Punjab-Haryana High Court
M/S Vardhaman Crop Nutrients Pvt. Ltd vs Union Of India And Ors on 17 December, 2014
Author: Ritu Bahri
Bench: Ritu Bahri
C.W.P. No.13589 of 2012 (O&M) [ 1 ]
IN THE HIGH COURT OF PUNJAB & HARYANA, CHANDIGARH
C.W.P. No.13589 of 2012 (O&M)
Date of Decision: 17.12.2014
M/s Vardhaman Crop Nutrients Private Limited.. Petitioner
Versus
Union of India and others .......................... Respondents
Coram: Hon'ble Ms. Justice Ritu Bahri
1.To be referred to the Reporters or not?
2. Whether the judgment should be reported in the Digest?
Present: Mr. Anand Chhibbar, Sr. Advocate with
Mr. Gaurav Mankotia, Advocate
for the petitioner.
Mr. Anil K. Aggarwal, Advocate
for respondent No.4.
...
RITU BAHRI, J.
The petitioner-M/s Vardhaman Crop Nutrients Private Limited is seeking quashing of the order dated 7.5.2012 (Annexure P-21) passed by respondent No.2 directing the petitioner company to delete the word 'VARDHAMAN' from its existing name as respondent No.4 has the registered trademark for the same.
The petitioner- M/s Vardhaman Crop Nutrients AJAY PRASHER 2014.12.24 16:32 I attest to the accuracy and authenticity of this document High Court Chandigarh C.W.P. No.13589 of 2012 (O&M) [ 2 ] Private Limited and respondent No.4-M/s Vardhaman Fertilizers and Seeds Private Limited were having good relations since 1970s. The Director of the petitioner company Shri Deepinder Singh Randhawa in due course of time agreed to act in the representative capacity for respondent No.4 to facilitate the registration of respondent No.4 company with the Directorate of Agriculture, Punjab as well as the Taxation authorities. Shri Deepinder Singh Randhawa was never employed nor received any remuneration from respondent No.4. Eventually, from the Minutes of Meeting held on 16.3.2009 (Annexure P-3) it is further clarified that he was not receiving any remuneration and was inclined to start his own business and respondent No.4, being represented by Mr. R.R.Shah, had no objection in this regard. Thereafter, the petitioner set up a private limited company on 29.5.2009 (Annexure P-2) and shortly thereafter entered into a Marketing Agreement with respondent No.4 on the following terms and conditions:-
1."Vardhaman Vardhaman Fertilizers" agrees to supply the captioned Fertilizers conforming to relevant specifications.
2."
"Vardhaman Crop Nutrients" agencies to market the Fertilizers supplied by "Vardhaman Fertilizers" with Trade Name VARDHAMAN".
3. "Vardhaman Fertilizers" shall have the valid AJAY PRASHER 2014.12.24 16:32 I attest to the accuracy and authenticity of this document High Court Chandigarh C.W.P. No.13589 of 2012 (O&M) [ 3 ] Dealer Registration certificate (DRC) duly acknowledged in Form A2 and shall have to issue Form 'O' in favour of "Vardhaman Crop Nutrients" as sole marketing agency for the state of Punjab.
4."
4. "Vardhaman Crop Nutrients" shall also have to obtain the Whole Sale License in Form A2 from the Regional Authority and shall have to issue Form 'O' in favour of their Dealers and Distributors located in the States Punjab and "Vardhaman Crop Nutrients" shall have to further obtain Wholesale/Retail Selling Permission in respective State.
5."
5. "Vardhaman Crop Nutrients" and "Vardhaman Fertilizers" will strictly follow the provisions of Fertilizer (Control) Order, 1985, as amended from time to time.
6.All other Government formalities with respect to the Selling Permission will be the responsibility of "Vardhaman Crop Nutrients".
