Posh Exports Private Ltd. v.

The Registrar of Companies

Posh Exports Private Limited ("Petitioner Company") was incorporated as a private limited company. The
board of directors in the meeting came to know that the documents compulsorily required to be filed by an
Indian company under Companies Act, 1956 ("CA 1956") had not been filed with the RoC by the Petitioner
Company and therefore, decided to take steps in the present petition and seek revival of the Petitioner
Company. The board of directors also undertook to make the statutory compliances and file the requisite
statutory records and the balance sheets in accordance with CA 1956. When the documents i.e., annual
returns and balance sheets, etc., were sought to be filed on website of MCA, the directors came to know
that name of the Petitioner Company has been struck of for the failure to file requisite statutory documents.
The Petitioner Company contended that the balance sheets of the company were prepared from time to
time, however, it was only recently discovered that none of the balance sheets and the statutory records
have been filed with RoC. It was contended that the accountant did not co-ordinate and further the learned
counsel for the petitioner company submitted that the part time accountant of the company who was
dealing with the aforesaid work was no more an employee of the company.

The petition was allowed in view of the fact that this non-compliance was due to the non-coordination of the
part time accountant and thus the petition was allowed subject to payment of costs. Consequently, it was
decided to restore the name of the Petitioner Company on the register of the RoC subject to Petitioner
Company filling all the statutory documents and returns for the outstanding period along with the prescribed
fees in accordance with CA 1956.
[Note: Restoration of a struck off company was allowed by the courts under Section 560 of CA 1956]

Bajaj Auto Ltd v. Western Maharashtra Development Co. Ltd.

The present case dealt with Section 111A of CA 1956 and section 58 of CA 2013 (both relating to free
transfer/transferability of shares). The parties to the Protocol Agreement (Clause 7) referred their dispute
relating to transfer of shares to arbitration. The real controversy that revolved around clause 7 was whether
it impinges on the free transferability of shares of a public company as contemplated under section 111A of
CA 1956. Clause 7 of the Protocol Agreement inter alia provided that if either party desires to part with or
transfer its shareholding or any part thereof in the equity share capital, such party shall give first option to
the other party for the purchase of such shares at the agreed price. The party desiring to part with or
transfer its shareholding or any part thereof, is required to give written notice to the other party specifying
its intention to do so and the rates at which it is willing to transfer / part with the same. The arbitral award
declared the said Clause 7 as inoperative in the present case. Being dissatisfied with the arbitral award, the
respondent company challenged the same before the learned Single Judge on various grounds as were
also covered under the Arbitration petition.

After hearing the parties, the learned Single Judge, negated all the contentions of the respondent, save
and except one, on the basis of which the award was set aside. In a nutshell, the ground on which the
award was set aside by the learned Judge was that Clause 7 of the Protocol Agreement entered into
between the parties which gave the right of first refusal to the appellant to purchase the shareholding of the
respondent, was not contrary to section 111A of the CA 1956. The learned Judge held that the effect of
Clause 7 of the said agreement was to create a right of pre-emption between the appellant and the
respondent for the purchase of each other's shares. The conclusion made by the single Judge was that
because shares of a company are movable property and the right of the shareholder to deal with his shares
and / or to enter into contracts in relation thereto (either by way of sale, pledge, pre-emption, etc.), is
nothing but a shareholder exercising his property rights. Such contracts voluntarily entered into by a
shareholder for his own shares giving rights of pre-emption to a third party / another shareholder, cannot
constitute a restriction on free transferability as contemplated under CA 1956. The court held that in fact,
such contracts (either by way of sale, pledge or pre-emption) are entered into by a shareholder in exercise
of his right to freely deal with and / or transfer his own shares and that two Joint Venture partners among
themselves having provision of right of first refusal is tenable. Thus, appeal was allowed.
Saloman Vs. Saloman & Co. Ltd. (1895 - 99)
Facts - Saloman sold his business to a company named Saloman & Company Ltd., which he formed.
Saloman took 20,000 shares. The price paid by the company to Saloman was £ 30,000, but instead of
paying him, cash, the company gave him 20,000 fully paid shares of £ 1 each & £ 10,000 in debentures.
The company wound up & the assets of the company amounted to £ 6,000 only. Debts amounted to £
10,000 due to Saloman & Secured by debentures and a further £ 7,000 due to unsecured creditors. The
unsecured creditors claimed that as Saloman & Co. Ltd., was really the same person as Saloman, he could
not owe money to himself and that they should be paid their £ 7,000 first.

Judgment-

1. A Company is a "legal person" or "legal entity" separate from and capable of surviving beyond the lives
of, its members.

2. The company is not in law the agent of the subscribers or Trustee for them.

3. Saloman was entitled to £ 6,000 as the company was an entirely separate person from Saloman.

4. The unsecured creditors got nothing.

Jubilee Cotton Mills, Ltd. v. Lewis, [1924] A. C. 958.

