Lalit began the discussion by informing the group that his client, Roopam Leathers Limited (the Company), changed its name to Rakshak Leathers Limited in January 2024, following the due process of law. Before this change
CS Executive · Company Law and Practice · PYQS · December 2024
Lalit began the discussion by informing the group that his client, Roopam Leathers Limited (the Company), changed its name to Rakshak Leathers Limited in January 2024, following the due process of law. Before this change, the company had filed a suit against one of its suppliers in May 2023 to recover compensation due to a breach of contract. However, in April 2024, the supplier applied to the Court for dismissal of the suit, arguing that Roopam Leathers Limited ceased to exist after the name change and the issuance of a new certificate of incorporation by the Registrar. The Managing Director of the Company has expressed concern about the fate of the litigation against the supplier. Explain the effect of the change in the company's name and advise the Managing Director on whether the Supplier's application for dismissal of the case is tenable.
Answer & Explanation:
Effect of Change in Name Clause 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 in its former name may be continued by or against the company in its new name. By change of name, constitution of company does not change, the only thing change is its name, all the rights and obligations under the law of old company pass to the new company. Case Laws: It was held in the case of Re Malhati Tea Syndicate Ltd. v. Revenue Officer, (1973) 43 Com Cases that where a company changes its name and the new name has been registered by the Registrar, the commencing of legal proceedings in the former name is not valid. In Re Pioneer Protective Glass Fibre (P) Ltd. v. Fibre Glass Pilkington Ltd., (1986) 60 Com Cases 707 (Cal) it was held that inspite of a change in name the entity of the company continues. The company is not dissolved or does any new company come into existence. If any legal proceeding is commenced, after change in the name, against the company in its old name, the company should be treated as if it is not in existence. It is not an incurable defect and the plaint can be amended to substitute the new name. Considering the above points, the contention of the supplier that the company is ceased to be in existence after change of name is not correct. Hence, the application filed by him for dismissal of the case shall not be tenable. However, the case will continue with its new name.
Topics: Company Administration
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