7. The terms and conditions of the supply will be mutually decided by the parties from time to time.
Pursuant to the Marketing Agreement (Annexure P-4) the petitioner company made certain Purchase Orders AJAY PRASHER 2014.12.24 16:32 I attest to the accuracy and authenticity of this document High Court Chandigarh C.W.P. No.13589 of 2012 (O&M) [ 4 ] (Annexures P-5 to P-8) to respondent No.4 for the purchase of Water Soluble Fertilizers. A communication was sent with regard to the details of the payment. Due to some delays Purchase Order No. 3 (Annexure P-7) could not be supplied in time by respondent No.4 which led to subsequent cancellation of the said Purchase Order (Annexure P-7). As a result of the same, payment of cheque bearing No. 616144 dated 18.8.2009 was stopped by the petitioner company till further reconciliation of the accounts. The details of the payments drawn out by the petitioner company were given as Annexure P-9.
Instead of trying to reconcile its account with the petitioner company, a Legal Notice dated 29.10.2009 (Annexure P-12) under Sections 138 and 141 of the Negotiable Instruments Act for release of certain payments was issued. As per the Legal Notice, the outstanding amount was `6,60,320/-. This amount is at variance with the amount mentioned by respondent No.4 in its letter dated 6.10.2009 (Annexure P-10) which states that the outstanding amount of the petitioner company was `4,27,063/-. There was difference of `2,00,000/- in the outstanding amount.
Thereafter, the petitioner company received another legal notice dated 31.10.2009 (Annexure P-13) under Section 22 of the Companies Act, 1956 objecting to the use of the word "Vardhaman" by the petitioner AJAY PRASHER 2014.12.24 16:32 I attest to the accuracy and authenticity of this document High Court Chandigarh C.W.P. No.13589 of 2012 (O&M) [ 5 ] company. Another legal notice was issued on 13.11.2009 (Annexure P-14) stating that the petitioner company had defrauded in making payment to respondent No.4 and hence the Marketing Agreement stood terminated. Thereafter, a complaint under Section 138/141 of the Negotiable Instruments Act,1881 (Annexure P-16) was filed by respondent No.4. Finally, pursuant to the legal notice dated 31.10.2009 (Annexure P-13) under Section 22 of the Companies Act, 1956, representations (Annexures P-17 and P-18) were made before respondent No.2-Regional Director (Northern Region), Ministry of Corporate Affairs, against the use of the word "Vardhaman" by the petitioner company. The petitioner filed its reply dated 10.2.2012 (Annexure P-
19). A rejoinder was filed on 11.4.2012 (Annexure P-20). After hearing both the parties on 4.5.2012, vide order dated 7.5.2012 (Annexure P-21) a direction was given to the petitioner to delete the word 'Vardhaman' from its existing name.
Mr. Chhibbar, learned senior counsel for the petitioner, is seeking quashing of the order dated 7.5.2012 (Annexure P-21) on the ground that at the time of entering into Marketing Agreement (Annexure P-4), respondent No.4 was well aware of the petitioner company i.e. Vardhaman Crop Nutrients Private Limited and this name was used with the consent and knowledge of respondent No.4. Respondent AJAY PRASHER 2014.12.24 16:32 I attest to the accuracy and authenticity of this document High Court Chandigarh C.W.P. No.13589 of 2012 (O&M) [ 6 ] No.4 had not raised any objection to the use of the word 'Vardhaman' at the time of entering into the Marketing Agreement (Annexure P-4) meaning thereby it had actually acquiesced to the use of the word 'Vardhaman' by the petitioner company irrespective of the fact that respondent No.4 had a registered trademark for the same. Due to certain differences with the petitioner company, respondent No.4 had issued legal notices (Annexures P-12 to P-15) on one pretext or the other containing false, fabricated and frivolous allegations. This name is being used by the company since its incorporation on 29.5.2009. There are 401 different companies registered under the Companies Act, 1956 with the name 'Vardhaman', out of which, several are in the same business/field of operation. No objection has been raised by respondent No.4 against other companies nor any company has objected to the use of word 'Vardhaman' by the petitioner company.
