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Pioneer Protective Glass Fibre P. Ltd. Vs. Fibre Glass Pilkington Ltd. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKolkata High Court
Decided On
Case NumberAppeal No. Nil of 1984 in Suit No. 874 of 1982
Judge
Reported in[1986]60CompCas707(Cal)
ActsCompanies Act, 1956 - Sections 21, 23 and 23(1)
AppellantPioneer Protective Glass Fibre P. Ltd.
RespondentFibre Glass Pilkington Ltd.
DispositionAppeal dismissed
Cases ReferredGarikapati Veerrayya v. N. Subbiah Choudhry
Excerpt:
- .....the supreme court laid down the following proposition (headnote).'the legal pursuit of a remedy, suit, appeal and second appeal are really but steps in a series of proceedings all connected by an intrinsic unity and are to be regarded as one legal proceeding.'27. the decision of this court in malhati tea syndicate ltd.'s case [1973] 43 comp cas 337, is, therefore, distinguishable. in any event, malhati tea syndicate ltd.'s case is not an authority for the proposition that commencement of proceeding by a company in its old name after a change would be a proceeding by a person not in existence.28. the facts in shree choudhan cold storage's case : air1982cal124 are entirely different from the facts of the case before us. there, a company had been dissolved by operation of a statute and a.....
Judgment:

Dipak Kumar Sen, J.

1. Fibre Glass Pilkington Ltd., the respondent in this appeal, is a company incorporated under the Companies Act, 1956. By a special resolution, passed prior to April 15, 1982, the respondent changed its name to F.G.P. Ltd. The change was duly approved by the Central Government, This was recorded in a letter of the Regional Director, Company Law Board, Western Region, Bombay, dated April 15, 1982. A fresh certificate of incorporation recording the change of name of the respondent was issued by the Additional Registrar of Companies, Maharashtra, Bombay on April 15, 1982.

2. On or about November 22, 1982, the respondent filed a suit in this court marked Suit No. 874 of 1982 against Pioneer Protective Glass FibreP. Ltd., the appellant, for price of goods sold and delivered to the appellant claiming, inter alia, Rs. 1,40,098.32 ; Rs. 75,654 on account of interest accrued; further interest and costs. In the cause title of the plaint filed in the suit, the respondent was described in its previous name, viz., Fibre Glass Pilkington Limited.

3. After the appellant entered appearance in the suit, the respondent on April 4, 1983, applied under Chapter XIIIA of the Rules of the Original Side of this court for final judgment.

4. The appellant filed an affidavit-in-opposition to the said application contending, inter alia, that the suit was not maintainable inasmuch as Fibre Glass Pilkington Ltd. was not an existing company on the date the suit was filed, A new company, viz., F.G.P. Ltd., having been incorporated with effect from April 15, 1982, it was contended that Fibre Glass Pilkington Ltd. stood dissolved and there was no company by that name on the date when the suit was filed. It was contended that the suit should be dismissed with costs.

5. Thereafter, on July 19, 1983, the respondent made an application in the suit for amendment of the cause title of the plaint, the register of the suit and other pleadings for describing the plaintiff as F.G.P. Limited and for leave to reverify the plaint. The said application was opposed.

6. On September 8, 1983, an order was passed by the first court on the application for amendment as follows :

' There will be no order on this application. This order, however, will not prejudice the right of the petitioner to file a suit against the defendant on the same cause of action as contained in the plaint...Operation of this order is stayed for a fortnight from date.'

7. Subsequently, it was directed that the application would again appear in the list on November 22, 1983, and that the said order dated September 8, 1983, should not be drawn up in the meantime.

8. The said application was further heard on June 12, 1984, and June 19, 1984. On June 19, 1984, an order was passed by the first court allowing the amendments as prayed for without prejudice, however, to the appellants' contention that the suit was not maintainable.