The memorandum and articles of the company were delivered to the Registrar for registration on the 6th
January. On the 8th January the Registrar issued the certificate of incorporation, and dated it 6th January.
On the 6th January and before the certificate was issued, the company allotted shares to L. Held, the
certificate of incorporation was conclusive as to the date on which the company was incorporated and
consequently the allotment of shares to L. was not void on the ground that it was made before the
company was incorporated.

EFFECT OF REGISTRATION
From the date of incorporation the members of the company form a body corporate by the name contained
in the memorandum, capable of exercising all the functions of an incorporated company, and having
perpetual succession and a common seal (s. 13). A public company, however, cannot carry on business
until some further requirements are complied with (s. 109).
A company on becoming registered is a legal person separate and distinct from its shareholders.

In re Pacaya Rubber and Produce Co., Ltd., [1914] 1 Ch. 542.

A company issued a prospectus inviting subscriptions for the purpose of buying a rubber estate in Peru.
The prospectus contained extracts from the report of an expert on the spot, which gave the number of the
matured rubber trees on the estate, and other information. The report was false. Held, the accuracy of the
report was prima facie the basis of the contract, and therefore the company should, if it did not intend to
contract on that basis, dissociate itself from the report in clear and unambiguous terms, and warn the public
that it does not vouch for its accuracy. As there was no such warning, the contracts to take shares should
berescinded.
An innocent misrepresentation is a sufficient ground for rescission. It is not necessary to prove knowledge
of the untruth of the statement.
Non-disclosure of a material fact may be misrepresentation, if the omission makes what is stated
misleading. " It is not that the omission of material facts is an independent ground for rescission, but the
omission must be of such a nature as to make the statement actually made misleading." (11)

Coles v. White City (Manchester) Greyhound Assn., Ltd. (1929), 45 T. L. R. 230.

A prospectus described a piece of land as " eminently suitable " for greyhound racing. The land in question
was, however, affected by a town planning resolution, with the result that, unless the local authority's
consent was obtained before any buildings were erected, the company would not be entitled to any
compensation in the event of the removal of the buildings under the town planning scheme. The local
authority :9fused its consent. Held, the omission to disclose the facts set out above rendered the
description of the land as " eminently suitable " misleading, and persons who had subscribed for shares on
the strength of the prospectus were entitled to rescind their contracts.

I. Shreya singhal versus union of india (2015)

II. BACKkground of the Case:

This is a landmark judgment, concerning section 66A of the Information Technology Act, 2000. This
Section was not in the Act as originally enacted, but came into force by virtue of an Amendment Act
of 2009 with effect from 27.10.2009.

The reason behind the insertion of section 66A according to the Amendment Bill was:

“A rapid increase in the use of computer and internet has given rise to new forms of crimes like
publishing sexually explicit materials in electronic form, video voyeurism, breach of confidentiality
and leakage of data by intermediary, e-commerce frauds like personation commonly known as
Phishing, identity theft and offensive messages through communication services. So, penal
provisions are required to be included in the Information Technology Act, the Indian Penal code, the
Indian Evidence Act and the Code of Criminal Procedure to prevent such crimes”.

III. Facts:

The Petitioners have raised a large number of points as to the constitutionality of section 66A.
According to them, first and foremost Section 66A infringes the fundamental right to freedom of
speech and expression and is not saved by any of the eight subjects covered in Article 19(2).

Also, the right of viewers is infringed as such chilling effect would not give them the benefit of many
shades of grey in terms of various points of view that could be viewed over the internet.
 The Petitioners also contended that their rights under Articles 14 and 21 are breached in as much
there is no intelligible differentia between those who use the internet and those who by words
spoken or written, use other mediums of communication. To punish somebody because he uses a
particular medium of communication is itself a discriminatory object and would fall foul of Article 14
in any case.

In reply, Mr. Tushar Mehta learned Additional Solicitor General defended the constitutionality of
Section 66A. He argued that the legislature is in the best position to understand and appreciate the
needs of the people. The Court will, therefore, interfere with the legislative process only when a
statute is clearly violative of the rights conferred on the citizens under Part-III of the Constitution.
There is a presumption in favour of the constitutionality of an enactment. Further, the Court would
so construe a statute to make it workable and in doing so, can read into it or read down the
provisions that are impugned. The Constitution does not impose impossible standards of
determining validity. Mere possibility of abuse of a provision cannot be a ground to declare a
provision invalid. Loose language may have been used in Section 66A to deal with novel methods
of disturbing other people’s rights by using the internet as a tool to do so. Further, vagueness is not
a ground to declare a statute unconstitutional if the statute is otherwise legislatively competent and
non-arbitrary. He cited a large number of judgments both from this Court and from overseas to
buttress his submissions.