Respondents No. 1 to 3 in their written statement have taken a stand that the petitioner company was incorporated on 29.5.2009 and the respondent No.4 was incorporated on 9.7.1987 with the name M/s Vardhaman Fertilizers and Seeds Private Limited. Respondent No.4 has acquired tremendous goodwill and reputation in the market while having 'Vardhaman' as its key word. Respondent No.2 accordingly issued a notice on 4.11.2012 to the petitioner to AJAY PRASHER 2014.12.24 16:32 I attest to the accuracy and authenticity of this document High Court Chandigarh C.W.P. No.13589 of 2012 (O&M) [ 7 ] furnish its comments on the use of word 'Vardhaman' as its name. Then the petitioner company filed its reply justifying that the logo and packaging of products of the petitioner company are completely different from the applicant company and there is no resemblance of shape and color of the packaging with the applicant company. After hearing both the parties, an order was passed that the name used by the petitioner company as M/s Vardhaman Crop Nutrients Private Limited has infringement of the rights of the applicant (respondent No.4) under Trade Mark Act, 1949.
Respondent No.4 has placed on record an application under Section 22 of the Companies Act, 1956 along with complete set of letters as Annexure R-1 collectively. It has been stated that respondent No.4 is continuously using its Trade Mark since 1.1.1991. The Trade Mark has been registered with the Registrar of Trade Marks on 8.2.2007 and is valid since then as per Certificate of Registration (Annexure A-2). Respondent No.4 has a vast network of dealers throughout India and has sold goods under the brand name and Trade mark 'Vardhaman' as per the details given in the final order dated 31.3.2012 (Annexure R-2) and details of the dealers (Annexure A-6). Mr. Deepinder Singh Randhawa, Director of the petitioner- company, has intentionally floated the new company with the first word "Vardhaman" to usurp the business of AJAY PRASHER 2014.12.24 16:32 I attest to the accuracy and authenticity of this document High Court Chandigarh C.W.P. No.13589 of 2012 (O&M) [ 8 ] respondent No.4 and wrongfully reap the benefit of brand name/trademark, reputation and goodwill of respondent No.4. The petitioner is selling its products under the same brand name and trademark 'Vardhaman' by mis- representing that the petitioner company is the regional outfit of respondent No.4 and that the two companies belong to the same promoters as that of respondent No.4. The name of the company is deceptively similar to the name of respondent No.4 which is causing confusion in the minds of the public at large, especially the farmers who are illiterate and naïve and are incapable of drawing difference between the names of the two companies. Respondent No.4 has obtained a license from Directorate of Agriculture, Punjab to sell its Fertilizers in the State of Punjab vide License bearing MOA No. 702 which was valid from 11.11.2008 to 10.11.2011 (Annexure A-9). Mr. Deepinder Singh Randhawa, Director of the petitioner company was authorized to represent respondent No.4 in the office of Director of Agriculture, Punjab for obtaining license for trading and for renewal thereof from time to time. The authorization letter written to him is dated 31.10.2008 (Annexure A-10). Annexure A-11 is the license to carry on the business of Fertilizer in the State of Punjab which is valid from 17.9.2009 to 16.9.2012. The Director of the petitioner company-Mr. Deepinder Singh Randhawa vide letter dated 23.9.2009 AJAY PRASHER 2014.12.24 16:32 I attest to the accuracy and authenticity of this document High Court Chandigarh C.W.P. No.13589 of 2012 (O&M) [ 9 ] (Annexure A-12) written to the Directorate of Agriculture, Punjab, surrendered the license of respondent No.4. Respondent No.4 on coming to know about this letter (Annexure A-12) immediately applied for a fresh license which was issued by the Directorate of Agriculture, Punjab bearing MAO No. 892 and was valid from 24.2.2010 to 23.2.2013 (Annexure A-13). The intention of Mr. Deepinder Singh Randhawa, Director of the petitioner company, was to kill the business of respondent No.4 through his new company. Respondent No.4 has applied for renewal of the above license (Annexure A-13) which was to expire on 23.2.2013. In this background, a legal notice was issued by respondent No.4 on 31.10.2009 (Annexure A-14) calling upon the petitioner to cease and desist from using the registered trademark of respondent No.4 and to change the name of the