2023 (3) TMI 838 - HC - Companies Law

Court issues writ of prohibition in Companies Act case, emphasizing jurisdictional clarity

The Court allowed the writ petition, issuing a writ of prohibition to terminate the proceedings before the Joint Director, Ministry of Corporate Affairs, ... Termination of proceedings pending, with immediate effect - rectification of the name of the company - premise of the challenge is that the proceedings are lacking in jurisdiction and ex-facie, barred by limitation - assumption of jurisdiction and the bar of limitation - HELD THAT:- The issue relating to assumption of jurisdiction and the bar of limitation hinges upon Section 16 of the Companies Act, 2016. Section 16 deals with rectification of name of company and states that if, through inadvertence or otherwise, a company on its first registration by a new name, is registered by a name which, in the opinion of the Central Government, or on an application by a registered proprietor of a trademark, is identical with, or too nearly resembles the trademark of a proprietor under the 1999 Trade Marks Act, such claim may be rectified, if such application were filed within 3 years of incorporation/registration/change of name of the company. The right of the officer has come to an end on 31.03.1956 and as on that date, the proceedings lapse. There was no possibility for the dead proceedings to be revived thereafter merely because the amended Section gave vested authority in the power to issue notice. Thus, and since the right to issue notice under the earlier Act had come to an end before the new Act came into force, the notice was struck down - In the present case, it is not merely a provision that has been amended but an entirely new enactment, the 2013 Act that has replaced the 1956 Companies Act. There is simply no avenue for the timelines under the old Act to enure to the benefit of R2. Thus, the limitation under Section 22 of the 1956 Act had long expired with the repeal of that Act and there is no question of any person being entitled to the benefit of the same thereafter. This argument is rejected. Thus, the jurisdictional fact of bar of limitation is clearly attractive/established. The Court has observed that a Writ of Prohibition is not normally issued for a mere error of law unless the error makes the proceedings fall outside the jurisdiction of the authority. Writ of Prohibition as sought for is issued and this Writ Petition is allowed. Issues Involved:1. Jurisdiction of the first respondent (R1).2. Bar of limitation under Section 16 of the Companies Act, 2013.3. Distinction between proceedings before the Civil Court and the Ministry of Corporate Affairs.4. Procedural fairness and natural justice in the proceedings.5. Relevance of previous legal provisions under the Companies Act, 1956.6. Applicability of decisions from other High Courts and the Supreme Court.Detailed Analysis:1. Jurisdiction of the First Respondent (R1):The petitioner challenged the jurisdiction of R1, the Joint Director, Ministry of Corporate Affairs, arguing that the proceedings were ex-facie barred by limitation and should be terminated immediately. The Court agreed that the question of jurisdiction should be decided at the threshold as it goes to the root of the matter.2. Bar of Limitation under Section 16 of the Companies Act, 2013:The petitioner's company was incorporated on 06.08.2009. R2 filed an application for rectification of the petitioner's company name on 27.10.2016, which is beyond the three-year limitation period stipulated under Section 16(1)(b) of the Companies Act, 2013. The Court rejected R2's argument that the limitation period should commence from the date of knowledge of the company's incorporation, emphasizing that the statutory provision clearly states the period runs from the date of incorporation.3. Distinction Between Proceedings Before the Civil Court and the Ministry of Corporate Affairs:R2 had previously filed a civil suit seeking an injunction against the petitioner for using the name 'Sri Krishna.' The Court noted that the civil proceedings concerning Intellectual Property Rights (IPR) were distinct from the current proceedings and should not influence the decision on the writ petition. The Court maintained that no observations in the current order would affect the pending civil suit.4. Procedural Fairness and Natural Justice in the Proceedings:The petitioner argued that R1 was proceeding with undue haste and without proper jurisdiction. The petitioner also sought the opportunity to cross-examine the complainant and present its case effectively. The Court found that the petitioner consistently argued the lack of jurisdiction and procedural fairness and concluded that these issues should have been addressed first by R1.5. Relevance of Previous Legal Provisions Under the Companies Act, 1956:The petitioner contended that the limitation period under the Companies Act, 1956, which allowed five years from the date of knowledge of incorporation, should apply. The Court rejected this argument, stating that with the repeal of the 1956 Act and the enactment of the 2013 Act, the provisions of the old Act no longer applied except as saved under Section 465 of the 2013 Act.6. Applicability of Decisions from Other High Courts and the Supreme Court:The Court reviewed various precedents, including decisions from the Supreme Court and other High Courts, to support its conclusions. It emphasized that a writ of prohibition could be issued to prevent an authority from exceeding its jurisdiction, as established in S.Govina Menon Vs The Union of India and Another. The Court found that the jurisdictional fact of the bar of limitation was clearly established, warranting the issuance of the writ of prohibition.Conclusion:The Court allowed the writ petition, issuing a writ of prohibition to terminate the proceedings before R1, as the application by R2 was barred by limitation under Section 16 of the Companies Act, 2013. The Court emphasized the importance of addressing jurisdictional issues at the threshold and maintained the distinction between the current proceedings and the pending civil suit. No costs were awarded, and connected miscellaneous petitions were closed.