Companies Act, 1956 – Section 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: VOV Cosmetics Pvt Ltd, incorporated on 15th September, 2011. Respondent Company: VOV Cosmetic Pvt Ltd, incorporated on 5th May, 2011.
Mr. A and Mr. B are Directors/Promoters of the Petitioner Company.
From the year 1986, Mr. C 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, Mr. A & Mr. C carried on business in the firm name and style of Pioneer Products and continued the business of manufacturing and marketing cosmetic products hitherto carried on by Mr. C.
Mr. C permitted the usage of the said mark “VOV” by Mr. A and the partnership firm “Pioneer Products.”
The petitioners had also made various applications for the registration of the said markVOV. With a view to expand their business they incorporated the Petitioner Company (VOV Cosmetics Pvt Ltd) on 15th September, 2011.
On 23rd April, 2012, respondent company (VOV Cosmetic Pvt Ltd, which was incorporated on 5th May, 2011) filed application under section 22 of the said Act to rectify the petitioner’s name, so as not to resemble its name and not to use the word VOV Cosmetic in the rectified name.
On receipt of the Respondent’s application, the Regional Director served a notice to the Petitioner 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 Petitionersadmitted that the application for registration of mark “VOV” under Trade Marks Act is still pending. Further, both the Companies have admitted before the Regional Director by that their marks were not yet registered.
It appears by the impugned Order that the moment Regional Director found the name of the subsequently registered company identical with or resembles the name of the company in existence,therefore it should be deemed to be an undesirable name. Further the RD on the basis of the event, Provisions of Section 22(1)(i) of the Act are attracted and the name of such subsequently registered company is required to rectify or change its name.
The Respondent 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 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 by which a company in existence has been previously registered. Whether such name is undesirable or not would depend on the facts and circumstances of the case. This is clear from sub-section (2) of section 20 which provides that such a name “may be deemed to be undesirable” by the Central Government within the meaning of sub-section (1). It is merely a presumption which is clear from the use of the word “may” in sub-section (2). If it were otherwise, instead of the word “may”, the Legislature would have used the word “shall”. Indeed if it were otherwise, the language of the section would have been entirely different. It would have provided for a bar to the registration of a company by a name which is identical with or too nearly resembles the name by which a company has been previously registered.
The impugned order has been passed only on the basis that the name of Petitioner Company is almost identical to the name of Respondent Company which was registered earlier. It was not even based on the incorrect statement made in Form 1 by the Promoter and Chartered Accountant of the Petitioner Company. 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 shallpass a fresh order, after affording the parties an opportunity of being heard, considering the relevant facts in an application under section 22.