petitioner company by deleting the name 'Vardhaman' from its existing name. The list of 401 companies attached by the petitioner as Annexure P-22 is misleading. None of the company, except respondent No.4, is engaged in the business of trading in water soluble fertilizers and micro nutrients. Respondent No.4 has no objection to the use of word 'Vardhaman' by companies engaged in other business like "Vardhaman Engineers", "Vardhaman Fabrics", "Vardhaman Gem Exports", "Vardhaman Pottries", "Vardhaman Wires", "Vardhaman AJAY PRASHER 2014.12.24 16:32 I attest to the accuracy and authenticity of this document High Court Chandigarh C.W.P. No.13589 of 2012 (O&M) [ 10 ] Woollen Mills" etc. The respondents have further denied that they were aware of the use of the word 'Vardhaman' by the petitioner company at the time of its incorporation. On the other hand, the stand taken is that the petitioner company had obtained license from the Directorate of Agriculture, Punjab, only on the condition that it will sell the products of respondent No.4 company which come under the brand name 'Vardhaman'. Subsequently, the promoter of the petitioner company by misusing his power surrendered the license of the petitioner company (Annexure A-12). Respondent No.4 has initiated criminal complaint against the petitioner company for the said action. Vide order dated 7.5.2012 (Annexure P-21) the petitioner company was directed to delete the word 'Vardhaman' from its name within three months. The stay order against this order granted by this Court was vacated on 12.10.2012 and petitioner company is violating the registered trademark of respondent No.4 as per the balance sheet dated 31.3.2012 (Annexure R-3).
Heard, counsel for the parties.
The facts not in dispute are that the petitioner set up a private limited company on 29.05.2009 (Annexure P-2) and thereafter, entered into a Marketing Agreement (Annexure P-4) with respondent No.4-M/s Vardhman Fertilizers and Seeds Private Limited to market the fertilizers AJAY PRASHER 2014.12.24 16:32 I attest to the accuracy and authenticity of this document High Court Chandigarh C.W.P. No.13589 of 2012 (O&M) [ 11 ] supplied by it with trade name "Vardhaman". As per agreement (Annexure P-4), the petitioner-company was to purchase fertilizers from respondent No.4 after obtaining wholesale licence from the Regional Authority. Pursuant to this agreement, petitioner-company made certain purchase orders (Annexures P-5 to P-8) to respondent No.4 for the purchase of Water Soluble Fertilizers. However, due to some delays, purchase order No. 3 (Annexure P-7) could not be supplied, which led to cancellation of the same. Thereafter, a dispute arose between the two companied with regard to payment of outstanding amount of Rs.6,60,320/-. Consequently, respondent No.4 initiated proceedings under Section 138 of the Negotiable Instruments Act (Annexure P-
16). Apart from this, a notice dated 31.10.2009 (Annexure P-
13) under Section 22 of the Companies Act, 1956 was also issued to the petitioner-company. Thereafter, an application/representation was made before the Regional Director (Northern Region), Ministry of Corporate Affairs- respondent No.2 against petitioner-company for the use of the word "Vardhaman." Ultimately, the Regional Director- respondent No.2 while exercising powers under Section 22 of the Companies Act, 1956, passed the impugned order dated 07.05.2012 (Annexure P-21) directing the petitioner- company to delete the word "Vardhman" from its existing name and change its name to some other name. AJAY PRASHER 2014.12.24 16:32 I attest to the accuracy and authenticity of this document High Court Chandigarh
C.W.P. No.13589 of 2012 (O&M) [ 12 ] Sections 20 and 22 of the Companies Act, 1956 read as under:-
"20. Companies not to be registered with undesirable names.--(1) names.-- No company shall be registered by a name which, in the opinion of the Central Government, is undesirable.
[(2) Without prejudice to the generality of the foregoing power, a name which is identical with, or too nearly resembles,-
(i) the name by which a company in existence has been previously registered; or
(ii) a registered trade mark, or a trade mark which is subject of an application for registration, of any other person under the Trade Marks Act, 1999, May be deemed to be undesirable by the Central Government within the meaning of sub-section (1). (3) The Central Government may, before deeming a name as undesirable under clause (ii) of sub-section (2), consult the Registrar of Trade Marks.]
