Companies Act, 1956 Sections 20 and 22 - incorporation of companies with identical names - later company directed to change its name merely on the ground that names are identical- whether tenable- Held, No.
Brief facts: Petitioner company and Respondent No.4 companies are incorporated with idendtical name with the words “VOV cosmetic”. As far as the respondent No. 4 - VOV Cosmetic Private Limited is concerned, it is sufficient to note that it was incorporated by that name on 5th May, 2011 i.e. prior to the incorporation of petitioner No.1 under the said Act.
Petitioner Nos. 3 and 4 are the directors/promoters of petitioner No.1. Petitioner No.2 - Pioneer Products is presently a partnership firm of which petitioner Nos.3 and 5 are the partners. From the year 1986, petitioner No. 5 carried on business of manufacturing and marketing cosmetics in the firm name and style of Pioneer Products as the sole proprietor thereof. The products were sold under the mark "VOV".
By and under a deed of partnership dated 20th February, 2012, petitioner Nos.3 and 5 carried on business in the firm name and style of petitioner No.2 - Pioneer Products. Petitioner No.2 continued the business of manufacturing and marketing cosmetic products hitherto carried on by petitioner No.5.
Petitioner No.5 permitted petitioner Nos. 2 and 3 to use the said mark “VOV”. The petitioners had also made various applications for the registration of the said mark. With a view to expand their business they incorporated the petitioner No.1 company on 15th September, 2011. On 23rd April, 2012, respondent No. 4 filed an application under section 22 of the said Act to rectify the first petitioner's name, so as not to resemble its name and not to use the word VOV Cosmetic in the rectified name. The names of petitioner No.1 and respondent No.4 are not merely deceptively similar, but are virtually identical.
Upon receipt of the fourth respondent's application, petitioner No.1 was issued a notice dated 14th May, 2012, calling upon it to show cause why it ought not be directed under section 22 of the Act to change its name. The petitioners admitted that their applications for registration of their trademarks, which included as a dominant part thereof, the word "VOV", were pending. It was admitted before the Regional Director that the marks of petitioner No.1 and respondent No.4 were not registered.
By the impugned order, the Regional Director appears to have proceeded on the basis that the moment it is found that a name of the subsequently registered company is identical with or resembles the name of a company in existence, it should be deemed to be an undesirable name. Respondent No.2 proceeded on the basis that in that event, the provisions of section 22(1)(i) are attracted and the name of such subsequently registered company is to be rectified / changed.
Decision: Appeal allowed. Matter remanded.
Reason: Respondents submitted that where, through inadvertence or otherwise, a company is registered by a name which is identical with or too nearly resembles the name by which a company in existence has been previously registered, the Central Government is bound to direct such subsequently registered company to change its name in the manner provided in section 22(1). They contended that in such a case the Central Government has no option but to order the name to be changed. We are unable to agree.
Firstly, section 20 does not bar the Central Government from registering by a name which is identical with or too nearly resembles the name by which a company in existence has been previously registered. In other words, section 20 does not provide that a name by which a company desires to be registered is not undesirable merely because it is identical with or too nearly resembles the name circumstances that fall within its ambit. It would include cases where a party makes an application fraudulently or by suppressing material fact. In the present case, therefore, one of the issues that would arise is whether the statement in the application for registration to the effect that the mark was registered in the name of petitioner No.3 was deliberate or inadvertent. If it is found to be deliberate, the question would arise whether by reason thereof alone, an order for change in the name must follow irrespective of the facts of the case prior to the incorporation and even thereafter. We keep this question open.
The impugned order has been passed only on the basis that the name of petitioner No.1 is almost identical to the name of respondent No.4 which was registered earlier. It was not even based on the incorrect statement made in Form 1 by petitioner No.3 - the promoter of petitioner No.1 and the Chartered Accountant of petitioner No.1. This is clear from the order which stated that, that was a separate matter which was not dealt with in the order. It could certainly be a relevant factor, but it was not made the basis of the order.
In an application for rectification of a name under section 22, it is necessary for the Regional Director to consider various aspects. It is neither possible nor desirable to exhaustively enumerate them. Suffice it to state that merely because the name of a company subsequently registered is identical with or too nearly resembles the name of a company which has already been registered, albeit, through inadvertence or otherwise, it does not follow that an order for rectification is bound to be passed.
The impugned order is, therefore, liable to be quashed and set aside only on this ground. The Registrar of Companies shall, after affording the parties an opportunity of being heard, pass a fresh order after considering the relevant facts in an application under section 22.