TaxTMI 
TaxTMI 
2026 (2) TMI 442
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....nd the officials of the respondent No. 1 - Registrar of Companies, substantial amounts payable to the petitioner company were illegally diverted to the account of respondent No. 3. On this basis, the petitioner has approached this Court, not only seeking cancellation of registration of the respondent No. 3 company, but also a direction to the respondent No. 2 - Union of India through the Ministry of Corporate Affairs to take necessary action for initiating inquiry and investigation against the respondent No. 1 and its officials. The petitioner has also prayed for direction to the respondent No.4 bank to remit balance amount lying in the account of respondent No. 3 to the liquidation account of the petitioner i.e. the corporate debtor (under liquidation). Apart from this, the petitioner is also claiming imposition of penalty on respondent No. 1 and a direction to the respondent No. 1 to pay appropriate compensation / damages into the liquidation account of the petitioner i.e. the corporate debtor (under liquidation). 3. The petitioner, who is the corporate debtor (under liquidation), was registered as a company named 'Sangeeta Aviation Services Private Limited' on 30.07.2012, wit....
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....ut the fraud before this Court, the respondent No. 3 did not proceed with the said writ petition. Accordingly, the Writ Petition bearing (L) No.4189 of 2022 was disposed of by a Division Bench of this Court. 6. Thereafter, the petitioner corporate debtor was placed in the process of liquidation by an order dated 20.10.2023 passed by the NCLT and the petitioner Rajesh Ramesh Kamath was appointed as the liquidator. The petitioner has filed separate writ petitions against the Directorate of Aviation, Government of Chhattisgarh in the High Court of Chhattisgarh and against the Airport Authority of India before the Delhi High Court with regard to its grievance about payments being illegally diverted into the account of the respondent No. 3 company. The present petition is filed for reliefs noted hereinabove and it is the case of the petitioner that due to the utter failure on the part of the respondent No. 1 in performing its duties as per law and also in connivance with respondent No. 3, and the suspended directors of the petitioner corporate debtor, serious fraud has been committed, for which remedial action is necessary. 7. The respondents were served in this petition. But, onl....
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....d that this Court ought to issue directions for initiating inquiry and investigation into the functioning of respondent No. 1 and its officials. 9. It was submitted that in the reply affidavit filed on behalf of respondent No. 1, shockingly, reliance was placed on a version of Rule 8 of the said Rules, which does not exist at all. It was further submitted that the respondent No. 1, instead of initiating civil and criminal proceedings against the fraud committed by the respondent No. 3 and respondent Nos.5 and 6, was wrongly placing the onus on the petitioner for initiation of such proceedings. On this basis, it was submitted that this Court may issue appropriate directions. 10. On the other hand, Mr. Mehta, learned counsel appearing for respondent No. 1, initially sought to defend the actions of respondent No. 1. But, subsequently, he conceded to the fact that Rule 8 quoted in the reply affidavit of respondent No. 1 was erroneously extracted. He could not deny that the language of Rule 8 is as relied upon by the petitioner and that the quotation in the reply affidavit was wrong. In that light, he submitted that the prayer for cancellation of registration of the respondent No.....
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....ames including a grammatical variation thereof; (j) complete translation or transliteration, and not part thereof, of an existing name, in Hindi or in English; (k) addition of the name of a place to an existing name, which does not contain the name of any place; (l) addition, deletion, or modification of numerals or expressions denoting numerals in an existing name, unless the numeral represents any brand; Provided that clauses (f) to (h) and clauses (k) and (l) shall not be disregarded while comparing the names, if a no objection by way of a Board resolution has been provided by an existing company." 12. The above-quoted portion of the Rule is followed by detailed illustrations to help understand the application of the said Rule to various situations. 13. We find substance in the contention of the petitioner that on a proper application of Rule 8 of the aforesaid Rules, respondent No. 3 could not have been registered as a company bearing the name 'Sangeeta Aviation Service Private Limited' as it was clearly and strikingly similar to the name of the petitioner corporate debtor i.e. 'Sangeeta Aviation Services Private Limited'. The only diff....
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....f such a fraud cannot be said to have been diluted merely because subsequently, the name of respondent No. 3 was changed to 'S4 Aviation Service Private Limited'. It is clear that on proper application of Section 4(2)(a) of the Companies Act, which prohibits incorporation of a company with the name, which resembles too nearly to the name of the existing company, read with Rule 8 of the aforesaid Rules, the respondent No. 1 ought not to have registered respondent No. 3 as a company bearing the name 'M/s. Sangeeta Aviation Service Private Limited'. 15. It is shocking that in the reply affidavit filed on behalf of the respondent No. 1, the aforesaid obvious fraudulent registration is sought to be justified relying on Rule 8(2) of the aforesaid Rules. We find that in the affidavit sworn by a Deputy Registrar of the office of respondent No1., Rule 8 is reproduced. But, the said reproduced version of Rule 8 has no connection with the actual Rule 8 as it exists, which has been quoted hereinabove. In the reply affidavit of respondent No. 1 at paragraph 10(b), Rule 8 purportedly of the Companies (Incorporation) Rules, 2014 has been reproduced as follows:- "Rule 8: Names which re....
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....ngly quoted Rule 8(2). The said wrongly quoted sub-rule (2) of Rule 8 provides for the board resolution of the existing company giving a no objection certificate (NOC) for registration of a new company bearing a name, which is identical or nearly resembling the name of the existing company. We find this to be a shocking instance of incompetence or even worse, connivance of the officials of the respondent No. 1 - Registrar of Companies in order to help unscrupulous elements to commit fraud, facilitating siphoning off amounts of the petitioner corporate debtor. The whole line of argument taken in the reply affidavit on behalf of the respondent No. 1 is based on such misquoting of Rule 8 of the said Rules. 17. In the reply affidavit, we also find much emphasis placed on behalf of the respondent No. 1 on its 'SPICe+ system', which is an automated name similarity checking mechanism. It is simply stated that the said system approved the name 'Sangeeta Aviation Service Private Limited', and therefore, registration and incorporation of respondent No. 3 was undertaken. Thereupon, reliance was placed on the 'NOC' purportedly given by the existing company, which was also a fraud and yet th....
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....nsequence that when the fraud was discovered, the name of respondent No. 3 was subsequently changed to 'M/s. S4 Aviation Service Limited'. We also find that the petitioner has suffered considerable financial loss due to significant amounts being diverted because of the fraud committed by respondent No. 3, for which separate proceedings have already been initiated. The record also shows that the respondent No.4 Bank had taken steps to debit-freeze the account of respondent No. 3. Considering the conclusions that we have reached hereinabove, we find that an appropriate direction ought to be issued to respondent No.4 to remit the balance amount lying in the account of the fraudulently registered and incorporated respondent No. 3 to the liquidation account of the petitioner corporate debtor (under liquidation). 21. Accordingly, we grant reliefs to the petitioner in terms of prayer clauses (A), (B) and (D), which read as follows:- "(A) To issue a Writ of Mandamus and / or Writ in the nature of Mandamus and / or any other appropriate writ, orders or directions, thereby calling upon the Respondent No. 1, being the Registrar of Companies, Mumbai, to show cause as to how it allo....