22. Rectification of name of company.--[(1) company.-- If, through inadvertence or otherwise, a company on is first registration or on its registration by a new name, is registered by a name which,--
(i) in the opinion of the Central Government, is identical with, or too nearly resembles, the name by which a company in existence has been previously registered, whether under this Act or any previous companies law, the first-mentioned company, or
(ii) On an application by a registered proprietor of a trade mark, is in the opinion of the Central Government identical with, or too nearly resembles, a registered trade mark of such proprietor under the Trade Marks Act, 1999, such company,---]
(a) may, by ordinary resolution and with the previous approval of the Central Government signified in writing, change its name or new name; and AJAY PRASHER
(b) Shall, if the Central Government so directs 2014.12.24 16:32 I attest to the accuracy and authenticity of this document High Court Chandigarh C.W.P. No.13589 of 2012 (O&M) [ 13 ] within twelve months of its firs registration or registration by its new name, as the case may be, or within twelve months of the commencement of this Act, whichever is later, by ordinary resolution and with the previous approval of the Central Government signified in writing change its name or new name within a period of three months from the date of the direction or such longer period as the Central Government may think fit to allow:
[Provided that no application under clause (ii) made by a registered proprietor of a trade mark after five years of coming to notice of registration of the company shall be considered by the Central Government.] (2) If a company makes default in complying with any direction given under clause (b) of sub-section (1), the company, and every officer who is in default, shall be punishable with fine which may extend to [one thousand rupees] for every day during which the default continues."
As per Section 22 of the Companies Act, an application can be made for rectification of the name of company and if, in the opinion of the Central Government, it is identical with or too nearly resembles a registered trade mark of the applicant, a direction can be given for changing the name. There is a proviso that no application can be made after five years of coming to notice of registration of the company.
In the facts of the present case, it is not the case of the petitioner that his company's name has been registered under the Trade Marks Act. The case of the petitioner-company is that initially, it had entered into an agreement (Annexure P-4) with respondent No.4 to sell its products in the State of Punjab and when the agreement AJAY PRASHER 2014.12.24 16:32 I attest to the accuracy and authenticity of this document High Court Chandigarh C.W.P. No.13589 of 2012 (O&M) [ 14 ] could not be carried out, the licence was surrendered and thereafter, the company proceeded to work independently. Moreover, at the time of the agreement (Annexure P-4), respondent No.4 had accepted the name of the petitioner- company and thereafter, had given its consent to the latter.
This argument is liable to be rejected on the ground that as per proviso to Section 22 of the Companies Act, an application for correction of the name can be made within five years by the company, whose trade mark is being infringed. In this case, the petitioner company was incorporated in the year 2009 and the application, raising objection, has been made rightly within five years. As per the written statement, respondent No.4 is continuously using its trade mark since 01.01.1991 and it was registered with the Registrar of Trade Marks on 08.02.2007. The petitioner has floated a new company with the first word "Vardhaman" to usurp the business of respondent No.4, as respondent No.4 has been using this trade mark since 1991. As per the details of the dealers (Annexure A-6), respondent No.4 has a vast network of dealers throughout India. Respondent No.4 had got a licence from Directorate of Agriculture, Punjab, to sell its fertilizers in the State of Punjab vide License bearing MOA No. 702, which was valid from 11.11.2008 to 10.11.2011 (Annexure A-9). Vide letter dated 31.10.2008 (Annexure P-10), the Director of the AJAY PRASHER 2014.12.24 16:32 I attest to the accuracy and authenticity of this document High Court Chandigarh C.W.P. No.13589 of 2012 (O&M) [ 15 ] petitioner-company was authorized to represent respondent No.4 in the office of Director of Agriculture, Punjab, for obtaining license for trading and renewal thereof. Vide Annexure A-11, a license was granted to carry on the business of fertilizer in the State of Punjab, which was valid from 17.09.2009 to 16.09.2012. Mr. Deepinder Singh Randhawa, director of the petitioner-company surrendered the license of respondent No.4 vide letter dated 23.09.2009 (Annexure A-12). Thereafter, respondent No.4 immediately applied for fresh license, which was issued by the Directorate of Agriculture, Punjab. The said license was valid from 24.02.2010 to 23.02.2013 (Annexure A-13).
