Bombay High Court Executive Board Of The Methodist ... vs Union Of India And Others on 10 September, 1984 Author: M S Manohar Bench: S V Manohar JUDGMENT Mrs. Sujata V. Manohar, J. 1. The Methodist Church is a well-established religious organization. The Methodist Episcopal Church began its work in India in the year 1856. By 1864, its work was organised in the name of India Mission Conference. By 1870, the Methodist Episcopal Church and established work both along educational and evangelical lines. At present the Methodist Church in India is divided into 11 regional bodies called regional conferences. It has about six lakhs members and it owns a very large number of immovable properties throughout the country. It runes educational institutions, hospitals, schools for the handicapped, hostels and houses for orphans, lepers, etc. 2. Originally the central conference of the United Methodist Church, USA, consisting of about 1,000 elected delegates from all over the world governed the Methodist Church throughout the world. Outside the United Methodist Church of America, there was a single conference of the Methodist Church in every country or region where the church was functioning. The central conference of the Methodist Church in Southern Asia was governing the said church in India. 3. In 1980, the central conference decided to reorganize the Methodist Church in Southern Asia by having an autonomous body for India. It was therefore, decided to reorganize the Methodist Church in Southern Asia as the Methodist Church in India. On January 7, 1981, the central conference declared that the central conference of the Methodist Church in Southern Asia stood dissolved and was reorganized as the central conference of the Methodist Church in India as from January 7, 1981. Accordingly, the original first petitioner, viz., the executive board of the Methodist Church in Southern Asia, also amended its name to the executive board of the Methodist Church in India. 4. On January 7, 1981, the central conference of the Methodist Church in Southern Asia further resolved that the executive board of the Methodist Church in Southern Asia shall hold the properties of the Methodist Church in India upon trust till such time as the central conference of the Methodist Church in India legally appoint its own trust association for holding the said properties upon trust for the benefit of the Methodist Church in India. 5. As a result, the executive board of the Methodist Church in Southern in Asia (since re-named) continues to hold the properties of the Methodist Church in India as trustees on their behalf and for their benefit. The first petitioner in this petition was originally the executive board of the Methodist Church in Southern Asia. The executive board of the Methodist Church in India, is the present first petitioner. The first petitioner is a Societies Registration Act and has its registered office at the Methodist Centre in Bombay. It is also registered under the Bombay Public Trusts Act (XXIX of 1950). 6. The formation of a trust company for holding the properties of the Methodist Church in India was in contemplation for some time. In 1979, the petitioners applied to the Registrar of Companies at Madras for the availability of the name Methodist Church in India Trust Association for the purpose of registering a company for holding the properties of the Methodist Church in India. The Registrar of Companies suggested modification in the name. Ultimately, by his letter dated February 25, 1980, the Registrar of Companies, Tamil Nadu, informed the advocate of the petitioners that there was no objection to the registration of the company by the name Methodist Church in India Trust Association P. Ltd. The letter stated that the proposed name cannot be reserved for more than there months and that the letter conferred no priority rights in the name on the petitioners. It was also set out in the letter that if it is ultimately found for some reason that the name is not available, the matter must be regarded as open to reconsideration up to the time of actual registration. According to the petitioners, in April, 1980, and in August, 1980, they applied for renewal of the availability of the name. According to them, this renewal was granted to them in April, 1980. 7. With reference to their application for renewal in August, 1980 however, the petitioners received a letter dated August 23, 1980, from the Registrar of Companies, Tamil Nadu, setting out that their name closely resembles an already existing company, viz., Methodist Church Northern India Trust Association P. Ltd,. as also a company registration in Hyderabad, viz., Methodist Church of India, Hyderabad. The petitioner was asked to obtain a no objection certificate from these two companies. 