The power of central government to rectify ‘name of the company’ is wider in its nature. [ CGMP Pharmaplan Pvt. Ltd. vs Regional Director]

CGMP Pharmaplan Pvt. Ltd. vs Regional Director, Ministry Of Corporate affairs & Anr.

Writ petition – 3217/2010

Criminal appeal no- 6437/10

Forum: Delhi High Court

Bench: S. Muralidhar

Decided on: 16 July 2010.

Relevant provision:

1. Article 226, Indian constitution, 1950
2. Section 22 of Companies Act, 1956

 Brief facts:

  • This petition was against the order of Regional director where petitioner company CGMP Pharmaplan India Pvt. Ltd was asked to change the name of the company as it was very similar to respondent 2 company i.e. NNE Pharmaplan India Pvt. Ltd.
  • Earlier Respondent 2 Company had filed a civil suit seeking an injunction to restrain Petitioner Company from passing off the name of the respondent company as its own where the court had held against respondent 2.
  • Meanwhile, the application before respondent 1 i.e. Regional Director was also heard and it was observed that name of the petitioner company is very similar to respondent 2 Company.
  • Involvement of the same person in both the companies and a similar area of business gives misleading effect in the mind of general public. Hence, Petitioner Company should rectify their company name within 3 months. Aggrieved by the same, petitioner approached HC.

Issue:

  • Whether or not, the names of the companies in the present dispute are similar?
  • Whether or not, the decision of Regional Director in accordance with the present facts and circumstances is legally valid?

Argument of petitioner:

  1. Under article 226 of Indian Constitution, a court can set aside the order of Respondent 1.
  2. Respondent 1 instead of determining whether the name was identical treated it as an action for infringement under trademark.
  3. Petitioner referred to Paragraph 28 of guidelines of the Department of Corporate Affairs which states mere distinct first word is sufficient to consider the names as distinguished.
  4. The action of Respondent 2 is mala Fide as there are other companies which have similar names but no action was brought against them.
  5. They relied on a case of Kalpana polytech India Ltd. v. Union of India 106(2001) CC 558 to urge that respondent 1 has exceeded its jurisdiction and adopted unwarranted approach under Sec. 22(1) of Companies Act, 1956.

 Argument of Respondent:

  1. They relied on case of Surya Dev Rai v. Ram Chandra Rai (2003)6 SCC 675 to urge that unless the court find that respondent 1 acted against the principle of Natural justice or committed an error of jurisdiction, it should not interfere under article 226 of the constitution merely because another view is possible to be taken.

Ratio:

  1. Under section 22 of Companies Act, 1956 power of central government is wider in as much as there is no need to examine whether there is a likelihood of deception and confusion. It is enough to examine if the name registered too nearly resembles another registered name.
  2. The decision in Montari Overseas Limited makes it clear that a Civil Court exercising its powers in terms of the CPC and determining in a passing-off action if one name is confusingly deceptive or similar to another name, is exercising a jurisdiction independent of the jurisdiction of Respondent No. 1 in respect of the registering of a company’s name.

Decision:  The court did not find any error in the decision of regional director and decided that Petitioners name, i.e., CGMP Pharmaplan Private Limited too nearly resembles the name of the Respondent No. 2 i.e. NNE Pharmaplan India Limited. The prominent part of both the names is ‘pharmaplan’ and when compared as whole both the names are very nearly similar.

The petition and the pending applications were dismissed. The court decided in favor of respondents stating that the name of petitioner’s company is very similar to respondent’s company.

(This brief was prepared and submitted to LawBriefs.in by Survi Sinha, Student at Gujarat National Law University.)

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