IV. Judgment:

The Court held that the provision of section 66A of the IT Act is derogative to the Article 19(1)(a) and as such
it is an arbitrary provision which breaches the right of citizen to have freedom of speech and expression of
their views on internet. As such the provision concerned is constitutionally invalid and as such struck down in
its entirety.

V. Judgment Analysis:

The judgment of this case is immensely important in the Supreme Court’s history for many reasons. In a rare
instance, Supreme Court has adopted the extreme step of declaring a censorship law passed by Parliament
as altogether illegitimate. The Judgment has increased the scope of the right available to us to express
ourselves freely, and the limited space given to the state in restraining this freedom in only the most
exceptional of circumstances. Justice Nariman has highlighted that the liberty of thought and expression is not
merely an inspirational ideal. It is also “a cardinal value that is of paramount significance under our
constitutional scheme.”

Hindustan Lever & another Vs. State of Maharashtra & another

Facts of the case:

Tata Oil Mills Co. Ltd amalgamated with Hindustan Lever Ltd [HLL] under a scheme of amalgamation, which was
sanctioned by the Court. On presentation of the certified copy of the Court's order the Registrar of Companies,
Maharashtra issued a certificate of amalgamating of the two companies. The authorities under the Bombay Stamp
Act, 1958 demanded stamp duty on the transfer of assets and properties affected under the sanctioning order passed
by the High Court, from HLL. In view of this HLL filed a writ petition in the Bombay High Court challenging the
constitutional validity of the provisions of the Stamp Act. By the impugned order the Division Bench of the High Court
dismissed the writ petition. HLL then appealed to the Supreme Court.
Issues:

The issues presented before the Supreme Court are as follows:

1. Whether the State Legislature has the legislative competence to impose stamp duty on the order of
amalgamation passed by a court; and
2. Whether an order sanctioning a scheme of amalgamation under Section 394 read with Section 391 of the
Companies Act, 1956 is liable to be stamped in accordance with the provisions of the Bombay Stamp Act in
its application in the State of Maharashtra.

Contentions by the Appellants:

HLL appealed to the Supreme Court mainly on the following grounds: (I). Amalgamation being an act by operation of
law, transfer of immovable properties effected under the court order sanctioning the scheme of amalgamation is an
“involuntary transfer” in nature, and therefore, not liable to stamp duty as only “voluntary transfer” under the head
“conveyance” is subject to stamp duty. (II). Court order is not an instrument subject to stamp duty.

Judgment:

The court held that the conveyance to the transferee company would be regarded as an instrument, which is subject
to payment of stamp duty and also an additional stamp duty on the scheme of amalgamation/ merger, which is to be
calculated on the basis of shares exchange ratio between the transferor company and the transferee company and
not solely on the basis of the assets and liabilities to be transferred under such scheme.

Conclusion:

The judgment of this case has clarified on the payment of stamp duty by the transferee company in the process of
amalgamation which has been in question for so many years.

PRASHANT SHARMA versus YOGESH AGARWAL

I. FACTS:-

A complaint was filed by the respondent against the petitioner under Section 138 of the NI Act with allegations that an
amount of Rs.1,05,000/- was taken by the petitioner/accused on credit and against repayment of the said amount,
three different cheques were given to him cheque (1) and (2) being of Axis Bank, Gwalior and cheque (3) of HDFC
Bank Ltd. Kalkaji New Delhi. When these cheques were sent to the concerning banks for encashment, same were
dishonored for want of sufficient funds in the account of holder of the cheques. Thereafter, legal notice was given in
writing by the complainant for payment of the amount within seven days from the receipt of the notice, but no such
payment was made by the petitioner. The complaint then filed against the petitioner for commission of offence
punishable under section 138 of the NI Act.
It was directed by the trial court that no complaint will lie at Gwalior in view of the fact that the third cheque was
dishonored from HDFC Bank Ltd. Kalkaji New Delhi. Against that order, the revision was preferred by the
complainant. Same was allowed and the trial court was directed to proceed with the trial against the accused in
respect of all the three dishonored cheques.

The instant petition under Section 482 of the Code of Criminal Procedure has been filed by the petitioner on being
aggrieved by the order passed by the revision court.

II. ISSUE:-

The issue here was that since third cheque was issued to be drawn at HDFC Bank Ltd. Kalkaji, New Delhi, therefore
in the event of dishonor of the said cheque, the remedy of filing complaint lies only at New Delhi and not at Gwalior.

III. CONTENTIONS OF BOTH PARTIES:-

Appellants-

1. The learned counsel contended that the court therefore lacks jurisdiction in entertaining such complaint so far
as third cheque is concerned and the order passed in a revision being illegal is liable to be quashed in
conformation with the order passed by the Trial Magistrate.
2. In support of this, the learned counsel placed reliance on the decision of the Apex Court in the case
of Dashrath Rupsingh Rathod Vs. State of Maharashtra & another.

