- 1 - 834.05bajaj IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.834 OF 2005 Bajaj Auto Limited a company registered under provisions of Indian Companies Act, 1913 and having its registered office at Mumbai Pune Road, Akurdi, Pune .. Petitioner vs 1. Union of India 2. Regional Director, Western Region, Ministry of Company Affairs, having his office at Everest,5th Floor, 100,Marine Drive, Mumbai-2. 3. Bajaj Tempo Limited, a company registered under the provisions of Companies Act, 1956 having its registered office at Bombay-Pune Road, Akurdi,Pune-411 035 4. Daimler Chrysler AG, a company incorporated in Germany and having its office at HPC: 0431 D-70546 Stuttgart, Germany. ..Respondents Mr.S.H.Doctor Sr.Advocate with Mr.Janak Dwarkadas,Sr.Advocate,Mr.Saren Jagtiani, Mr.Shrikant Mehta and Mr.B.D Souza i.b Malvi Ranchhoddas & Co for Petitioner Mr.S.R.Mishra with Mr.Y.S.Bhate for Respondent nos. 1 and 2. Mr.Iqbal Chagla, Sr.Advocate with Dr.Milind Sathe Sr.Advocate, Mr.Jimi Arodsia, Mr.A.S.Doctor i.b Kanga & Co for Respondent no.3 - 2 - 834.05bajaj CORAM: D.K.DESHMUKH & N.D.DESHPANDE, JJ DATE: 6th January,2011 P.C.(Per D.K.Deshmukh, J) 1. By this petition, the petitioner a company registered under the Companies Act challenges the order dated 11th February, 2005 passed by the respondent no. 1 under section 22 of the Companies Act directing respondent no.3-Bajaj Tempo Limited, a company registered under the provisions of Companies Act to change its name as per the procedure under the Companies Act within three months from the date of these directions. According to the averments in the petition, the petitioner holds16.23 shares of the respondent no.3. According to the petitioner, order dated 11th February, 2005 is patently illegal and ab-initio void. According to the petitioner, it has been obtained by respondent nos. 3 and 4 by - 3 - 834.05bajaj making collusive application before the respondent no.1. Admittedly an application dated 2nd July, 2004 was filed by the respondent no.4 before the respondent no.1 on 11th January,2005 claiming therein We are registered owner of the two trade marks viz. Tempo and Tempo in circles and these trade marks are registered with the Registrar of Trade Marks, Bombay. It was further stated that these trade marks were originally registered in the name of Vidaland Sohn Tempowerke GmbH and were acquired and became property by successive acquisitions and mergers of German entities owned these marks and were today the respondent no.4 registered proprietors of these marks. It was further claimed that In view of these circumstances, we request you to kindly direct Bajaj Tempo Limited to change its corporate name and to avoid the use of the word Tempo in its corporate - 4 - 834.05bajaj name. This application as stated above was filed on 11th January,2005. The respondent no.3 appeared before the respondent no.1 and filed its say which is dated 6th February, 2005. It was stated that Accordingly we have no objection to their request for directions as per the provisions of section 22 of the Companies Act,1956. The respondent no.1 thereafter made an order dated 11th February,2005. The order first recites gist of the application made by respondent no.4. Then it recites that in response to the show cause notice, the respondent no. 3 has filed its reply and stated that they have no objection to issuance of a direction under section 22 of the Act and therefore, respondent no.1 issued a direction for change in the name of respondent no.3 company. The present petition was filed in March 2005 challenging the order. During the pendency of the petition, it appears that - 5 - 834.05bajaj initially a statement was made that no further action would be taken by the respondent no.3 pursuant to the order made by respondent no.1. It appears that thereafter parties were heard by this Court on the question whether interim relief is to be granted or not. The Court by a detailed order dated 3rd May, 2005 declined to grant any interim relief in favour of the petitioner. That order was challenged before the Supreme Court in a Special Leave Petition. The Supreme Court by order dated 1th June,2005 dismissed the Special Leave Petition but, the High Court was directed to hear the petitioner at an early date. While declining the interim relief this Court had made it clear by its order order dated 3rd May,2005 that change in the registered name of respondent no.3 would be subject to the final order that may be passed in this petition. - 6 - 834.05bajaj 2. We have heard learned counsel appearing for the petitioner and respondent nos. 1 and 3. None appears for respondent no.4. Learned counsel appearing for the respondent no. 3 claimed that the petitioner does not have locus standi to maintain this petition. It was claimed that by the impugned order nothing adverse to the interest of the petitioner has been done and therefore, the petitioner cannot challenge the order. 