The Federal Bank Ltd. vs Sri C.P. Augustine

Pius C. Kuriakose, J.—The Official Liquidator challenges the order of the learned Company Judge in C.A. 404/08 allowing the company application and permitting deletion of the name Toshiba from the name of the company in liquidation viz., Toshiba Anand Batteries Ltd. The application was filed by Toshiba Corporation who claims to have entered into Annexure-A promotion agreement with KSIDC. Mr.C.LAnand and others for setting up the company in liquidation Toshiba Anand Batteries Ltd. (''TABL'' for short). According to the application, Toshiba, the applicant had allowed the use of the name Toshiba in TABL in view of the shareholding and association with TABL. It is alleged that due to reasons beyond control of the parties TABL has gone in liquidation and is no longer an operating company. It is claimed that the applicant is the exclusive owner of the trade mark and trade name Toshiba. The applicant has already withdrawn the licence granted to TABL for using the name Toshiba. It is alleged that the applicant company Toshiba does not any longer have any active association with TABL and even otherwise since TABL is in liquidation, the applicant wishes that TABL should cease and desist from using the name Toshiba further. Hence, the application for deletion of the name Toshiba from the name of TABL since the same is necessary for protecting the trade mark and trade name of Toshiba.

The official liquidator filed a counter statement wherein what is contended is only that subsequent to the registration of TABL the said company has functioned in the name TABL alone and is ordered to be wound up in the name of TABL. The winding up proceedings are still continuing and order of dissolution is yet to be passed. It is also stated that TABL is not presently functioning and no production or other activities are being undertaken thereby suggesting that no prejudice will be caused to Toshiba by allowing the name to continue till such time as dissolution orders are passed. The Registrar of Companies apart from endorsing the contentions raised by the Official Liquidator contended that any attempt to change the name of the company would adversely affect the ongoing litigations before various courts and authorities and would jeopardize the interest of the company in liquidation and its Board of Directors. It is also pointed out that no dividend has so far been paid to the shareholders and hence, the plea to delete the name of Toshiba from the name of TABL will be detrimental to the interest of winding up of the company. Reference is made in the counter of the Registrar of Companies to Section 21 of the Companies Act and it is contended that the change of name is permissible only according to the procedure laid down in that section.

Lastly, it is contended that this is an era of globalisation and a large number of multinational companies and foreign players are participating in Indian Companies and are doing business in India. Having chosen to do business in India and having made profit it is not acceptable to permit the applicant, a foreign player to withdraw its name from TABL once the business fails and company goes in for liquidation.

The learned Company Judge on considering the contentions would notice that neither the Official Liquidator nor the Registrar of Companies have disputed that the name Toshiba is essentially the trademark and tradename of the applicant and also that TABL is no longer an operating company. The learned Judge took the view that the company is in liquidation and winding up proceedings are on and apparently what remains before the company court are only a couple of title suits in relation to certain assets of the company. According to the learned Judge, even though technically it may be plausible to project the chances of revival before dissolution, the reality as discernible from the materials available on record is that dissolution is inevitable. On the above reason, the learned Judge found that the request is justifiable and hence, allowed the application.

Mr. M. Pathrose Matthai, senior counsel for the appellant and Mr. Ciccu Mukhopadhaya, the learned Counsel for the respondent addressed us extensively. Sri Pathrose Matthai, the learned senior counsel would draw our attention to Section 481 of the Companies Act and submit that in the eyes of law a company will continue to exist notwithstanding winding up order till an order for dissolution under that section is passed. So long as the company exists all provisions of the Companies Act according to the learned senior counsel, will apply to TABL also. The learned senior counsel submitted that application No. 404/08 was filed by the respondent invoking Rule 9 of the Company Court Rules. According to the learned Senior Counsel, Rule 9 is akin to Section 151 of the CPC and hence, is only procedural law in contradistinction with Section 21 which is a provision of substantive law. Section 21, according to the learned Senior Counsel, is a specific provision dealing with change of names of existing companies. In order that name is changed there should be a specific resolution adopted by the Board of the Company and approval of the Central Government signified in writing will also be necessary before the change of name is effected. The learned Senior Counsel also referred to Section 20(2) of the Companies Act and submitted that the above provision was not in currency at the time when Annexure-A agreement was entered into between the parties. The learned Senior Counsel highlighted that the Registrar of Companies who is the statutory authority to give approval for any change in the name of the company has very stiffly opposed the application. The learned Counsel requested that the impugned judgment be set aside and the application be dismissed. In support of his arguments, the learned senior counsel referred to the judgment in In Re: Shri Ambica Mills Ltd., Ex Parte Jaykrishna Harivallabhdas and Others, .

Mr. Ciccu Mukhopadhaya, the learned Counsel for the respondent would support the impugned judgment. The learned Counsel submitted that it is not disputed by anybody that TABL has become a non-operating company. The claim of the respondent that Toshiba is virtually the trade-name and trade-mark of the respondent is also not disputed by anybody. Section 21 cannot have application to the present case where it is not the company in liquidation which wants change of name. Mr. Ciccu Mukhopadhaya referred to Section 20(2) and submitted that if an application for registration were to be made by the TABL presently, the application would not be granted since the same will be found to be undesirable in view of the obtaining fact situation.

We have very anxiously considered the rival submissions addressed at the Bar. We are not impressed by the argument advanced by the learned senior counsel for the appellant on the basis of Section 21 of the Companies Act. Significantly, such an argument was not even raised before the learned Single Judge. According to us, Section 21 cannot have application in the present case where it is not the company that has moved for change of its name. On the contrary, it is the respondent who permitted the company in liquidation to adopt the name Toshiba under Annexure-A agreement that has sought for change of name giving the reason that for all practical purposes TABL has ceased to exist. As rightly noticed by the learned Single Judge TABL has become non-operational and what remains before the Company Court are only one or two title suits regarding certain assets of the company. The chances of revival is only a hypothetical probability and we are in agreement with the learned Single Judge that order of dissolution is inevitable. According to us, the respondent company is justified in seeking deletion of its tradename from the name of a company in liquidation. The learned senior counsel for the appellant was not able to convince us of any serious legal prejudice which may be occasioned to the company in liquidation by the deletion of the name Toshiba from its present name. True, the Registrar of Companies had raised a contention that allowing deletion applied for presently will prejudice the ongoing litigations initiated by the Official Liquidator but importantly such a contention is not shared by the Official Liquidator who figures as plaintiff in these litigations. We are convinced on the materials available that the word "Toshiba" is the tradename and trademark of the respondent/company and they are justified in insisting that their name should not continue in the name of a company which is on the verge of dissolution.

The result is that we do not find any warrant for interference. The appeal fails and is dismissed accordingly.