Delhi High Court held that similarity or near resemblance of corporate names triggers Regional Director powers under Section 16, Companies Act, 2013, regardless of business differences. Justice Manmeet Pritam Singh Arora rejected dilution arguments protecting trademarks and company names.
NEW DELHI: The Delhi High Court reiterates that similarity or near resemblance of corporate names alone is sufficient to invoke the powers of the Regional Director, irrespective of whether the companies operate in different business sectors.
It clarifying the scope of Section 16 of the Companies Act, 2013, particularly concerning corporate name rectification when such names conflict with existing company names or registered trademarks.
The bench of Justice Manmeet Pritam Singh Arora decisively rejected the argument that distinct lines of business dilute statutory protection against identical or deceptively similar company names.
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Factual Background of the case:
Refex Industries Limited (“the Petitioner”) was originally incorporated in 2002 under the Companies Act, 1956 as Refex Refrigerants Private Limited. Over the years, it underwent corporate restructuring and ultimately adopted the name Refex Industries Limited in 2013.
The Petitioner is a well-established entity in the refrigerant gases industry and is the registered proprietor of the trademark “REFEX” (Trademark No. 1559466) in Class 1, with registration dating back to 17 May 2007. The Petitioner also leads a group of companies, all using “REFEX” as the dominant part of their corporate identity.
Respondent No. 2, Refex Hotels Private Limited, was incorporated in January 2017 under the Companies Act, 2013, carrying on business in the hospitality sector.
In April 2018, the Petitioner filed an application under Section 16(1)(b) of the Companies Act, 2013, seeking directions from the Regional Director (Respondent No. 1) to compel Respondent No. 2 to change its corporate name on the ground that it was identical and deceptively similar to the Petitioner’s corporate name and registered trademark.
By an order dated 23 August 2018, the Regional Director dismissed the application, holding that since both companies operated in different business sectors, there was no likelihood of confusion.
Aggrieved, the Petitioner approached the Delhi High Court challenging the legality and correctness of the Regional Director’s order.
Arguments Of Parties:
The Petitioner contended that:
- The Regional Director misconstrued Section 16 by importing considerations of business similarity, which are not statutorily mandated.
- The word REFEX is a coined and distinctive mark, forming the dominant and essential part of both corporate names.
- The Petitioner was incorporated much earlier (2002) and held a registered trademark since 2007, giving it clear priority.
- Respondent No. 2 adopted the word “REFEX” without obtaining consent from the Petitioner, contrary to established corporate naming norms.
- Reliance was placed on:
- CGMP Pharmaplan (P) Ltd. v. Regional DirectorEverstone Capital Advisors Pvt. Ltd. v. Everstone Ventures LLPMondelez Foods Pvt. Ltd. v. Regional Director
- The Petitioner argued that delay was not fatal, especially considering the Supreme Court’s suo motu extension of limitation during the COVID-19 period.
Respondent No. 2 argued that:
- The Petitioner operates in Class 1 (industrial goods), while Respondent No. 2 operates in Class 43 (hospitality services), eliminating confusion.
- The corporate name was adopted bona fide and reflected hospitality-related services.
- The Petitioner’s trademark registration did not extend to the hospitality industry.
- Reliance was placed on Mahendra & Mahendra Paper Mills Ltd. v. Mahindra & Mahindra Ltd. to argue that confusion arises only when businesses overlap.
The Regional Director contended that:
- The petition suffered from delay and laches, having been filed nearly four years after the impugned order.
- Legislative intent behind Section 16 was to prevent identical names within the same business field, not across unrelated sectors.
Issues Framed:
- Whether similarity of business activities is a relevant consideration under Section 16 of the Companies Act, 2013?
- Whether the name “Refex Hotels Private Limited” is undesirable due to its identity or near resemblance with the Petitioner’s name and trademark?
- Whether the impugned order of the Regional Director suffered from legal infirmity?
- Whether the petition was liable to be dismissed on the ground of delay and laches?
Legal Analysis of the Court:
- Scope of Section 16, Companies Act, 2013:
The Court emphasised that Section 16 is concerned solely with identity or near resemblance of names, not with overlap of business activities. It observed that importing trademark-style confusion analysis into Section 16 would amount to judicial overreach.
Relying heavily on CGMP Pharmaplan (P) Ltd. v. Regional Director Ministry of Corporate Affairs the Court reiterated that “the powers of the Regional Director are wider than those of civil courts in passing-off actions.”
It said that,
“the powers of the Regional Director [i.e., Respondent No. 1herein] under Section 22 of the Act of 1956 are wide. The Court further opined that the relevant criteria is to determine whether the name registered too nearly resembles another registered name; and if it is so then a direction for changing the name has to follow. The Court held that there is no need to examine whether there is a likelihood of deception or confusion.”
- Dominant and Distinctive Part Test
The Court held that “REFEX” is the dominant and distinctive element in both corporate names. Since it is a coined word, its adoption by a later entity strongly indicates undesirability.
The structural and phonetic similarity between Refex Industries Limited and Refex Hotels Private Limited was found to be undeniable.
- Dissimilarity of Business is Irrelevant
Following Everstone Capital Advisors and Mondelez Foods, the Court categorically ruled that:
“Irrespective of dissimilarity in business, mere resemblance to a previously registered name is sufficient.”
The reliance placed by Respondent No. 2 on Mahendra & Mahendra was rejected, as that case arose in a passing-off context, not under company law.
It said,
“Court is of the opinion that the dissimilarity in the businesses of the Petitioner and Respondent No. 2 was not a relevant criterion for the Regional Director to consider for declining to exercise the jurisdiction conferred upon him under Section 16 of the Act of 2013.”
- Trademark Rights and Corporate Names
While acknowledging that the Petitioner’s trademark was registered in Class 1, the Court clarified that Section 16 operates independently of trademark classification. The protection flows from prior corporate existence and statutory mandate, not merely trademark overlap.
The court considering Section 4(2)(a) of the Act of 2013 observed that,
“In view of the identity of the prominent and distinctive part of the corporate names of the parties, the name of Respondent No. 2 would be undesirable as stipulated under Section 4(2)(a) of the Act of 2013, which reads as under: –
“(2) The name stated in the memorandum shall not….. (a) be identical with or resemble too nearly to the name of an existing company registered under this Act or any previous company law”
It held that,
“The documents on record show that the Petitioner is the prior adopter of this coined word ‘REFEX’ and, therefore, Respondent No. 2 had no reasonable grounds for adopting this word as a part of its corporate name. The adoption of this name is undesirable within the scope of Section 4(2)(a) of the Act of 2013 as it is identical with the name of the Petitioner.”
- Delay and Limitation
The Court refused to dismiss the petition on grounds of delay, noting the Supreme Court’s suo motu extension of limitation during the pandemic In Re: Cognizance for Extension of Limitation.
Final Order :
The Delhi High Court Allowed the writ petition and Set aside the Regional Director’s order dated 23 August 2018
It Directed Refex Hotels Private Limited to change its corporate name within four weeks and the Regional Director to ensure compliance under the Companies Act, 2013.
This ruling strengthens the jurisprudence protecting prior corporate identity, goodwill, and registered trademarks, while also reaffirming the wide statutory powers of the Central Government under company law.
Case Title : Refex Industries Limited v. Regional Director, Northern Region, Ministry of Corporate Affairs & Anr.
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