9. Leave to file the present appeal from the said order dated June 19, 1984, was given on July 3, 1984. The respondent has waived service of the notice of appeal. By consent of the parties, filing of the paper book has been dispensed with and the undertaking to do so has been directed to stand discharged. By consent, the appeal was treated as in the day's list and has been heard along with the application for leave to file the appeal.

10. Learned counsel for the appellant submitted that the amendments prayed for by the respondent ought not to have been allowed inasmuch asthe suit at its inception was not maintainable having been instituted in the name of a non-existent person. It was submitted that the plaint was incurably defective and the respondent was not entitled to amend the same. It was contended that the Companies Act, 1956, provided that a change of the name of an existing company was to be registered afresh and a new certificate of incorporation was to be issued by the Registrar, from the date of which, the change of name would be effective. It followed that from the date of the change of its name, a new company under a new name had come into existence. The rights and liabilities of the old company vested in the new company under the statute which further provided that any proceeding which had been commenced or continued by the company in its old name could be continued by the company in such name even after the change of name. No right, however, was conferred on the company to commence a new proceeding in its old name.

11. Learned counsel drew our attention to the relevant provisions of the Companies Act, 1956, which may be noted :

'Section 21. A company may, by special resolution and with the approval of the Central Government signified in writing, change its name...'

' Section 23(1). Where a company changes its name in pursuance of Section 21 or Section 22, the Registrar shall enter the new name on the register in the place of the former name and shall issue a fresh certificate of incorporation with the necessary alterations embodied therein ; and the change of name shall be complete and effective only on the issue of such a certificate.

(1A) Where the change in the name of a Government company consists only in the deletion of the word ' private' therefrom, that Government company shall, not later than three months from the date thereof, inform the Registrar of the aforesaid change and thereupon the Registrar shall delete the word ' private ' before the word ' Limited ' in the name of the company upon the register and shall also make the necessary alteration in the certificate of incorporation issued to the company.

(2) The Registrar shall also make the necessary alteration in the memorandum of association of the company.

(3) The change of name shall not affect any rights or obligations of the company, or render defective any legal proceedings by or against it ; and any legal proceedings which might have been continued or commenced by or against the company by its former name may be continued by or against the company by its new name.'

12. Learned counsel for the respondent contended on the other hand that a change of the name of a company did not bring into existence a newentity. The company remained the same and continued under a new name. In the instant case, the company had been misdescribed in the cause title of the plaint by its previous name and the previous suit had not been filed in the name of a non-existent person. He submitted that the amendments have been rightly allowed.

13. In support of the respective contentions of the parties, several decisions were cited at the Bar which are considered hereafter.

(a) D. Srinivasaiah v. Vellore Varalakshmi Bank Ltd, [1954] 24 Comp Cas 55 (Mad). A decree-holder applied for amending the cause title of the pleadings in the execution proceedings initiated by it by substituting its new name, viz., Varalakshmi Fund Vellore Ltd. The change in the name of the bank had been effected by a special resolution and a certificate under the Indian Companies Act, 1913, had been issued. A Division Bench of the Madras High Court considered Section 11(6) of the Indian Companies Act, 1913, which is more or less similar to Section 23 of the later statute of 1956, and held that the object of the said section was to provide that notwithstanding the change in the name, there would be no alteration in the legal status of the company as its incorporation was not in any manner affected by the mere change of name. It continued to possess the same rights and remained subject to the same obligations as before the change.

(b) Kalipada Sinha v. Mahalaxmi Bank Ltd., : AIR1966Cal585 . In this case, Mahalaxmi Bank Ltd., which was under a moratorium, changed its name to Mahalaxmi Loan and Trading Co. Ltd. under Section 21 of the Companies Act, 1956. The change was registered and a certificate of incorporation of the new name was issued under Section 23 of the said Act. Thereafter, in a pending execution case, the bank, which was the decreeholder, applied for amendment of its petition for execution by altering its name from the old to the new. The application was allowed. On a revision, a Division Bench of this court affirmed the amendment and observed as follows (at p. 586):