Defendants-

1. The learned counsel for the respondent contended that all the cheques were issued in one transaction for
repayment of the loan amount. Both the parties are residing at Gwalior.
2. He also relied upon the ratio of guidelines issued in the case of Dashrath Rupsingh Rathod, and contended
that the same have been followed in due manner by the revision court before reaching on conclusion and
therefore no inference is warranted in this revision.

IV. CONCLUSION:-

The case law clearly indicated that when offence of dishonored cheque under Section 138 of NI Act is committed
along with other offences in a single transaction within the meaning of section 220(1) read with section 182 of CrPC or
is covered by the provision of section 182(1) read with 184 and 220 thereof then said offence can be tried jointly at
one place by a court having jurisdiction for another offences.

Therefore, the court held that the order passed by the revision court does not call for any interference. The petition
was dismissed accordingly.
Lal Babu Priyadarshi vs. Amritpal Singh
I. Facts of the case:

The Appellant, trading as M/s. Om Perfumery, made an application to the Registrar of Trade Marks to register a trade
mark by name “RAMAYAN” with the device of crown in class 3 in respect of incense sticks (agarbattis, dhoops) and
perfumeries etc., The Respondent was a dealer for sale of the products of the Appellant and was also trading as M/s.
Badshah Industries. The Respondent filed a Notice of Opposition to oppose the registration of aforesaid trademark
claiming that the impugned mark, being the name of a religious book, cannot become the subject matter of monopoly
for an individual.

The Assistant Registrar of Trade Marks, after holding that the impugned trade mark consists of device of crown and
the word “RAMAYAN” is capable of distinguishing the goods and is not included in the list of marks not registrable
under the Act, by order, had dismissed the opposition filed by the Respondent. Being aggrieved by the said Order, the
Respondent herein preferred an Original Appeal before the Board and the Board by impugned order, set aside the
order passed by the Assistant Registrar of Trade Marks.

Aggrieved, the Appellant filed this appeal by way of Special leave.

II. Observations:

The Supreme Court observed that Section 9 of the Act stipulates that a mark shall not be registered as trademarks if
(i) it deceives the public or causes confusion, (ii) it contains or comprises of any matter likely to hurt the religious
susceptibilities, (iii) it contains scandalous or obscene matter, (iv) its use is prohibited. It further provides that if a mark
consists exclusively of (a) the shape of goods which form the nature of goods themselves, or (b) the shape of goods
which is necessary to obtain a technical result, or (c) the shape which gives substantial value of the goods then it shall
not be registered as trade mark.

From the Eighth Report on the Trade Marks Bill, 1993 submitted by the Parliamentary Standing Committee, the Court
found that the Committee expressed its opinion that any symbol relating to Gods, Goddesses and places of worship
should not ordinarily be registered as a trade mark. This report was presented on 21.04.1994. When the report was
presented, the Appellant’s trade mark had not been registered and the application filed by the Respondent herein
opposing its registration was dismissed only on 31.03.2004 by the Assistant Registrar of Trade Marks.

The Court further observed that “RAMAYAN” represents the title of a book considered to be a religious book of the
Hindus in our country. Thus, using exclusive name of the book “RAMAYAN”, for getting it registered as a trade mark
for any commodity could not be permissible under the Act. If any other word is added as suffix or prefix to the word
“RAMAYAN” and the alphabets or design or length of the words are same as of the word “RAMAYAN” then the word
“RAMAYAN” may lose its significance as a religious book and it may be considered for registration as a trade mark.

III. Judgement:

The Court dismissed the appeal and found that the Appellant had applied for registration of the word “RAMAYAN” as
a trade mark instead. The Court also found that in the photographs, after adding “OM’s” to the word “RAMAYAN”, at
the top and in between “OM’s and RAMAYAN”, the sentence, “Three Top Class Aromatic Fragrance”, is also written.
Thus, it is not a case that the Appellant is seeking the registration of the word “OM’s RAMAYAN” as a trade mark.
Further, from the photographs, the Court found that the photographs of Lord Rama, Sita and Lakshman are also
shown in the label which is a clear indication that the Appellant is taking advantage of the Gods and Goddesses which
is otherwise not permitted.

IV. Conclusion:

There are many holy and religious books like Quran, Bible, Guru Granth Sahib, Ramayan etc., to name a few. The
answer to the question as to whether any person can claim the name of a holy or religious book as a trade mark for
his goods or services marketed by him is clearly ‘NO’.

Moreover, the appellant has not been able to establish that the word “RAMAYAN” for which he has applied the trade
mark had acquired a reputation of user in the market in as much as, we find that there are more than 20 traders in the
city using the word “RAMAYAN” as a mark for the similar products and also in different parts of the country.

