2025 (11) TMI 1454 - HC - Companies Law

Section 16(1)(a) allows company name change based on structural, phonetic similarity; no trademark infringement, deception or confusion required

SKA Insurance Surveyors And Loss Assessors Private Limited Versus Regional Director (Northern Region), Ministry Of Corporate Affairs & Anr.

HC held that Section 16(1)(a) of the Companies Act, 2013 empowers the Regional Director to direct change of a company's name whenever it is identical ... Jurisdiction - suo motu power of the RD to direct change of name of a company, only on the ground that it is identical with, or too nearly resembles, the name of an existing company - Section 16(1)(a) of the Companies Act, 2013 - HELD THAT:- Section 16(1)(a) is not restricted to a claim of trademark infringement. It can be invoked in any case where the name of a company is identical with, or closely resembles, the name of a pre-existing company. The judgments cited by petitioner also do not support the petitioner’s case. The coordinate Bench judgment of this Court in cGMP Pharmaplan [2010 (7) TMI 272 - HIGH COURT OF DELHI], concerns the exercise of powers by the RD under Section 22 of the Companies Act, 1956. The said provision was admittedly pari materia with Section 16(1)(a) of the 2013 Act. The Court’s analysis was that the names of the two companies in question – cGMP Pharmaplan P. Ltd. and NNE Pharmaplan India P. Ltd., had to be compared as a whole, and did structurally and phonetical too nearly resemble each other - The Court noted that the jurisdiction of the RD is independent of the powers of a Civil Court in a passing off action and observed 'While it is true that respondent No. 1 cannot approach the case as it would in a trademark dispute, it is nevertheless required to come to the conclusion whether the name of which the registration is sought or has been granted too nearly resembles the name of another company. 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.' The present case is closer on facts to the judgment in cGMP Pharmaplan, which, in fact, supports the stand of the respondent. Jurisdiction under Section 16(1)(a) of the Act can be invoked merely upon a finding that the names of two companies are identical or too closely resemble each other, without any finding of deception or confusion. In the present case, the names of the petitioner and respondent No. 2 are admittedly identical, except for the first word, which is “SKA” and “SKAAD” respectively. The names are therefore substantially identical. The impugned order is justified, simply on the basis of the similarity of the names of the two companies, as contemplated under Section 16(1)(a) of the Act. The order is not to be read as returning a finding relating to trademark or passing off - there are no perversity in the conclusion arrived at by the RD, which would warrant exercise of jurisdiction by this Court under Article 226 of the Constitution. Petition dismissed. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether the power under Section 16(1)(a) of the Companies Act, 2013 can be exercised solely on the ground that the name of a company is identical with or too nearly resembles the name of a pre-existing company, independent of trademark rights or likelihood of deception/confusion. 1.2 Whether, on the admitted facts, the names of the two companies in question are so similar as to attract Section 16(1)(a) of the Companies Act, 2013. 1.3 Whether the Regional Director exceeded his jurisdiction under Section 16(1)(a) by proceeding on considerations akin to trademark infringement or passing off, in light of the decisions in cGMP Pharmaplan and Panchhi Petha Store, and whether such alleged excess vitiates the impugned order. 1.4 Whether the impugned order suffers from perversity or jurisdictional error warranting interference by the High Court under Article 226 of the Constitution of India. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Scope and nature of power under Section 16(1)(a) of the Companies Act, 2013 Legal framework 2.1 Section 16(1)(a) of the Companies Act, 2013 empowers the Central Government to direct a company to change its name where, in its opinion, the name is identical with or too nearly resembles the name of a company previously registered, and mandates compliance within three months by ordinary resolution. Interpretation and reasoning 2.2 The Court holds that Section 16(1)(a) is not confined to claims of trademark infringement. It is sufficient that the name of the later company is identical with, or closely resembles, that of a pre-existing company. 