' Section 21 enables a company to change its name by a given method, viz., by a special resolution and with the approval of the Central Government signified in writing. It does not provide for altering the entity but only the name. This is also made quite clear by the provisions of Section 23. Sub-section (1) of Section 23 states that where a company changes its name in pursuance of Section 21 or Section 22, the Registrar shall enter the new name on the register in the place of the former name, and shall issue a fresh certificate of incorporation with the necessary alterations embodied therein and the change of name shall be complete and effective only on the issue of such a certificate. It would be observed that the emphasis is on the expression 'change of name'. Sub-section (3) laysdown that the change of name shall not affect any rights or obligations of the company or render defective any legal proceedings by or against it ; and any legal proceedings which might have been continued or commenced by or against the company by its former name may be continued by or against the company by its new name. '

(c) Jai Jai Ram Manohar Lal v. National Building Material Supply, Gurgaon, : [1970]1SCR22 . Here, in a suit filed in the name Jai Jai Ram Manoharlal, the plaintiff, Manoharlal, sought to amend the cause title of the plaint by describing himself as Manoharlal, proprietor of Jai Jai Ram Manoharlal. The amendment was allowed and a decree was passed in the suit. On appeal, the High Court of Allahabad noted that in the application for amendment, there was no averment that the institution of the suit in the wrong name was on account of any bona fide mistake or omission and that the amendment was wrongfully allowed at a time when the suit was barred by limitation. It was held that the suit was instituted in the name of a person not in existence. On a further appeal, the Supreme Court set aside the order of the High Court and observed as follows (at p. 1270) :

' In our view, there is no rule that unless in an application for amendment of the plaint, it is expressly averred that the error, omission or mis-description is due to a bona fide mistake, the court has no power to grant leave to amend the plaint. The power to grant amendment of the pleadings is intended to serve the ends of justice and is not governed by any such narrow or technical limitations.

Since the name in which the action was instituted was merely a mis-description of the original plaintiff, no question of limitation arises ; the plaint must be deemed on amendment to have been instituted in the name of the real plaintiff on the date on which it was originally instituted. '

14. The Supreme Court reiterated the principles laid down earlier by it in Purushottam Umedbhai and Co. v. Manilal and Sons, : [1961]1SCR982 and quoted the following observations from the judgment in that case (at p. 330):

'... a plaint filed in a court in India in the name of a firm doing business outside India is not by itself a nullity. It is a plaint by all the partners of the firm with a defective description of themselves for the purposes of the Code of Civil Procedure. In these circumstances, a civil court could permit, under the provisions of Section 153 of the Code (or possibly under Order VI, Rule 17, about which we say nothing), an amendment of the plaint to enable a proper description of the plaintiffs to appear in it in order to assist the court in determining the real question or issue between the parties.'

(d) Malhati Tea Syndicate Ltd, v. Revenue Officer, Jalpaiguri, [1973] 43 Comp Cas 337 (Cal). In this case, Malhati Tea Syndicate Ltd. moved under Article 226 of the Constitution challenging a demand from a statutory authority for payment of arrears of rent under a lease as also for arrears of cess. During the pendency of the writ application, Malhati Tea Syndicate Ltd. changed its name by a special resolution and obtained a certificate of incorporation recording its new name, viz., Malhati Tea and Industries. The writ application was partially successful. An appeal was preferred by the company from the order of the first court.

15. The company applied in the appeal for amendment of the pleadings in the original proceedings as also pleadings in the appeal for substituting its new name.

16. After considering and disposing of the appeal on merits, a Division Bench of this court held that on the day the appeal was filed, there was no company in the register in the name Malhati Tea Syndicate Ltd. which was no longer in existence within the meaning of the Companies Act, 1956, and, as such, the appeal was incompetent. There is no indication in the judgment as to how the application for amendment was disposed of.

