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IN THE HIGH COURT OF CALCUTTA
Appearances : Gautam Chakraborty, S. N. Mukherjee & Soumen Sen for the
Petitioners. D. Prosad Pal, Ram Chandra Prasad, Shib Chandra Prasad &
M. Chatterjee for the Respondents.
JUDGMENT
ANSARI, J.
1. This writ petition is filed questioning the order dated 15th September,
1997 being annexure 'Q' to the writ application of the Regional Director,
Department of Company Affairs, informing the petitioner that no action can
be taken under section 22
of the Companies Act, 1956 (hereinafter 'the Act') as the period stipulated
for the same under the said provisions of section
22 has elapsed.
2. The facts leading to the filing of the above writ petition, briefly stated,
are that the petitioner-company [Sen & Pandit Electronics (P.) Ltd.]
was incorporated on 4th December, 1984 and is carrying on business of manufacturing
and sale of voltage stabiliser, inverter, emergency light, constant voltage
transformers and other electronic products.
3. The respondent No. 3 [Sen & Pandit Equipment (P.) Ltd.] company was
incorporated on 4th January, 1996, the petitioner lodged a complaint on
20th February, 1996 before the respondent Nos. 1 and 2 for rectification
of the name of the new company (respondent No. 3). On 17th May, 1996, the
respondent No. 3 on coming to know about the filing of the said complaint
filed a Title Suit No. 193 of 1996 and also filed a petition for ad interim
injunction praying to restrain the defendant from taking steps in any court
from interfering, cancelling the registration of the plaintiffs as per complaint
and from publishing any notice against the business of the plaintiff in
any paper. By orders dated 18th May, 1996, the learned 1st Sub-Judge, 1Patna
issue ex-parte interim order of status quo and later on contest confirmed
the same by order dated 8th August, 1996.
4. Aggrieved against the same, the petitioners preferred an appeal against
the said order dated 8th August, 1996 before the learned District Judge,
Patna. On an interlocutory application filed by the petitioners, the learned
District Judge by his order dated 12th September, 1996 stayed the operation
of the order passed by the learned 1st Sub-Judge to the extent that "the
defendants are restrained from taking any step in court for cancellation
of plaintiff No. 1-company and to publish any notice against its interest"
(annexure 'H' to the writ petition). Thereafter, the appeal filed by the
petitioners was allowed by orders dated 25th January, 1997 setting aside
the order dated 8th August, 1996 passed by learned 1st Sub-Judge, Patna.
5. The petitioners requested the Regional Director, to take prompt action
in the matter of their complaint, consequent on the order passed by the
District Judge setting aside the order of the learned 1st Sub-Judge.
6. By letter dated 18th March, 1997, from the office of the Regional Director,
the petitioners were required to satisfy him that the period of injunction,
i.e., from 17th May, 1996 to 11th September, 1996 can be excluded for the
purpose of computation of 12 months time as stipulated in section
22 (1)(b). The petitioners responded to the same by their letter dated
22nd April, 1996 enclosing therewith copies of the orders passed in the
title suit and the appeal and also enclosing a legal opinion on the subject
of exclusion of time covered by the injunction orders.
7. The directorate appears to have issued notice to the respondent No. 3
asking it to appear before it on 30th May, 1997 in the matter of the rectification
of name. Thereafter, by letter dated 25th January, 1997, respondent No.
3 was informed that personal hearing has been refixed on 30th June, 1997.
Thereafter, the impugned letter dated 15th September, 1997 (annexure 'Q')
was issued by the Regional Director.
8. In effect by the impugned letter dated 15th September, 1997, the Regional
Director has informed the petitioner that the period stipulated in section
22 having elapsed, no action can be taken by him for rectification of
the name of respondent No. 3-company based upon their complaint.
9. No affidavit-in-opposition has been filed on behalf of the respondent
Nos. 1 and 2. Learned counsel on behalf of the said respondents, however,
made oral submissions.
10. Affidavit-in-opposition has been filed on behalf of the respondent No.
3. It is denied that the respondent No. 3 has been registered with the name
identical and/or too nearly resembling with the name of the petitioner company.
Action as in the impugned letter annexure 'Q' has been supported by the
respondent No. 3 and it is stated that the aforesaid action is bona fide
and in due compliance of the mandate of the provisions of section
22. Various other averments have been made in the affidavit-in-opposition
which, are not necessary or relevant for the purpose of the present enquiry.
11. The short question for determination is whether the impugned order is
valid in law and whether any directions can at all be issued to the Regional
Director when the period stipulated in section
22 has elapsed. The further question is when the period of limitation
as prescribed in section 22
elapsed and whether the same can be extended or a enlarged.