From the above facts, it is clear that when the petitioner was facing a criminal complaint under Section 138 of the Negotiable Instruments Act on account of dishonour of cheque for a sum of Rs.6,60,320/-, he surrendered the licence of respondent No.4 ide letter 23.09.2009 (Annexure A-12). Vide agreement (Annexure P-4), respondent No.4 had authorized the petitioner-company only to sell the products on its behalf, therefore, a fresh licence (Annexure A-13) was issued by the Directorate of Agriculture, Punjab, which was valid from 24.02.2010 to 23.02.2013. Respondent No.4 again applied for renewal of the above licence, which was to expire on 23.02.2013. Respondent No.4 also initiated criminal complaint against the petitioner-company for AJAY PRASHER 2014.12.24 16:32 I attest to the accuracy and authenticity of this document High Court Chandigarh C.W.P. No.13589 of 2012 (O&M) [ 16 ] surrendering the licence vide Annexure A-12. Section 22 of the Companies Act, came up for consideration before the Division Bench of Bombay High Court in VOV Cosmetics Pvt. Ltd., Mumbai and others Vs. Union of India and others, 2014 (9) RCR (Civil) 145. In this case, respondent No.4-VOV Cosmetic Private Limited was incorporated on 05.05.2011. An application under Section 22 of the Act was made by respondent No.4 to rectify the petitioner's name, as it was similar to the said company. Applications for registration of trade marks of both the parties i.e. petitioner and respondent No.4 were pending before the Regional Director. While exercising powers under Sections 22 of the Companies Act, an order was passed directing the petitioners to effect the change of name. While interpreting Section 22 (1) (b) of the Act, the Division Bench held that the Central Government has to satisfy itself that the name of the subsequent company, registered even through inadvertence or otherwise, was undesirable. Discretion has been given to the Central Government that it should come to a conclusion that the name, sought to be changed, is undesirable. In paragraph 18 of the judgment, it has been observed as under:
"18. There appears to be good reason for conferring such discretion upon the Central Government even where a subsequently registered company is registered by an identical name or a name that closely resembles the name of a previously registered company through inadvertence AJAY PRASHER 2014.12.24 16:32 I attest to the accuracy and authenticity of this document High Court Chandigarh C.W.P. No.13589 of 2012 (O&M) [ 17 ] or otherwise. If, for instance, the subsequent registration is merely through inadvertence, there is no reason why it's name should be changed despite the fact that the Central Government comes to the conclusion that the name is not undesirable. There may also be cases where the facts that transpire after such inadvertent registration warrant the continuation of the registration by the said name. Take for instance a case where after the inadvertent registration, the company obtains a registration of the trademark under the Trademarks Act or where such a company obtains an injunction restraining the previously registered company from using the mark as part of its's corporate name. It would be an empty formality for the Central Government to first require the change in the name and thereafter, entertain a fresh application under Section 20."
The Division Bench set aside the order directing the petitioners to change their name by giving a direction to the Regional Director to consider various aspects afresh by giving detailed reasons. In paragraphs 21 and 22 of the judgment, it was observed as under:-
"21. 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.
22. 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 AJAY PRASHER Section 22."2014.12.24 16:32 I attest to the accuracy and authenticity of this document High Court Chandigarh
C.W.P. No.13589 of 2012 (O&M) [ 18 ] From the facts of the above case, it transpires that even if, a direction was being sought for rectification of the name of a company under Section 22 of the Companies Act, the Central Government was bound to give a reason why the name was undesirable. As per the aforesaid judgment of the Bombay High Court, once an application under Section 22 of the Companies Act is made for rectification of the name, the Central Government is required to consider all the aspects and pass a detailed order directing the change of name.
