TaxTMI 
TaxTMI 
2012 (9) TMI 1256
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....e ratio of 2500 shares each. Respondent No.3 is engaged in the business of manufacturing and sale of passenger and freight elevators. 3. Petitioner is a private limited company incorporated on 29.11.2010 in the name and style "Surya Elevators & Escalators India Private Limited". Mr. Venugopal Reddy and Mrs. Meena Pothireddy are the Directors of the petitioner-company. The petitioner is engaged in the business of manufacturing and sale of elevators and escalators. 4. Respondent No.3 initiated proceedings under Section 22(1)(i) of the Act against the petitioner before the second respondent for a direction to change the name of the petitioner, by filing the application on 13.11.2011, on the ground that the petitioner-company's name is registered through inadvertence. The petitioner herein filed objections to such application before the second respondent. 5. In the meanwhile, respondent No.3 instituted the suit in O.S.No.5275/2011 for injunction alleging 'passing off'. In the said suit, relief of permanent injunction restraining the petitioner from using the trade/brand name "Surya" is prayed for on the ground that respondent No.3 is the sole owner of the said trade/brand name....
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.... members of Mr. C. Surendranadha Reddy, former Director of respondent No.3-company. Mrs. Meena Pothireddy is the wife of Mr. C. Surendranadha Reddy and Mr. Venugopal Reddy is the brother-in-law of Mr. C. Surendranadha Reddy. Mr. C. Surendranadha Reddy individually issued 'No Objection Certificate' dated 8.12.2010 to Mr. Venugopal Reddy for incorporation of the petitioner in the name and style of "Surya Elevators and Escalators India Private Limited" and accordingly the petitioner was registered/incorporated inadvertently inasmuch as respondent No.3 had not issued 'No Objection Certificate' in favour of the petitioner-company. 8. After hearing both the parties, the second respondent has passed the impugned order directing the petitioner to change its name within a period of three months from the date of the impugned order. 9. Mr. Naganand, learned senior counsel appearing for the petitioner submitted that the second respondent has totally misdirected himself in exercise of the statutory power under Section 22 of the Act; the object of Section 22 is to remove confusion when names are similar and not to provide an adjudicatory forum for settlement of disputes inter-se particular....
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....t the company by inviting Mr. C. Surendranadha Reddy by offering him 50% of the shares in the company based on the trust reposed on him; Mr. C. Surendranadha Reddy without the knowledge and consent of the Board of third respondent-company, issued 'No Objection Certificate' on 8.12.2010 to the Registrar of Companies to incorporate the petitioner-company in the name and style of "Surya Elevators and Escalators India Private Limited", which has been started by none other than Mr. C. Surendranadha Reddy's wife and his brother-in- law; Mr. C. Surendranadha Reddy, the former Director of respondent No.3 has acted detrimental to the interest of respondent No.3 by issuing 'No Objection Certificate' with mala fide intention; having come to know that 'No Objection Certificate' is issued by Mr. C. Surendranadha Reddy, the third respondent in order to protect the interest and intellectual property of respondent No.3 removed Mr. C. Surendranadha Reddy from the Board in an Extraordinary General Meeting of members held on 22.1.2011 after issuing a special notice under Section 284(2) of the Act. Thereafter, the third respondent-Board passed a resolution to make an application to the Central Governm....
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.... he argued for dismissal of the writ petition. 11. Before proceeding further, it is beneficial to note the undisputed facts, which are: i) The third respondent-company is incorporated on 6.10.2005, whereas the petitioner is incorporated subsequently, i.e., on 29.11.2010. ii) The third respondent-company had two Directors from the date of incorporation. They are Mr. C. Surendranadha Reddy and Mr. K. Arunachalam. iii) After removal of Mr. C. Surendranadha Reddy, Mr. K. Arunachalam continued as the Managing Director of respondent No.3-company. Mrs. Rajani Challachemala Subramanyam was appointed as an Additional Director of respondent No.3-company. The said appointment of Additional Director is not challenged before the Company Law Board, Chennai, as is clear from Annexure-C. iv) Mr. C. Surendranadha Reddy, prior to his removal from respondent No.3-company, unilaterally gave 'No Objection Certificate' on 8.12.2010 for incorporation of the petitioner-company starting with the name "Surya Elevators and Escalators" or such other similar name. The other Directors of respondent No.3-company did not join hands with Mr. C. Surendranadha Reddy while issui....
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....uced at Annexure-R4 to the statement of objections. In the said meeting also, it was decided that since brand name "Surya" is mainly created by respondent No.3-company, the brand name shall not be the property of any of the Directors and can be used only by respondent No.3-company. It was mutually agreed between the Directors that, either directly or indirectly they should not use the company's name or any other similar name or incorporate a new company with the word "Surya" as the third respondent-company already built up the brand image in that name. Ultimately, the Directors of respondent No.3-company by passing the resolution agreed not to start any business or venture, which was being carried on by the company and also not to use the word "Surya" in any business to be carried on by them or their family members in future without the written consent of the other Directors. It was further resolved that any future formation of the company or any form of organization with the name "Surya" either directly or indirectly by any of the Directors or their relatives can be done only with the unanimous resolution of the Board. 14. From the above, it is clear that both the then Director....