8. It seems that on February 4, 1980, seven persons applied for registration of a company limited by guarantee to be known as Methodist Church of India. Their application appears to have been promptly attended to On February 11, 1980, respondents Nos. 1 to 3 granted the application. On June 30, 1980, the fourth respondent were also granted licence under s. 25 of the Companies Act to dispense with the words Limited or Private Limited, in their name. On July 26, 1980, the fourth respondent company was incorporated at Hyderabad. Its memorandum of association is signed by seven persons and it is a company limited by guarantee with each of the sever persons giving a guarantee for Rs. 100 each. In view of this company being registered at Hyderabad in July, 1980. The petitioners were required in August, 1980, by the Registrar of Companies at Madras to obtain a no objection certificate from the fourth respondent company before making the name available to the petitioners. The petitioners have challenged these actions of respondents Nos. 1 to 3. 9. Under section 20 of the Companies Act : (1) No company shall be registered by a name which, in the opinion of the Central Government, is undesirable. (2) Without prejudice to the generality of the foregoing power, a name which is identical with, or too nearly resembles, the name by which a company in existence has been previously registered, may be deemed to be undesirable by the Central Government within the meaning of sub-section (1). 10. The Department of Company Law Administration has formulated certain guiding instructions for deciding cases of making a name available for registration under the Companies Act, 1956. Under these instructions, a name which falls under certain specified categories will not generally be made available. Instruction No. 13 refers to a case where a companys name is identical with or too nearly resembles the name by which a company in existence has been previously registered. (There are certain exceptions when the proposed company is under the same management or group, etc., which are not relevant for present purposes). It further provides that the even in the case of unregistered companies or firms which have built up a reputation over a considerable period, the same principle should be observed as far as practicable, even though the company or firm is not previously registered. The case of a foreign company of repute should also be similarly treated even if there are no branches of such a company in India. 11. Under instruction No. 18, the use of the name may be considered undesirable if it is intended or is likely to produce a misleading impression regarding the scope of the activities which would be beyond the resources at the companys disposal, e.g., words like International, may be allowed only if the scale and scope of business of the proposed company justified the use of such a word. 12. In the present case, the name, the Methodist Church of India, denotes an institution which has been set up officially by a resolution of the central conference in 1981, and which is organised and functions in accordance with the prescribed rules and regulations. It would be highly misleading to allow the use of such a name to an organization which is no way connected with the official organization and is set up by seven private individuals. Such a name, if it is allowed to be used by any company simply because there is no previously registered company under the Companies Act bearing such a name, would cause not only confusion in the mind of the members of the Methodist Church, but also it can mislead the general public. Moreover, the Methodist Church in India also owns a number of properties, both movable and immovable in India. If the company is allowed to call itself the Methodist Church of India, an impression may be created that the properties of the Methodist Church in India belong to such a company. There is a grave danger of misuse of such name for the purpose of claiming ownership of the properties which belong to the Church. In fact, immediately after getting respondent No. 4 registered, that company has filed a suit against the petitioners in Hyderabad asking, inter alia, for ma schedule of properties of the said church in India for accounts and for an injunction restraining the officials of the said church of the said church from dealing with the said properties. Respondent No. 4 has indulged in other litigations. This would also indicate that the registration of the fourth respondent was not done bona fide. 13. In the present case, my attention has also been drawn to a letter dated August 10, 1984, addressed by Rev. T. S. Kamble to Bishop E. A. Mitchell, of the Methodist Church at Bombay in which he has pointed out that a certain property at Hingoli which was purchased for the Methodist Church in 1965 has been claimed by one of the signatories to the application made for the registration of respondent No. 4. This letter is annexed to the affidavit of Rev. Stanley E. Downes, the secretary first petitioner dated August 23, 1984. 14. In the objects clause of the memorandum of association of the fourth respondent-company, the first object mentioned is a follows : 1. To take over and assume the complete charge of administration with entire finances, property, rights, undertaking and managements of the incorporated or not incorporated body or bodies known as the Methodist Church in Southern Asia and its institutions and organizations, with all assets and liabilities thereof under its executive board and regional bodies which are otherwise called the annual conferences in India, as a going establishment and institution, to regularize, reorganize, manage and conduct the affairs of the Methodist Church of India, in accordance with the laws of the country. 