On a perusal of the artistic work said to have been created, there is no doubt that both the marks are identical in
design, colour, scheme and the reproduction of photographs is in such a manner that an ordinary buyer would
reasonably come to a mistaken conclusion that the article covered by one brand can be the article covered by the
other. Both the parties have claimed to be manufacturing units engaged in certain goods.

Further, the respondent herein claimed that though he had been in the business since 1980, he had developed and
published theartistic work in 1986 and has also been using the mark as a trademark and claiming use since 1986
whereas the appellant herein claimed use of the trademark since 1987. However, by filing an application to the
concerned authority, the appellant has claimed the use since 1981. Further, in various pleadings in the Title Suits filed
by the respondent herein, the appellant herein has admitted the use and publication of the artistic mark of the
respondent before the date of claim of the first use by the appellant, that is, 1987. From these facts, it is clear that the
respondent herein was using the artistic mark earlier in point of time to that of the appellant herein.

In view of the foregoing discussion, we do not find any irregularity in the order passed by the Board dated 10.01.2005,
consequently, the appeal fails and is accordingly dismissed. However, the parties are left to bear their own costs.

The intent of the Supreme Court is quite clear – religious teachings and the names of deities belong to all, therefore
no one can claim monopoly over the use of these names.

RAJEEV SAUMITRA vs NEETU SINGH & ORS

FACTS:

The plaintiff is Rajeev Saumitra who began the business of imparting education under the banner of Paramount
coaching centre in January 2005 as a sole proprietor. Defendant No.1 is the plaintiff’s wife, Neetu Singh, defendant
No.2 is K.D Campus Pvt. Ltd., the One Person Company of defendant No.1 and defendant No.3 is Paramount
Coaching Centre Pvt. Ltd.
There is a dispute between the plaintiff and defendant No.1 as to who adopted the mark PARAMOUNT prior in times.
However, it is not in dispute that in 2009, the said mark became the property of defendant No.3-Company on its
incorporation.

Defendant No.1 came into contact with the plaintiff looking for a job and requested him to let her teach English subject
in his coaching institute as she was in dire need of financial assistance. The plaintiff allowed the defendant No.1 to
take English Classes in his coaching centre.

Subsequently after 8-9 months, defendant No.1 expressed her willingness to get married with the plaintiff. The plaintiff
got married with defendant No.1 on 12th March, 2006. Subsequently the proprietorship concern, namely, Paramount
Coaching Centre was converted into a Private Limited Company, i.e. defendant No.3. Defendant No.1 was inducted
as a Director of defendant No.3 with an equal shareholding of 50%.

Later into the marriage, plaintiff finds out that defendant No.1 is already married and is the founder and Director of
K.D. Campus Pvt. Ltd. (defendant No.2). She just married him with an intention to conspire with her family members
to hijack and divert the business, customers and revenue of defendant No.3 into defendant No.2. The plaintiff accuses
the defendant no. 1 of using the brand name of the defendant No.3 ‘PARAMOUNT’ for deceiving the customers and
clients of defendant No.3 into thinking that defendant No.2 is incorporated and a part of defendant No.3. The
defendant accuses the plaintiff of obstructing her from participating in the business of defendant No.3 and embezzling
its funds.

CONTENTION OF THE CASE:

 Whether defendant No.1 is authorised to use the trademark ‘PARAMOUNT’ at her discretion?
 Whether the defendant No.1 is in violation of her Directorial duties towards defendant No.3?

ARGUMENTS OF PLAINTIFF:

Defendant No.1 has made many statements publically by way of advertisements and messages on mobile phone to
the students and other modern media in order to harm the business of defendant No.3 and its goodwill and reputation
as well as against the plaintiff which is in violation of section 166 of Companies Act 2013 which states the fiduciary
obligations of the Director towards his Company and section 88 of the Trusts Act of 1882.

ARGUMENTS OF THE DEFENDANT NO.1

 The plaintiff has no right or authority to file such an action. The Company has not authorized the plaintiff to file
any such action. The derivative action filed by him is not maintainable.
 The suit of the plaintiff is without any cause of action, as he has filed the suit as shareholder to the extent of
50% in the shareholding of defendant No.3-Company for violation of his individual membership rights. The
remedy for the plaintiff, if any, is a petition under Section 397/398 of the Companies Act, 1956 before
Company Law Board. The suit is impliedly barred by the provisions of Companies Act read with Section 9 of
CPC.
  The share of the defendant No.1 was reduced by 9% in the financial year 2013-14 by the plaintiff by forging
the signatures of the defendant No.1 in collusion with the previous account care-taker Mritunjay Singh who
had misrepresented himself as C.A.
 The nature of the facts of the case would establish that the dispute be treated as quasi- partnership dispute.
 The suit filed by the plaintiff is barred under Order II Rule 2 CPC.