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....No.3-company and also not to use the word "Surya" in the business to be carried on either by the Directors or by their family members without written consent of the other Directors. In spite of the same, fraudulently 'No Objection Certificate' is issued in favour of the Directors of the petitioner-company to float new company with the brand name "Surya". Thus, the petitioner-company got the brand name "Surya" pursuant to the fraud played by Mr. C. Surendranadha Reddy, the then Director of respondent No.3- company. In this view of the matter, Mr. Uday Holla, learned senior counsel appearing for respondent No.3 is justified in arguing that the petitioner should be non-suited inasmuch as the fraud vitiates everything. 17. Fraud and collusion vitiate even the most solemn proceedings in any civilized system of jurisprudence. It is a concept descriptive of human conduct. In Black's Legal Dictionary, fraud is defined as an intentional perversion of truth for the purpose of inducing another in reliance upon it to part some valuable thing belonging to him or surrender a legal right. Section 17 of the Indian Contract Act defines fraud as an act committed by a party to a contract wit....
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....of three months from the date of the direction or such longer period as the Central Government may think fit to allow: Provided that no application under clause(ii) made by a registered proprietor of a trade mark after five years of coming to notice of registration of the company shall be considered by the Central Government. (2) If a company makes default in complying with any direction given under clause (b) of sub-section (1), the company, and every officer who is in default, shall be punishable with fine which may extend to one thousand rupees for every day during which the default continues.". From the above, it is clear that no company shall be registered by a name which is identical with or too nearly resembles the name by which a company in existence has been previously registered. Such name is deemed to be undesirable by the Central Government. If in the opinion of the Central Government, through inadvertence or otherwise the company is registered and if the subsequently registered company is identical with or too nearly resembles the name by which a company in existence has been previously registered, then, the registration of the subsequently registe....
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....red to be disclosed as per law, amounts to misrepresentation by him which impliedly means the commission of fraud played by him not only on the third respondent, but also on the Registrar of Companies. Consequently the exercise of jurisdiction/power by the Registrar of Companies was by inadvertence or by similar mistake such as lack of attention, carelessness or negligence. 21. The name of a company may be relevant in construing its memorandum and to see what its main object is. Under Company Law, a company by registering its name gains a monopoly of the use of that name. Even if the company is not registered, the Court will restrain a projected new company which was intended to carry on the same business as the unregistered company and to bear a name so similar to its name. A company on discovering that another company has been or is about to be registered under the same or similar name as itself may have a common law right to prohibit the new comer from the use of that name. The company which has registered itself should need to enjoy the benefit of goodwill created by that company. It is not necessary to prove any fraudulent intention on the part of the petitioner herein. It ....
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....egistered Company Existing company too nearly resembling name 1. Surya Elevators & Escalators India Private Limited Surya Elevators Private Limited The illustrations mentioned supra in the Guidelines are identical to the similarity of the names of petitioner and respondent No.3. 24. In the present case, the third respondent namely Surya Elevators Private Limited was incorporated on 6.10.2005 by Mr. C. Surendranadha Reddy and Mr. K. Arunachalam holding 50% shares each. The petitioner-company was incorporated on 29.11.2010 in the name and style "Surya Elevators and Escalators India Private Limited". As aforementioned, one of the Directors of erstwhile company alone issued 'No Objection Certificate' for incorporation of the petitioner-company despite specific resolution passed by the Board of third respondent-company that none of the two Directors should without the consent of another shall issue 'No Objection Certificate' for starting another company under the same or similar name. It is also not in dispute that the petitioner-company has got two Directors, namely, Smt. Veena Pothireddy and Mr. Venugopal Reddy, who are the wife and brother-in- law respectively of Mr....
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....elaborate investigation. As 'No Objection Certificate' purported to have been issued by the existing company (i.e., the third respondent) was submitted by the petitioner-company, the Registrar might not have required the petitioner to get 'No Objection Certificate' once again from the existing company. In the matter on hand, since 'No Objection Certificate' is issued illegally or unauthorizedly by one of the Directors of respondent No.3-company, the Registering Authority without further enquiry, registered the petitioner-company based on such 'No Objection Certificate'. Since no enquiry in that regard need to be held, it seems, no enquiry was held by the Registering Authority at the time of registration as to find out whether 'No Objection Certificate' is actually issued or not by the third respondent. The very fact that the petitioner has relied on such 'No Objection Certificate' at the time of its registration, itself clearly reveals that the petitioner was of the definite opinion that the name of the petitioner too nearly resembles the name of respondent No.3-company in existence which has been previously registered. Moreover, curiously or fairly the petitioner herein has not ta....
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....order passed by the Regional Director is bad in the eye of law. The similarity of name is not in one word only, but it is in a combination of name of "Surya Elevators". Since the Registering Authority has failed to verify as to whether 'No Objection Certificate' is validly issued by the Board of respondent No.3 or not while registering the petitioner-company, it has to be held that the authority has inadvertently or negligently approved the name of the petitioner-company. Therefore, under the facts and circumstances of the case, the second respondent has passed the impugned order as per law. 27. May be, the name "Surya" is akin to Sun God. The contention of the petitioner that 1500 companies are registered in the name of "Surya" cannot be accepted in the matter on hand, inasmuch as no single company is said to have been registered in Karnataka with the name "Surya Elevators". It seems, one company is registered in Maharashtra under the said name. It is open for the third respondent to take action against such company, if it so chooses. Merely because another company is registered in Maharashtra State by which respondent No.3 is not aggrieved, the petitioner cannot be allowed to ....