3. Learned counsel appearing for the respondent no. 3 relied on the judgments of the Supreme Court in the case of JASBHAI MOTIBHAI DESAI VS ROSHANKUMAR, HAJI BASHIR AHMED AIR 1976 SUPREME COURT 578, R.C.COOPER VS UNION OF INDIA AIR 1970 SUPREME COURT 564, judgment of the Division Bench of this Court in the case of SHANTI PRASAD JAIN VS.UNION OF INDIA 778 THE BOMBAY LAW - 7 - 834.05bajaj REPORTER, the judgment of the Supreme Court in the case of STATE OF RAJASTHAN & ORS VS D.R.LAXMI & ORS (1996) 6 Supreme Court cases 445 and Judgment of the Full Bench of ALLAHABAD HIGH COURT in the case of SRI.DURGA GITA VIDYALAYA ASSOCIATION through RAM SINGH KOTWAL vs.STATE OF U.P. AIR 1962 ALLAHABAD 187 FULL BENCH. Learned counsel appearing for the petitioner submitted that the petitioner has locus standi to maintain this petition because, according to the petitioner, what is required to be done by a special resolution under the Companies Act has been done by an ordinary resolution. Learned counsel relied on the judgment of the learned Single Judge of the KERALA HIGH COURT in the case of JOSEPH VS JOS, 1964 932 Company Cases (Vol.XXXIV), judgment of the Division Bench of the KERALA HIGH COURT in the case of Dr.T.M.PAUL VS CITY HOSPITAL - 8 - 834.05bajaj (PVT) LTD & OTHERS 1999 Company cases,216, a judgment of the MADRAS HIGH COURT in the case of N.V.R.NAGAPPA CHETTIAR vs THE MADRAS RACE CLUB, a judgment of the Division Bench of the KERALA HIGH COURT in the case of THE STAR TILE WORKS LTD & ors vs N.GOVINDAN & ORS, AIR 1959 KERALA 254 (V 46 C 90), the judgment of the Privy Council in the case of RAM KISSENDAS DHANUKA vs SATYA CHARAN LAW AIR (37) 1950 PRIVY COUNCIL 81 as also the judgment of the Court of Appeal in the case of EDWARDS AND ANOTHER VS HALLIWELL AND OTHERS 1064 (December 2,1950) ALL ENGLAND LAW REPORTS and submitted that a share holders can maintain action against a company if the company acts contrary to the provisions of the Companies Act and Articles of Association. Learned counsel also relied on the observations of the Supreme Court in the case of BENNETT COLEMAN & CO AND OTHERS - 9 - 834.05bajaj VS UNION OF INDIA (1972) 2 SUPREME COURT CASES 788. Learned counsel also relied on the judgment of the Division Bench of this court in MRC LOGISTICS PRIVATE LIMITED VS REGIONAL DIRECTOR 2009 (4) Bom. C.R.600. 4. Learned counsel appearing for the petitioner submitted that the order impugned in the petition is void ab-initio in as much as the order has been made on an application filed by respondent no.3. In that application a false statement was made that the respondent no.4 is the registered proprietor of the trade mark. Learned counsel also submitted that the application has also not been made within the period provided by section 22. Learned counsel submitted that in the absence of the order made under section 22 change in the name of respondent no.3 company could have been brought about only by passing a special - 10 - 834.05bajaj resolution. The Board of Directors of the respondent no.3 is not in a position to get a special resolution passed in the general body meeting and therefore, this strategy was devised to get an order passed under section 22 and then bring brought about change in the name of respondent no.3 company by passing an ordinary resolution. The learned counsel submitted that respondent no.1 also assisted the respondent nos. 3 and 4 in their strategy to bring about change in the name of respondent no.3 company contrary to the provisions of the Companies Act. Learned counsel appearing for respondent no.3 submitted that though on the date on which application was made, the respondent no. 4 was not the registered proprietor of the trade mark and respondent no.4 hadbecome owner of the trade mark becauseofmergerofthe registered proprietor of the trade mark with respondent no.4, - 11 - 834.05bajaj before the application was made. Learned counsel therefore, submitted that the statement made in the application that respondent no.4 is a registered proprietor of the trade mark is a not an incorrect statement. 5. Learned counsel then submitted that the petitioner has challenged the order with ulterior motives. It is submitted that though the petitioner is a share holder of respondent no.3 it is competitor in its business and therefore wants to oppose change in the name of respondent no.3. It was also submitted that really the petitioner does not have any objection to the deletion of the word  Tempo from the name of respondent no.3. It really has an objection to the deletion of the word  Bajaj from the name of respondent no.3. It is submitted on behalf of the respondent - 12 - 834.05bajaj no.3 that respondent no. 3 cannot continue the word Bajaj in its name because, it is the registered trade mark of the petitioner. It was contended that as no right of the petitioner was violated by the order impugned in the petition, this Court should not exercise its extra-ordinary jurisdiction under the Constitution of India in favour of the petitioner. It was also contended that during the pendency of the petition not only necessary resolutions have been passed but, orders have also been passed by the authorities incorporating and registering the trade mark and that has been done in the month of May, 2005 and therefore, this Court should not disturb that position. Learned counsel appearing for the respondent no.1 supported the order passed by the respondent no.3. 