Having examined the impugned order (Annexure P-21) in the light of the aforesaid judgment, the same appears to have been rightly passed by the Regional Director-respondent No.2 while exercising his power. At this stage, reference can be made to a judgment delivered by the Karnataka High Court in Surya Elevators and Escalators India Private Limited, Bangalore Vs. Union of India and others, 2012 (6) KantLJ 225. In this case, an application under Section 22 of the Companies Act was made, directing the petitioners to change the name from 'Surya Elevators and Escalators India Private Limited', as the applicant was using the trade name 'Surya Elevators Private Limited', much prior to that of the petitioner. The respondent-
company had been incorporated on 06.10.2005 and the petitioner-company had been incorporated on 29.11.2010 in the name and style "Surya Elevators and Escalators India AJAY PRASHER 2014.12.24 16:32 I attest to the accuracy and authenticity of this document High Court Chandigarh C.W.P. No.13589 of 2012 (O&M) [ 19 ] Private Limited". No objection was given by two Directors of the respondent-company to the petitioner-company and both the companies were engaged in the same business. A civil suit had been filed by the respondent-company seeking permanent injunction restraining the petitioner from using the incorporated name. Remedy under Section 22 of the Companies Act was not barred once the respondent-
company had taken remedy of common civil law. The Civil Court proceedings relate to passing-off action and the Regional Director under Section 22 of the Act was not to consider the irrelevant facts relating to passing-off action.
The company of the petitioner was registered with the help of 'no objection' certificate by one of the Directors. The order passed by the Regional Director under Section 22 of the Act was upheld by observing that the petitioner had relied upon 'no objection' certificate at the time of registration, which shows that the name of the petitioner resembled the name of respondent-company, which was previously registered. In paragraph 28 of the judgment, it was observed as under:-
"28. The contention of the petitioner that suit is pending before the Civil Court and that therefore, the third respondent should not have initiated proceedings under Section 22 of the Act, deserves to be rejected. Reference to suit is irrelevant. The reliefs claimed before the second respondent and before the Civil Court are entirely different. Both the matters are dealt with independent of each other.AJAY PRASHER 2014.12.24 16:32 I attest to the accuracy and authenticity of this document High Court Chandigarh
C.W.P. No.13589 of 2012 (O&M) [ 20 ] The applicant will have two independent rights of action against the opponent who may be using corporate name of a previously incorporated company, one under Section 22 of the Act and other seeking the order of injunction restraining the opponent from using the corporate name of the applicant or from using the name bearing close resemblance which may cause or is likely to cause confusion in the minds of the customers or general public in view of the similarity of names. Both the remedies, one under Section 22 of the Act and the other under the common law operate in different fields. Under Section 22 of the Act, the Central Government has no jurisdiction to grant injunction against the use of an undesirable name by a company, whereas in a suit for permanent injunction the Court cannot pass an order as could be passed under Section 22 of the Act by the Central Government. The jurisdiction of the Central Government under Sections 20 and 22 of the Act and the jurisdiction of the Civil Court operate in two different fields. Therefore, merely because the suit is filed for injunction restraining respondent No.3 from using the corporate name bearing close resemblance of the name of the petitioner-company, the jurisdiction of the Central Government under Sections 20 and 22 of the Act is not ousted......."