JUDGEMENT:

Examining the pile of evidence produced by the plaintiff, one can easily draw conclusion that the way the defendants
No.1 and 2 had been carrying on business since February, 2015, it amounts to completely competing the business of
defendant no. 3. The defendant No.1 is in violation of the provisions of Section 166 of Companies Act, 2013. She has
failed to assign any valid reason or justification as to why she being the Director of defendant No.3 has started parallel
business under the name of defendant No.2. If she had any grievances or the plaintiff is trying to control the business
of defendant No.3 or she was ousted as alleged by her, she had the remedy and rightly so, she was availing the
remedy, but there is hardly any justification to start parallel/similar to the business of defendant No.3. Normally, the
injunction should have been followed; however, as the facts in the present case are peculiar. Therefore, it is to be
examined, as to what type of order is required to be passed under the circumstances available in the case.

Considering the entire gamut of the matter and peculiar facts and circumstances of the case, the judge was of the
view that there can be three scenarios in order to decide the dispute in hand but as the first two scenarios are not
agreeable to the parties, the third scenario seems to be the only solution at hand.

Scenario 1:

That the defendants No.1 and 2 accept the terms and conditions for the purpose of settlement of matter in hand
suggested by the plaintiff.

Scenario 2:

As suggested by Mr. Kapur (senior advocate) that all centres of defendant No.2 are merged with defendant No.3 and
let the defendant No.3 may run under the name of Paramount in a peaceful manner for which the plaintiff has no
objection.

Scenario 3:

The third scenario i.e. the interim application is disposed of with the following directions:

Subject to the condition and by filing of an affidavit of undertaking that (i) the defendants No.1 and 2 shall not use the
mark PARAMOUNT, its goodwill in any manner in its Company. Defendant No.2 shall not poach teachers, students or
staff members of defendant No.3 and within two weeks shall remove the word PARAMOUNT from all hoardings,
advertisements, brochures and other materials and shall not open any new centre within the range of 100 meters
where the centre of defendant No.3 already exists; (ii) she shall furnish the true account from February, 2015 till
December, 2015 and every quarterly till the decision of the suit; the first statement would be filed by 15th February,
2016; (iii) she will not create any hurdle in smoothly going of defendant No.3 and she shall perform her fiduciary duties
under the Act and sign all the requisite papers of the defendant No.3 and shall not create any hindrance of running
business of defendant No.3 directly or indirectly.

In case of above said compliance and undertaking, the defendants No.1 and 2 are allowed to continue with the
business of defendant No.2. In case of any breach, the plaintiff is entitled to move before Court for modification of
order and then the Court may pass any appropriate orders.
SHILPI SHARMA V/S JINDAL STEEL & POWER LIMITED
DECIDED ON: 08/07/2013

CASE IN BRIEF: Section 111A of Companies Act, 1956 – Loss of share certificates – fraudulent transfers – non-
issuance of duplicate share certificate by company – whether petition is maintainable- Held, Yes.

FACTS: The Petitioner has filed a petition under Section 111A of Companies Act, praying for an order for rectification
of register of members by restoring the name of the petitioner and payment of the accrued benefits.

In the year 1997, the aforesaid share certificates in physical form were lost and a police complaint was lodged by the
Petitioner. However, on the other side, when the said share certificates were first lodged with the erstwhile M/s. Jindal
Strips Limited (“Company / Respondent company”) by some person for transfer in his name, wherein the signature of
the petitioner were forged and fabricated, the company noticed the difference in the signatures with the specimen
signatures of the petitioner in its records and returned the share certificates to the alleged transferee and also,
informed the petitioner in this regard and made a ‘stop transfer’ remark in its records. Immediately thereafter, the
petitioner informed the company about the loss of share certificates along with copy of the police complaint.

When the petitioner applied for issuance of the duplicate share certificates, the company rejected the request
informing that the said share certificates have already been lodged with the company by various alleged transferees.

Therefore the present petition filed against such rejected request and other matter incidental thereto.

DECISION: Petition allowed

REASONS FOR ALLOWING THE PETITION:

The petition was allowed by the board on the following grounds:

Firstly, the petitioner has complied with the entire requirement for issue of duplicate share certificates and submitted
the affidavit, indemnity bond, police complaint and demand draft of necessary fees.

Secondly, in the year 2001, the company informed the petitioner about a scheme of arrangement between M/s. Jindal
Strips Limited and M/s. Jindal Steel & Power Limited, whereby the petitioner would be allotted shares in the ratio of
60:40, and thereby the petitioner was allotted 300 new equity shares of Rs. 10 each of M/s. Jindal Strips Limited and
200 new equity shares of Rs. 10 each of M/s. Jindal Steel & Power Limited. In the later years, there was a stock Split
and issue of bonus shares in the company and the petitioner was also paid dividend till the year 2001 which all
justified the fact that company accepted the ownership of the petitioner on the impugned shares as no claim was
made by the respondent before any court or judicial authority for transfer of impugned shares.