15. This clearly indicates that the fourth respondent-company has been formed in order, inter alia, to take complete charge of the properties of the Methodist Church in Southern Asia and its institutions. Clearly, the name, Methodist Church in India, has been chosen by the fourth respondent in order to facilitate its usurping the properties of the said church in India. 16. The fourth respondent has, as its members, the seven signatories to the memorandum of association. Their names are set out in paragraph 20 of the petition. They are Methodist and belong to the Methodist Church. They reside in Hyderabad. These are their only qualifications for labeling themselves as the Methodist Church of India. These persons have not been authorised by the central conference or by the general body nor are they elected or appointed by the general body to constitute the Methodist Church of India. In fact, it was contended by the learned advocate on their behalf that it is open to any seven persons to register a company and name it the Methodist Church of India so long as there is no other company with such a name registered in India. This contention has to be stated only to be rejected. Any and every member of the Methodist Church cannot be allowed to thus register a company called the Methodist Church of India, particularly when the object of such a company is to take over the properties and institutions of the church. 17. It is the case of the petitioners that there are only seven members of the fourth respondent-company. Learned advocate for respondent No. 4 is unable to give any information on this point. In their affidavit-in-reply, the fourth respondent has stated that they are enrolling more members. No particulars, however, are given about membership. It would thus be seen that the membership of the fourth respondent is, to put it mildly, extremely limited and the fourth respondent, in these circumstances, cannot be allowed to use the name Methodist Church of India. 18. In Halsburys Laws of England, fourth edition, Volume 7, para. 130, it is stated as follows : If in the opinion of the department, the name by which a company registered gives so misleading an indication of the nature of its activities as to be likely to cause harm to the public, the department may direct it to change its name ........... A company registered under the Companies Act, 1948, is not entitled to carry on its business in such a way or under such a name, as to represent that its business is the business of any other company or firm or person; and the absence of fraud is immaterial. In such cases, the old company or firm can apply to the court for an injunction, and the principles then apply which apply to individuals trading under identical or similar names. 19. In the case of La Societe Anonyme des Anciens Establishments Panhard Levassor v. Panhard Levassor Motor Co. Ltd. [1900-3] All ER Rep. 477; [1901] 2 Ch 513, the plaintiffs were a reputed firm of manufactures of motor cars in Europe. The defendants formed a company using the name of the plaintiffs and registered it in England. The court restrained the promoters of the company from carrying on the business under the name on the ground that the company had been fraudulently formed. In a later case in Exxon Corpn. v. Exxon Insurance Consultants International Ltd. [1981] 2 All ER 495; [1981] 1 WLR 624 (Ch.D.), an injunction was granted restraining the company from using the word Exxon in its name and restraining it from allowing any name containing the word Exxon to remain on the register as the name of the company, on the same ground. 20. In the present case, respondents Nos. 1 to 3 ought not to have allowed the fourth respondents-company to be registered with the name the Methodist Church of India. There are instructions to guide respondents Nos. 1 to 3 in the exercise of their discretion under s. 20 of the Companies Act. They ought to have considered whether the name given by the fourth respondent was likely to mislead or deceive, especially when the objectives clause provides for taking over all the properties of the Methodist Church. It is true that at the stage of registering of a company, respondents Nos. 1 to 3 are not required to carry out any elaborate investigation. As observed by the Andhra Pradesh High Court in the case of Krishna v. Andhra Prabha P. Ltd. [1960] 30 Comp Cas 437, the only duty cast on the Registrar before he registers a company is to see that the requirements prescribed under sub-ss. (1) and (2) of s. 33 are complied with. Unless the purpose of the company appears to be unlawful ex facie or is transparently illegal or prohibited by any statute, it cannot be regarded as an unlawful purpose. Respondents Nos. 1 to 3 were, therefore, not required to make any elaborate enquiry. But they could have at least required respondent No. 4 to get a no objection certificate from one of the existing companies just as they had required the petitioners to obtain such a certificate. No enquiry, however, seems to have been made by respondents Nos. 1 to 3. One cannot, of course, expect respondents Nos. 1 to 3 to have any extensive general knowledge. But one would expect them