[This post has been authored by SpicyIP intern Kaustubh Chakrabarti. Kaustubh is a second year BA.LLB. (Hons.) student at Hidayatullah National Law University, Raipur.]
In a decision passed on November 11, the Delhi High Court held that the Regional Director under the Companies Act has no jurisdiction to decide ownership of trademark. This was passed in a writ against an order by the Regional Director rejecting the Panchhi Petha Store’s (Petitioner) application for rectification/change in the name of Respondent No. 4 (Panchhi Petha Pvt. Ltd.) and cancel/remove it from the Register under S.16(1)(b) of the Companies Act, 2013. Section 16(1)(b) allows a trademark proprietor to file an application before the Registrar seeking to rectify the name of a company which is identical or which “too nearly resembles” their registered trademark. However, the Regional Director in the present case rejected the application filed for rectification/change in the name holding that the petitioner is not the owner of the trademark in his name and the actual owner of the trademark is in the name of one Subhash Chander. This raises an interesting question as to whether the Regional Director or any other unrelated Executive Authority is entitled under law to make trademark determinations.
The petitioner argued that the Regional Director exceeded his powers as S.16(1)(b) of the Companies Act can be exercised only at the application of the actual owner of the trademark. The Regional Director, under the above provision, is not empowered by itself to pass a decision regarding the ownership of the trademark.
As per S.16(1)(a), the Regional Director does have suo motu cognizance to rectify the name of a company, if such name resembles the name of an existing company or is identical to the name of an existing company. But, S.16(1)(b) provides a different condition. When a company registers itself with a name which is identical or which nearly resembles a registered trademark, then the Regional Director, acting for the Central Government, is not free to exercise its discretion but can only act on the application of the owner of the registered trademark within three years.
The present order also arrived at the same interpretation. While determining the scope and applicability of S.16(1)(b) of Companies Act, the Bench clearly pointed out that the Regional Director is not authorized to decide the question of ownership of a trademark. Such an authority is in excess of his jurisdiction as the Regional Director cannot undertake an examination of the trademark as the Intellectual Property Division of a Court would. Even under the Trademarks Act, 1999, it is the Registrar of Trademarks or a Commercial Court who has the power to make trademark determinations and not any other unrelated Executive Authority. Therefore, the order of the Court is based on sound reasoning.
A similar instance involving the Excise Commissioner came up before the Madhya Pradesh High Court in Mount Everest Breweries Limited v. Excise Commissioner. The Court assigned the authority to determine the similarity of competing labels to the Excise Commissioner, although, the relevant provisions of the MP Foreign Liquor Rules, 1996, and MP Beer and Wine Rules, 2002, do not explicitly grant such an authority to the Excise Commissioner. This is a function that falls within the jurisdiction of the Trademarks Registry and the Court seemed to have passed an unreasonable decision. Therefore, it is imperative for the judiciary to draw the boundaries of executive authorities, like in the Panchhi Petha order, so that the crucial questions of determinations of Intellectual Property can be handled by specialized bodies which are authorized to do so.