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November 5, 2013

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In the earlier issue we have discussed on section 17 of the Companies Act, 1956 and in the present issue we shall proceed with section 22 & 23 which deals with the rectification of name of Company and registration of change of name respectively.

Query # 1 : Where Registrar of Companies directed petitioner-company to change its name as it resembled with name of an existing company carrying on similar business, can the order of Registrar of Companies be sustained ?

Decided Case Law : Lords Insullations India (P.) Ltd. v. Regional Director, Department of Company Affairs [2004] 122 Comp. Cas. 892/[2006] 65 SCL 15 (Mad.)

Facts of the case : The petitioner-company 'Lords Insullations India Private Limited' was incorporated under the Act on 10-03-2003. The respondent-company 'Lloyd Insullations India Ltd.' which was registered in 1977 for carrying out similar business filed an application before the Registrar of Companies for direction to the petitioner to change the name on the allegation that the name of the petitioner-company was causing confusion with their customers. The Registrar of Companies directed the petitioner to delete the word 'Lords' from the name and change it to some other name/prefix. The petitioner filed the writ petition to quash the order of Registrar of Companies.

Clarification : Held that except the word 'Lloyd' and 'Lords' all other words in the name of both the companies were exactly the same. The words 'Lloyd' and 'Lords' are phonetically resembling. The products of both the companies were the same, namely, the insulations and ancillary materials. To pass an order under section 22 the requisite is that names should be found either identical or too similar. In the instant case the words 'Lloyd' and 'Lords' were phonetically resembling and all other words in the name of the companies were exactly the same and hence there was no reason warranting quashing of the order passed by the Registrar of Companies.


Query # 2 : If the name of the company is changed, will the constitution also get changed ?

Decided Case Law : Economic Investment Corpn. Ltd. v. CIT [1970] 40 Comp. Cas. 1 (Cal.)

Facts of the case : Company M changed its name to company E on 23-9-1947 and it was assessed to income-tax in the name of M for the year 1946-47, and in the course of certificate proceedings for the recovery of tax, a notice was sent by the Income-tax department to bank A who was maintaining the account of Company in the name of E to collect tax for the relevant assessment year.

Clarification : Held that the bank was holding account in the name of M which was the assessee.

Conclusion : By the mere change of name, the constitution of the old company will not change. The only thing that will change is its name and all the rights and obligations under the law, of the old company passes to the new company. It's not similar to the reconstitution of a partnership, which, in law, means the creation of a new legal entity altogether.

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