17. In construing Section 23 of the Companies Act, 1956, the Division Bench observed as follows (at p. 340):

' The first part of the sub-section protects the rights and obligations of the company, already acquired before the change of its name and also protects legal proceedings by or against it. The second part of the subsection authorises the continuation of a pending legal proceeding which was commenced by the company in its former name. The second part provides that legal proceedings commenced by the company in its former name may be continued by the company after the change of its name. Nothing in this sub-section authorised the company to commence a legal proceeding in its former name at a time when it had acquired its new name which has been put on the register of the joint stock companies. '

(e) Shanti Kumar R. Canji v. Home Insurance Co. of New York, : [1975]1SCR550 . This decision was cited for the following observation of the Supreme Court: (headnote)

' Where an amendment takes away from the defendant the defence of immunity from any liability by reason of limitation, it is a 'judgment' within Clause 15, It is a decision affecting the merits of the question between the parties by determining the right or liability based on limitation. It is the final decision as far as the trial court is concerned. '

(f) Patel Roadways P. Ltd. v. Bata Shoe Co, P. Ltd. [1979] 2 c HN 273. Here, the Bata Shoe Co. P. Ltd. instituted a suit in the City CivilCourt, Calcutta, against Patel Roadways P. Ltd, in October, 1971, for a money decree. During the pendency of the suit, the plaintiff converted itself into a public (limited company) and by a resolution dated April 7, 1973, changed its name to Bata India Ltd. A fresh certificate of incorporation was accordingly issued. Thereafter, by an order dated July 1, 1976, passed under rule 10 of Order VII of the Code of Civil Procedure, the plaint filed in the city civil court was returned and was refiled in the Court of the First Subordinate Judge, Alipore. In 1977, an application was made in the suit before, the Alipore court for amendment of the cause title of the plaint for substituting the changed name of the plaintiff in place of the previous name. The application was allowed and on a revision before a Division Bench of this court, the order allowing amendment was upheld. The contention of the defendant that the amendment amounted to substitution of an existing person for a non-existent person was rejected. It was held that a change of the name of the company did not indicate a change of its identity and further that the previous name of the plaintiff in the cause title of the plaint was a mere misdescription which could be corrected by amendment.

(g) Shree Choudhary Cold Storage (1972) v. Ruby General Insurance Co. Ltd., : AIR1982Cal124 . In this case, under the General Insurance (Emergency Provisions) Act, 1971, Ruby General Insurance Co. Ltd. was taken over and its management vested in the Government of India. Under the subsequent General Insurance (Emergency Provisions) Amendment Act, 1972, the National Insurance Company took over the management of the company which was treated as an unit of the former. Under the National Insurance Company Ltd. (Merger) Scheme, 1973, promulgated thereafter, all companies taken over were directed to be merged with the National Insurance Company Ltd. and to stand dissolved without winding-up.

18. Thereafter, a suit was filed describing the defendant in the cause title of the plaint as follows (at p. 640):

' Ruby General Insurance Company Limited of which the management is vested in the Government of India by the provisions of the General Insurance (Emergency Provisions) Act 17 of 1971...'

19. National Insurance Company Ltd. applied under Order 7, Rule 11 of the Code of Civil Procedure and succeeded in obtaining an order for dismissal of the suit on the ground that the same had been filed against a dissolved company and was thus incompetent. On appeal, a Division Bench of this court held, inter alia, that as Ruby General Insurance Company Ltd. had been dissolved and a new company, namely, National Insurance Company Ltd., had come into existence, it was not a case of mere misdescription. The order of dismissal of the suit was affirmed.

20. The question before us is whether the suit in the instant case is by an entity which is not in existence or by an entity in existence which has been misdescribed in the plaint.

21. On a consideration of the relevant sections of the Companies Act, 1956, relating to change of name of existing companies, noted earlier, it does not appear to us that a change of the name of the company results in its dissolution and incorporation of a new company under a new name. Section 21 of the statute permits a company to change its name in the manner as prescribed and nothing else. Ex facie, the section indicates that the company continues in a new name.