12. The submissions of Mr. Gautam Chakraborty, learned senior counsel appearing
for the petitioners are that the respondent Nos. 1 and 2 in purporting to
act as they did are guilty of non-application of mind and failure to appreciate
the statutory rights available to the petitioners under section
22. No explanation has been offered by the respondent Nos. 1 and 2 for
their inaction within the period stipulated under section
22 of the Act and for the said inaction and default, the petitioners'
legal rights cannot be allowed to be either violated or provision of section
22 rendered otiose.
13. Lastly, it was submitted that in any event, the period covered by the
orders of injunction issued by the court are liable to be excluded and the
respondent No. 3 having filed suit and obtained injunction cannot be heard
to say that the period of limitation having elapsed no action can be taken
under section 22.
14. On behalf of the respondent No. 3, Dr. Debi Prosad Pal, learned senior
counsel, submitted that the limitation prescribed under section
22 of the Act having elapsed, ad powers vested in the authority under
section 22 cannot be invoked
thereafter. It was further submitted that the court can issue a writ of
mandamus to an authority compelling it to perform its duties in accordance
with the statute and not in derogation thereof. The authority vested with
the power cannot be compelled to invoke the said powers when the period
prescribed therefor has statutorily expired. It is not within the province
of this court either to extend or to enlarge the period of limitation which
has been statutorily prescribed under section
22 of the Act, it was contended.
15. Before we deal with the contentions of the respective learned senior
counsels, it may be appropriate to look at the relevant section
20 and section 22
of the Act, which reads as under :
"20. Companies not to be registered with undesirable names - (1) 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, the name by which a company
in existence has been previously registered, may be deemed to be undesirable
by the Central Government within the meaning of sub-section (1).
22. Rectification of name of company. - (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, 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 -
(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 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.
(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 hundred rupees for
every day during which the default continues."
16. A bare perusal of the provisions of section
20 show that if in the opinion of the Central Government, it is undesirable
to register a company with the proposed name, it shall not be so registered.
In sub-section (2) thereof, it has been stated that a name which is identical
with or too nearly resembles the name by which a company in existence has
been previously registered may be deemed to be undesirable by the Central
Government within the meaning of sub-section (1).
17. If through inadvertence or otherwise a company is registered by a name
which is identical or too nearly resembles the name by which a company in
existence has been previously registered, the Central Government is conferred
with the power within 12 months of the company's first registration to direct
it to change its name. This section
22 thus, provides a procedure as regards rectification of the name of
a company and also confers power on the Central Government to compel a change
of name and enforcing compliance with its direction by penalising the company
in default. The powers under section
22, it appears, have been delegated to the Regional Director by the
Central Government.
18. In the instant case, the respondent No. 3 company was registered on
4th January, 1996. The petitioners lodged their complaint with the respondent
Nos. 1 and 2 and sought for rectification of the name by an application
dated 20th February, 1996. The period of 12 months prescribed in section
22 (1)(b) expired on 3rd January, 1997. Meanwhile, however, interim
order was granted on 18th May, 1996 by the learned Sub-Judge which continued
until the stay thereof was granted by the learned District Judge, Patna
by order dated 12th September, 1996 and the appeal itself was disposed of
by the learned District Judge on 25th January, 1997, setting aside the order
of the learned Sub-Judge, Patna.
19. There can be no dispute with the proposition, as contended by Dr. Pal
that the Central Government and/or the Regional Director, Company Affairs,
is not a court though while exercising the powers conferred upon them under
section 22, they perform
a quasi judicial function.
20. It was contended by Dr. Pal and as held by the learned Single Judge
of Andhra Pradesh High Court in Sidhvi Constructions (India) (P.) Ltd. v.
ROC reported in [1997] 24 CLA 207 that when the limitation prescribed by
the statute has expired, it would not be open for writ court to extend the
same by exercising the power under article 226 of the Constitution and that
the court cannot compel the statutory authorities to pass orders in violation
of provisions which has the effect of extending the period of limitation
under the Act.
21. The actual decision in Sidhvi Construction's case (supra) though is
not in point, I am respectful agreement with the observations as noted supra
and made by Justice Bikshabathy of Andhra Pradesh High Court.
22. The distinguishing feature being that in Sidhvi Construction's case
(supra), the application of the petitioner therein before the competent
authority was made after the expiry of the period of limitation prescribed
in section 22 (1)(b).