to have at least heard of the Methodist Church. Anyway it is fairly apparent from the name that it denotes some sort of a religious group. When such a name is proposed to be used by a company which is being registered for the first time, it would not have been out of tune for respondent Nos. 1 to 3 to have enquired as to whether the persons applying for registration were in any manner connected with or authorised by the Methodist Church to get the company registered. In other words, they ought to have enquired whether the proposed company had any connection with the religious group whose name it was choosing to adopt. In failing to make such enquiries and in allowing respondent No. 4 to be registered, respondents Nos. 1 to 3 have failed to discharge their obligation under s. 20 of the Companies Act. 21. Respondents Nos. 1 to 3 were not right in insisting that the petitioners should obtain a no objection letter from a company which had no right to use their name. Apart from respondent No. 4, the only other company registered in India with a similar name is the Methodist Church in Northern India Trust Association registered in Calcutta. The former secretary of that association has addressed a letter dated July 31, 1984, in which he has stated that the said company has not functioned since 1970. No annual reports or minutes have been submitted to the Registrar of Companies, Calcutta, since 1970. Some directors have died and some have left India. In these circumstances, it is not necessary to obtain any no objections certificate from the Methodist Church in Northern India Trust Association. And the registration of the said company in Calcutta is not a bar to the registration of the proposed company by the petitioners with the name, Methodist Church in India Trust Association Pvt. Ltd. 22. The only other point which requires consideration is the point relating to jurisdiction. The application for registration was made by the petitioners before the Registrar of Companies at Madras. The petitioners, however, are registered in Bombay and they have their registered office in Bombay. The petitioners received the letter of August 23, 1980, from the Registrar of Companies through advocates in Bombay. The petitioners have submitted that the effect of the letter asking them to get the no objection certificate has been felt by them in Bombay. In this connection, the petitioners relied upon two decisions of this court. One is the decision in the case Damomal Kausomal Raisinghani v. Union of India, , where a Division Bench of this Court under art. 226 of the Constitution. Article 226 of the Comic Con Indiastitution, as amended, mentions that the High Court exercising jurisdiction will be that High Court in relation to the territories within which the cause of action wholly or in part arises : notwithstanding that the authority to whom directions are issued will not be within its jurisdiction. The Division Bench of this High Court held that the place where the effect of the order was felt would also be the place where the cause of action can be said to arise. 23. A similar view was taken by the Bombay High Court in an earlier case of Joshi v. State of Bombay, . In view of the ratio laid down by the these decisions, the cause of action can be said to have arisen in part at least in Bombay. The petitioners have also submitted that the effect of the registration of the fourth respondent on the properties of the petitioners, is felt wherever the properties are situated. Some of these properties are situated in Bombay. As a result of the registration of the fourth respondent, misunderstanding relation to the title to these properties is likely to arise in Bombay. On this count also, one can say that the effect of the order passed by respondents Nos. 1 to 3 is felt in Bombay. In my view, therefore, this court has jurisdiction to entertain this petition. 24. In these circumstances, the petition is allowed and the rule is made absolute in terms of prayer (a). Accordingly respondents No. 1 to 3 are directed to remove the name of respondent No. 4 from the register. Respondent No. 4 is restrained from using the words Methodist Church in his name. Respondents Nos. 1, 2 and 3 are directed to make the name the Methodist Church in India Trust Association P. Ltd. available to the petitioners for registration, without requiring them to produce any no objection certificate, either of respondent No. 4 (since the question now does not arise of getting their consent) or from the Methodist Church in Northern India Trust Association. 25. The rule is made absolute accordingly. 26. The respondents will pay to the petitioners costs of this petition. Its an appeal to all methodist church members and laity;s and clergys to come forward and save,the methodist church in india trust association pvt ltd.properties and institutions better progress and developments in india mci mission works for families, needy,poors,sick patients hospitals,schools,colleges,institutions for illiterate,self employment and employments for unemployed,shelter,food and accommodations,recreation halls,sports clubs,sports grounds,club house,for all members mci.in national and international.other activities ETC.
Posted on: Wed, 17 Sep 2014 14:06:59 +0000