The High Court of Telangana, in its judgment dated August 24, 2023 in the case of M/s GMR Spintex Private Limited, rep. by its Director v The Regional Director, Ministry of Corporate Affairs1, upheld an order passed by the Ministry of Corporate Affairs, where, it directed the change of name of a company on the grounds that it may cause confusion and deception.
In the aforesaid case, the petitioner, a textile company, had applied for the name "G.M.R Spintex Private Limited" under Section 20 of the Companies Act, 1956 ("Act"). The Registrar of Companies ("ROC") had approved the aforesaid name after carrying out the necessary verification. The respondent company submitted a composite application to the ROC under Section 22 of the Act seeking that directions be issued to the petitioner company (along with 9 (nine) other companies) to change their names on the ground that the promoters of the petitioner company, by using the word "GMR" as a prefix in the name of the company were using its trade mark to wrongfully project to its consumers and potential investors their association with the respondent company and that it be held that the petitioner company was passing of the respondent company's goods and services. The ROC allowed the application of respondent company and directed the petitioner company to remove the prefix "GMR" from its existing name within 3 (three) months.
During the course of the arguments in this matter, the following claims were made by the disputing parties:
The petitioner argued that the prefix "GMR" was to indicate the name of the father of the main promoter i.e., "Gade Manohar Rao", whose family had been in the business of cotton and textiles since a long duration. Accordingly, the petitioner argued that the respondent company had no exclusive right over the prefix "GMR" especially when it had not been used by the petitioner in the same fashion and design as that of the respondent company's name. It was argued that the petitioner was in the business of textiles and the respondent company had not registered its trade mark under the style "GMR" in relation to textiles. Therefore, the petitioner concluded, the question of the petitioner company selling its textile products as that of the products of GMR did not arise and claimed that the ROC had exceeded its jurisdiction and acted against the provisions of Section 22 of the Act.
The respondent company had filed an application for rectification of the petitioner company's name as it resembled that of the respondent company, in accordance with Section 22 of the Act. The respondent company contended that the petitioner without such a trade mark was misleading the public at large as the names of the companies resembled or was likely to deceive/cause confusion in the minds of its customers and investors. The respondent company stated that it was a well-established company operating in various sectors worldwide and had held the trademark "GMR" ever since 2005, which was recognized not only in India but also internationally; whereas, in contrast, the petitioner, was a newly registered company. The respondent company proceeded to clarify that the dispute was not regarding trademark but the similarity in the names of the petitioner company's prefix as 'GMR' and the likelihood of this misleading or create confusion in the minds of customers and the public at large.
The Hon'ble Court clarified that although the Act had been amended in the year 2013, the amended act had prospective effect and the earlier Act would therefore be applicable to the current matter. The Hon'ble Court held that a careful reading of the Sections 20 and 22 of the Act indicated that it is not open to the ROC to register the name of a company with a name similar to an existing company; and that in cases of close resemblance, such names ought to be avoided altogether. It was highlighted that the ROC, while registering the company at the initial stage is not required to make a thorough investigation. However, if such an issue is subsequently brought before the ROC within the time stipulated under Section 22 of the Act, it would open to the Central Government to direct the later company to change its name.
On the issue of the authority of ROC to entertain the application under Section 22 after expiry of 12 (twelve)-month period, the court referenced the Delhi High Court Judgement in Mondelez Foods Private Limited v. The Regional Director (North), Ministry of Corporate Affairs2 in which it was held that Section 22 stands amended by virtue of the Trade Marks Act, 1999 and the proviso to Section 22(1) was inserted. It was held that it was implicit in the proviso that a registered trade mark user could make an application within 5 (five) years of becoming aware of registration of a company with similar name and that this indicates that the Regional Director could act upon such representation even after 12 (twelve) months have elapsed from the date of registration of the company with the undesirable name. This was in response to the contention that Section 22(1)(ii)(b) of the Act indicated that the company with an undesirable name is obliged to change its name only on receipt of such directions within a period of 12 (twelve months) from the date of registration. Further, it was held that if the owner of a registered trade mark is not precluded from making a complaint within a period of 5 (five) years of becoming aware of a company with a deceptively similar name, the power of the Regional Director to examine and address such complaint should be read in the statutory provision. Hence, it was concluded that the ROC can entertain the application even after expiry of statutory period of 12 (twelve) months.
In view of the above observation and the other contextual aspects of the dispute, the Court pronounced that the ROC had rightly invoked the powers under Section 22 of the Act. The petitioner's company was registered in 2006 and this was much after the registration of the respondent company. Further, the court acknowledged that if the petitioner was allowed to continue using the prefix of "GMR" in its name, it would cause confusion and deception to the respondent's business.
In the broad landscape of branding being a focal priority for most modern businesses, discourse on provisions like the one discussed above highlight the need to not restrict the analysis of what might dilute the brand name of a company to the silos of intellectual property law.
Footnotes
1. Writ Petition Number 10747 of 2008.
2. 2017 SCC OnLine Del. 9219.
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