22. Section 23 of the Act appears mainly to be a ministerial section and lays down the procedure for recording of the change of name. A fresh certificate of incorporation is no doubt issued, but the same is only for the purpose of recording the alteration in the name. The effect of the issue of the new certificate as provided in Sub-section (1) of Section 23 is to render the change of name complete and effective and nothing more. The section does not provide or imply that on the issue of the new certificate, the company as it existed will stand dissolved and a new company will come into existence.

23. Sub-section (3) of Section 23 provides that change of name will not affect any right or obligation of the company and that legal proceedings in the old name will not be rendered defective but will be continued by or against the company in its new name. The expression used in the section is ''the company' and not 'old company', or 'new company', or 'dissolved company'. There are further indications that in spite of a change of name, the entity continues.

24. For the above reasons, we hold that on a change of its name, a company does not stand dissolved nor any new company comes into existence. It follows that after change of its name, if any legal proceeding is commenced or instituted by a company in its old name, it would be a case of mere misdescription and not a case of initiation of a proceeding by a person not in existence.

25. A similar question came up before a Division Bench of this court in Economic Investment Corporation Ltd. v. C1T : [1970]75ITR233(Cal) . In that case, a company changed its name under Section 11(5) of the Indian Companies Act, 1913. The change was duly intimated to the Income-tax Officer concerned. In spite of such intimation, the Income-tax Officer assessed the company in its old name and initiated certificate proceedings. During the pendency of the proceedings, the Income-tax Officer requested the certificate officer to substitute the old name of the company by its new name. The company appeared and objected. The certificate originallyissued against the company was cancelled and a fresh notice under Section 46(5A) of the Indian Income-tax Act, 1922, was issued to the company in its new name. The said notice was challenged under article 226 of the Constitution where it was contended that proceedings against the company could not be continued without fresh assessment being made in the new name of the company. The contention was negatived both by the first court and in appeal by a Division Bench which construed Section 23(3) of the Companies Act, 1956, and observed as follows (at p. 235) :

' It is clear from Sub-section (3) that by the change of name, the constitution of the old company is not changed. The only thing that is changed is its name and all the rights and obligations under the law of the old company pass to the new company. It is not similar to the reconstitution of a partnership, which, in law, means the creation of a new legal entity altogether.'

26. In Malhati Tea Syndicate Ltd.'s case : AIR1973Cal78 it was held that an appeal filed in the old name of the company after a change of its name was commencement of a proceeding and was, therefore, incompetent. An earlier decision of the Supreme Court in Garikapati Veerrayya v. N. Subbiah Choudhry, : [1957]1SCR488 , was not cited or considered in that case. The majority judgment of the Supreme Court laid down the following proposition (headnote).

'The legal pursuit of a remedy, suit, appeal and second appeal are really but steps in a series of proceedings all connected by an intrinsic unity and are to be regarded as one legal proceeding.'

27. The decision of this court in Malhati Tea Syndicate Ltd.'s case [1973] 43 Comp Cas 337, is, therefore, distinguishable. In any event, Malhati Tea Syndicate Ltd.'s case is not an authority for the proposition that commencement of proceeding by a company in its old name after a change would be a proceeding by a person not in existence.

28. The facts in Shree Choudhan Cold Storage's case : AIR1982Cal124 are entirely different from the facts of the case before us. There, a company had been dissolved by operation of a statute and a new company had taken over the assets and management of the dissolved company. The suit having been filed against the dissolved company was held to be incompetent. We agree with the said decision with respect.

29. The decision of the Supreme Court in Pumshottam Umedbhai & Co.'s case, : [1961]1SCR982 , though not directly on the point, supports the view that a suit filed in the wrong name would be a case of misdescription and not a suit by a non-existent person. This is also the view of the two other Division Benches of this court in the decisions noted earlier.

30. For the above reasons, the appeal fails and is dismissed with costs.

31. The operation of the judgment is stayed for a fortnight from date but there will be an interim order directing stay of further proceedings in the suit during the said period.

Suhas Chandra Sen J.

31. I agree.


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