In the instant case though the application was made well within time (20th
February, 1996), i.e., within one month from the date of registration of
respondent No. 3-company, no action was taken thereon by the respondent
authority. Meanwhile, by virtue of the interim injunction order dated 17th
May, 1996 no action could be taken until 12th September, 1996 when the injunction
was vacated by the learned District Judge, Patna temporarily. On 25th January,
1997, the injunction order was set aside when the appeal was allowed by
the learned District Judge.
23. It cannot be disputed much less by respondent No. 3 herein (plaintiff
in Title Suit No. 193 of 1996) that during the period of injunction order
of court was in operation, respondent Nos. 1 and 2 (repository of the power
under section 22) could
not invoke the power thereby vested in ad them under section
22.
24. The question, therefore, that arises is whether during the period the
injunction order was in operation, the period covered thereby is liable
to be excluded or not for the purpose of computing the period of twelve
months time stipulated in section
22 (1)(b).
25. It is well established principle of judicial procedure that where any
proceedings are stayed by an order of a court or by an injunction issued
by any court that period should be excluded in computing any period of limitation
prescribed by the statute.
26. Dr. Pal, learned senior counsel for the respondent No. 3, however, sought
to contend that the said principle would apply only where a provision has
been specifically made in the statute and not otherwise. It was the submissions
of Dr. Pal that under the Companies Act, there is no such provision for
excluding the period of stay.
27. Mr. Gautam Chakraborty, learned senior counsel for the petitioners,
countered the above submissions by submitting that non-existence of a provision
in the Companies Act providing for exclusion of time covered by any injunction/stay
order of court would not militate against the efficacy of the principle
noted above. Even if there was such a provision in the Companies Act providing
for exclusion of time covered by injunction/stay order of a court, the same
would be superfluous. Mr. Chakraborty referred to and relied upon the Supreme
Court judgment in Director of Inspection of Income-tax (Investigation) v.
Pooran Mall & Sons reported in [1974] 96 ITR 390, wherein it was held
as follows :-
"It was also argued based on Explanation 1 to section
132 and similar provision in certain other sections which lay down that
in computing the period of limitation any period during which any proceeding
is stayed by an order or injunction of any court shall be excluded, that
where it is intended that the period of limitation prescribed by any of
the provisions of the Income-tax Act should not be strictly enforced the
law itself makes a specific provision. It is well established principle
of judicial procedure that where any proceedings are stayed by an order
of a court or by an injunction issued by any court that period should be
excluded in computing any period of limitation laid down by law. Especially
after the Limitation Act, 1963, the provisions of which are now applicable
to all proceedings, a provision like Explanation 1 to section
132 is superfluous and no argument can be based on it."
28. In view of the above, it must be held that the period covered by the
order of injunction is liable to be excluded while computing the period
of 12 months laid down in section
22 (1)(b) of the Act. The contention of Dr. Pal to the contra has, therefore,
to be rejected.
29. Even if the said period is excluded, as it has to be, then also the
said period within which the power could have been invoked expired in April
1997. The impugned order is dated 15th September, 1997 and, therefore, no
direction as prayed for can be granted to the respondent authority to invoke
the powers or initiate any action by virtue thereof.
30. True, as contended by Mr. Chakraborty, learned senior counsel for the
writ petitioner that the respondent No. 2 authority is solely responsible
for the delay and default in not taking action within the prescribed period
or thereafter, when the injunction order was no longer in operation.
31. It was Mr. Chakraborty's submissions that when the provisions of the
statute relate to the performance of a duty and the authority acts in neglect
of this duty to the detriment of and thereby causing to a person who have
no control over those who are entrusted with the said duty, the writ court
is not without jurisdiction or power and can compel such authority by a
writ of mandamus to perform its duty in a lawful manner in order to prevent
injustice.
32. The above submissions would have merited consideration, if it was a
case of statutory duty imposed under section
22. A distinction has and needs to be drawn between a statutory "duty"
and statutory "power", where a public officer is directed by a statute to
perform a duty within a specified time, the cases establish that provisions
as to time are only directory. However, if the statutory provision as to
time is a condition for exercise of a statutory power as distinguished from
a duty, the prescription as to time has been construed as mandatory.
33. In my judgment, what is conferred by section
22 is a discretionary power to be exercised by the repository of the
power on the formation of an opinion. The said power may be exercised suo
motu and may be open an application by an aggrieved person.
34. For all the aforesaid reasons, the relief as prayed for cannot be granted.
The period prescribed for the exercise of the power including the extended
period have elapsed.
35. In the result, the writ petition must fail and is accordingly dismissed,
however, without any order as to costs.
It must, however, be clarified that nothing contained in this judgment and
order shall be construed as decision on merits of the main controversy.
Petition dismissed.
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