Thirdly , Neither the respondent nor their counsel have appeared before the Hon’ble board despite the notices issued
to the Respondents on different dates, therefore the aforesaid order passed.
Vov Cosmetics Pvt Ltd & Ors v. Union Of India & Ors [Bom]
[Decided on 05/04/2013]

Companies Act, 1956 Sections 20 and 22 - incorporation of companies with identical names - later company directed
to change its name merely on the ground that names are identical- whether tenable- Held, No.

Brief facts: Petitioner company and Respondent No.4 companies are incorporated with idendtical name with the
words “VOV cosmetic”. As far as the respondent No. 4 - VOV Cosmetic Private Limited is concerned, it is sufficient to
note that it was incorporated by that name on 5th May, 2011 i.e. prior to the incorporation of petitioner No.1 under the
said Act.

Petitioner Nos. 3 and 4 are the directors/promoters of petitioner No.1. Petitioner No.2 - Pioneer Products is presently
a partnership firm of which petitioner Nos.3 and 5 are the partners. From the year 1986, petitioner No. 5 carried on
business of manufacturing and marketing cosmetics in the firm name and style of Pioneer Products as the sole
proprietor thereof. The products were sold under the mark "VOV".

By and under a deed of partnership dated 20th February, 2012, petitioner Nos.3 and 5 carried on business in the firm
name and style of petitioner No.2 - Pioneer Products. Petitioner No.2 continued the business of manufacturing and
marketing cosmetic products hitherto carried on by petitioner No.5.

Petitioner No.5 permitted petitioner Nos. 2 and 3 to use the said mark “VOV”. The petitioners had also made various
applications for the registration of the said mark. With a view to expand their business they incorporated the petitioner
No.1 company on 15th September, 2011. On 23rd April, 2012, respondent No. 4 filed an application under section 22
of the said Act to rectify the first petitioner's name, so as not to resemble its name and not to use the word VOV
Cosmetic in the rectified name. The names of petitioner No.1 and respondent No.4 are not merely deceptively similar,
but are virtually identical.

Upon receipt of the fourth respondent's application, petitioner No.1 was issued a notice dated 14th May, 2012, calling
upon it to show cause why it ought not be directed under section 22 of the Act to change its name. The petitioners
admitted that their applications for registration of their trademarks, which included as a dominant part thereof, the
word "VOV", were pending. It was admitted before the Regional Director that the marks of petitioner No.1 and
respondent No.4 were not registered.

By the impugned order, the Regional Director appears to have proceeded on the basis that the moment it is found that
a name of the subsequently registered company is identical with or resembles the name of a company in existence, it
should be deemed to be an undesirable name. Respondent No.2 proceeded on the basis that in that event, the
provisions of section 22(1)(i) are attracted and the name of such subsequently registered company is to be rectified /
changed.

Decision: Appeal allowed. Matter remanded.

Reason: Respondents submitted that where, through inadvertence or otherwise, a company is registered by a name
which is identical with or too nearly resembles the name by which a company in existence has been previously
registered, the Central Government is bound to direct such subsequently registered company to change its name in
the manner provided in section 22(1). They contended that in such a case the Central Government has no option but
to order the name to be changed. We are unable to agree.

Firstly, section 20 does not bar the Central Government from registering by a name which is identical with or too
nearly resembles the name by which a company in existence has been previously registered. In other words, section
20 does not provide that a name by which a company desires to be registered is not undesirable merely because it is
identical with or too nearly resembles the name circumstances that fall within its ambit. It would include cases where a
party makes an application fraudulently or by suppressing material fact. In the present case, therefore, one of the
issues that would arise is whether the statement in the application for registration to the effect that the mark was
registered in the name of petitioner No.3 was deliberate or inadvertent. If it is found to be deliberate, the question
would arise whether by reason thereof alone, an order for change in the name must follow irrespective of the facts of
the case prior to the incorporation and even thereafter. We keep this question open.

The impugned order has been passed only on the basis that the name of petitioner No.1 is almost identical to the
name of respondent No.4 which was registered earlier. It was not even based on the incorrect statement made in
Form 1 by petitioner No.3 - the promoter of petitioner No.1 and the Chartered Accountant of petitioner No.1. This is
clear from the order which stated that, that was a separate matter which was not dealt with in the order. It could
certainly be a relevant factor, but it was not made the basis of the order.

In an application for rectification of a name under section 22, it is necessary for the Regional Director to consider
various aspects. It is neither possible nor desirable to exhaustively enumerate them. Suffice it to state that merely
because the name of a company subsequently registered is identical with or too nearly resembles the name of a
company which has already been registered, albeit, through inadvertence or otherwise, it does not follow that an order
for rectification is bound to be passed.