2.3 The Court notes that Section 16(1)(b) specially deals with applications by proprietors of registered trademarks, but this does not limit or condition the independent operation of Section 16(1)(a), which is concerned with similarity of company names as such. 2.4 Relying on the reasoning in cGMP Pharmaplan (under the pari materia Section 22 of the Companies Act, 1956), the Court reiterates that the jurisdiction under such a provision is wider than that in a trademark or passing off action: it is enough to examine whether one registered name too nearly resembles another registered name; there is no need to examine likelihood of deception or confusion. Conclusions 2.5 The Court concludes that Section 16(1)(a) can be invoked purely on the ground that the name of a company is identical with or too nearly resembles the name of a pre-existing company, without needing to establish trademark infringement, ownership of trademark rights, or likelihood of deception/confusion. Issue 2: Applicability of Section 16(1)(a) to the facts and similarity of the two company names Interpretation and reasoning 2.6 The Court records the undisputed facts: the earlier company was incorporated in 2008, its name subsequently changed to include 'Insurance Surveyors and Loss Assessors', and the director who later founded the petitioner-company had been a director of the earlier company for over 13 years, ceasing about two months before incorporation of the petitioner-company. Both companies are engaged in the same line of business as insurance surveyors and loss assessors. 2.7 The Court observes that the two company names are identical in all respects except for the first word: 'SKA' in the petitioner's name and 'SKAAD' in the earlier company's name. On this basis, the Court finds the names to be 'substantially identical'. 2.8 The Court further notes the Regional Director's reliance on the undisputed circumstance that certain payments due to the petitioner were inadvertently credited by an insurance company to the bank account of the earlier company, which reinforces the practical similarity/confusability of the names. Conclusions 2.9 The Court holds that, on the admitted facts, the names of the two companies are substantially identical and too closely resemble each other within the meaning of Section 16(1)(a). The jurisdiction to direct a change of name was, therefore, validly attracted. Issue 3: Alleged excess of jurisdiction by the Regional Director and relevance of trademark considerations and cited precedents Interpretation and reasoning 2.10 The petitioner argued that the Regional Director exceeded his jurisdiction by purporting to protect trademark rights in 'SKAAD', despite the abandonment/non-progression of the trademark application, and by using language of 'infringing the rights' and 'confusion in the minds of general public', thereby travelling into the domain of trademark infringement and passing off. Reliance was placed on cGMP Pharmaplan and Panchhi Petha Store. 2.11 The Court rejects this contention as misconceived, holding that the Regional Director's power under Section 16(1)(a) is not limited to trademark-based claims and can be exercised wherever there is identity or close resemblance of company names. 2.12 As to cGMP Pharmaplan, the Court notes that the earlier decision under Section 22 of the 1956 Act (pari materia with Section 16(1)(a)) explicitly recognised that the Central Government's powers in name-rectification proceedings are wider than in trademark disputes. It held that the primary inquiry is whether the names 'too nearly resemble' each other, independent of detailed trademark analysis or proof of deception/confusion. The present case is found closer to that precedent, which in fact supports the respondent's position. 2.13 Regarding Panchhi Petha Store, the Court notes that the earlier decision interfered because the Regional Director in that case had returned a finding on ownership of the trademark and then ordered a change of name. In contrast, in the present case, the impugned order is justified solely on the ground of similarity of company names as contemplated by Section 16(1)(a), and is not to be read as a determination of trademark ownership or passing off. 2.14 The Court explicitly clarifies that the impugned order is not to be construed as returning a finding on trademark rights or passing off, but only as a rectification order based on similarity of names under Section 16(1)(a). Conclusions 2.15 The Court concludes that the Regional Director did not exceed his jurisdiction. Any reference to 'infringing the rights' or 'confusion' does not convert the proceedings into a trademark or passing off adjudication and does not vitiate the order, which is legally sustainable on the independent ground of similarity of company names under Section 16(1)(a). Issue 4: Interference under Article 226 of the Constitution Interpretation and reasoning 2.16 The Court considers whether the impugned order of the Regional Director suffers from such perversity or jurisdictional error as would justify exercise of writ jurisdiction. 2.17 Having found that: (i) Section 16(1)(a) applies; (ii) the names are substantially identical; (iii) the relevant factual circumstances are undisputed; and (iv) the Regional Director acted within his statutory jurisdiction, the Court holds that there is no perversity in the conclusion warranting interference. Conclusions 2.18 The Court declines to exercise jurisdiction under Article 226 and dismisses the writ petition and pending applications, while extending, at counsel's request, the time for compliance with the Regional Director's order by a further period of one month.