read as implicitly enhanced by inclusion of the proviso. However, the same cannot be enhanced indefinitely. Petition dismissed. Issues Involved:1. Validity of the petitioner's application under Section 22 of the Companies Act, 1956.2. Interpretation of the proviso to Section 22(1)(ii) of the Companies Act.3. Jurisdiction and power of the Central Government to issue directions for change of corporate name.4. Acquiescence and limitation period for filing the application.5. Timeliness and diligence in pursuing the petition.Detailed Analysis:1. Validity of the Petitioner's Application under Section 22 of the Companies Act, 1956:The petitioner challenged an order dated 25th July 2011, rejecting its application under Section 22 of the Companies Act, 1956. The petitioner sought the deletion of the letters 'NTK' from respondent no.4's corporate name, claiming ownership of the registered trademark 'NTK'. The application was rejected by the Regional Director (RD) on the grounds of being highly belated, as more than five years had passed since the incorporation of respondent no.4.2. Interpretation of the Proviso to Section 22(1)(ii) of the Companies Act:Section 22(1)(ii) of the Companies Act allows the Central Government to direct a company to change its name if it is identical or nearly resembles a registered trademark. The proviso, added by Section 158 of the Trademarks Act, 1999, stipulates that no application can be made after five years of becoming aware of the company's registration. The court noted the repugnancy between Section 22(1)(ii)(b) and the proviso, emphasizing that the proviso allows applications within five years of the trademark proprietor becoming aware of the company's registration.3. Jurisdiction and Power of the Central Government to Issue Directions for Change of Corporate Name:The court highlighted that the Central Government's power to issue directions for a name change must be read in conjunction with the proviso. The Karnataka High Court in Technova Tapes (India) P. Ltd. v. Regional Director observed that the proviso implicitly extends the Central Government's power to entertain applications filed within the five-year period. The court affirmed that the legislative intent was to incorporate the principle of acquiescence and align with Section 33(1) of the Trademarks Act, 1999.4. Acquiescence and Limitation Period for Filing the Application:The court examined whether the petitioner's application was filed within the stipulated time. Respondent no.4 was incorporated on 19th June 2001, and the petitioner claimed awareness of respondent no.4 on 3rd April 2006. The court rejected this claim, stating that the registration details were in the public domain, and presumed notice of incorporation. The court emphasized that extending the limitation period by claiming ignorance for six years was not permissible.5. Timeliness and Diligence in Pursuing the Petition:The court noted that the petitioner waited over two and a half years after becoming aware of respondent no.4 to file the application and further delayed filing the present petition by more than two years after the RD's rejection. The court found the petitioner's explanation for the delay unacceptable and highlighted the lack of diligence, as the petition had been dismissed in default twice before being restored.Conclusion:The court dismissed the petition, finding no infirmity in the RD's decision to reject the application under Section 22(1) of the Companies Act. The court also emphasized that the discretionary remedy under Article 226 of the Constitution of India was not warranted in this case due to the petitioner's lack of diligence. The court clarified that the petitioner could pursue other appropriate legal actions if available.