The Delhi High Court in GMP Pharmaplan Pvt. Ltd. Vs. Regional Director, Ministry of Corporate Affairs and another, 2011 (7) RCR (Civil) 2815, was examining the name of two firms i.e. 'GMP Pharmaplan Pvt. Ltd.' and 'NNE Pharmaplan India Ltd.' After comparing the two names, the Court came to a conclusion that if dissimilar portions of names i.e. NNE and CGMP, are removed then the remaining portion i.e. 'PHARMAPLAN' is similar and identical. Affirming the orders passed by the Regional Director, the writ petition AJAY PRASHER 2014.12.24 16:32 I attest to the accuracy and authenticity of this document High Court Chandigarh C.W.P. No.13589 of 2012 (O&M) [ 21 ] was dismissed. In Paragraphs 16 and 17 of the judgment, it was observed as under:-
"16. The above submissions have been considered. This Court finds no error having been committed by the Respondent No.1 in coming to the conclusion that the petitioner's 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 names is the coined word 'PHARMAPLAN'. The two names are to be compared as a whole. When so compared, the name of the Petitioner too nearly resembles the name of the Respondent No.2. In terms of para 28 of the Guidelines, if the dissimilar portions of the names are removed i.e. NNE and CGMP, then the remaining portion is the identical word PHARMAPLAN'. The word 'PHARMAPLAN' being a coined word is indeed the prominent and distinctive part of the names of both the Petitioner and Respondent No.2. When compared as a whole, it would be apparent that the two names structurally and phonetically too nearly resemble each other.
17 The decision in Montari Overseas Limited makes it clear that a civil court exercising its powers in terms of the Civil Procedure Code 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. The latter is a power vested in the central government in terms of Sections 20 and 22 of the Act. While it is true that the Respondent No.1 cannot approach the case as it would in a trade mark dispute, it is nevertheless required to come to the conclusion whether the name of which the registration is sought or has been granted too nearly resembles the name of another company. Mr. Chandra is right in his contention that the powers of the central government under Section 22 of the Act are wider inasmuch as there is no need to examine whether there is a likelihood of deception or confusion. It is enough to examine if the name registered AJAY PRASHER 2014.12.24 16:32 I attest to the accuracy and authenticity of this document High Court Chandigarh C.W.P. No.13589 of 2012 (O&M) [ 22 ] too nearly resembles another registered name. The Respondent No.2 has been able to show that both names too nearly resemble each other."
In the facts of the present case, the petitioner had entered into an agreement (Annexure P-4) with respondent No.4-company and he was well aware that respondent No.4 had been in the business of fertilizers right from its incorporation and had a registered trademark. In order to promote the business of respondent No.4 in the State of Punjab, he had taken a wholesale licence. Thereafter, some purchase orders (Annexures P-5 to P-8) were made, out of which, purchase order No.3 (Annexure P-7) could not be supplied, which led to cancellation thereof. Thereafter, vide letter dated 23.09.2009 (Annexure A-12), Mr. Deeping Singh Randhawa surrendered the license of respondent No.4. A complaint under Section 138 of the Negotiable Instrument Act was filed by respondent No.4 against the petitioner- company. Despite that, the petitioner proceeded to go ahead with his company in the State of Punjab by using the name of 'Vardhaman'. Immediately, thereafter, respondent No.4 filed a criminal complaint against the petitioner for surrendering the license without its knowledge. The surrendered license was got renewed, which was to expire on 23.02.2012 in order to safeguard the interest of respondent No.4 as it has a large network of dealers, as is evident from Annexure A-6. Moreover, it is not the case of AJAY PRASHER 2014.12.24 16:32 I attest to the accuracy and authenticity of this document High Court Chandigarh C.W.P. No.13589 of 2012 (O&M) [ 23 ] the petitioner-company that it has got the name registered the name with the authorities under the Trade Marks Act. Merely by using the name similar to that of respondent No.4, the petitioner made an attempt to usurp the business of respondent No.4 in the State of Punjab.
In the light of the above discussion, this Court is of the view that the Regional Director while passing the impugned order dated 07.05.2012 (Annexure P-21) under Section 22 of the Companies Act, has taken into consideration the letter (Annexure R-1, Colly.) addressed to him by respondent No.4 and has rightly come to a conclusion that the word "Vardhman" is a registered trademark of respondent No.4-company and cannot be used as prefix/suffix by the petitioner-company i.e. M/s Vardhaman Crop Nutrients Private Limited. Accordingly, the impugned order does not require any interference.
Resultantly, the writ petition is dismissed.
( RITU BAHRI ) JUDGE 17.12.2014 rupi/ajp AJAY PRASHER 2014.12.24 16:32 I attest to the accuracy and authenticity of this document High Court Chandigarh