6. Admittedly, the order which is impugned - 13 - 834.05bajaj in the petition has been made under section 22 of the Companies act. Section 22 reads as under : (1) If through inadvertence or otherwise a company on its 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 (b) shall, if the Central Government so - 14 - 834.05bajaj directs within twelve months of its first 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 a 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 though and rupees for every day during which the default continues. “ 7. Perusal of the above quoted provision shows that if a company is registered in a name which in the opinion of the Central Government is identical with or resembles a registered trade mark then on an application - 15 - 834.05bajaj made by the registered proprietor of that trade mark the Central Government may issue a direction for effecting necessary change in the name of such a company. It is thus, clear that for empowering the Central Government to make an order under section 22 (1) (ii) it is necessary that an application for that purpose should be made by the registered proprietor of the trade mark. The term registered Proprietor of a trade mark is not defined by the Companies Act but, the term is borrowed by the Companies Act from the Trade Mark Act, 1999 and that term is defined by section 2 (1) (v) of the Trade Mark Act,1999 as under : - 16 - 834.05bajaj A registered proprietor in relation to a trade mark means a person for the time being entered in the Register as proprietor of the trade mark. 8. Perusal of the provision of Chapter III of the Trade Mark Act shows that any person who claims to be the owner of a trade mark and who is desirous of getting it registered has to make an application in writing to the Registrar in the prescribed manner for registration of his trade mark and it is after following the procedure laid down by Chapter III that the trade mark is registered in the name of the person who has applied for registration. Thus, for making an application under section 22 name of the person who is making the application must be recorded in the Register maintained under the Trade Mark Act, 1999 as a proprietor of - 17 - 834.05bajaj the trade mark. The application in the present case admittedly was made by respondent no.4. That application is dated 2nd July, 2004. In that application, as we have already observed above a clear statement was made we are today the registered proprietor of these marks . It is also common ground before us that no document was produced along with the application by the respondent no. 4 in support of its claim that on the date of the application they were the registered proprietor of the mark. When the show cause notice was issued to the respondent no.3 in response to the show cause notice, the respondent no.3 filed its reply on 6th February, 2005. In para 1 of that reply, the respondent no.3 stated that the word Tempo and word Tempo in three circles are registered trade marks owned by Daimler Chrysler AG. Thus, the position asserted by - 18 - 834.05bajaj the respondent no. 4 that it is a registered proprietor of the trade mark was not supported by the respondent no.3. What was stated by the respondent no.3 is that the respondent no. 4 is owner of the registered trade mark. The owner of the registered trade mark and registered proprietor of the trade mark are two different distinct terms. A person who is the owner of the trade mark may not necessarily be its registered proprietor. Similarly, a person who is a registered proprietor may not continue to be owner of the trademark while he may continue to be registered proprietor of the trade mark. Really speaking therefore, in this situation, it was necessary for the respondent no.1 to make an inquiry by asking the respondent no.4 to produce the documents in support of its claim that it is a registered proprietor but, it appears that the respondent no.1 without making any - 19 - 834.05bajaj inquiry and only because, the respondent no. 3 said that it has no objection to the grant of the application granted the application. 10. In our opinion, this cannot be said to be proper exercise of the statutory powers by the respondent no.1. In our opinion, in this situation, the respondent no.1 was under a duty to hold an inquiry by directing the respondent no 4 to produce documents in support of its claim. That admittedly was not done. The material produced on record shows that the respondent no. 4 was not in a position to produce the documents in support of its claim that on the date of application it was the registered proprietor of the trade mark. An affidavit has been filed by one Vikram Grover on behalf of respondent no.4. Perusal of that affidavit shows that on the date on which the application was filed the registered proprietor of the trade - 20 - 834.05bajaj mark was some other company. The petitioner had applied for its name being recorded as a registered proprietor and that change was recorded only on 22nd May, 2007. This fact has been stated in the affidavit of Vikram Grover dated 10th October, 2007. Thus, admittedly, in 2004 respondent no.4 was not registered proprietor of the trade mark and therefore could not have made application under section 22 of the Trade Mark Act, 1999. Perusal of the provision of section 22 shows that power under section 22 (1) (ii) of issuing direction to the company to change its name can be exercised by the Central Government only on an application made by the registered proprietor of the trade mark. In other words, therefore, if there is no application made by the registered proprietor of trade mark, the Central Government has no power and jurisdiction to issue any direction under - 21 - 834.05bajaj section 22. It is thus, clear to our mind that as application of the respondent no.4 was incompetent, there was no application in the eye of law before the Central