Section 22 of Companies Act v scope of passing off

By Amaya Singh, Lex Orbis IP Practice
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Section 22 of the Companies Act, 1956, provides a remedy in terms of rectification of the name of a company which “too nearly resembles” the name of an already registered company or a registered trademark. A recent order passed by Delhi High Court in cGMP Pharmaplan Pvt Ltd v Regional Director, Ministry of Corporate Affairs deliberates on the powers of the central government under this section.

In it the court held that the jurisdiction of a civil court, while determining whether one name is confusingly or deceptively similar to another name in a passing off action, is distinct and independent of the jurisdiction of the central government in respect of registering of a company’s name. In passing this order the court upheld its earlier decision in Montari Overseas Limited v Montari Industries Limited.

Amaya Singh Lex Orbis IP Practice
Amaya Singh
Lex Orbis IP Practice

Facts of the case

NNE Pharmaplan India, the second respondent in the present writ petition, was incorporated in 1987 under the name of Pharmaplan (India) Limited. Its main business objective was to provide services as technical and industrial consultants and engineers, specifically planning, consulting, engineering, and supplying plant and equipment to the pharmaceutical, bio-technology, medical devices and health care industries. In 2008 the company changed its name to NNE Pharmaplan India.

In July 2009 the petitioner, cGMP Pharmaplan, was incorporated under the Companies Act. This prompted NNE to file a civil suit seeking an injunction against cGMP to restrain it from passing off NNE’s name as its own. Simultaneously, NNE also filed a representation to the central government, which acts through the regional director of the Ministry of Corporate Affairs under section 22 of the Companies Act, asking the government to direct the petitioner, cGMP, to change its name.

No case in court

A single bench of Delhi High Court dismissed the application for an interim injunction in the civil suit. While doing so the court concluded that there was no prima facie case for passing off as the names of the two companies were in no manner similar when considered as a whole and particularly when emphasis was given to the prefix words “NNE” and “cGMP”. An appeal against this order of the single bench was filed before the division bench of Delhi High Court, but the division bench granted no stay on the operation of the order.

Misleading the public

In the meanwhile, the regional director in the Ministry of Corporate Affairs considered NNE’s representation under section 22 of the Companies Act, 1956. In these representations the company had relied on its registration of the trade mark “Pharmaplan” and “NNE Pharmaplan” in the name of its holding and group companies. The regional director concluded that cGMP’s use of the word “Pharmaplan” in its name would have misleading effect in the mind of the general public. As such the government directed cGMP to delete the “Pharmaplan” from its name and change its name to some other name within three months from the date of the order.

Appealing the order

Aggrieved by the order of the Ministry of Corporate Affairs, cGMP filed the present writ petition and argued that the basic approach adopted by the regional director in this case was erroneous. It pointed out that instead of determining whether the petitioner’s name was either identical with or “too nearly” resembled the second respondent’s name, the regional director had proceeded to examine if the petitioner’s name caused “misleading effect” in the minds of general public. cGMP also submitted that the prefix “cGMP” was sufficient to distinguish its name from that of the second respondent.

In its defence NNE, relying on the Montari case, pointed out that the jurisdiction of the civil court in a passing off action is distinct and independent of the jurisdiction that is exercised by the central government in dealing with an application under section 22 of the Companies Act. NNE also submitted that the court could not interfere with the order of the regional director, unless there had been a violation of the principles of natural justice or error of jurisdiction.

The high court considered the above submissions and found that no error was committed by the regional director in concluding that petitioner’s name “cGMP Pharmaplan Private Limited” too nearly resembled the name of the respondent. It found that the two names resembled each other phonetically and structurally, as the prominent and most distinctive part of both names was the coined word “Pharmaplan”. Accordingly, the petitioner was directed to change its name by deleting the word “Pharmaplan” from it.

Amaya Singh is a trademark attorney, specializing in the prosecution of trademark applications and oppositions. As trademarks coordinator at Lex Orbis, she has handled trademarks prosecutions, assignments, renewals and oppositions. She is also well versed with prosecuting trademark applications globally.

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