The impugned order is, therefore, liable to be quashed and set aside only on this ground. The Registrar of Companies
shall, after affording the parties an opportunity of being heard, pass a fresh order after considering the relevant facts
in an application under section 22.
Sahara India Real Estate Corporation Limited & Others Vs. SEBI.
A landmark judgment was passed on 31st August 2012 by the Supreme Court of India, in Sahara India Real Estate
Corporation Ltd. and others v. Securities and Exchange Board of India and another [2012] 174 Comp Cas 154 (SC)
wherein the two companies of the Sahara Group, Sahara India Real Estate Corporation Limited (SIRECL) and Sahara
Housing Investment Corporation Limited (SHICL), were directed to refund around Rs 17,400 crores to their investors
within three months from the date of the order with an interest of 15% per annum. Sahara India Real Estate
Corporation Limited (SIRECL) and Sahara Housing Investment Corporation Limited (SHICL), appellants are
Companies controlled by the Sahara Group. The two appellant companies raised from investors by issuance of
Optionally Fully Convertible Debentures (OFCDs) and collected between April 2008 and April 2011 over Rs. 17,656
crores, from about three crore investors. This was done pursuant to special resolutions passed under section 81(1A)
approving the issue of OFCDs. For inviting investors to subscribe to the OFCDs, an Information Memorandum (IM)
was circulated after it was filed with the Registrar of Companies, purportedly under section 60B of the Companies Act,
1956. But the IM described the issue as 'Private Placement Issue' and hence did not comply with the requirements
applicable to the 'public issue' of securities. On investigation, a Whole-time Member of SEBI passed an order on 23
June 2011 directing the two companies to refund the money so collected to the investors and also restrained the
promoters of the two companies from accessing the securities market till further orders. In the appeal that Sahara
preferred before the Securities Appellate Tribunal (SAT) against the order of the Whole-time Member, the SAT
confirmed and maintained the order of the Whole-time Member by an order dated 18th October, 2011. Sahara’s
contentions in the detailed reply dated 30.5.2011 were as under:

1. The raising of funds through issue of OFCDs was in compliance with all regulations and was legal.
2. The raising of funds through issue of OFCDs was by way of private placement to persons who were
associated with Sahara Group and those issues were not public issues.
3. The OFCDs issued were in the nature of “hybrid” as defined under the Companies Act and SEBI did not have
jurisdiction to administer those securities since Hybrid securities were not included in the definition of
'securities' under the SEBI Act, SCR Act etc.
4. That such hybrids were issued in terms of Section 60B of the Companies Act and, therefore, only the Central
Government had the jurisdiction under Section 55A(c) of the Companies Act.
5. Sections 67 and 73 of the Companies Act could not be made applicable to Hybrid securities, so also the DIP
Guidelines and ICDR 2009.
6. The company had raised funds by way of private placement to friends, associates, group companies,
workers/employees and other individuals associated/affiliated with Sahara Group, without giving any
advertisement to the public.
7. The RoC, Kanpur and Maharashtra had registered those RHPs without any demur and, therefore, it was
unnecessary to send it to SEBI.

SEBIs contentions:

1. Sahara Group was issuing Housing bonds without complying with the rules/regulations and guidelines.
2. The issue of OFCDs was public issue.
3. Issuance of OFCD was made to more than 50 investors and therefore securities were liable to be listed on a
recognized stock exchange under Section 73 of Companies Act, 1956. SEBI also held that the parliament had
conferred powers on it under Section 55A to administer issue of securities to public.
 4. SEBI analysed and concluded that OFCDs are indeed securities (Transferable hence marketable as provided
in terms and conditions in bond agreement).
5. Sahara violated the provision of Section 73 of Companies Act, 1956 and subsequently it comes under the
ambit of provision of Section 55 of Companies Act, 1956 under which listing of instrument was mandatory.
6. Issuance of OFCD by Sahara’s was prima facie violation of Sec 56 and Sec 73 of the Companies Act, 1956.
7. Saharas violated DIP Guidelines & SCR Act regulations.
8. OFCDs issued by Saharas would come within the definition of Securities under provision of Section 2(h) of
SCR Act.
9. OFCDs are marketable and comes under the meaning of debentures.
10. Having made a public issue, it cannot escape from complying with the requirements of Section 73(1) of the
companies Act, 1956.

Subsequently Sahara filed an appeal before the Supreme Court against the SAT order. The Supreme Court confirmed
the findings of the SAT based on the below observations:

 Issue of OFCDs is not a private placement.

 When the above securities are offered to more than 50 persons it is to be considered as a public issue
accordingly SEBI has jurisdiction as per Section 55A in the matter of unlisted public companies.

Supreme Court concluded that the appellants companies knowingly issued securities by way of private placement in
order to diminish various laws and regulation also asked SEBI to probe into the matter and find out the actual
investors who had subscribed to the OFCDs.