This writ petition challenges the order issued by the Regional Director of Companies appointed under the Indian Companies Act (Respondent no 1), which directed the petitioner, KCP Infra Ltd. (Petitioner), to change its name and stop using “KCP”. The 2nd Respondent, KCP Ltd had initiated proceedings under Section 16 of the Companies Act, 2013, seeking to remove the letters “KCP” from the petitioner’s company name, arguing that it was undesirable due to the prior incorporation of the 2nd respondent company with the same letters “KCP”.

The Regional Director (respondent no 1) ruled in favour of 2nd respondent and ordered petitioner to change its name and stop using “KCP” within three months. This note discusses the Writ filed by the petitioner to challenge the direction of the Regional Director and summarises the order passed by the High Court.

The petitioner in the Writ Petition contended:

1. Long-term Use: The petitioner, KCP Infra Ltd., argued that they have been using the name “KCP” since 2005 when the company was initially started as a partnership firm named “KCP Engineers and Fabricators”. They later incorporated as a Private Limited Company in 2011 under the name “KCP Engineers Pvt. Ltd.” and subsequently changed to “KCP Infra Ltd” in 2021. They claimed that the name “KCP” has been part of their company name since its inception.
2. Trademark Registration: The petitioner contended that they are the registered proprietor of the trademark “KCP” in class 37 with respect to Civil Contractor and “KCP Infra” in Class 37 with respect to construction, infrastructure construction, building maintenance, and repairs. They argued that their exclusive rights in the “KCP” name is well recognized.
3. Distinct Line of Operation: The petitioner argued that their line of operation and that of the 2nd respondent are distinctly different, and there would be no confusion arising in the mind of customers or clients of the two companies. They claimed that for the past 17 years, the 2nd respondent had allowed them to function by co-existing, and no detriment would be caused to the 2nd respondent due to the continuance of the name.
4. Acquiescence: The petitioner contended that the 2nd respondent had allowed them to develop into a well-known entity by remaining a mute spectator. They argued that the belated application filed by the 2nd respondent to change the name is impermissible as the conduct of the 2nd respondent amounts to acquiescence.
5. Goodwill and Prejudice: The petitioner argued that having allowed them to function for about 17 years, they have developed enough goodwill amongst their customers and clients. They claimed that passing the impugned order would severely derail and cause serious prejudice to them. They also argued that the name “KCP” was bona fide adopted, derived from the name of their founder, and is specifically permitted under the Trademarks Act, 1999.
6. Political Influence: The petitioner claimed that the present complaint under Section 16 of the Companies Act, 2013, was the result of a complaint lodged against them by certain vested political interests mainly to sabotage their name. They argued that if the impugned order is upheld, it would severely impact their business and prejudice them in the eyes of their customers and clients.

Second Respondent/Complainant contends:

1. Prior Use and Registration: The 2nd respondent argued that they have been using the trademark “KCP” since 1941 and have registered it under different classes in 1968, 2006, and 2014. They claimed that the petitioner’s use of the same trade name “KCP” is not bona fide or honest but an attempt to dilute the distinctive character of their trade name, thereby destroying the goodwill generated over several decades.
2. Similarity and Confusion: The respondent contended that the name “KCP” is phonetically too similar to their trademark, and this similarity is sufficient to cause confusion among customers. They argued that the power vested under Section 16 of the Companies Act, 2013, is broad and does not require examining the likelihood of deception or confusion as long as the resemblance is conspicuous.
3. Global Presence and Goodwill is associated with the name “KCP” and allowing the petitioner to use the name would mislead the public into believing that the petitioner and the 2nd respondent are associated with each other, causing irreparable injury to their reputation.
4. Balance of Convenience: They have been using the name “KCP” for more than six decades, whereas the petitioner has only used it for about a decade and a half. They claimed that the continuance of the name “KCP” in the petitioner’s name would severely impact them more than causing prejudice and hardship to the petitioner.
5. Acquiescence: The respondent contended that they had not acquiesced to the petitioner’s use of the trademark “KCP”. They argued that mere inaction or silence does not amount to acquiescence and that there must be positive acts leading to the inference of a license sufficient to create a new right in the petitioner.
6. Legal Provisions: The respondent argued that Section 16 of the Companies Act, 2013, which deals with the rectification of the name of a company, is a procedural, statutory, and mandatory provision that supersedes Section 35 of the Trademarks Act, 1999. They claimed that the petitioner’s contention that their name is derived from the name of their promoter and Managing Director and is saved under Section 35 of the Trademarks Act is flawed.

Regional Director contended

1. The Regional Director argued that the date of incorporation of the 2nd respondent is 3rd July 1941, while the initial registration of the petitioner is only on 14th December 2011, which was subsequently changed on 24th August 2021. Therefore, the petition under Section 16(1)(b) is maintainable and not barred by limitation.
2. The names of both companies bear the word “KCP,” which phonetically resembles each other. They argued that the power vested under Section 16 of the Companies Act, 2013, is broad and does not require examining the likelihood of deception or confusion. As long as the resemblance is conspicuous, the 2nd respondent is within its rights to seek relief under Section 16(1)(b).
3. The similarity in the names is sufficient to cause confusion from the perspective of the common man. The diversified interests of the 2nd respondent, including its overseas presence, could lead customers to believe that both companies are under the same management, causing irreparable injury to the 2nd respondent if the petitioner is permitted to use the word “KCP”.
4. The Regional Director emphasized that the 2nd respondent has been using the trademark “KCP” for more than six decades, even before the inception of the petitioner. They argued that allowing the petitioner to use the tradename “KCP” would mislead the public into believing that the petitioner and the 2nd respondent are associated, thereby justifying the impugned order.
5. The petitioner’s claim that their name is derived from the name of their promoter and Managing Director and is saved under Section 35 of the Trademarks Act, 1999, is flawed. Section 35 is a saving clause, while Section 16 is a procedural, statutory, and mandatory provision, which supersedes Section 35 of the Trademarks Act.
6. The Regional Director argued that the balance of convenience favoured the 2nd respondent, as they have been using the name “KCP” for more than six decades, whereas the petitioner has only used it for about a decade and a half.

The Court after considering the pleadings, arguments and case laws held:

1. Limitation Period: The court found that the application to change the name was filed within three years of the petitioner’s name change to “KCP Infra Ltd” in 2021. This was in accordance with Section 16(1)(b) of the Companies Act, 2013, which allows such applications within three years of incorporation, registration, or name change.
2. Acquiescence: The court ruled that mere inaction or silence does not amount to acquiescence. There must be positive acts that lead to the inference of a license sufficient to create a new right in the defendant. The court found that the 2nd respondent had not acquiesced to the petitioner’s use of the name “KCP” and had acted promptly upon becoming aware of the identical name.
3. Goodwill and Reputation: The court emphasized the importance of protecting the goodwill and reputation of the 2nd respondent, which had been using the trademark “KCP” for more than six decades. The court found that the petitioner’s use of the name “KCP” could cause confusion and damage the 2nd respondent’s goodwill.
4. Balance of Convenience: The court found that the balance of convenience was more in favour of the 2nd respondent, as the 2nd respondent had been using the name “KCP” for a much longer period and had built significant goodwill and reputation. The court ruled that allowing the petitioner to continue using the name “KCP” would cause irreparable injury to the 2nd respondent.

Comment

The case illustrates the interplay between different legal provisions, such as Section 16 of the Companies Act, 2013, and Section 35 of the Trademarks Act, 1999. The court found that Section 16, which deals with the rectification of the name of a company, is a procedural, statutory, and mandatory provision that supersedes Section 35.