Government made by the registered proprietor of the concerned trade mark and therefore, the Central Government had no jurisdiction and power to make the order directing the respondent no. 3 to change its name. Thus, it is clear that the order impugned in the petition is made by the Central Government without having any authority in law to make that order. It is patently without jurisdiction order. Consequence of the order is that the respondent no.3-company becomes entitled to effect change in its name by passing an ordinary resolution. In the absence of order under section 22 (i) (ii) if the company wants to effect change in its name, section 21 requires the company to pass special resolution. It is section 189 - 22 - 834.05bajaj of the Companies Act which deals with ordinary and special resolutions. Section 189 reads as under : 189. Ordinary and special resolutions-(1) A resolution shall be an ordinary resolution when at a general meeting of which the notice required under this Aft has been duly given, the votes cast (whether on a show of hands, or on a poll, as the case may be) in favour of the resolution including the casting vote, if any, of the chairman) by members who, being entitled so to do,m vote in person, or where proxies are allowed, by proxy exceed the votes, if any, cast against the resolution by members so entitled and voting. (2) A resolution shall be a special resolution when- (a) the intention to propose the resolution as a special resolution has been duly specified in the notice calling th3e general meeting or other intimation given to the members of the resolution. (b) the notice required under this Act has been duly given of the general meeting; and - 23 - 834.05bajaj (c) the votes cast in favour of the resolution( whether on a show of hands or on a poll, as the case may be) by members who, being entitled so to do, vote in person, or where proxies, are allowed, by proxy are not less than three times the number of the votes, if any, cast against the resolution by members so entitled and voting. 11. Perusal of the above provision shows that there is vast difference in the manner of passing ordinary and special resolutions. An ordinary resolution can be passed by a simple majority of the persons present and voting and while passing a special resolution a special majority is required. There is difference in the manner in which notice is to be given to the members of the general body of ordinary resolution and special resolution. For passing a special resolution subject has to be placed on the agenda of the meeting and at least 14 days notice has to be given to the members of the intention of the company to pass special - 24 - 834.05bajaj resolution. 12. In our opinion, therefore, the petitioner is right in submitting that because of the order impugned in the petition, the company was able to bring about change in its name by passing an ordinary resolution thereby denying the petitioner s right under the Companies Act. Learned counsel appearing for the petitioner pointed out to us several judgments in support of his contention that a share holder of a company can institute a suit against a company for enforcement of his right as individual share holder under the Articles of Association and Companies Act. This proposition that an individual member can institute a civil suit for enforcement of his right against a company which are given to him either by the Articles of Association or by the Companies - 25 - 834.05bajaj Act was not disputed by learned counsel for the respondent no.3. According to him, a Writ Petition cannot be filed though a civil suit may be filed. In our opinion, as a result of the judgment of the Privy Council in the case of RAM KISSENDAS DHANUKA VS SATYA CHARAN LAW relied on by learned counsel for the petitioner it can be taken as settled law that if action of the company is contrary to the provisions of the Articles of Association and results in denial of certain rights given by the Articles of Association to the members the court cannot decline to interfere with such action of the company at the instance of an individual member on the ground that it concerns the internal management of the company. 13. In our opinion, following observations from the opinion of Sir Raymond Evershed, - 26 - 834.05bajaj M.R. in the case of EDWARDS VS HALLIWELL (Asquith, L.J) are relevant: There is a further exception which seems to me to touch this case directly,. That is the exception noted by Romer, J, in Cotter v National Union of Sea-men (3). He pointed out that the rule did not prevent an individual member from suing if the matter in respect of which he was suing was one which could validly be done or sanctioned,not by a simple majority of the members of the company or association, but only by some special majority, as for instance in the case of a limited company under the Companies Act, a special resolution duly passed as such. As Romer, J pointed out the reason for that exception is clear because otherwise, if the rule were applied in its full rigour, a company which, by its directors, had broken its own regulations by doing something without a special resolution which could only be done validly by a special resolution could assert that it alone was the proper plaintiff in any consequent action and the effect would be to allow a company acting in breach of its articles to do de facto by ordinary resolution that which according